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Q & A: Dodgers, Fox feud calls for a primer

With a two-day hearing set to start Wednesday in U.S. Bankruptcy Court over a contract dispute between the club and the TV network, here is an explanation on some of the key points of the dispute.

December 06, 2011|By Bill Shaikin
  • Dodgers owner Frank McCourt is seeking authorization to negotiate a sale of the team's long-term television rights.
Dodgers owner Frank McCourt is seeking authorization to negotiate a sale… (Mark Boster / Los Angeles…)

Reporting from Wilmington, Del — The main event in the Dodgers' bankruptcy case was supposed to be McCourt versus Selig. Little did we suspect that, five weeks after Dodgers owner Frank McCourt agreed to sell the team, the legal fireworks really would get underway.

In a two-day hearing set to start Wednesday in U.S. Bankruptcy Court, McCourt's antagonist is Fox Sports, not the commissioner of baseball.

Before the Dodgers filed for bankruptcy, Fox stood with McCourt in an effort to secure the Dodgers' long-term television rights by throwing McCourt the financial lifeline of a new broadcast contract. After Commissioner Bud Selig rejected the deal, Fox abandoned McCourt and stood with Selig in an effort to enforce its current contract.

Baseball politics make strange bedfellows too. After McCourt agreed to sell, Selig abandoned Fox, leaving the television company to stand alone Wednesday in a Delaware courtroom. Questions and answers about the hearing:

What is Fox going to argue?

A deal is a deal. The Dodgers' contract with Fox forbids them from negotiating with another television outlet until Nov. 30, 2012. McCourt has agreed to sell the team by April 30, 2012.

So why wouldn't the new owner simply inherit the Fox contract?

McCourt believes the Dodgers might sell for more money if prospective buyers knew exactly how many billions a new television contract would pay. He wants the court to let him maximize the value of his asset in bankruptcy — the Dodgers — by negotiating a television contract now.

Could bidders for the Dodgers figure out the value of a new television contract by themselves?

Prospective buyers can get a good estimate, using the proposed Fox deal rejected by Selig. McCourt valued that deal, without competitive bidding, at $3 billion. Since the contract would be awarded after competitive bidding, the Dodgers could add another billion, maybe more.

McCourt proposes that he negotiate a contract and the new owner decide whether to accept it. What would a new owner be likely to do?

Reject it, according to Lee Berke, the sports media consultant who helped the New York Yankees launch the YES Network.

"Most owners want to purchase something that is totally unencumbered," Berke said. "The team is in a distressed situation. They would be going in saying, 'I can do a better job.' To take the TV rights away before they can address that is self-defeating to generating the highest bids for the team."

If Fox is going to have to deal with competitive bidding this year or next, and if Fox has acknowledged the cost of television contracts only goes up, why not go ahead and negotiate now?

Fox would prefer to negotiate directly with the new owner, in the year provided under the current contract. Also, in next year's negotiations, the new owner would start the bidding at, say, the $4 billion in a deal McCourt might propose now rather than the $3 billion in the deal Selig rejected last spring.

Why has Selig abandoned Fox, which funnels billions into Major League Baseball?

To get McCourt to sell. MLB is rooting for Fox, concerned about a precedent for owners to try to void television contracts, but the league put self-interest first and agreed to stand down.

If the court lets the Dodgers sell their television rights now, could Fox claim damages?

McCourt says damages, if any, would be minimal. Fox says damages could be "colossal" if an accelerated sale of television rights leads to Fox's loss of the Dodgers and the closure of Prime Ticket. Adam Swanson, media analyst at SNL Kagan, values Prime Ticket at $520 million.

What's the best way to follow the action in court?

The hearing starts at 10 a.m. PST. We'll have coverage at latimes.com/sports and minute-by-minute updates at twitter.com/BillShaikin.

bill.shaikin@latimes.com

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