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Dodgers pitch MLB settlement

by Jamie Mason  |  Published December 8, 2011 at 11:35 AM
DodgersPicther227x128.jpgMore than a month after announcing a settlement with Major League Baseball, Los Angeles Dodgers LLC finally has filed the terms of the deal.

Chief Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware in Wilmington is set to consider approval of the settlement at a Dec. 27 hearing.

The agreement will lie at the heart of the Dodgers' reorganization plan, built around the sale of 100% of the baseball team's equity or all its assets. The debtor hasn't yet filed a reorganization plan or sale motion with the court.

The Dodgers' financial adviser, Blackstone Advisory Partners LLC, will handle the sale process.

Under the terms of the agreement, reached on Nov. 1 and filed Tuesday, the Dodgers will sell the team, its stadium and its future telecast rights. (The Dodgers have moved to market the latter initially through a separate process. The sale of the telecast rights would be subject to final approval from the buyer of the Dodgers.) The parking lots and surrounding land will not be required to be included in the sale.

Buyers can bid for the parking lots and surrounding land, but the decision to sell will be left to Dodgers owner Frank McCourt, court papers said.

McCourt can't retain any interest in the Dodgers, the agreement said.

Through the settlement, the auction of the team must be completed by April 1, and a sale must close by April 30. The debtor and MLB hope to have initial bids for the team by Jan. 13.

The two sides reached the agreement after being ordered to mediation by the bankruptcy court in October. Joseph J. Farnan Jr. of Farnan LLP oversaw the mediation.

"The agreement provides a middle ground to the polar opposite approaches that were previously advocated by the debtors and MLB," the Dodgers said in court papers. "On the one hand, the agreement provides for a sale of the team, which was MLB's preferred course. On the other hand, the agreement provides for the sale to be conducted in a manner that will be under the direction of the debtors and [their] financial adviser and provides for procedural and substantive protection to assure that the sale process will be conducted to maximize value and not for any other purpose."

The Dodgers said they had spent "millions of dollars fighting with MLB" on disputes in the Chapter 11 case and would have spent millions more as the case wore on, which will now be avoided, along with delays and distractions.

A bitter dispute between the debtor and Fox Sports Net West 2 LLC, one of its current broadcast partners, endures, however. Farnan, a former U.S. district judge in Delaware, also is mediator for ongoing talks between those parties.

The two sides have fired litigation brushback pitches over the debtor's move to market its future telecast rights, filing rival lawsuits with the bankruptcy court.

Gross was scheduled on Wednesday afternoon to consider the proposed marketing procedures.

Shortly before filing for Chapter 11 on June 27, the Dodgers struck a new 14-year deal with Fox Sports affiliate FSN Prime Ticket, but MLB's commissioner, Bud Selig, didn't approve the transaction, in part because of restrictions in the current deal that prevented negotiations with other potential purchasers.

The team blamed the bankruptcy filing on Selig's refusal to approve the TV deal, as well as underlying cash flow issues stemming from sliding attendance, some $22 million in deferred compensation due to players and the need to share its revenue with other clubs.

The Dodgers also said the appointment of a receiver by MLB in April "generated adverse publicity."

MLB, however, faulted McCourt for the bankruptcy case. In court papers filed on Oct. 24, MLB said McCourt "was free to take almost $190 million from the Dodgers, putting them into bankruptcy, because there is no rule that bars distributions to owners."

The adverse publicity surrounding McCourt's messy divorce proceedings also worried MLB. McCourt only recently agreed to a $131 million settlement with his wife, Jamie, in the divorce proceedings.

McCourt bought the team in early 2004 from Fox Entertainment Group Inc., the parent of FSN Prime Ticket.

McCourt paid $330 million for the team and spent a further $100 million to acquire Dodger Stadium and real estate surrounding the stadium.

Bruce Bennett, Sidney Levinson, Martin Bienenstock and Philip Abelson of Dewey & LeBoeuf LLP and Robert S. Brady of Young Conaway Stargatt & Taylor LLP are debtor counsel.

Mark Thomas, Bradley I. Ruskin and Jeffrey Levitan of Proskauer Rose LLP; Thomas Lauria and John K. Cunningham of White & Case LLP; and Jeffrey M. Schlerf of Fox Rothschild LLP represent MLB.

Paul J. Laurin, C. John M. Melissinos, Christian A. Jordan and Neeta Menon of Rutter Hobbs & Davidoff Inc., Robert J. Dehney and Gregory W. Werkheiser of Morris, Nichols, Arsht & Tunnell LLP and Richard L. Stone and Kenneth D. Klein of Jenner & Block LLP are counsel to Fox Sports.

Brett H. Miller, Lorenzo Marinuzzi and Todd M. Goren at Morrison & Foerster LLP, and Donna L. Harris and Joanne P. Pinckney at Pinckney, Harris & Weidinger LLC represent the official committee of unsecured creditors.

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Tags: Blackstone Advisory Partners LLC | Chapter 11 | Dodger Stadium | Fox Sports Net West 2 LLC | Frank McCourt | FSN Prime Ticket | Joseph J. Farnan Jr. | Los Angeles Dodgers LLC | U.S. Bankruptcy Court

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Jamie Mason

Senior Editor: Out of Court Restructuring



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