The Los Angeles Dodgers were allowed to exit bankruptcy after completing their $2 billion sale to a group including Guggenheim Partners and its top executive Mark Walter and ex-basketball player Magic Johnson.
The deal became final after Major League Baseball and other creditors declined to appeal the Dodgers’ reorganization plan, approved last month by the bankruptcy judge.
“The Dodgers move forward with confidence -- in a strong financial position, as a premier Major League Baseball franchise, and as an integral part of and representative of the Los Angeles community,” the team said yesterday in a statement.
U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware, approved the sale and bankruptcy exit plan over objections by the league to aspects of the sale, including ownership of stadium parking lots and the continuing involvement of a court- appointed mediator.
Gross said that some disputes related to the sale and the plan would need to be resolved through the mediator, retired federal judge Joseph Farnan. Under a settlement between MLB and the Dodgers former owner, Frank McCourt, Farnan has the power to make final rulings on aspects of the sale and MLB’s review of a television contract the team may negotiate later this year.
McCourt put the Dodgers into bankruptcy in June, claiming baseball Commissioner Bud Selig forced the team into a cash crisis by rejecting a new contract with News Corp. (NWSA:US)’s Fox Sports, holder of the club’s TV rights through the 2013 season.
“I am grateful that the unbecoming events of recent years are behind us and the focus can be squarely on the field,” Selig said in a statement.
Decision to Sell
After mediation sessions with Farnan, McCourt agreed to sell the team, ending his battle with MLB in November and, in January, dropping his effort to sell the television rights separately from the team.
The Magic Johnson group won an auction for the team on March 27, beating offers from Stan Kroenke, who owns the National Football League’s St. Louis Rams and Arsenal of English soccer’s Premier League, and a group led by Steven A. Cohen, who runs hedge the fund manager SAC Capital Advisors LP.
Guggenheim Partners owns the biggest stake in the team, a person familiar with the transaction said. Walter and Johnson own smaller stakes of about 7 percent to 10 percent each, said the person, who declined to be identified because the details aren’t public.
Other investors include Hollywood producer Peter Guber, chief executive officer of Mandalay Entertainment Group and co- owner of the National Basketball Association’s Golden State Warriors, and former Atlanta Braves and Washington Nationals President Stan Kasten, who will relocate to Los Angeles and run the Dodgers.
Walter will be the controlling partner, allowing him to vote on behalf of the team on issues brought before the owners of the 30 MLB clubs.
Later this year, the new owners will have the chance to sell future television rights to games, the team’s most valuable asset. Fox Sports has a right to match any rival offers under certain conditions.
Fox successfully fought McCourt when he tried to sell the rights earlier than allowed under the current contract.
“We look forward to working with them on showcasing the first-place Dodgers to their fans around the country and helping the fans get to know the new owners,” Fox said in a statement provided by company spokesman Chris Bellitti.
While based in Brooklyn, New York, the Dodgers became the first Major League Baseball team with a black player when Jackie Robinson took the field in 1947. They started play in 1884 as the Brooklyn Atlantics, and didn’t win their first championship until 1955. Departing from devoted fans that lovingly called them “Dem Bums,” they joined the Giants in moving from New York to California in 1958.
The Dodgers have won six World Series, tied for fifth-most in baseball. Five came in Los Angeles, where Duke Snider, Sandy Koufax, Steve Garvey, Fernando Valenzuela and Kirk Gibson led them to championships.
The case is In re Los Angeles Dodgers LLC, 11-12010, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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