Q: Why did Dodgers owner Frank McCourt file for bankruptcy in Delaware?
A: The Dodgers are a limited liability company organized in Delaware, Ristaino says. That gives them access to the Delaware bankruptcy courts, which have experience dealing with some of the largest and most sophisticated cases in the world, so they will not be awed by Major League Baseball and its lawyers. In addition, Ristaino said, "The courts have a general reputation of being pro-debtor."
Q: How long will the process take?
-
MORE: Bankruptcy filing leaves Dodgers in limbo
-
COLUMN: 10 reasons Mark Cuban should buy Dodgers
-
PHOTOS: Los Angeles Dodgers gallery
A: The Dodgers will have 120 days to file a plan of reorganization, but the case has the potential to last for years. That gives McCourt leverage in his dispute with Commissioner Bud Selig, who presumably would prefer a quick resolution. "That's the beauty of McCourt's strategy," Sabino says. "He forces Selig to deal with him now on the Fox TV deal."
Q: Can the court force MLB to approve McCourt's TV deal with Fox, which he says could be worth $3 billion?
A: Yes. The court's main concern is that the creditors get paid, not whether the Dodgers get the best TV rights contract out there. If McCourt can find the money, the court is likely to OK the agreement.
Q: Can McCourt take money from that deal for his personal use?
A: Not likely, and certainly not until the creditors have been paid in full. As Sabino points out, "Everything McCourt does now is subject to strict scrutiny by the judge and creditors. Yet again, he's not under Selig's thumb anymore. It's the court, and clearly he prefers that."
Q: What are MLB's options?
A: Baseball could oppose the Fox deal in court, arguing it does not favor the team's creditors, or find a buyer with deep pockets and try to broker a sale. Selig's power to act in "the best interests of baseball" is curtailed because the court's authority generally overrides his.
Q: What happens next?
A: McCourt will seek court approval today for $150 million in interim financing he has obtained. That would allow him to make payroll Thursday and buy him time to negotiate a TV rights deal. That money could be used to pay the creditors. MLB figures to oppose that arrangement.
Q: Will McCourt get to keep the team?
A: Probably not, Ristaino says, noting that in the Phoenix Coyotes bankruptcy case, "that court gave great weight to the NHL constitutional bylaws making the NHL commissioner the exclusive arbiter of disputes between the league and teams."
Q: Will the Dodgers be put up for auction?
A: Possibly, but not for a while. "A cardinal rule of bankruptcy is 'maximize value for creditors,'" Sabino says. "If selling the Dodgers would do so, they will go on the auction block."
Q: How does this filing impact the divorce settlement between McCourt and his ex-wife, Jamie McCourt?
A: It doesn't. The issue of who owns the team still needs to be resolved in California court.
Q: How does the bankruptcy filing affect the team's daily operations?
A: In a team release, McCourt said the Dodgers would "continue to operate in the ordinary course of business." Even if that's the case, increased scrutiny from the courts and creditors could limit the scope of the team's transactions.
Q: Who are the major creditors?
A: According to the filing, the vast majority of the money the team owes is to players, including more than $40 million to those no longer with it. Manny Ramirez ($21 million) and Andruw Jones ($11 million) head that list. The Dodgers still owe $2.7 million to Marquis Grissom, an outfielder who last played for them in 2002, as well as $240,563 to the city of Los Angeles for business taxes.