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Dodgers sold for nearly $1.6 billion in cash plus debt assumption, court records show

Guggenheim Baseball L.P. will also assume about $400 million in debt in record-setting deal for a sports franchise.

April 06, 2012|By Bill Shaikin
  • Magic Johnson, part of the group that's buying the Dodgers, watches the team's season opener with Frank McCourt on Thursday.
Magic Johnson, part of the group that's buying the Dodgers, watches… (Luis Sinco / Los Angeles…)

The purchase agreement between Frank McCourt and Guggenheim Baseball for the Dodgers, filed in U.S. Bankruptcy Court Friday afternoon, failed to answer two big questions: What McCourt's future involvement with the team and property might be; and where exactly is the new owner's money coming from.

Guggenheim is paying $1,587,798,000 in cash and assuming debts of no more than $412,200,000 to buy the Dodgers from Frank McCourt, according to documents filed. However, Mark Walter, who is designated as "the MLB Control Person" with respect to the team, is the only buyer named in the document.

The sale agreement is expected to be approved by U.S. Bankruptcy Judge Kevin Gross at an April 13 hearing. In the interim, the agreement will be reviewed by Major League Baseball, Fox Sports, McCourt’s ex-wife and the creditors’ committee, all of which have reserved the right to object.

The parties could resolve any concerns before the hearing.

The sale is scheduled to close April 30, the same day McCourt must pay his ex-wife $131 million in a divorce settlement. The Guggenheim group would take over the Dodgers May 1.

If the sale closes as expected, the Dodgers will have emerged from bankruptcy in 10 months. McCourt took the team into bankruptcy last June, claiming he was forced to do so after MLB Commissioner Bud Selig rejected a television contract that McCourt said would have resolved the Dodgers’ financial troubles.

McCourt initially asked the court to overrule Selig and authorize an auction of the Dodgers’ television rights, with the intent of retaining ownership of the team. McCourt accused Selig with hatching a plan to choke off the Dodgers’ money supply and force an ownership change, even though Selig had supported and accommodated owners of other teams in financial peril.

Selig claimed that McCourt had no one to blame but himself for the Dodgers’ financial situation, and he accused McCourt of “looting” $189 million in Dodgers revenue and diverting it for personal use rather than investing it back into the team. Selig said he would reject any television deal that would keep McCourt in control, even threatening to kick the Dodgers out of the league.

Gross ruled that the focus of the proceedings would be on the Dodgers and that McCourt would not be allowed to put Selig on trial. Gross also denied the Dodgers access to league documents and television deals with other teams, restricting McCourt’s ability to marshal evidence to support his position that Selig applied a double standard to the Dodgers.

In the fall, McCourt reached settlements with his fiercest opponents within weeks of one another. In October, he settled his divorce, with his ex-wife abandoning her claim to half-ownership of the Dodgers in exchange for the $131 million. In November, he agreed to sell the Dodgers, with MLB agreeing to let him control the sale and decide whether to include the Dodger Stadium parking lots in the deal.

The Dodgers officially were put up for sale in January. After McCourt’s investment bankers eliminated some prospective buyers and MLB owners eliminated others, the court-appointed mediator selected three bidders for a final auction, set to start March 28.

On March 27, after MLB owners approved those three bidders, McCourt and his bankers acknowledged that the last Guggenheim bid topped the next-closest bid by more than $500 million. McCourt and Guggenheim agreed on the deal that night, and the auction was canceled.

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