Sometimes a Los Angeles bankruptcy story is more like a World Wrestling Entertainment (WWE) match than a court case, (or a ball game). And I expect the financial saga of the Los Angeles Dodgers bankruptcy to have more in common with a WWE match than a Baseball game.
When the Los Angeles Dodgers Bankruptcy case was filed last week, I could almost hear the deep voiced ring announcer say, “In the Blue Corner, it’s Frank—Da Check’s in da Mail—McCourt, and from the Red Corner, he’ll be facing Bud—Da Repo Man—Selig, aka the Commish.” Here’s why:
Like a WWE presentation, the two financial steroid-popping wrestlers were already circling the ring and calling each other out before the Los Angeles Dodgers Bankruptcy case began. In classic WWE fashion, they
each screamed insults and curses at each other at the pre-match press conferences while looking for flashy weapons at their disposal in order to threaten mayhem (you know, things like back-cracking folding chairs, heavily-sequined championship belts to rake across the face or even paper-cutting basic contracts thrown at quasi-legal, monopolistic franchise agreements). Shockingly, neither wrestler was hurt badly by any of the shouting and folding chair throwing. Is the Los Angeles Dodgers Bankruptcy just a game? You bet it is.
And since the hate-mongering press conferences were not enough to settle who is the biggest, baddest dude, it was time to take the fight into the bankruptcy wrestling ring. So what have we learned from all this (besides the fact, and I’m just guessing here, that the two men don’t really hate each other off camera)?
It turns out that Frank—Da Check’s in da Mail—McCourt bought himself a major league ball team on the lay away plan. He is having trouble making all of his payments on time, and filed for bankruptcy protection when the Commish, Bud—Da Repo Man—Selig, stopped McCourt from completing a media deal with Fox Broadcasting that would have saved Frank’s chestnuts, at least temporarily.
The Los Angeles Dodgers Bankruptcy outcome is financially critical for Frank (and for Jaime McCourt who is no longer Frank’s main squeeze, but still owns a piece of the beleaguered wrestler and would like to see him win so that she may continue to pay her divorce attorney.) A loss could leave them both so broke that you’ll see them at the bottom of the Stadium Way freeway off ramp with cardboard signs saying, “Ex Dodgers Owner – Please Help Me.” If it comes to that, look for the divorce court judge to make them to stand on separate street corners.
As a Los Angeles bankruptcy lawyer for over 30 years, I’m used to dealing with regular folks that are struggling to keep their homes and businesses afloat, especially during a recession. I also see divorce situations that make finding financial solutions even more difficult. But I find it extremely interesting when supposedly rich and famous folks find themselves in the same boat. In fact, there are many similarities between the McCourt’s situation and that of smaller franchise businesses whose owners are struggling to maintain control while they look for a financial reprieve. I was recently quoted extensively on this topic at Entrepenuer.com: What Small-Business Owners Can Learn from the Dodgers’ Financial Woes in a fine article by Jason Fell posted on June 28, 2011.
But back to the McCourts and the Dodgers. Using the bankruptcy laws, McCourt is trying to gain a brief reprieve from losing control, if not ownership, of the Dodgers. Outside of the bankruptcy court, you might think of the Commish, Bud Selig, as akin to a Fortune 500-sized repo man, combined with all the same powers and prerogatives of an absolute monarch.
And what can the Los Angeles Dodgers Bankruptcycase do for McCourt? He might be able to reign in MLB’s authority if he can show the court that the Commish has abused his discretionary powers when he killed the Fox Broadcasting deal. The deal would have paid McCourt enough money up front to solve his most pressing money troubles, like paying lawyers and players (probably in that order, including Jamie McCourt’s divorce lawyers).
For the Commish, the bankruptcy case presents an immediate challenge to his authority under the franchise arrangement between team owners and Major League Baseball. The Commish must now justify in the bankruptcy court every move he has made that undermined McCourt. And to truly prevail as the “Repo Man,” the Commish must prove that McCourt’s handling of the team has been objectively detrimental to the interests of both the team and to Major League Ball.
If McCourt is successful in bankruptcy, he may gain the legal freedom he needs to consummate the Fox deal. On the other hand, the Commish contends (among other things) that McCourt is seeking to sell long term media rights far too cheaply as a desperate ploy to gain immediate front money. Selig’s position may likely be that the Fox deal will bear consequences that devalue the media rights of the Dodgers and the other MLB teams, and that the deal will still not provide enough long term cash flow to solve all of the Dodgers extensive financial commitments.
The Commish needs to show the court that creditors will not be hurt by his edict to kill off the Fox deal. He can do this by establishing that MLB will make good on the obligations of the Dodgers, hence the Fox deal is unnecessary; that MLB would gain a super priority in the bankruptcy debt repayment scheme for later reimbursement after the team is sold in an orderly process. If the Commish can do these things, he will win.
The U.S. Bankruptcy Court is expected to make a series of preliminary rulings during the next few days that will auger whether this bankruptcy gamble was a successful bounce off the ropes for the Dodgers owner. McCourt’s bankruptcy may keep him from being pinned and bloodied for a little while longer, or it may result in Bud the Repo Man leaping off the top of the bankruptcy ring’s corner pole to land hard on McCourt and end the match.
Either way, though, it’s not just entertainment. I’m pretty sure it’s real. Isn’t it?
Bayer, Wishman & Leotta is a full service bankruptcy firm. We have offices in Downtown Los Angeles, the San Fernando Valley and Long Beach. Our attorneys are Certified Specialists in consumer and small business bankruptcy and you may reach us at (800) 477-3111. Check us out on AllExperts.com.