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Los Angeles Dodgers File for Chapter 11 Bankruptcy Protection
Chapter 11 to provide Dodgers with process to address its immediate financing requirements andobtain the capital necessary to ensure the C
lub’s long term financial stability
Action is precipi
tated by Commissioner Selig’s interference with Club operations and refusal to
approve multibillion dollar media rights transaction
LOS ANGELES, June 27, 2011
–
The Los Angeles Dodgers filed for protection under Chapter 11 of the U.S.Bankruptcy Code in order to protect the franchise financially and provide a path that will enable theClub to consummate a media transaction and capitalize the team. Dodger owner Frank McCourt cited
Major League Baseball Commissioner Bud Selig’s refusal to approve the Fox tra
nsaction as the cause forthe Chapter 11 filing.
“The Dodgers have delivered time and again since I became owner, and that’s been good for baseball,”
McCourt said.
“We turned the team around financially after years of annual losses before I purchased
the team.
We invested $150 million in the stadium. We’ve had excellent on
-field performance, includingplayoff appearances four times in seven years. And we brought the Commissioner a media rights dealthat would have solved the cash flow challenge I presented to him a year ago, when his leadership team
called us a ‘model franchise.’
Yet he’s turned his back on the Dodgers, treated us differently, and forced
us to the point we find ourselves in today. I simply cannot allow the Commissioner to knowingly andintentionally be in a position to expose the Dodgers to financial risk any longer. It is my hope that the
Chapter 11 process will create a fair and constructive environment to get done what we couldn’t
achieve with the Commissioner directly
.”
The Los Angeles Dodgers have tried for almost a year to have Commissioner Bud Selig approve atransaction, which would assure that the Los Angeles Dodgers would be one of the strongest capitalizedfranchises in Major League Baseball, both now and for years to come. Indeed, for months, the Dodgershave sought approval from the Commissioner of a multibillion dollar media rights transaction negotiatedbetween the Dodgers and FOX, which would immediately infuse hundreds of millions of dollars of capital into the Los Ange
les Dodgers. The Commissioner’s office last week rejected the deal, despitehaving been made aware by the Dodgers since the spring of 2010 of the franchises’ cash projections and
in turn liquidity needs for 2011.
“The deal with Fox demonstrates that the
Dodgers have enormous value which substantially exceeds
the team's current and future liabilities,” said Bruce Bennett, bankruptcy counsel from Dewey &LeBoeuf. “The team is entering the bankruptcy case with enough
committed financing to meet all of itsshort term expenses and to successful reorganize. The media rights will, one way or another, generateenough value to facilitate a reorganization."
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