Bloomberg News

Dodgers’ Owner ‘Looted’ Team of $190 Million, League Claims

October 25, 2011

(Updates with court ruling in sixth paragraph.)

Oct. 25 (Bloomberg) -- Frank McCourt, the Los Angeles Dodgers owner, “looted” the club of about $190 million, lawyers for Major League Baseball contend in a U.S. Bankruptcy Court filing.

The league made the accusation yesterday in a 61-page brief in Wilmington, Delaware, asking a judge to prematurely end the team’s exclusive right to formulate a reorganization plan in favor of the league’s plan to sell the team. The filing was among a series of documents from MLB and the Dodgers in which they trade allegations about who is responsible for the team’s financial troubles.

“The 2012 season is fast approaching,” and “Mr. McCourt cannot continue taking money out of the Dodgers to satisfy his personal debts,” including a reported $130 million he owes his ex-wife, Jamie McCourt, as part of a divorce settlement, Jeffrey M. Schlerf, a lawyer for the league, wrote in the filing.

Since the Los Angeles team filed bankruptcy in June, MLB, Baseball Commissioner Bud Selig and the Dodgers have fought over how best to reorganize the team’s finances. McCourt wants to hold an auction for the right to televise the team’s future games, while MLB wants to force McCourt to sell.

‘Inflammatory’ Allegations

“Once again, MLB has mischaracterized the facts with inflammatory allegations that are not supported by the evidence,” the Dodgers said in an e-mailed statement. “As the commissioner knows and as our legal documents have clearly shown, he approved and praised the structure of the team about which he belatedly complains. We look forward to the opportunity to show the truth next week in court.”

U.S. Bankruptcy Court Judge Kevin Gross ordered MLB to give the Dodgers more information to help the team prepare for a hearing beginning Oct. 31, where the judge will decide whether to sell the television rights, or the entire team. The information includes notes taken at internal MLB meetings about the Dodgers, e-mails sent by, or from, a former Dodgers public relations manager who now works for MLB and all press releases MLB issued related to the Dodgers.

In its bankruptcy petition, the team listed $370.6 million in assets and $643.9 million in debt as of June 30.

In court documents, team lawyers have denied McCourt wrongly took any money from the team, saying any financial transactions involving the Dodgers were either approved by MLB or didn’t have to be submitted to Selig.

Past Accusations

MLB has accused McCourt of taking money out of the team in the past, claiming the withdrawals hurt the Dodgers and justify Selig’s position that the team should be sold.

In a separate court filing today, season ticket holders withdrew their request to have an official committee, with legal fees paid by the Dodgers, represent their interest in the bankruptcy.

Instead, two new members will be added to the existing committee of unsecured creditors.

“Hopefully the perspectives and salient interests of the season tickets holders will be represented in the actions of the official committee,” Robbin Itkin, the ticket holders attorney, said in an e-mailed statement.

The case is In re Los Angeles Dodgers LLC, 11-12010, U.S. Bankruptcy Court, District of Delaware (Wilmington).

--Editors: Charles Carter, Mary Romano

To contact the reporters on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net; Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net.

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.


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