Dodgers Judge Expected to Rule on Who Will Bankroll Team in Bankruptcy
The Los Angeles Dodgers may learn today whether the team can borrow $150 million from a unit of JPMorgan Chase & Co., or must accept a loan from Major League Baseball, which has battled the club since it filed bankruptcy last month.
After listening to the Dodgers and MLB argue yesterday about who should loan the team the money it needs to reorganize, U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware, said he will issue a written decision by tonight.
“To me this is about dollars and cents,” Gross told the two sides.
In a court hearing that lasted almost 10 hours, the league contended its loan would cost less, while the Dodgers claimed they should not be forced to accept financing from MLB because of Baseball Commissioner Bud Selig’s disagreement with the team and its owner Frank McCourt.
The Dodgers filed for bankruptcy last month after Selig rejected a proposed cable-TV rights deal McCourt negotiated with News Corp. (NWSA)’s Fox Sports. The team intends to try to sell those rights while in bankruptcy and will propose rules for marketing them next month, Bennett said.
Bruce Bennett, an attorney for the Dodgers, said the team can’t trust MLB to be its banker. Bennett cited two letters from baseball financial officials to the Dodgers in which the commissioner’s office backed out of a deal about how the team should account for $14 million in rent it pays on Dodgers Stadium to a company controlled by McCourt.
Conflict of Interest
Baseball attorney Tom Lauria said McCourt should not be allowed to pick JPMorgan’s Highbridge Capital Management LLC as the team’s lender because the Dodgers’ owner had a conflict of interest early in the company’s bankruptcy case, when Highbridge was given temporary permission to loan the team $60 million. McCourt would have been forced to pay $5.25 million to Highbridge should another lender win permission to make that loan.
While searching for the best deal for a bankruptcy loan, the Dodgers contacted at least seven lenders other than Highbridge, Dodgers Assistant Treasurer Jeffrey Ingram said while testifying about the Highbridge loan. Those lenders included Goldman Sachs Group, Inc., Time Warner Cable Inc., Bank of America Corp., Colony Capital LLC and General Electric Capital Corp. and a financing company associated with the family of Disney Co. founder Walt Disney called Shamrock, Ingram said.
The Dodgers ultimately picked Highbridge as the lender, Ingram said.
Under cross examination by baseball attorney Glenn Kurtz, Ingram said that many of the terms in the proposed baseball loan were “better” than the Highbridge loan.
The case is In re Los Angeles Dodgers LLC, 11-12010, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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