Sunday, 1 May 2016
Last updated 1 day ago
Jun 28 2011 | 5:33am ET
While Major League Baseball appears happy to let hedge fund manager David Einhorn's millions float the financially troubled New York Mets, the intervention of another hedge fund in the sport's other big money mess appears a good deal less welcome.
The Los Angeles Dodgers yesterday filed for bankruptcy protection in Delaware, announcing they were poised to miss $38.7 million in financial commitments later this week, including $20 million in payroll. The team's owner, Frank McCourt, says he needs a $150 million loan from Highbridge Capital Management to meet those obligations.
Should the deal be approved by the court, Highbridge would extend a $150 million one-year loan to the Dodgers on very favorable terms for itself. The hedge fund, a division of JPMorgan Chase, would be guaranteed at least 10% interest, as well as a $4.5 million deferred commitment fee, 0.5% of the unused part of the loan paid monthly and first dibs on the Dodgers' assets.
The Dodgers, who would draw $60 million of the loan immediately, would get more time to force baseball Commissioner Bud Selig to accept its proposed television rights deal, the proceeds of which McCourt needs to satisfy a $385 million divorce settlement between himself and his ex-wife, Jamie, the Dodgers' former CEO. The team said that Highland was the only lender it approached willing to offer at least $40 million right away.
Selig has rejected the $3 billion TV deal, and in April seized control of the team. He also made clear that McCourt's bankruptcy filing had done nothing to endear him more to the commissioner.
"The Commissioner's Office has spent the better part of one year working with Mr. McCourt and his representatives on the financial situation of the Los Angeles Dodgers, which was caused by Mr. McCourt's excessive debt and his diversion of club assets for his own personal needs," Selig said in a statement. "We have consistently communicated to Mr. McCourt that any potential solution to his problems that contemplates mortgaging the future of the Dodgers franchise to the long-term detriment of the club, its loyal fans and the game of baseball would not be acceptable."
"To date, the ideas and proposals that I have been asked to consider have not been consistent with the best interests of baseball," Selig continued. "The action taken today by Mr. McCourt does nothing but inflict further harm to this historic franchise."