Bankruptcy Q&A: Dodgers closer to a resolution

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The Dodgers have filed for bankruptcy protection and the first step in the process is a court hearing Tuesday in which owner Frank McCourt will ask the judge to approve the interim financing that would keep him in control of the team during the proceedings.

Times staff writer Bill Shaikin poses questions — and provides answers — about what that might mean for Dodgers ownership and how Major League Baseball is likely to react:

If McCourt is filing for bankruptcy, howcan he tell the Bankruptcy Court he has money?


McCourt got a $150-million loan at stiff terms — at least 10% interest, plus a $4.5-million fee. He will ask the court to approve $60 million in interim financing to pay immediate bills, including the player payrolls on June 30 and July 15.

What can Major League Baseball do?

MLB plans to propose alternative financing at more favorable terms. If the court believes those terms are better for creditors, McCourt could lose control of the Dodgers.

Why is McCourt still in control?

The MLB constitution authorizes Commissioner Bud Selig to revoke the franchise of any owner whose team files for bankruptcy. Selig did not take that step Monday — no sense trying to assert power before the bankruptcy judge’s first hearing — but the commissioner might do so soon.

Can the bankruptcy judge stop him?


That is the essence of the case: Would the Bankruptcy Court override MLB rules? The primary function of the court is to ensure that creditors are paid. The league says it alone can decide who owns its teams and can grant approval for television contracts. McCourt says the Dodgers would not be broke if Selig had approved a proposed contract with Fox.

But didn’t Fox say there was no contract once Selig rejected the deal?

Yes. McCourt now wants the Bankruptcy Court to auction the Dodgers’ cable television rights. That could put Fox in the uncomfortable position of opposing MLB or risking the loss of the Dodgers, most likely to Time Warner’s new Lakers channel. However, in defending its right to authorize television contracts, MLB also would say the Dodgers’ contract would be just as rich — if not richer — without McCourt as owner.

How can Frank McCourt take the Dodgers into bankruptcy if Jamie McCourt says she owns half the team?

If Frank McCourt did not move now, he could have missed payroll, and Selig could have seized the team and sold it. Jamie McCourt is expected to join MLB in opposing the filing, arguing that the prospect of months of bankruptcy litigation could devalue the Dodgers, by far the largest asset in a divorce that has yet to be settled. It is uncertain whether the divorce court could determine whether Jamie owns half the Dodgers before the Bankruptcy Court determines whether Frank can keep them — or, at least, half of them.