Dodgers seek to prove MLB's "abusive conduct"

Reuters News
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Posted: Jul 06, 2011 12:33 PM
Dodgers seek to prove MLB's "abusive conduct"

By Tom Hals

WILMINGTON, Delaware (Reuters) - "Abusive conduct" by Major League Baseball Commissioner Bud Selig created the cash crunch that led to the bankruptcy of the Los Angeles Dodgers, the team says.

Now the team is requesting that a bankruptcy court order Major League Baseball to turn over documents the Dodgers say will prove the allegations. And if the league is forced to produce the materials, it could cast a harsh light on the New York Mets and other teams struggling with financial problems.

The Dodgers filed for bankruptcy last month after the league vetoed the team's proposal to sell future cable television rights, a deal that would have helped it meet payroll.

The team says it wants to document its accusations that Selig has launched a clandestine campaign to get rid of owner Frank McCourt, whom the league accuses of siphoning team revenue for personal use and is embroiled in a messy divorce.

Proving the league has singled out the Dodgers could help the team control their finances in bankruptcy.

The league declined to comment on Wednesday.

The Dodgers want to depose Selig and other league executives and want documents showing how Major League Baseball deals with other cash-strapped teams, according to a request filed in U.S. bankruptcy court in Delaware on Tuesday.

The team is seeking information on how Major League Baseball reached its decision earlier this year to appoint a monitor to oversee the Dodgers, and whether the same standard applies other teams.

The Dodgers also want evidence if the league gave any thought to removing McCourt as owner, ending the team's franchise or forcing a sale.

In particular, the Dodgers want details of the financial affairs of the New York Mets. Mets owner Fred Wilpon recently told Sports Illustrated the team was "bleeding cash" and has been in talks to sell a stake to raise cash.

The Dodgers want to prove the league is acting in "bad faith" -- essentially, that it is hostile to the team.

"Contrasting the treatment of the Dodgers to the velvet-glove treatment enjoyed by other teams with financial questions will help this court and the debtors to evaluate the full extent of MLB's conflict and animus toward the Dodgers," the team said in a filing.

The league has gone so far as to try to seize the team's computer servers following media leaks, according to court papers.

Proving the league is an adversary could make it easier for the team to arrange its own finances while in bankruptcy.

The Dodgers want final approval to borrow $150 million from a hedge fund unit of JPMorgan Chase & Co. The league insists it can lend the money more cheaply than the 10 percent charged by JPMorgan's Highbridge subsidiary, and wants Judge Kevin Gross to force the team to accept MLB's loan.

Bankruptcy loans often come with strict budgets and have been used to exert control over the borrower.

The league has made its own requests for documents and plans to depose McCourt and Jeffery Ingram, the Dodgers' assistant treasurer, during next week's All-Star break.

A bankruptcy court hearing to consider the document and deposition requests is scheduled for Thursday. The court is scheduled to consider final approval of the bankruptcy loan on July 20.

The case is In re: Los Angeles Dodgers LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-12010.

(Editing by Steve Orlofsky)