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League Impact on the Sports Team Bankruptcy Process

By Thomas J. Salerno and Jordan A. Kroop
October 26, 2010

Professional sports team bankruptcies are, happily, more rare than a pitcher's perfect game. Only six teams from the “big four” American sports leagues ' Major League Baseball (MLB), the National Football League (NFL), the National Basketball Association (NBA), and the National Hockey League (NHL) ' have filed bankruptcy cases since Congress adopted the U.S. Bankruptcy Code in 1978.

In Part One of this article, we explored two recent Chapter 11 bankruptcy cases for two MLB franchises ' the Chicago Cubs and the Texas Rangers. The Cubs' Chapter 11 bankruptcy case ' The “Good” in our Clint Eastwood-inspired formula ' was intended to effect the sale of the team before the start of the 2010 baseball season. That bankruptcy sale process went smoother and fared far better than most of what the Cubs managed on the field in 2010. The sale of the Cubs was completed in a manner that avoided much of the drama that would befall the Texas Rangers' bankruptcy case only months later. The Rangers' case ' The “Bad” ' demonstrated what can happen when two would-be ownership groups (only one with the MLB imprimatur) compete. That case is perhaps a distant memory for fans as the Rangers head into this year's playoffs. (The Rangers were, until press time, the only MLB franchise never to have won a post-season series.) But the team's new ownership group, headed by baseball legend Nolan Ryan, will be sitting nearest the field-side bunting this fall owing, in part, to MLB's participation in the bidding.

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