Major League Baseball has revealed for the first time exactly how much money it accuses Los Angeles Dodgers owner Frank McCourt of taking from the team, the Los Angeles Times reported Tuesday.
The league filed documents in a Delaware bankruptcy court Monday and accused McCourt of “siphoning” $189.16 million of team revenue for non-baseball use. Major League Baseball claimed McCourt took $61.16 million of the team’s revenue to pay off personal debts, in addition to $55 million for personal distributions and $73 million funneled through Blue Land Co., an organization that is not affiliated with the Dodgers.
Including the accusation of misused revenue, the league said McCourt violated 10 MLB rules, all of which give Major League Baseball the grounds to terminate McCourt’s ownership status.
"The Dodgers are in bankruptcy because McCourt has taken almost $190 million out of the club and has completely alienated the Dodgers' fan base," the league said.
The Dodgers, who also filed court documents, argued that baseball commissioner Bud Selig approved the team’s business structure and its use of Blue Land Co. to pay $14 million in annual rent to play in Dodgers Stadium. Major League Baseball said in response that McCourt did not fully disclose the nature of those structures.
The court filings are part of a continued saga involving the Dodgers and Major League Baseball.
Both the Dodgers and MLB cite the incident involving Bryan Stow, the San Francisco Giants fan who was severely beaten in a Dodgers Stadium parking lot on March 31, to advance their respective cases. The league used the attack as an example of lapse security during McCourt’s tenure as team owner, while the Dodgers pointed to Selig’s actions following the incident as an example of how desperately the commissioner wants to oust McCourt.
Stow, who was beaten by two Dodgers fans after the opening game of the season, was the latest instance of dysfunction that surrounded the Dodgers, whose owner was still in the middle of divorce negotiations with his wife and former business partner.
Frank and Jamie McCourt reached a divorce settlement this month, almost two years to the day after Frank fired his wife, the Dodgers’ chief executive until 2009. During the long divorce process, the couple’s lavish spending and possible misuse of team funds came into focus.
In June, the couple reached a settlement that was contingent upon the approval of a television contract between the Dodgers and Fox Sports. But Selig blocked the $3 billion television rights deal, reigniting divorce proceedings and setting off what has developed into a battle between Frank McCourt and the commissioner’s office.
McCourt announced that the Dodgers were entering bankruptcy on June 27, indicating soon after that he would attempt to auction the rights to televise Dodgers games. Major League Baseball and Fox requested that U.S. Bankruptcy Judge Kevin Gross keep McCourt from auctioning a television deal, and Fox sued the Dodgers last month for what the network said was a breach of its current cable contract. The lawsuit also calls for exclusive negotiating rights to remain with Fox until November 2012.
News Corp. (NASDAQ:NWSA) is the parent company of Fox Sports and the Fox Business Network.
Selig wants McCourt to sell the Dodgers, and the league is seeking permission to file a reorganization plan to that end. Meanwhile, McCourt has accused Selig of acting in bad faith, saying the commissioner will not approve of any television contract that could help the team emerge from bankruptcy with McCourt as the owner.
The league has argued that if the Dodgers agree to a new television contract, McCourt would have to use some of that revenue for personal reasons, including the payment of his $130 million divorce settlement. Citing these concerns, Major League Baseball has said it will not approve of a Dodgers television contract, as it is unclear if the bankruptcy judge would allow McCourt to help pay his divorce settlement using revenue from a television deal.
The Los Angeles Times also reported that the Dodgers, who say Major League Baseball and Fox are not working cooperatively with the team, requested that the judge grant them an April 25 extension on their exclusive period to offer a restructuring plan.