The Dodgers currently do not have enough cash to meet their payroll at the end of May, according to a report in the Los Angeles Times, putting owner Frank McCourt's stewardship of the franchise in further jeopardy.
With Major League Baseball in the midst of an investigation into McCourt's finances and former Rangers president and U.S. ambassador Tom Schieffer appointed to monitor the situation, a payroll shortfall could lead to MLB temporarily taking over the franchise's operation from McCourt, according to the report. Currently, Schieffer must approve any financial transactions for $5,000 or more..
Citing two anonymous sources familiar with the matter, the Times reported that the first of two payrolls for the month, along with the entire April payroll, was met thanks to a $30 million loan from FOX, with whom McCourt says he has a $3 billion media deal pending MLB approval that includes a $285 million immediate payment. MLB has maintained that its investigation into the Dodgers' finances must be completed before any transactions are approved.
A person familiar with the issue told the Times that MLB would cover expenses if McCourt were unable to meet the team's payroll at the end of the month, and then would have the option to take control of the club. The report also cited a source saying that McCourt's chances of receiving another loan from FOX as "very unlikely."
A spokesman said the Commissioner's Office would have no comment on the Times report.
McCourt said in a statement provided by the club, "The fact that we had obligations coming due in 2011 was no surprise to us and no surprise to Major League Baseball. We developed a plan which eventually became the Fox transaction. We've been working on that plan, in different versions, for the last six months. That is a transaction that is now completely negotiated, ready to be signed, and ready to be closed.
"It's the series of delays in allowing us to close this transaction that has created the problem here. Otherwise, there would be no problem here. My recent investment into the club was necessitated by the delay."
Commissioner Bud Selig announced April 20 that he would appoint a representative to monitor the Dodgers because he had "deep concerns regarding the finances and operations" of the club. Selig appointed Schieffer, president of the Texas Rangers from 1991-99 as well as a former U.S. ambassador to Australia and Japan, to oversee the day-to-day operations, business and finances of the Dodgers on April 25.
On April 27, McCourt met with MLB officials and was informed that the FOX deal would not be approved until Schieffer's work was complete. McCourt then conducted a conference call, saying he felt a seizure of the club is a "predetermined end result" of the investigation and the reason behind MLB's delay in approving the FOX agreement. MLB executive vice president for labor relations Rob Manfred responded, "Mr. McCourt was clearly told that the Commissioner would make no decision on any transaction until after his investigation into the club and its finances is complete so that he can properly evaluate all of the facts and circumstances."
Schieffer met with McCourt on Friday, and that evening addressed the team's players and staff, accompanied by former Dodgers manager and current MLB vice president for baseball operations Joe Torre.
On Friday, Schieffer said, "Major League Baseball has not seized anything. Frank McCourt is still owner of the Los Angeles Dodgers. The Commissioner acted under the 'best interests of baseball' clause and sent me to do an investigation and monitor the franchise. We're trying to ensure that the difficulties encountered here don't increase and have a bigger impact on the future of the franchise. A seizure is different than what is going on here."
John Schlegel is a national reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.