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Dodgers to sell team, telecast rights separately

by Jamie Mason | Published November 14, 2011 at 3:28 PM

After reaching an agreement with Major League Baseball, bankrupt Los Angeles Dodgers LLC is looking to sell its team and its telecast rights separately, with the team sale being completed by April 30.

Chief Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware in Wilmington will consider the marketing procedures for the sale of the telecast rights on Nov. 30.

The sale of telecast rights is subject to final approval from the team's buyer.

According to an amended marketing procedures motion filed on Nov. 12, the Dodgers will proceed with a reorganization plan built around the sale of 100% of the team's equity or all its assets. The team sale will be completed by April 30, court papers said.

The Dodgers, however, haven't yet filed a motion to sell the team in an auction managed by Blackstone Group LP.

Also yet to be filed is the terms of the MLB agreement, which the Dodgers said in court documents will be submitted "in the near future."

The Dodgers currently license their TV rights to Fox Sports.

If a prospective buyer doesn't choose to complete the telecast rights deal as part of the sale of the team, then the existing contract would govern future negotiations, court filings said.

"By marketing the telecast rights, the debtors will be able to provide prospective buyers of the team with real-world information about what the value of the telecast rights would be if openly marketed," the amended motion said.

Through the amended marketing procedures, the MLB team would license the rights to telecast roughly 150 preseason and regular season games each year beginning with the 2014 MLB season. The licensing deal would have at least a five-year term.

Fox Sports Net West 2 sued the Dodgers on Sept. 27 for breach of its contract with Fox Sports by embarking on a process to market its TV rights for sale.

The Dodgers' games are currently broadcast by FSN Prime Ticket as part of deals that run through the 2013 baseball season. The Fox Sports affiliate has the right to telecast 100 regular season games and a local CBS station can telecast 50 regular season games.

According to the lawsuit, Fox Sports under the current contract has the exclusive right to negotiate a contract for future telecast rights with the debtor beginning in October.

Through the marketing procedures, the debtor wants to begin its exclusive negotiations with Fox Sports the day after the marketing procedures receive court approval, instead of Oct. 15. The exclusive negotiations would last for a 45-day period.

If an agreement is not reached by Jan. 14, the debtor would be allowed to negotiate with other prospective licensees. Fox Sports would have until Jan. 23 to make a final written offer and until Feb. 22 to accept the Dodgers final offer. If it doesn't, the team will have the right to enter into a telecast rights agreement with other parties, court filings said.

However, if the debtor reaches an agreement with another party that is less favorable than its final offer to Fox Sports, then Fox Sports has the right to match it, court papers said.

Since the Dodgers reached an agreement with MLB, Fox Sports "has publicly stated that it is supportive of a change of ownership of the team, but has maintained its staunch refusal to engage in any meaningful discussions with the debtors," court filings said.

Counsel to Fox Sports, Paul J. Laurin of Rutter Hobbs & Davidoff Inc., couldn't be reached for comment. A Fox Sports spokesman also couldn't be reached.

Shortly before filing for Chapter 11 on June 27, the Dodgers struck a new 14-year deal with 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, has faulted the Dodgers' current owner, Frank 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 $130 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 are counsel to MLB.

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 creditors' committee.

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