Frank McCourt calls proposed MLB loan 'deal with the devil'
Dodgers owner Frank McCourt cannot be forced to accept a bankruptcy loan from a commissioner with "an eye jaundiced by irrational animosity toward Mr. McCourt," attorneys for the Dodgers owner argued in a court filing Monday.
In a bare-knuckle filing that promises future litigation between McCourt and Commissioner Bud Selig, the attorneys for McCourt called the proposed Major League Baseball loan a "deal with the devil" and argued the bankruptcy court has no grounds to impose an MLB loan upon the Dodgers over one McCourt has arranged, even if the league offers better financial terms.
The bankruptcy court is set to hear arguments Wednesday over whether the Dodgers should be financed during the bankruptcy proceedings with a loan arranged by McCourt or one proposed by MLB, in which the interest rate is lower and almost $10 million in fees are not included.
"The financing purportedly offered by the commissioner is nothing but a pretext for the commissioner to burden and exert control over the Dodgers in furtherance of the commissioner's ulterior motive of seizing control of the [Dodgers] and ousting Mr. McCourt," the attorneys for McCourt wrote.
Beyond Wednesday's hearing, the attorneys foretold of a legal "collision course" between Selig and McCourt over the powers of the commissioner in general, and over his authority over assets beyond the team itself.
On Aug. 16, the Dodgers plan to ask the court to approve a sale of the team's cable television rights, a sale that McCourt says would enable the Dodgers to repay their creditors and exit bankruptcy by the end of 2011.
The filing strafes Selig for selectively choosing his court arguments and, more critically, for selectively enforcing rules against McCourt.
Although the Major League Baseball filing last week redacted the amount the league alleged McCourt had taken out of the Dodgers, McCourt's filing revealed the figure at "more than $180 million." Selig had approved the business organization to which he now objects, the filing read, including the separation of the team, stadium and land into separate entities. As a result, McCourt's attorneys said their client had "taken distributions 'from the Dodgers' of less than $30 million."
According to Wednesday's filing, the Dodgers had worked cooperatively with Selig and his lieutenants on securing additional financinguntil the divorce trial last fall of McCourt and his ex-wife, Jamie, when the commissioner's attitude "changed from 'you can take on more debt' to 'you have too much debt.' "
On June 20, Selig rejected a proposed contract with Fox, citing in part a divorce settlement that would have diverted almost half the $385 million up-front payment from the Dodgers. On June 24, McCourt says he offered to dedicate the entire $385 million to the team, but "the commissioner still expressed no interest." The Dodgers filed for bankruptcy on June 27.
In the filing, McCourt argues that the proposed MLB financing includes terms tilted toward triggering defaults that would enable the league to take over the Dodgers. If Selig truly were concerned about the Dodgers' financial condition all along, the filing says, "he would not have squeezed the team's cash flow and "systematically vetoed every financing and liquidity alternative available to the [Dodgers] outside of bankruptcy."
The filing also claims that Selig's "unfounded criticism" of the Dodgers' stadium security and operations led "directly to fan unease and attendant declines in attendance."
-- Bill Shaikin
Photo: Frank McCourt. Credit: Robert Gauthier / Los Angeles Times