The Los Angeles Dodgers have proposed an auction of the right to broadcast the baseball team's games in a bid to bring in billions of dollars to stabilize its finances and end its bankruptcy.
The team also demanded a slew of documents from Major League Baseball in possible anticipation of a showdown with the game's commissioner who rejected a similar proposed media deal earlier this year.
The team blamed its June bankruptcy on Commissioner Bud Selig's refusal to approve a proposed $3 billion, 17-year media rights deal with Fox, a division of News Corp (NWSA.O).
The auction that the team proposed in court documents filed on Friday requires the Dodgers to break its current broadcast agreement with Fox. That contract grants Fox exclusive negotiating rights until the end of November 2012.
The proposed auction will provide Fox an exclusive 45-day negotiating period to reach a stalking horse or initial bid for the auction. The team would then spend 60 days shopping for competing bidders to set up an auction.
The winning bid would be presented to baseball's commissioner for approval.
Timothy Coleman, of the Blackstone Advisory Partners LP which is assisting the Dodgers, said in court papers the sale of media rights was forecast to bring in more money than the proposed deal the team reached with Fox prior to bankruptcy.
He said the media rights auction would allow the team to pay all creditors in full and exit bankruptcy with excess cash of $175 million.
Coleman also said the auction would allow the team to avoid selling any assets.
Several observers have speculated that team owner Frank McCourt would have to sell a stake or the entire team to put it on sound financial footing.
The Dodgers said in court documents that if Selig does not approve the sale of the media rights, they will ask the bankruptcy court to find that his rejection was not in good faith, and ask the court to clear it without league approval.
In an apparent attempt to prove the league treats the Dodgers differently from other teams, the Dodgers requested league documents relating to approvals of similar media deals for a number of teams including the Texas Rangers and New York Mets.
The case is In re: Los Angeles Dodgers LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-12010.