MLB objects to Los Angeles Dodgers DIP loan, offers cheaper financing

By Caroline Salls

Pittsburgh, June 28 - Major League Baseball filed an objection to Los Angeles Dodgers LLC's proposed debtor-in-possession facility, saying it would provide the team with a DIP loan on "substantially better terms," according to a June 28 filing with the U.S. Bankruptcy Court for the District of Delaware.

"Having siphoned off well over $100 million of club revenues and obviously unable to properly distinguish between his personal interests and those of the club, [Dodgers owner] Frank McCourt has driven the Los Angeles Dodgers to a liquidity crisis so severe that, absent extraordinary measures, the club would be unable to make its payroll," the league said in the objection.

The league said McCourt tried to use "that looming disaster" to leverage the Office of the Baseball Commissioner into approving the sale of the club's future broadcast rights "to pay current expenses and to permit millions more to be misappropriated for his personal use."

According to the objection, the commissioner's office rejected the proposal because it was not in the best interests of the team or Major League Baseball.

"Threatening the immediate demise of one of baseball's great teams, [McCourt] seeks emergency approval of a DIP financing that compels the club to do exactly what Mr. McCourt improperly sought to do outside of bankruptcy - selling the club's valuable future broadcast rights to pay current expenses and make significant proceeds available for personal use," the league said in the objection.

"In contrast to Mr. McCourt's proposal, the [league] stands ready, willing and able to provide a materially cheaper, no-strings-attached solution to the debtors' immediate and anticipated cash flow problems over the coming year."

The league said its proposed DIP facility eliminates a $4.5 million fee and all other fees required under the Dodgers' current DIP loan, reduces the interest rate by 3%, "does not impose an artificial timeline for disposing of the team's valuable future broadcast rights" and includes fewer default triggers.

Filing issues

The league said McCourt also placed the team in bankruptcy without obtaining the required consent of its monitor.

As a result, the league said issues surrounding whether the cases were properly filed, whether the monitor is entitled to continue performing his duties and whether McCourt should still be in control of the team in Chapter 11 will also need to be addressed in the early stages of the bankruptcy case.

The Los Angeles Dodgers filed bankruptcy on June 27. The Chapter 11 case number is 11-12010.

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