Court approves Dodgers settlements with Fox, MLB; clears path for sale

By Jim Witters

Wilmington, Del., Jan. 11 - The U.S. Bankruptcy Court for the District of Delaware on Wednesday approved the Los Angeles Dodgers LLC's settlements with Fox Sports Net West 2, LLC and Major League Baseball, clearing the way for the sale of the Dodgers by the league's April 30 deadline.

Judge Kevin Gross approved the settlement agreements.

Continued litigation among the parties would have hindered the sale process and impaired recovery to the estate and creditors, Gross said.

"I believe without question, this is in the best interest of the debtors," he said.

The agreements include a withdrawing of all proofs of claim, objections, litigation and pending appeals by all parties.

The April 30 sale deadline is included in the settlement agreement with MLB and also meets a deadline for current Dodgers owner Frank McCourt to pay $131 million to his ex-wife in their divorce settlement.

Debtors' attorney Sidney P. Levinson said the Dodgers have been actively marketing the team and conducting tours of the stadium in Los Angeles.

Fox telecast rights

The agreement with Fox Sports provides for any buyer of the Dodgers to assume the current telecast rights contract with Fox.

The Fox contract includes telecast rights through the 2013 baseball season and contains back-end rights giving Fox a 45-day period of exclusive negotiations and right of final refusal on any terms the Dodgers may extract from another party.

The debtors had sought to market telecast rights separately before the sale of the team, arguing that immediate sale of the rights would maximize value to the estate.

When Fox objected, seeking enforcement of its existing contract, judge Gross ruled in favor of the Dodgers. Fox then filed an appeal in the U.S. District Court and won a stay of the sale of telecast rights.

Under the agreement approved Jan. 11, Fox reserves the right to object to the sale of the team to any entity associated with Time Warner Cable Inc. or its affiliates.

"We are now confident the full value of the media rights will be realized in the sale price," Levinson said.

MLB settlement

The debtors' settlement with Major League Baseball provides for the orderly sale of the team in a "process designed to maximize value for the estate," Levinson said.

The agreement refers to confidential "special terms," that the court was not asked to approve and which Levinson assured the court do not impair the provisions made public.

As previously reported, the MLB agreement calls for the filing of a plan of reorganization under which the team will be sold to a buyer or group of buyers to be identified in a sale process run by financial adviser Blackstone Advisory Partners LLC.

The company said it will sell either 100% of the shares in debtor LA Holdco LLC or all assets owned directly or indirectly by LA Holdco related to the team's baseball operations, including its future telecast rights, Dodger stadium and all fee interests currently owned by debtor LA Real Estate LLC.

The fee interests in parking lots and surrounding land will not be required to be included in any sale, except for parking lots around the stadium owned by non-debtor Blue Landco LLC, according to court documents.

In addition, the league and the company have agreed to a resolution mechanism, conducted by mediator Joseph J. Farnan, to address disputes arising from the sale of the team and the league's evaluation of prospective buyers.

The company said action to enforce any determination would be heard by the bankruptcy court.

The auction must be completed by April 1, and the sale must close by April 30, the debtors said.

Major League Baseball team Los Angeles Dodgers filed for bankruptcy on June 27, 2011. Its Chapter 11 case number is 11-12010.

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