SAFE AT HOME – The Los Angeles Dodgers Bankruptcy

The Dodges filed Chapter 11 Bankruptcy in Federal Court last month. How can a Team worth over $500 Million Dollars go broke?

Fact is that Dodgers are not broke. They have a billion dollar contract with the Fox Network pending the approval of Major League Baseball.

Bud Selig, the commissioner, refused to ratify the Dodgers Fox contract because Mr. Selig, apparently, does not like the way Frank McCourt is operating the Dodgers baseball team.

According to news reports, Frank McCourt has an ultra extravagant lifestyle and spends millions of dollars on swimming pools and houses.

Mr. Selig claims that Mr. McCourt does not follow the rules of MLB and he is draining money generated from the Dodgers and converting those funds for his personal use.

The key legal question is: what happens when private contract agreements – between MLB and an individual owner—conflict with federal bankruptcy rules? The answer is Federal bankruptcy rules trump MLB.

In the end, the Bankruptcy Court will most likely allow the Dodgers to enter into the contract with Fox News, and that influx of cash will allow the Dodgers to exit Chapter 11 Bankruptcy, with the federal judge declaring “Play Ball”.

For more information email me at j.weinstein@jlwlawoffices.com or call me at 212-693-3737.