A U.S. Bankruptcy judge today set December 7 to kick off a two-day hearing about whether the Los Angeles Dodgers can begin marketing the team’s lucrative future local TV rights, which Fox Sports holds through the end of the 2013 baseball season. Fox already has sued the Dodgers to block any early rights sale. The network claims its regional network has an exclusive window to renegotiate a new deal as part of its current contract, and that that team is using bankruptcy protection to break that agreement. (As part of that lawsuit, Fox will ask Judge Kevin Gross to dismiss the team’s bankruptcy altogether in a hearing set for December 27.) How valuable are those TV rights? Soon-to-be-ex-Dodgers owner Frank McCourt at one time had a $3 billion deal with Fox in place before it was rejected by Major League Baseball and commissioner Bud Selig, forcing McCourt to seek bankruptcy for the team and eventually agree to sell the franchise outright.
Fox Sports has asked a federal bankruptcy court to dismiss the Dodgers from bankruptcy as the networks said it would earlier this week, the LA Times reported late Friday. Fox Sports said it is not necessary for owner Frank McCourt to market the team’s TV rights to fulfill his obligations to creditors. Fox contends McCourt can repay his creditors in full simply by selling the team “for a handsome price” either with the current TV contract with Fox Sports or with a new owner negotiating a new TV deal. The team’s bankruptcy likely would hamper Fox’s ability to enforce its existing contract without court intervention. The Dodgers would like to auction those rights and attract higher bids for the team and for those broadcast rights. Fox has asked the court to enforce the current contract that bars the Dodgers from discussions with any other media outlets before November 30, 2012. Major League Baseball extracted an agreement with McCourt to sell the team, and he’s promised to close a sale by April 30. Fox cited the $160 million contract with Matt Kemp as evidence that bankruptcy is not necessary for the Dodgers to continue operating and that McCourt is just trying to come out of any deal with more money in his own pocket.
The Los Angeles Dodgers sued Fox Sports on Wednesday, accusing the News Corp-owned network of attempting to ”interfere with the sale of the Dodgers and their assets in bankruptcy.” The Dodgers’ goal is to sell the team and its valuable TV rights through separate court-sanctioned auctions to maximize returns. In a sharply worded court response filed Wednesday night Fox said it would ask that the Dodgers be dismissed from bankruptcy, according to the LA Times. Fox slammed Major League Baseball as “Prime Ticket’s former ally” and asserted the only reason Frank McCourt wants to auction the team’s TV rights now is to put “value rightfully belonging to Prime Ticket,in his own pocket” — referring to Fox Sports’ package of programming. The Dodgers’ suit was filed in U.S. Bankruptcy Court in Delaware, where Fox already has a suit pending against the team for alleged breach of contract in the continuing squabble over TV rights. Responding to the latest development, the Dodgers called Fox “obviously desperate” to prevent an auction that would reveal the “enormous value” of those rights and “lead to a record-smashing sale price for the team and benefit not just the Dodgers but all of baseball.”
