Trial postponement could lead to sale of Dodgers by Frank McCourt
The Dodgers’ bankruptcy trial has been postponed for one month so Dodgers owner Frank McCourt and Major League Baseball can explore a possible settlement under which McCourt would agree to sell the team, multiple people familiar with the matter said Wednesday.
McCourt discussed a potential settlement with league officials Monday and Tuesday, said the people, none of whom were authorized to comment on the confidential talks. U.S. Bankruptcy Judge Kevin Gross announced the postponement in a one-sentence order on Wednesday, without citing a reason for the delay.
The four-day trial had been set to start Monday. Gross postponed the trial to Nov. 29.
Neither the Dodgers nor the league would comment Wednesday, according to their respective spokesmen.
However, the settlement talks hit a snag when the league declined to guarantee McCourt a specific return for selling the team, one of the people said. The league, which already has loaned McCourt $150 million in bankruptcy financing, is not willing to subsidize his exit should the team sell for less than whatever figure he might ask MLB to guarantee, the person said.
In court papers this week, attorneys for McCourt estimated the value of the Dodgers, their stadium and the surrounding land at “in excess of $1 billion.” Forbes valued the assets at $800 million last March.
McCourt might need more than $1 billion just to break even after paying off debts, tax liabilities and his divorce settlement, based on interviews by The Times and an analysis of court records in California and Delaware.
McCourt might also want some control over a sale, said Thomas Salerno, an attorney for the NHL’s Phoenix Coyotes during that team’s bankruptcy. Salerno, who is not involved in the Dodgers case, said the difference between McCourt controlling the sale and the league doing so could be “hundreds of millions of dollars.”
The Coyotes attracted a $250-million offer, but the league interceded to keep the team in Phoenix, with an eventual sale price of $140 million. The sale price of the Texas Rangers jumped from $520 million to $593 million in a Bankruptcy Court auction.
The league is willing to work with McCourt on conducting an auction, according to a person familiar with the discussions.
Commissioner Bud Selig had urged McCourt to sell a minority interest in the team before the bankruptcy filing, but Selig has advocated the ouster of McCourt since then. Selig also has rejected McCourt’s position that he could sell the Dodgers but keep Dodger Stadium and the surrounding parking lots.
McCourt has asked the Bankruptcy Court for permission to sell the Dodgers’ television rights, the key to his strategy to emerge from bankruptcy as the team’s owner. Selig has asked the court to order the Dodgers sold.
No party has supported McCourt’s proposal, which is opposed by Selig and Fox Sports.
The creditors’ committee this week asked Gross to reject McCourt’s proposal but defer any ruling on Selig’s request so the parties could discuss a “consensual exit strategy” that would satisfy creditors and “provide for the smooth transition of ownership.”
On Tuesday, the court ordered MLB and Fox to turn over communications between each other, a ruling that McCourt believes could enhance his leverage, according to a person familiar with the case. The league considers those documents largely superfluous, according to another person familiar with the case.
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