By Diehard Sports Fans
The Los Angeles Dodgers situation was thrown into further disarray on June 28 when a bankruptcy judge granted the club’s owner Frank McCourt interim approval to borrow $150 million so he can pay the players and cover the rest of the bills until the end of the year. There’s also a scheduled hearing for July 20 to decide whether an alternative loan offer from Major League Baseball should be approved for the Dodgers instead.
The Dodgers filed for Chapter 11 bankruptcy on June 27 and MLB objected to the procedure saying it was opposed to the $150 million debtor-in-possession loan. The league’s attorneys told the bankruptcy judge that it would provide the money for the Dodgers via its own banks and would give McCourt better terms than the J.P. Morgan hedge fund will.
When it filed the objection, MLB stated that the league would offer a no-strings attached and cheaper solution to McCourt’s financial problems over the next year. According to MLB, the original conditions of the hedge fund loan will see McCourt charged 10 percent interest as well as an additional fee of $4.5 million. However, the hedge fund then agreed to lower the fee to just $250,000 as an exit fee if the judge decides to go with the loan offered by MLB, which will charge just seven per cent interest and no extra fees.
MLB has blamed the club’s current financial situation on McCourt as they said he’s been using the franchise’s funds for his personal use. The league also said that McCourt didn’t have permission from Commissioner Bud Selig or when he filed for bankruptcy, which is an MLB requirement.
MLB also wants the court to look into some other things, such as if the case was filed properly, and if McCourt is eligible to keep control of club during the bankruptcy process. The league also said publicly that McCourt and his ex-wife Jamie siphoned more than $100 million for family us, which disregarded his debtors and the interests of the Dodgers and baseball in general.
They went on to say McCourt put his personal interests before the club’s and not being able to cover the payroll is a result of it. However, McCourt and his debtors say Selig is to blame since they refused to approve McCourt’s multi-year deal with Fox TV which would have injected millions of dollars into the franchise immediately and $3 billion over the life of the deal.
It’s believed the Dodgers’ next payroll payment is $40 million with $8 million of that going to the retired Manny Ramirez as a deferred payment. McCourt is asking the judge to approve the proposed hedge fund loan as well as to open up bidding between media companies to for a new television deal.
Selig said he shot down the deal between the Dodgers and Fox because he didn’t feel it was in the best interests of baseball and the Dodgers. MLB is claiming that McCourt has filed for Chapter 11 to have the television deal approved and that he didn’t seek financial help from the league before doing so.
If approved, the Fox deal would have pumped $385 million into the club in an up-front payment to keep it afloat. Fox also loaned $23.5 million to McCourt personally to cover May’s payroll.