The Los Angeles Dodgers have filed for bankruptcy protection today in a Delaware court.
The filing was described by the team in a statement as a move “to protect the franchise financially and provide a path that will enable the club to consummate a media transaction and capitalize the team.”
Owner Frank McCourt said he had lined up $150 million in interim financing in order to keep the team during the court proceedings, but various reports indicated that the team would have trouble meeting its June 30 payroll.
Earlier, Commissioner Bud Selig had nixed a TV deal with Fox that reportedly was worth as much as $3 billion, saying it is not in the Dodgers’ best interests.
“Critically, the transaction is structured to facilitate the further diversion of Dodgers assets for the personal needs of Mr. McCourt,” Selig said of the Fox deal in a statement last week. “Given the magnitude of the transaction, such a diversion of assets would have the effect of mortgaging the future of the franchise to the long-term detriment of the club and its fans.”
According to mlb.com, Selig has the power to veto the TV deal because of the debt-service rule, which doesn't allow franchises to borrow on future assets in order to pay current bills. The rule states that owners must sell team equity to raise revenue, decrease spending or both.