Frank McCourt down but not out after ruling, bankruptcy expert says
The chances of Frank McCourt retaining ownership of the Dodgers through the bankruptcy process took a significant hit on Friday -- but not a fatal one, according to a bankruptcy expert.
The Dodgers had asked for at least two months to take depositions and examine financial records related to other ball clubs, in search of evidence to support McCourt's allegation that Major League Baseball Commissioner Bud Selig had treated the Dodgers differently than other financially troubled teams. On Friday, U.S. Bankruptcy Judge Kevin Gross set the key hearing for Oct. 31 and said the Dodgers could not put Selig or any other team on trial.
"It is a loss that they're not going to take discovery," said Thomas Salerno, the lead attorney for the NHL's Phoenix Coyotes during that team's bankruptcy. "It's not the end of the game."
According to Salerno, Gross' order refocuses the case on McCourt's essential reason for taking the Dodgers into bankruptcy -- to get the television contract that Selig would not approve. Gross has agreed to hear testimony on that subject, and the judge wrote that he expected McCourt and Selig to testify in person.
Salerno said McCourt and his attorneys could try to introduce evidence about other teams in two ways: one, with cross-examination of Selig; two, with an expert witness who could discuss publicly available information (for example, a sports business analyst who could discuss the Florida Marlins' financial documents leaked last year to Deadspin).
In addition, Gross ruled that he would hear arguments about whether Selig has acted in bad faith with McCourt and/or the Dodgers.
"That's always been a concern of leagues with these bankruptcies -- that they have a bankruptcy judge deciding what is 'good faith,'" Salerno said. "Sports leagues are not used to having that kind of oversight."
The stage appears set for a ruling that could make case law in determining the power of sports leagues to determine their rules and their membership.
Salerno said MLB cannot possibly settle at this point, for fear of setting a precedent under which other financially troubled owners might file their teams for bankruptcy. McCourt remains unwilling to sell the team, so he won't settle either.
"He's all in, as is MLB," Salerno said. "There is not going to be a settlement here."
-- Bill Shaikin
Photo: Frank McCourt. Credit: Damian Dovarganes / Associated Press.