After a two-year battle to keep the Dodgers through a bruising divorce and a bankruptcy filing, owner Frank McCourt appears close to agreement with Major League Baseball on a bankruptcy settlement in which he would agree to sell the team.
McCourt would get some control over the sale, people familiar with the negotiations said Monday. The purchase probably would include Dodger Stadium and the surrounding parking lots in a package that could command a record price of $1 billion or more.
The negotiations are fluid, and settlement talks could fall apart at any time, said the people, speaking on condition of anonymity because of the confidential discussions. McCourt has not reached any final decision to sell, another person cautioned.
Dodgers spokesman Robert Siegfried, asked Monday whether a settlement appears close, said the team had no comment “to such kinds of inquiries.” MLB spokesman Pat Courtney also declined to comment.
McCourt has long vowed not to surrender the Dodgers. In April, as Commissioner Bud Selig appointed a trustee to oversee the team and attendance plummeted at Dodger Stadium, McCourt insisted he would not sell.
However, analysts suggested McCourt now might be willing to sell for a simple reason: Even if he won in court, he could lose.
Based on figures McCourt submitted to the Bankruptcy Court, he would be hard-pressed to sell the Dodgers’ television rights, settle his divorce and be left with enough capital to renovate Dodger Stadium and restore the team to prominence.
“I don’t know that there’s a way for him to win,” said Marc Ganis, president of the sports business consulting firm Sportscorp Ltd.
McCourt had pledged to pass the Dodgers along to his sons rather than sell the team. But as circumstances have backed him into a corner, holding on has become an ever-decreasing likelihood.
“I have always believed — notwithstanding any protestations — everyone will sell for a certain price. Everything is a cost-benefit analysis for him,” said Thomas Salerno, an attorney for the NHL’s Phoenix Coyotes during that team’s bankruptcy.
McCourt took the Dodgers into bankruptcy with the intention of winning court approval to sell the team’s television rights while exposing how Selig had abused his power by applying a double standard to the Dodgers in an effort to push McCourt out.
U.S. Bankruptcy Judge Kevin Gross denied McCourt access to documents from other teams and ruled that the bankruptcy case would not be a forum to put Selig on trial. The motion to sell the Dodgers’ television rights is pending, amid opposition from Selig and Fox Sports. But even a victory for McCourt on that front might not be sufficient.
“It would be a Pyrrhic victory,” Ganis said. “He would win the battle but lose the war.”
In order for McCourt to secure the Dodgers’ financial future through a television rights auction, Ganis said, the court would not only have to permit the auction over MLB objections but would need to restrict the league’s ability to decide how McCourt could spend the proceeds and how much would be deducted for MLB revenue sharing.
“He needs to effectively get the judge to overturn all of baseball’s rules,” Ganis said.
There is also the issue of costs digging deeply into any profit McCourt may realize in a sale.
In asking the court to approve the television rights auction, the Dodgers said a sale comparable to the proposed $3-billion deal it had with Fox — which was vetoed by Selig in June— would provide the team with “excess cash of more than $175 million as of the end of 2012.”
Since that September filing, McCourt has agreed to pay his ex-wife $130 million in a divorce settlement.
The Dodgers also have been sued by the family of Bryan Stow, the San Francisco Giants fan critically beaten in the Dodger Stadium parking lot. The Dodgers are challenging the suit, but Stow’s attorney has said his client’s medical bills could exceed $50 million.
In addition, Fox has threatened what it calls a “massive” damages suit against the Dodgers should McCourt proceed with the auction.
In court filings, MLB has argued that McCourt does not have any major source of income beyond the Dodgers, and that he already has pledged every significant team revenue stream beyond the television rights toward other debts.
As a result, the league said in a filing last month, McCourt could sell the television rights and still face “liquidity issues again as early as 2013.” The Dodgers deny that would happen.
In a settlement, Salerno said, McCourt could get cash without any league restrictions on how he could use the money, whether to pay off debts, the divorce settlement or otherwise. He might also get the court to supervise an auction for the team.
“The court will keep an eye on MLB to make sure it doesn’t depress the value solely to punish McCourt,” Salerno said.
Even if the league might believe victory would be likely at trial, Salerno said, its interests might be better served with a settlement. He said such an agreement would keep Selig off the witness stand, preventing him from revealing any potentially damaging information, and would signal to other owners that the commissioner is not averse to striking a deal.
Ultimately, Salerno said, there is one criterion that must be met for McCourt and Selig to agree.
“Both sides need to be able to declare victory for this to work,” Salerno said.