Dodgers

Bankruptcy Settlement Could Prove A Bonus For Dodgers' TV Revenue

Published May 18, 2012

Dodgers Owner Guggenheim Baseball Management could “reap hundreds of millions of dollars in benefits from the confidential terms of a U.S. Bankruptcy Court settlement” between former owner Frank McCourt and MLB, according to Bill Shaikin of the L.A. TIMES. Sources said that the terms can be “enforced for up to 40 years, with final authority over distribution of the Dodgers’ television revenue granted to the court rather than to MLB.” Shaikin notes, as a result, GBM “could retain millions each year that otherwise would be shared with other teams.” The terms “help explain the record sale price for the Dodgers and the context of MLB attorney Thomas Lauria's statement in court last month that the settlement could result in a league of ‘the Dodgers and the other 29 teams.’” A source said that MLB Commissioner Bud Selig's office “disputes that the terms could enable the Dodgers to tap financial streams unavailable to other teams." McCourt took the Dodgers into bankruptcy last year, after Selig "rejected a proposed television" contract with Fox Sports. In that contract, the Dodgers would have received “a minority ownership stake in Prime Ticket and annual rights fees” starting at $84M with an annual increase of 4%. Sources said that under the confidential terms of the settlement with McCourt, MLB “agreed that the annual rights fees in the proposed Fox contract represented fair market value.” GBM can negotiate a new television contract "as soon as this fall, with Fox Sports, Time Warner Cable and perhaps CBS expected to bid." However, the Dodgers are “expected to pursue a regional sports network,” and GBM could “establish a media company separate from the Dodgers, then have the company pay the team in accordance with the proposed Fox contract and keep the remaining revenue.” Media analysts said that the difference “could be tens of million each year” (L.A. TIMES, 5/18).

FLEXING THEIR MUSCLES: In L.A., Dylan Hernandez notes Dodgers GM Ned Colletti “expects to have more financial flexibility” than he has had in recent years, which “could mean making significant additions to the payroll.” Colletti said, “If we have a chance to improve our club, they’re open-minded to doing it and everything that it entails” (L.A. TIMES, 5/18). Dodgers co-Owner Peter Guber appeared on Bloomberg TV’s “Sportfolio" on Wednesday and discussed his role in purchasing the team. Guber said, “I didn’t pay $2 billion. Most of the folks in my circle have seen me go buy the Warriors or buy baseball teams or hockey teams or make movies. They realize I'm a conscious business person. After all, this is show business.” Noting the team’s sale price is tied into the value of its media rights, Guber said, “The ownership people who understand that business will support (President & CEO Stan Kasten) are looking at every option. Right now, their arrangement is with Fox, and I think they enjoy that arrangement and I think they’ll live up to that arrangement.” Guber said of his role, he wants to “bring intellectual capital to it, experiential capital to it, reputational capital and bring my resourcefulness to it” (“Sportfolio,” Bloomberg TV, 5/16).

A NEW LEAF: ESPN.com’s Buster Olney wrote, "Times have changed quickly” for the Dodgers and the team is in a “time of renewed commitment -- the organization to the players and vice versa.” Kasten recently spoke with the team and told the players that the Dodgers “needed them to be part of the organization’s effort to touch the community.” Kasten asked four players on Sunday “to go to a gate at Dodger Stadium as fans came through the turnstiles; a fifth player, [P] Clayton Kershaw, also volunteered.” After they finished, P Aaron Harang “approached Kasten and told him how much he enjoyed it and how he thought about what Kasten had said about their possible impact on fans” (ESPN.com, 5/17).