Tess Vigeland: As if a 35-and-44 record isn’t bad enough, the L.A. Dodgers’ blues got even worse today. The team’s owner, Frank McCourt, filed for bankruptcy protection.
If you’re familiar at all with the team’s troubles of late, you know that the off-field errors and strikeouts are piling up. There’s a divorce, a rejected multi-billion-dollar TV contract, the possibility of a team takeover by the league, and fans are taking a flyer.
For more we’re joined by Matt Futterman, sports writer for the Wall Street Journal. Good to talk to you.
Matt Futterman: Thanks for having me.
Vigeland: Boy, this thing just never ends, does it?
Futterman: It’s going to go on for quite some time, seemingly.
Vigeland: Oh boy. So let’s start with why Frank McCourt chose to file for bankruptcy today. Is that because he’s not going to be able to make payroll?
Futterman: That’s one reason. The other reason is because it’s really the best thing he can do to prevent Major League Baseball from seizing his team.
Vigeland: Yeah, so there was talk if he was not able to make payroll, that Major League Baseball would take over the team. How does this stop that?
Futterman: Well it attempts to stop it by lining up $150 million in financing where he asks the judge — he’s going to ask him on Tuesday – to allow him to remain in control. He’s got what’s called debt-earned possession financing, and try to convince the judge also to force Major League Baseball to approve a media rights agreement for him.
Vigeland: Right, now this is the proposed contract with the FOX network that would reportedly be worth about $3 billion. And Major League Baseball has rejected that.
Futterman: It has rejected that because they were worried that he was going to do what he’s done in the past, which is use that contract to raise debt and use the money that he has on personal expenses. And baseball wants that money to go back into the team and not Frank McCourt’s pockets.
Vigeland: One of the most fascinating aspects of the bankruptcy filing was looking at who the creditors are here, and I know Manny Ramirez is the biggest one, isn’t he?
Vigeland: They owe him like $20 million or something?
Futterman: Right, but poor Vin Scully is owed $152,000. Vin Scully!
Vigeland: Oh Vin? No!
Futterman: He’s worked for like 60 years for the Dodgers or something like that, and he’s out $152,000 at the moment. But yes, there are some other good names in there. One: Uribe, who helped the rival Giants win a World Series last year; he’s owed some money. Marquis Grissom, who hasn’t played since 2005. So there’s a lot of people that have their hooks into Dodgers money at this point.
Vigeland: So what are the options for Major League Baseball in terms of responding to this?
Futterman: They’re going to try and block the debt-earned possession financing. They’re going to say that you do not need to approve this outside hedge fund, Highbridge Principal Strategies. We’re here, we’ll provide the financing until we can sell the team, because they don’t want Frank McCourt to be the owner anymore.
Vigeland: Have you ever seen anything messier, particularly when it comes to such a storied sports franchise?
Futterman: Definitely not. Maybe what’s been happening with the Mets, but they at least have the excuse of getting mixed up in the Bernie Madoff Ponzi scheme. But nothing along these lines where you have a bankruptcy, a divorce, a club in limbo. And the great irony of all this? There are people frothing at the mouth to buy this franchise because it has an expiring television deal, and anyone who buys it can use it to start their own regional sports network. I think they’re talking about a sale that will easily surpass $1 billion.
Vigeland: Well their first job is certainly going to be to get the fans back in the seats, because they are leaving in droves. Matt Futterman is a sports writer for the Wall Street Journal, thanks so much for joining us.
Futterman: Thanks for having me.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.