After the Major League Baseball commissioner refused to approve a $3 billion television deal between the Los Angeles Dodgers and Fox Network, the team filed for Chapter 11 bankruptcy protection. Owner Frank McCourt claims that the proposed deal would have offered the baseball team an opportunity to put an end to its growing financial problems.
“We brought the commissioner a media rights deal that would have solved the cash flow challenge I presented to him a year ago,” said McCourt. “Yet he’s turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves in today,” he continued. Monday’s bankruptcy filing will allow the baseball team to continue playing this season while also paying players and vendors. However, the filing also puts into question the ownership of the team.
After battling a lengthy divorce that has already cost McCourt nearly $400 million, McCourt may now also face losing ownership of the Dodgers. The filing will give Major League Baseball a significant say in the decision regarding who will own the team.
The Chapter 11 bankruptcy filing reported that the team has between $500 million and $1 billion in assets and between $100 million and $500 million in liabilities. The team owes more than $30 million combined to former players Manny Ramirez and Andruw Jones.
Although the baseball team’s bankruptcy will be processed differently than a Chapter 7 or Chapter 13 bankruptcy in Florida, the filing does illustrate the financial struggles any business can face. During tough economic times, it may become difficult for a small business in Florida to meet payroll needs and other expenses. In some cases, bankruptcy may give a business the opportunity to continue its operations while also improving its financial stability.
Reuters News & Insight: “Los Angeles Dodgers baseball team files bankruptcy,” Jonathan Stempel, 27 June 2011