Dodger owner scores early win over MLB

@CNNMoney June 29, 2011: 8:22 AM ET

NEW YORK (CNNMoney) -- Embattled Los Angeles Dodgers owner Frank McCourt scored a partial victory in bankruptcy court Tuesday, but the judge left the door open to giving Major League Baseball the ultimate victory at a hearing next month.

Major League Baseball had asked the bankruptcy court in Delaware to block the Dodgers' plans to borrow $150 million from an outside lender, offering to provide the needed cash itself instead.

The league also made clear that it is moving towards ending team owner Frank McCourt's ownership of the Dodgers.

Major League Baseball argued that McCourt did not have the authority to file for bankruptcy without the approval of the league and the monitor appointed by MLB to oversee its operations, a fact it said he simply ignored.

The league said the court should determine early in the process whether McCourt should be allowed to continue controlling the team during the bankruptcy process.

MLB said in its filing that it was prepared to provide the Dodgers with all the financing the team needs to meet payroll and continue operations through the reorganizing.

But Judge Kevin Gross approved the Dodgers' plan to get the financing from Highbridge Capital, a unit of JPMorgan Chase (JPM, Fortune 500), although he said he'll hear more about MLB's request to be the one to provide the financing at a hearing set for July 20.

The league argued its financing would be at a lower cost to the team than the financing being provided by private lender Highbridge. The interest on the MLB loan would be at 7%, while Highbridge's would be at 10%.

Experts say MLB is making the loan offer partly to improve its legal position in its fight with the Dodgers.

Last week, MLB Commissioner Bud Selig blocked a $3 billion local television rights deal that the Dodgers had reached with News Corp. (NWS) unit Fox Sports. Selig ruled the contract was not in the best long-term interest of the team or baseball and was instead designed to meet McCourt's own needs to settle a bitter divorce.

Kirkland & Ellis partner Jonathan Henes, who is not representing any of the parties in this case, said that McCourt is hoping a bankruptcy judge might order the Fox deal to be completed.

But Henes said the chances of such a ruling would decrease if the court agrees to have the league fund the team through bankruptcy. He expects the league to ultimately triumph in its battle with McCourt.

"I think we are at the beginning of the end of the drama and McCourt's ownership," Henes said.

MLB escalated its attack on McCourt's ownership of the Dodgers Tuesday as well, stating in the filing that he "siphoned off well over $100 million of club revenues" and was "unable to properly distinguish between his personal interests and those of the club."

The Dodgers public relations office said it had no immediate comment on the filing. To top of page

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