Legal rights of Major League Baseball in question in Dodgers bankruptcy case, expert says
There is a “very gray area” legally over the rights of Major League Baseball to veto a proposed contract or a team sale when a team, such as the Dodgers, is in bankruptcy, said USC Law School Dean Robert K. Rasmussen, a bankruptcy scholar.
“Baseball will take the position that their right is unreviewable," Rasmussen said. "The current owners would have to say you have to give good reasons. At the end you would expect some sort of settlement.”
Still, he said, “there is a very strong case that Major League Baseball has an unreviewable veto.”
“Maybe the judge can’t force a sale that Major League Baseball doesn’t agree with, but he cannot not approve a sale" that the league wants, Rasmussen said. "He could say that it is not in the best interest of the team to sell at this price.”
“People have speculated that the MLB might be quite happy with the Dodgers being sold to a new owner.”
He said the filing prevents MLB from seizing the team without the approval of the bankruptcy judge.
“Once any company is in bankruptcy, if you try to get control of the company, you have to go through the court,” he said.
“So at a minimum the team has bought itself more time," Rasmussen said. "It is unclear if it has done anything more than that. It still has to get its finances in order. It could be through perhaps a new investor like the Mets did. Or you could imagine a new deal with Fox that MLB would approve. If you don’t have that, you might be looking at a forced sale of the team eventually, much like the Texas Rangers were auctioned off while they were in bankruptcy last year.”
He wasn’t sure if the Dodgers were the first baseball team to file without MLB approval. He noted the Baltimore Orioles were in bankruptcy in '94.
But he said: “I do think the current ownership of the Dodgers has gotten crossways with MLB in a way that is pretty much unprecedented. Normally, it is a pretty clubby group, the owners. This is certainly the exception.”
Photo: Major League Baseball Commisioner Bud Selig. Credit: Bebeto Matthews / Associated Press