Insolvent Professional Sports Teams: A Historical Case Study
42 Pages Posted: 21 Nov 2013
Date Written: November 20, 2013
The U.S. professional sports industry has recently witnessed a series of high-profile bankruptcy proceedings involving teams from both Major League Baseball ("MLB") and the National Hockey League ("NHL"). In some cases — most notably those involving MLB’s Los Angeles Dodgers and the NHL’s Phoenix Coyotes — these proceedings raised difficult issues regarding the proper balance for bankruptcy courts to strike between the authority of a professional sports league to control the disposition of its financially struggling franchise’s assets and the rights of the debtor team to maximize the value of its property. However, these cases did not mark the first time that a court was called upon to balance the interests of a professional sports league and an insolvent team.
Building off of related research documenting the history of the 1922 Supreme Court case of Federal Baseball Club of Baltimore, Inc. v. National League of Professional Baseball Clubs (resulting in the book Baseball on Trial: The Origin of Baseball's Antitrust Exemption, Forthcoming 2014, University of Illinois Press), this article documents the history of two long forgotten disputes in 1915 for the control of a pair of insolvent franchises in the Federal League of Professional Base Ball Clubs (specifically, the Kansas City Packers and the Indianapolis Hoosiers). Drawing upon original court records and contemporaneous newspaper accounts, the article contends that despite the passage of time — and the different factual and procedural postures of the respective cases — courts both then and now have adopted similar approaches to managing litigation between professional sports leagues and their insolvent franchises. Moreover, the article discusses how the history of these 1915 disputes helps explain why U.S. professional sports leagues have traditionally disfavored public franchise ownership.
Keywords: MLB, NHL, NFL, NBA, Major League Baseball, National Hockey League, bankruptcy, insolvency, insolvent team, bankrupt team, Federal League, Phoenix Coyotes, Chicago Cubs, Texas Rangers, Los Angeles Dodgers, Dallas Stars, Kansas City Packers, Indianapolis Hoosiers, Landis, antitrust, Federal Baseball
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