The current recession has taken its toll on many families and businesses, forcing thousands to file for bankruptcy. Why, then is it so surprising that a professional baseball team could find itself in a similar financial crisis? Many people were shocked to find that the Los Angeles Dodgers are entering a Chapter 11 bankruptcy as the team is financially struggling.
Part of the financial burden comes from the divorce of the team owners, Frank and Jamie McCourt, who filed over two years ago, unveiling some dishonest use of the Dodger’s money. The Associated Press reported that the McCourts took out more than $100 million in personal loans from team accounts to pay for their extravagant lifestyles, which included homes in Holmby Hills and Malibu, private jet travel and his-and-hers house calls from hairdressers. Because of these findings, the MLB (Major League Baseball) has been in control of the team since April.
The Dodgers were relying on a substantial TV deal with Fox to help keep the team from filing bankruptcy. The deal would offer an upfront payment of $385 million, but the MLB refused to approve the deal.
Last month Frank McCourt asked the judge for a $150 million loan to meet payroll, retain control of the team and hold an auction for TV rights. Once the negotiation of TV rights can resume, McCourt can pay off all of the Dodger’s creditors. They would ask for immediate approval of $60 million in financing.
Some of the Dodger’s financial obligations include$20 million in current and deferred salaries and a $25-million advance from Fox for this year’s TV rights. The subsidiary that controls the Dodger Stadium parking lots also has $67 million in loans coming due at the end of this month.
Frank McCourt is desperately trying to maintain ownership of the Dodgers, but will be fighting in court on at least four fronts – against with Bud Selig, baseball’s commissioner, on whether his franchise rights will be revoked. As well as his ex-wife, his former law firm and the family of Bryan Stow, a fan who was critically beaten in the Dodger Stadium parking lot on opening day.
While it seems that the Dodger’s cash flow may be running out, McCourt promises that the Dodgers will continue to play with “no disruption to the Dodgers’ day-to-day business, the baseball team or to the Dodger fans.”
If you’re considering filing for bankruptcy and would like to find out more, please contact an experienced Killeen and Waco bankruptcy attorney.