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Bankruptcy protection sought by Dodgers: Will it affect ownership of the team?

Bankruptcy filing by Dodgers owner Frank McCourt throws a curveball at Major League Baseball. But sports analysts say the move only delays the inevitable: MLB will find a new owner.

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“The bankruptcy courts in the recent past have upheld the League constitution,” says Andrew Zimbalist, a professor at Smith College and an expert on the finances of baseball.

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This is not the first time an embattled sports owner has gone to bankruptcy court, points out Mr. Feder. Last year the Texas Rangers baseball franchise, which had a very heavy debt load, went into bankruptcy. After heated negotiations with MLB they ended up putting the team up for auction.

“The auction was highly compressed over several weeks when normally it would be several months,” says Feder. He says the speed of the auction, which was won by the Nolan Ryan group favored by MLB, meant some of the legal issues were never squarely addressed.

However, Feder points out that in 2009, the Phoenix Coyotes hockey team filed for bankruptcy and tried to sell themselves to Jim Balsillie, the Canadian developer of the Blackberry. The NHL was opposed to the sale. The bankruptcy court sided with the NHL, which opposed Mr. Balsillie’s plan to move the team to Canada.

Feder expects MLB will be an active participant in the Dodgers’ bankruptcy proceeding since he thinks their ultimate goal “is to get McCourt out of baseball as soon as possible.”

McCourt is in the middle of a messy divorce from his wife, Jamie, who has asked for 50 percent of the team. In addition, according to some media reports, there have been questions about whether McCourt has used Dodgers’ money for himself.

“The Dodgers are in deep trouble right now,” says Mr. Zimbalist, of Smith College. “They have been mismanaged by McCourt financially and operationally. Having him there prolongs the agony.”

Zimbalist says the final straw came early in the season when a San Francisco Giants fan was nearly killed by Dodger fans after one of their games. The LAPD have now taken over security.

In his press release about his filing, McCourt says the Chapter 11 process “provides the path on which to position the Los Angeles Dodgers for long-term success.”

Feder, however, says McCourt’s move “is the type of step you take when you have nothing left at this point.”

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