Selig, McCourt won’t testify in Dodgers bankruptcy
AP Business Writer
WILMINGTON, Del. (AP) – Los Angeles Dodgers owner Frank McCourt and baseball Commissioner Bud Selig do not have to testify at a hearing next week on the team’s plan to sell future media rights, a federal bankruptcy judge in Delaware ruled Wednesday.
Fox, whose Prime Ticket subsidiary owns the current broadcast contract with the Dodgers, sought to have Selig and McCourt testify at next week’s hearing, but Major League Baseball and the Dodgers argued that their testimony was not necessary and would simply be a distraction.
“We don’t think this procedure motion should be turned into a sideshow,” Dodgers lawyer Sid Levinson said.
Fox, a division of Rupert Murdoch’s News Corp., has objected to the sale process. Fox attorney Gregory Werkheiser said the marketing plan proposed raises fundamental issues that require a full evidentiary hearing, including whether a media rights sale would be primarily for the benefit of McCourt, not the team.
“This is all about Mr. McCourt, and this is all about Mr. McCourt addressing his personal liabilities,” Werkheiser said. “That is not a valid bankruptcy purpose.”
After hearing several hours of arguments, U.S. Bankruptcy Judge Kevin Gross noted the Dodgers have the burden of proof in persuading him to approve the sale procedures and have chosen to present no evidence other than expert testimony of their financial advisers.
“I’m not going to expand that evidence by having witnesses or testimony or even depositions of other people,” Gross said, noting that Fox will have the opportunity to rebut testimony from the Dodgers’ witnesses with its own experts.
MLB lawyer Glenn Kurtz said his client has not taken a position on the sale motion, but that Selig and MLB executive vice president Rob Manfred would not be able to offer any relevant testimony at the hearing, scheduled to start next Wednesday.
The Dodgers filed for bankruptcy protection in June after Selig refused to approve a renegotiated multibillion-dollar TV deal with Fox that McCourt was counting on to keep the franchise solvent.
The Dodgers subsequently argued in bankruptcy court that auctioning off the television rights to future games was the best way to maximize the value of the bankruptcy estate for the benefit of all stakeholders. But the league said any plan to sell television rights without its approval was “dead on arrival” and would spell the end of the club. League attorneys argued, among other things, that such a sale would breach the Dodgers’ existing contract with Fox, leaving the team subject to substantial legal claims, while also providing grounds for termination of the franchise for failure to abide by MLB agreements.
After battling with the Dodgers over control of the ballclub and seeking to force McCourt to sell the team, MLB agreed to a settlement with the help of a court-appointed mediator.
Fox contends it has been left in the lurch since MLB, which had been arguing in defense of Fox’s rights, settled its dispute with the Dodgers without the knowledge or consent of Fox.
“Fox had every reason to believe that Major League Baseball had its back,” Werkheiser said. “We do need the opportunity to make our case.”
Fox Sports Net West, which runs the Prime Ticket regional sports network, has a contract to televise Dodgers games through 2013. The contract also gives the network an exclusive 45-day negotiating period starting Oct. 15, 2012, for the contract to televise games starting in 2014.
Under the Dodgers’ proposed media rights sale process, Fox still would have an exclusive 45-day period to negotiate a new deal, but could also be outbid later.
Levinson said Fox wants to buy the rights to future games for as little as possible, while the Dodgers are trying through the media rights sale to maximize the value of the bankruptcy estate.
“This is bankruptcy law 101,” he told Gross.
But Werkheiser said it’s not clear that a media rights sale now would maximize value for the Dodgers and their creditors because if a court finds that the sale breached Fox’s rights under the existing contract, the team could be liable for substantial damages.
Fox has filed motions to end the Dodgers’ exclusive rights to file a reorganization plan and to dismiss the bankruptcy case, saying it was filed in bad faith in an effort to enrich McCourt. Gross said Wednesday that he will arguments on those motions at a Dec. 27 hearing. The Dodgers said Fox’s motions “are without merit.”