Dodgers’ merchandise vendor cries foul

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As the Dodgers operate under bankruptcy protection, their merchandise vendor has asked the U.S. Bankruptcy Court for protection from the Dodgers.

With Dodger Stadium merchandise revenue down by 25% this season, Facility Merchandising Inc. (FMI) could face a ‘business-threatening event’ if the court does not intervene on its behalf, the company attorneys wrote in a court filing.

FMI pays the Dodgers a minimum of $4.5 million per year under a contract that extends through 2017, according to court papers. In its filing, FMI claims it will lose about $2.5 million over the first two years of the agreement.

The company contends it could recoup those losses over the life of the contract. However, bankruptcy law affords the Dodgers the option to walk away from the contract. FMI wants the court to order the Dodgers to decide whether to honor or reject the contract by the end of the season, before the company has to make this year’s payments to the Dodgers and buy next year’s merchandise.

The Dodgers say they should be allowed to proceed with a reorganization plan on their own timetable, that FMI can sue for any damages at a later date and that the company has refused to pay more than $300,000 in outstanding bills. The Dodgers claim FMI is leveraging the bankruptcy to redo a contract in which the company negotiated no attendance benchmarks.

‘Eager to get its foot in the door at a time ... when [the Dodgers] were enjoying unparalleled success at the box office, FMI made a deal that it now regrets,’ the Dodgers’ court filing alleges.

The FMI contract took effect for the 2010 season, the first after owners Frank and Jamie McCourt initiated divorce proceedings, with the team posting its worst record in five years and attendance falling by 200,000 from the previous year.

Beyond the widely noted attendance decline of close to 20% this season, FMI claims in its filing that ‘actual ‘turnstile’ attendance is down even more, with the number of ‘no shows’ almost quadrupling, resulting in less foot traffic at the stadium and even lower merchandise sales.’

A hearing on the matter is set for Aug. 16.

-- Bill Shaikin