Dec. 7 (Bloomberg) -- The Los Angeles Dodgers asked a judge to approve a settlement with Major League Baseball that includes a secret provision binding MLB to specific rules for approving a new television-rights contract.
The settlement requires team owner Frank McCourt to sell the bankrupt franchise and gives the Dodgers freedom to seek bids for a new TV-rights deal over opposition from the current contract holder, Fox Sports, according to a filing yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.
“MLB has agreed how MLB rules, regulations and practices will be applied to certain media rights transactions,” the Dodgers said in the filing.
A confidential section of the settlement spells out how MLB will decide whether to approve a new TV contract, the team said in court papers.
Today, the Dodgers and Fox Sports Net West 2 LLC will be in court to fight over a proposal to solicit bids for those future television rights. Fox Sports, a unit of New York-based News Corp., can broadcast games through the 2013 season and has an exclusive right to negotiate a new contract until December, 2012, according to court records.
Fox opposes any early effort to garner bids for TV rights, claiming McCourt is wrongly trying use bankruptcy to break the team’s contract with Fox’s Prime Ticket unit.
The Dodgers want to accelerate the bidding process by giving Fox 45 days to extend its contract. Should those negotiations fail, the team would seek other offers, according to court documents.
Under the Dodgers’ deal with MLB, no sale of the TV rights can go forward without approval from MLB, U.S. Bankruptcy Judge Kevin Gross and whoever wins the bidding for the team.
The sale of the team won’t include the surrounding land and parking lots, which are also owned by McCourt, according to yesterday’s filing.
The Dodgers and Major League Baseball want to have initial bids for the team submitted before Jan. 13 and complete an auction for the team no later than April 1. The sale should be finished April 30, according to the filing.
“The agreement is a ‘win-win’ not only for the debtors and MLB but for all parties in interest in these bankruptcy cases,” the team said in the filing.
The Dodgers may sell for a record $1 billion, sports bankers including Gordon Saint-Denis, president of Katonah, New York-based Major League Sports Consulting LLC, said after the team entered bankruptcy on June 27. Forbes magazine values the Dodgers at $800 million, the third-highest in baseball after the New York Yankees and Boston Red Sox.
MLB Commissioner Bud Selig said in June that a 17-year TV-rights deal between the Dodgers and Fox Sports, which McCourt valued at about $3 billion, would harm the franchise in the long term and rejected the proposal. The Dodgers filed for bankruptcy a week later, listing assets of $370.6 million and debt of $643.9 million as of June 30.
The case is In re Los Angeles Dodgers LLC, 11-12010, U.S. Bankruptcy Court, District of Delaware (Wilmington).
-- Editors: Fred Strasser, Andrew Dunn