Frank McCourt’s divorce trial so troubled Bud Selig that the commissioner circumvented his own rules and choked off the Dodgers’ money supply in a scheme to oust McCourt as the team owner, the Dodgers alleged in a court filing Tuesday.
And, as the Dodgers pressed for the television rights sale with which McCourt claims the team could prosper, Fox Sports said such a sale could leave the team liable for damages so “massive” as to threaten the viability of McCourt’s strategy to exit bankruptcy as the team’s owner.
Fox also threatened not to air the Dodgers’ games for the final two years of the current contract, and Major League Baseball reiterated that it could render McCourt’s television rights worthless by kicking the Dodgers out of the league.
The parties set their positions in filings in the U.S. Bankruptcy Court as foundation for a four-day hearing critical to McCourt’s hope of retaining the Dodgers. The hearing starts Oct. 31.
The league has asked the court to order the team sold. The league also wants the court to deny the Dodgers the chance to sell their television rights now, alleging that McCourt has diverted more than $180 million from team revenue for personal use.
According to the Dodgers’ filing, an unspecified portion of that $180 million was used to pay down debt and another unspecified portion was distributed to McCourt not by the Dodgers but by another McCourt entity to which the Dodgers pay rent, in an arrangement MLB approved in 2005.
“The commissioner’s allegations are nothing more than pretexts to justify his desire to expel Mr. McCourt from Major League Baseball,” the filing read, “not directly, in accordance with the due process rights afforded under the Major League Constitution, but indirectly by starving the Dodgers of liquidity until Mr. McCourt was left with no choice but to submit to the commissioner’s desire that he sell the team.”
Under the MLB Constitution, the league cannot strip an owner of his team without providing him a list of charges in writing, extending an opportunity for a hearing and securing the vote of three-fourths of other owners.
“The commissioner does not have the authority to force an owner to sell,” the Dodgers’ filing read.
Instead, the team claims, Selig responded to the “enormous negative publicity” of last year’s divorce trial by refusing to let the Dodgers sign a new television contract with Fox, take a loan from Fox or tap into the MLB credit line.
McCourt has argued he could put the Dodgers on solid long-term financial footing by selling their television rights now, a claim challenged in separate filings by MLB and Fox.
The Dodgers said it was “unlikely that Fox Sports can assert any meaningful damages” for an early sale of the television rights. In turn, Fox threatened a damages claim so high it would threaten McCourt’s promise to repay all creditors in full and “render meaningless” his financial projections.
If McCourt were to walk away from the current contract, Fox suggested it could pass up any chance to carry the Dodgers in 2012 and 2013 and leave the team to “confront the challenge of finding alternative means to air its games in a fashion that MLB would support.”
In addition, even under McCourt’s projections, the league alleged the Dodgers’ debts still would be so high that the club would operate at a loss starting in 2014. The league also claimed the Dodgers could get 10% to 20% more for its television rights by waiting a year or two.