MLB agreement says Frank McCourt must sell Dodgers by end of April
Reporting from Wilmington, Del. — Frank McCourt must divest himself of the Dodgers and their stadium by April 30 but has sole authority to decide whether he keeps or sells the parking lots surrounding the stadium, according to the terms of his sale agreement with Major League Baseball.
Initial bids for the team are due by Jan. 13.
The agreement, filed late Tuesday in U.S. Bankruptcy Court, outlines the Nov. 1 settlement under which McCourt agreed to sell the Dodgers.
“McCourt shall not retain directly or indirectly any interest in the assets that comprise the team,” according to the agreement.
The settlement facilitates the goal of McCourt and his advisors to secure the highest possible sale price by offering prospective buyers the chance to bid on the team, its television rights, its stadium and its surrounding land, as a whole or in desired parts.
MLB executives opted not to risk further litigation by trying to force McCourt to sell the Dodger Stadium parking lots, which are owned by a McCourt entity not in bankruptcy.
McCourt must transfer to the Dodgers’ new owner a long-term lease that enables the team to use the parking area on game days. That lease entitles McCourt to build parking structures so he could use the land for development without losing a significant amount of parking spaces.
Under the sale agreement, prospective team owners can bid for the parking lots as well, but McCourt has “sole and absolute discretion” over whether to sell them. If he keeps the parking lots, he would retain an annual income stream of about $10 million.
The Dodgers want to market their television rights as part of the sale, under the theory that prospective buyers might pay more for the team given the certainty of billions of incoming television revenue. Fox Sports has objected, since its current contract with the Dodgers forbids the team from negotiating with other broadcast outlets until Nov. 30, 2012.
As part of the settlement, MLB agreed to remain neutral in any disputes between the Dodgers and Fox.
However, under the sale agreement, McCourt has no authority to sign a new television rights deal for the Dodgers, even if he can persuade the court to let him negotiate one. A hearing on that issue is set Wednesday.
“The decision to enter into a telecast rights agreement shall be in the sole and exclusive discretion of the buyer,” according to the sale agreement.
The agreement also mandates that “McCourt and his relatives [and his or her affiliates] shall not participate directly or indirectly … in any media transaction entered into in connection with the sale of the team, or any financing provided with respect thereto.”
MLB and the Dodgers declared certain specific sale procedures as confidential, although people familiar with the process have said McCourt and not the league will select the winning bidder.
Blackstone, the investment bank advising McCourt, is permitted to send out the Dodgers’ preliminary financial information to any interested party deemed a “potentially qualified bidder,” without notification to MLB, according to the sale agreement.
Blackstone will then submit bidders for approval to MLB. The league will provide a small group of approved bidders in return, and McCourt can conduct the bidding thereafter, with the winning bidder needing no further ratification from MLB, according to the people familiar with the process.
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