Judge: Dodgers can pay creditors without selling TV rights

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In explaining a ruling that could kill the Dodgers’ hope of selling their television rights before owner Frank McCourt must sell the team, one federal judge said Tuesday he was likely to find ‘clearly erroneous’ another judge’s conclusions that the Dodgers needed to market those rights now to get the best deal for the team and to assure creditors of full repayment.

On Friday, U.S. District Court Judge Leonard Stark granted Fox Sports a stay of a U.S. Bankruptcy Court ruling allowing the Dodgers to sell their television rights earlier than called for under their contract with Fox. In Tuesday’s opinion, Stark said he halted the sale in part to restore negotiating leverage to Fox.

The contract with Fox bars the Dodgers from negotiating with any other broadcast outlet until next Nov. 30. Under a deal with Major League Baseball, however, McCourt has agreed to sell the team by April 30, and U.S. Bankruptcy Judge Kevin Gross ruled Dec. 8 that the Dodgers could market their television rights along with the team.

‘The amended procedures -- imposed by the Bankruptcy Court, without any compensation (and perhaps never any compensation) to [Fox] -- reduces Fox’s chance of obtaining the unique and extremely valuable asset of the right to telecast future Dodgers baseball games,’ Stark wrote in his opinion.

Stark is scheduled to hold a hearing Jan. 12 on whether to make his stay permanent. He warned in his opinion that he could ‘not be certain how quickly’ he would rule. Initial bids for the Dodgers are due Jan. 13, with McCourt obligated to identify a winning bidder by April 1.

Dodgers spokesman Robert Siegfried said the sale of the team was proceeding on the schedule that McCourt and MLB agreed to.

‘The activities in the District Court do not affect the sale process of the team,’ Siegfried said.

In his opinion, Stark noted that the Dodgers repeatedly testified in Bankruptcy Court that creditors would be repaid in full, without condition. He also noted that Timothy Coleman of Blackstone Advisory Partners, the investment banker handling the Dodgers’ sale, had not projected how a new television rights deal would affect payments to creditors. Stark also rejected Gross’ contention that the Dodgers might get more money for their TV rights now rather than later. He cited the testimony of Coleman, former Fox Sports Networks chief Robert Thompson and former NBA TV President Ed Desser.

‘The undisputed evidence demonstrates that the value of future telecast rights is increasing,’ Stark wrote.

In his decision, Gross ruled that Fox’s exclusive negotiating period was not enforceable in bankruptcy. But Stark said the case upon which Gross relied as precedent was relevant to the Dodgers case.

The bankruptcy judge also had called Fox ‘disingenuous’ for negotiating with McCourt before bankruptcy and then objecting to negotiating with him now, complaining about how he might have used money Fox would have been happy to give him earlier this year.

Stark dismissed that argument, describing the earlier talks as ‘voluntary negotiations’ rather than ones that would be undertaken on a court-imposed timetable.

‘The public does not have a great interest in compelling negotiations in a manner that deprives one party of contractual rights for which it paid,’ Stark wrote.

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