Last Friday, US Bankruptcy Judge, Leonard Stark agreed with Fox Sports position and dealt a blow to the Los Angeles Dodgers plans to sell television rights to all future games. Although this is not written in stone, the Dodgers must stop any attempt to sell the media rights while the judge considers the appeal. He further stated that a bankruptcy judge who originally authorized the sale of media rights was wrong because Fox had certain protections in their existing contract that should’ve been enforced in the bankruptcy filing.
The bankruptcy attorney for the Dodger’s, along with creditors had expressed their discontent at a hearing on Thursday, saying that this could possibly ruin the plans to sell the team and media rights by the April 30 deadline that was already decided in a settlement between the Dodgers and Major League Baseball. Judge Stark said the team itself could be sold by the April 30 deadline even with the court ordered automatic stay and he didn’t believe that it would damage the creditors or the Dodgers.
The attorney for Fox Sports, Catherine Steege argued that the previous bankruptcy judge exceeded his authority by allowing the sale of the media rights even though there was an existing contract between the Dodgers and Fox Sports. This contract is supposed to give Fox and exclusive 45 day period in October 2012 to negotiate a further contract. In this contract, the Dodgers are not allowed to speak with any other interested buyers of the media rights until after November 30. The US Bankruptcy Judge, Kevin Gross believed that because the Dodgers were filing bankruptcy this clause was unenforceable by Fox.
The attorneys for Fox have argued that the sale of the Dodgers without the media rights would generate enough money to pay all their creditors allowing them to exit the bankruptcy filing. This will allow them to exit bankruptcy without being subjected to a lawsuit for breach of contract by Fox s multiple Sports.