Frank McCourt’s fight to keep the Los Angeles Dodgers might have cost him another ally. Fox Sports, which owns TV broadcast rights to the Dodgers (as well as exclusive negotiation rights when the current deal expires after next year), has sued the team in U.S. Bankruptcy Court, saying the Dodgers are breaching their contract by shopping future rights. “The telecast rights to the Los Angeles Dodgers baseball games are an inherently unique and irreplaceable asset and business opportunity,” the filing reads. McCourt, who lost financial control of the team to Major League Baseball earlier this year, sees the next media-rights deal as the key to solidifying his and the team’s cash woes, which would allow him to remain owner. Remember, McCourt and Fox had worked out a long-term extension this year that would have given the owner $385 million in upfront payments that he claims was necessary to keep the team afloat, but MLB commissioner Bud Selig vetoed the deal. For Fox Sports, which airs the games on its cable channel Prime Ticket, the lawsuit is an attempt to keep a valuable asset and fend off rivals like Time Warner Cable, which already acquired the Los Angeles Lakers’ TV rights and created a pair of regional sports networks to air games. It’s likely the cabler would want to do the same with the Dodgers. McCourt has said in court filings that DirecTV and Dish Network also might make bids …
The Los Angeles Dodgers agreed to borrow as much as $150 million from Major League Baseball, almost two weeks after the judge overseeing the team’s bankruptcy ordered the two sides to negotiate a deal. The Dodgers today sought a judge’s approval for terms of the loan, which would finance the team’s operations while it is under court protection in Wilmington, Del., according to a report from Bloomberg. The plan does not address the proposed cable television rights deal Dodgers owner Frank McCourt negotiated with News Corp’s Fox Sports. It was MLB’s refusal to OK that deal which lead to the Dodgers filing for bankruptcy in June. Team lawyers said in court they intend to try to sell those rights while in bankruptcy and will propose rules for marketing them this month. Fox has said in court that it would oppose any effort to sell the rights before its exclusive right to negotiate a deal expires next year.
Sports Report: NFL Thursday TV Package In Play; Dodgers Anger Ally Fox Sports; NBA Lockout Hits The Courts
The NFL is shopping an eight-game Thursday primetime TV package, with commissioner Roger Goodell having informal conversations with networks last week, according to the Sports Business Journal, which is reporting that a stake in the league’s NFL Network might be in play for the winning bidder. The talks are expected to gain momentum now that the league-imposed lockout is over. The NFL Network currently has rights to eight late-season Thursday NFL games; the new package will cover the early season. The SBJ says Turner and Comcast would be front-runners, especially since they have cut previous deals that included league-owned assets (Turner pacted with the NBA in 2007; Comcast has a similar deal with the NHL). Fox and ESPN also are expected to be interested in the package. …
Dodgers Owner Gets OK For Bankruptcy Loan; League Backs Off After Team Agrees Not To Auction TV Rights
The Delaware court that is sorting out the Los Angeles Dodgers’ Chapter 11 filing has authorized the team to enter into a $150 million bankruptcy financing arrangement that will allow owner Frank McCourt to meet the Dodgers’ payroll obligations this week. The deal came together today as Major League Baseball dropped opposition to the financing after getting the Dodgers to agree to not auction off their broadcast TV rights for the next six months and seeing that a $4.5 million fee from the facility’s lender — JPMorgan Chase’s Highbridge Capital Management — be reduced to $250,000.
The TV rights are everything to McCourt now; he says that a deal in place with Fox Sports worth $3 billion over 17 years would put the team back on solid financial ground, but MLB commissioner Bud Selig would not approve the contract, saying too much of the upfront money would go to McCourt, not the franchise. A Dodgers lawyer told Bloomberg today that the team still has the right to propose a TV-rights auction while under court protection, so who knows what the league really gets out of that part of the agreement. One possibility is that Selig and the league will seize the Dodgers within that six-month time frame; baseball clearly believes the Dodgers and their TV rights are worth more on the open market if a new, more palatable owner (we’re talking to you, Mark Cuban) were to step up to …
With no resolution in sight over a lucrative Fox Sports TV deal that would give owner Frank McCourt the cash influx he needs to continue operating the Los Angeles Dodgers, the team filed for Chapter 11 bankruptcy Monday. The move allows the team to use $150 million for daily operations and gives the franchise some time to find a new TV deal; Major League Baseball commissioner Bud Selig rejected the proposed long-term deal with Fox last week, saying “the transaction is structured to facilitate the further diversion of Dodgers assets for the personal needs of Mr. McCourt.” Baseball had already taken control of the team in April. Said McCourt — who faces a costly divorce that could force the sale of the team, skyrocketing payroll obligations, declining attendance and a commissioner that is sick of it all — in a statement Monday:
