They must be laughing in Brooklyn. The Los Angeles Dodgers, one of baseball’s most storied teams, have been forced to seek bankruptcy protection. One reason is that they can’t rustle up enough cash to meet their next payroll. But the more likely cause is that the cash-strapped owner is trying keep Major League Baseball from seizing his franchise.
Well, that’s one way for sports teams to get out from under ridiculous player contracts. The Dodgers’ biggest unsecured creditor turns out to be Manny Ramirez at almost $21-million (U.S.). He hasn’t worn a Dodger uniform since August, 2010, and barely wore one in his two years with the team. Mr. Ramirez retired from baseball early this season, rather than face his second suspension for using a banned performance-enhancing drug. No. 2 in the creditor lineup is Andruw Jones ($11-million), who now plays part-time for the New York Yankees and was overweight, slow and generally dreadful during his brief Dodger sojourn. The Texas Rangers similarly ended up with current Yankee Alex Rodriguez ($24-million) as their biggest creditor when they filed for court protection in May, 2010.
When the Pittsburgh Penguins ended up in bankruptcy in 1998, the matter was resolved when the team’s biggest individual creditor, Mario Lemieux, subsequently converted his debt into equity and took control of the team. Hard to imagine the irrepressible Manny Ramirez ever running a franchise. But his agent undoubtedly could do the job.
Once upon a time, the National Hockey League was unmatched in its ability to unearth financially light operators who could spin a good yarn and persuade bedazzled governors to grant them franchises. My personal favourite: Boots Del Biaggio, former co-owner of the Nashville Predators, who soon ended up in prison on fraud charges, after stiffing creditors to the tune of $100-million.
But baseball, it would seem, wants that dubious title back. The Dodgers were one of baseball’s wealthier and best-run teams for decades, worth an estimated $800-million. They drew huge crowds year in and year out and ranked just behind the likes of the Yankees and the Boston Red Sox in most of the important financial measurements. Then real estate tycoon Frank McCourt got his hands on the team, and, almost overnight it turned into a sad-sack franchise on and off the field.
Even before the Dodgers became the prize at the centre of a vicious divorce battle between Mr. McCourt and his wife, Jamie, its capital and reputation were in tatters. Divorce court filings showed that between 2004 and 2009, the feuding but comfort-loving owners piled up more than $450-million in personal debt, much of it by using the Dodgers and other related property assets as collateral. Nearly half of the baseball income is estimated to have been earmarked to cover interest payments on the loans.
By the time baseball commissioner Bud Selig, who made his fortune selling cars in Milwaukee, appointed a financial overseer for the team in April, it was only a matter of time before the plug was pulled. And once Mr. Selig vetoed a $3-billion, 17-year TV deal last week with Rupert Murdoch’s Fox Sports, on the grounds that it wouldn’t be in the best interests of the Dodgers (translation: Mr. McCourt would get his hands on the cash), the die was cast.
The Dodgers left a trail of tears in Brooklyn when the beloved team hurriedly decamped for a richer untapped market in sunny Southern California after the 1957 season. Now the only people crying are the lenders and unsecured creditors, like Manny. And as colleague Greg Keenan noted, if anyone ever needed a haircut, it’s Manny. It is ever thus in Bankruptcyland.