Monday, June 27, 2011

Los Angeles Dodgers file for bankruptcy as pro sports teams begin feeling economic downturn

The Los Angeles Dodgers filed for bankruptcy protection in a Delaware court Monday, blaming the refusal of Major League Baseball to approve a multibillion-dollar TV deal that owner Frank McCourt was counting on to keep the troubled team afloat.

The Chapter 11 financing permits the Dodgers to use $150 million for daily operations and buys time for the team to seek a media deal, the team said in a news release.

"There will be no disruption to the Dodgers day-to-day business, the baseball team, or to the Dodger fans," the statement said.

Bankruptcy protection will provide the Dodgers with a process to address its immediate financing requirements and obtain the capital necessary to ensure the baseball franchise's long-term financial stability, the team said.

McCourt said the Dodgers have tried for almost a year to get Selig to approve the Fox transaction. The deal would have provided him with $385 million up front and was vital to a binding settlement reached between him and his ex-wife and former Dodger CEO Jamie McCourt last week. McCourt now faces the potential of missing a June 30 team payroll without the TV funds and that could lead to a MLB takeover.

The McCourts have been embroiled in a contentious divorce where their lavish spending habits were detailed in court documents. The former couple took out more than $100 million in loans from Dodger-related businesses, records show. (read more)