Last week, Dodgers owners Frank and Jamie McCourt agreed to a plan for a divorce settlement that would have given Frank McCourt sole ownership of the franchise — if Major League Baseball approved a lucrative TV deal that McCourt struck with Fox. That multiyear deal worth $3 billion (and, more importantly, $385 million upfront) would help McCourt shore up the Dodgers, who right now are being controlled by the league during all of this divorce mess. Well, baseball commissioner Bud Selig always seemed reluctant to OK the Fox contract, and today Selig made it official by rejecting the deal, saying in part that “the transaction is structured to facilitate the further diversion of Dodgers assets for the personal needs of Mr. McCourt.” Ouch. Under terms of the divorce plan, it means the Dodgers are one step closer to being sold off — the assets would be split 50-50 between Frank and Jamie — unless Frank can find some other way to get a massive amount of money together to play his players’ monthly salaries and restore the league’s faith in him as an owner. Here’s Selig’s statement:
Los Angeles Dodgers owners Frank and Jamie McCourt were in an LA courtroom today saying they have agreed to a divorce settlement that could potentially take the team out of ownership limbo. But as usual in this case it doesn’t come without a big question mark. According to the LA Times, the deal hinges on Major League Baseball approving Frank McCourt’s multiyear TV deal with Fox that is worth as much as $3 billion, cash that would allow him to meet his team’s payroll obligations and give him the stability to retake financial control of the franchise, which right now is being handled by the league during all of this mess. The Fox deal calls for a $385 million upfront loan to McCourt to handle the Dodgers’ immediate money problems, Bloomberg reports. Here’s the problem, though: the league is hesitant to approve any TV contract in case the Dodgers need to be sold as part of a community property divorce settlement, worried any TV deal signed to now could be undervalued for the new owners. Frank McCourt has said that the league is stalling on purpose to force him out.
A former TV sports executive said today that the trustee who will be appointed by Major League Baseball to handle day-to-day operations of the financially strapped Los Angeles Dodgers would have to consider scrapping a TV rights offer from Fox Sports currently on the table and open the bidding to others. Former CBS Sports president Neal Pilson told Bloomberg that Fox’s current offer, which the Los Angeles Times reported today is a 20-year deal worth about $3 billion, might not be the team’s best option. “The trustee would take a very serious look at that deal and could very well void it,” he said. “He may very well think the team can get more money if they put it up for bid.” If so, that could open the door to Fox Sports rival Time Warner Cable, which recently locked up the Los Angeles Lakers’ TV rights with a 20-year deal that begins with the 2012-13 NBA season and will see the creation of a pair of HD channels to show the team’s games.
Any TV rights deal would be used to reduce the Dodgers’ debt, which Bloomberg Businessweek reported in August was about $525 million. (Forbes has said almost all the team’s profit was being eaten up by interest.) All of this comes two days after baseball commissioner Bud Selig said that the league would take financial control of the team, citing “deep concerns regarding the finances and operations.” On Thursday, …
Less than a week after a report surfaced that Los Angeles Dodgers owner Frank McCourt arranged for a $30 million personal loan from TV partner Fox to help pay the team’s bills, Major League Baseball owner Bud Selig said today that the league is taking over financial control of the franchise. He said he will appoint a representative to run the day-to-day business. “The Dodgers have been one of the most prestigious franchises in all of sports, and we owe it to their legion of loyal fans to ensure that this club is being operated properly now and will be guided appropriately in the future,” Selig said Wednesday in a statement, adding that he has “deep concerns regarding the finances and operations of the Dodgers.” Frank and Jamie McCourt are in the midst of a messy divorce that has thrown the team’s financial future into doubt. A new long-term TV deal with Fox that the Times’ Bill Shaikin reported could be in the neighborhood of $3 billion over 20 years would go along way to stabilizing things at Chavez Ravine, and McCourt recently took the offer to Selig, who already had rejected a proposed $200 million loan to McCourt from Fox using the future TV contract as collateral.