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Bankruptcy judge sides with Major League Baseball in Dodgers' request for documents

He rejects team's demands to depose Commissioner Bud Selig and obtain a wide range of documents about other teams' financial, security and television deals.

July 07, 2011|By Bill Shaikin
  • Dodgers owner Frank McCourt talks about bankruptcy protection during a news conference at Dodger Stadium.
Dodgers owner Frank McCourt talks about bankruptcy protection during… (Kevork Djansezian / Getty…)

What do the finances of the New York Mets, the security protocol at Angel Stadium and the cable television contract of the Seattle Mariners have to do with how to keep the Dodgers from running out of money this season?

Nothing, a bankruptcy judge ruled Thursday, rejecting the Dodgers' demands to depose Commissioner Bud Selig and obtain a wide range of documents from Major League Baseball.

"This is clearly, in my mind, not an appropriate occasion to turn this hearing into a trial on the commissioner," U.S. Bankruptcy Judge Kevin Gross said.

Gross' ruling sets up a July 20 hearing, at which he will decide whether Dodgers owner Frank McCourt can use his own financing during the bankruptcy process. Gross did not preclude McCourt and his attorneys from asking for those documents — or asking to put Selig under oath — later in the case.

"On the issue of financing, the discovery seems to be not relevant," Gross said.

Dodgers attorney Bruce Bennett disagreed, telling Gross in Thursday's hearing that to compel the team to accept a loan from MLB would be "horrifyingly unfair" and that the requested documents could show that Selig does not treat other owners in the "biased and hostile" way the commissioner treats McCourt.

The league has offered the Dodgers financing at a lower interest rate than McCourt has arranged, and without $9.75 million in fees.

"We concede cheaper is normally better," Bennett said. "But it is not always better."

Thomas Salerno, the lead attorney for the NHL's Phoenix Coyotes during that team's bankruptcy case, said Gross' decision to reject such a sweeping request for documents "doesn't surprise me in the least."

Salerno said Gross has the option to ask McCourt's lender to match the terms of the MLB loan. If the lender were to decline, Salerno said, Gross could impose the MLB loan upon the Dodgers with a "stern admonition" not to leverage the financing into improper control of the team during the bankruptcy proceedings.

Salerno also said Thursday's hearing was "a skirmish in a bigger battle" and did not necessarily foretell how Gross might rule as McCourt fights to retain ownership of the Dodgers amid MLB allegations of financial mismanagement of the team.

McCourt has challenged the MLB constitution, which authorizes Selig to strip an owner of his team upon filing bankruptcy. The league is not expected to try to seize the Dodgers before the July 20 hearing but could do so afterward, said a person familiar with Selig's thinking but not authorized to discuss it.

Glenn Kurtz, an MLB attorney, hinted at such a move during Thursday's hearing.

"There may be disputes about any future action the league may take with respect to Mr. McCourt," Kurtz said.

Selig and other top league officials were excused from depositions at this time because Gross said they would not be the people most familiar with the details of the MLB financing offer. However, McCourt is scheduled for deposition next Wednesday, the day after the All-Star game.

"I wish for those childhood days when baseball was just a game," Gross said.

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