With the anticipated approval of the Dodgers’ sale two days away, officials from Major League Baseball traveled to Delaware on Wednesday to discuss their concerns with a court-appointed mediator.
The league does not intend to try to derail the sale, but tension between MLB and the Dodgers has intensified over the issue of what sale details must be disclosed to the league.
U.S. Bankruptcy Judge Kevin Gross is expected to bless the Dodgers’ sale at a hearing Friday in Wilmington.
If the league cannot resolve its concerns with Joseph Farnan, the mediator who has taken control of the sale process, MLB could be faced with the unappealing choice of swallowing hard and saying nothing on Friday or registering complaints that might have no impact.
The meeting with Farnan was disclosed by two people familiar with the sale process but not authorized to comment publicly.
As part of a settlement under which Dodgers owner Frank McCourt agreed to sell the team, MLB agreed to pre-approve several buyers and let McCourt select the winning bidder.
McCourt last month agreed to sell the Dodgers to Guggenheim Baseball Management, a group fronted by Magic Johnson and incoming team president Stan Kasten, for $2.15 billion. The MLB owners had approved three bids -- including the Guggenheim bid, then at $1.6 billion.
With McCourt planning to hold an auction, the league had reserved the right to review the structure and financing of the winning bid if the purchase price increased significantly from the amount already approved.
The league has asked for details about the source of the additional $505 million, and about the joint venture that McCourt and Guggenheim formed to own the Dodger Stadium parking lots.
The Dodgers have declined, claiming the structure and financing of the deal remains the same as approved by MLB -- all cash plus debt assumption, with no new team debt and no new financial partners.
The Dodgers also have declined to explain the parking lot arrangement, since the McCourt entity that currently owns the lots is not part of the team’s bankruptcy filing.
The mediator appears to believe the Dodgers’ actions are consistent with the terms of the sale agreement, according to a person familiar with the process.
With the Dodgers expected to negotiate a television contract worth at least $4 billion next year, the league also would be interested to learn if the buyers plan to put all that money into the team and/or stadium renovation rather than into recapitalizing the purchase.
However, confidential terms negotiated by McCourt as part of his agreement to sell could limit what control MLB has over revenue from the new television deal. Those terms -- and Farnan’s authority over them -- would survive the Dodgers’ exit from bankruptcy, according to the proposed order approving the sale agreement.
On Tuesday, the deadline for parties to object to the sale agreement, MLB asked only that McCourt be ordered to pay the league $8 million, mostly in legal fees. The league also said it “reserves all of its rights … including, but not limited to, commenting” on the proposed order approving the sale agreement.