Professional Teams Gone Broke
On April 20, 2011, Baseball commissioner Bud Selig announced that Major League Baseball was taking the drastic step of taking control of the Los Angeles Dodgers. "I have taken this action because of my deep concerns regarding the finances and operations of the Dodgers," he said. However, after Selig rejected a lucrative television deal that stood to infuse the team with much-needed cash, the team filed for Chapter 11 bankruptcy protection on June 27, 2011.
Although relatively uncommon, sports franchises do go bankrupt from time to time. Generally, teams go bankrupt after racking up large amounts of debt, making bad investments or when the owners’ primary business goes bust. Most of the time, a bankruptcy does not lead to the dissolution of the team, but usually results in a shift in ownership. Of the nine teams that have filed for bankruptcy in the past 40 years (the Pittsburgh Penguins filed twice), six are in the NHL.
So, which major professional teams have gone bankrupt? Click ahead to find out!
By Darren Rovell
Updated 28 Jun 2011
1970 Seattle Pilots
The Seattle Pilots played for one year in Seattle. In March of 1970, Pacific Northwest Sports, the team’s parent company, filed for bankruptcy after a judge granted the state of Washington an injunction to prevent them from moving the team to Milwaukee.
Putting the team into bankruptcy allowed the $10.8 million sale of the team to current MLB commissioner Bud Selig to proceed in time for the 1970 season. The team moved to Milwaukee and was renamed the Brewers.
1975 Pittsburgh Penguins
The Penguins' first bankruptcy filing came in June of 1975 after when the team’s owners, Tad Potter and Peter Block, couldn't pay $6.5 million in debt, including $500,000 owed to the government in taxes. The IRS imposed a lien and seized the assets, which led to the bankruptcy filing.
1978 Cleveland Barons
The Barons played for two seasons in the NHL, but due to lack of fan support, quickly got in financial trouble. Instead of filing for bankruptcy, the Gund Brothers, who went on to own the Cleveland Cavaliers, agreed to merge the team with the Minnesota North Stars, which they assumed control of.
The Cleveland Barons are the last franchise in the big 4 American leagues (NFL, NHL, MLB and NBA) to cease operations.
1993 Baltimore Orioles
In 1992, the Orioles opened up Oriole Park at Camden Yards, the first of the retro stadiums. But even with crowds coming in, it wasn’t enough to save Orioles owner Eli Jacobs from debt problems related to his stake in Memorex, the suffering computer disk producer.
In March 1993, Jacobs was forced into bankruptcy and the team auction was won by Peter Angelos, who paid $173 million and still owns the team today.
1995 Los Angeles Kings
The bankruptcy of the Los Angeles Kings had less to do with the Kings business and more to do with the problems with its owner, Bruce McNall. In 1993, McNall defaulted on the loan he took out to buy the team and the Kings were forced into bankruptcy.
While Ed Roski and Phil Anschutz bought the team, McNall went to prison for defrauding banks of hundreds of millions of dollars.
1998 Pittsburgh Penguins
The Penguins became the only team to file for bankruptcy twice after team officials said they lost $37.5 million over the previous two seasons. It appeared like the Penguins wouldn’t make it through the 1998-99 season, but thanks to the fact that many of its players agreed to defer their salaries, the team stayed in Pittsburgh and made it through the season.
Mario Lemieux, who was owed $30 million, converted his share into equity and became an owner.
2003 Ottawa Senators
In the middle of the 1992-93 NHL season, the Ottawa Senators filed for bankruptcy protection. The team owed over $200 million in Canadian dollars to creditors, including the NHL. After the season ended, Canadian pharma titan Eugene Melnyk was approved as the new owner of the team.
In 2007, the team made it all the way to the Stanley Cup Finals before losing to the Anaheim Ducks.
2003 Buffalo Sabres
The Sabres became the second team in the NHL to file for bankruptcy in 2003, when the team filed just five days after the Senators sought protection.
Seven months earlier, the team’s owner John Regas was forced to resign as CEO of Adelphia Communications after he was accused on stealing company funds. He began serving a 15-year jail sentence in August 2007 after being convicted.
The bankruptcy court put control of the team in the NHL’s hands. It is currently owned by East Resources natural gas company founder Terrence Pegula, who purchased it on February 18, 2011 for $189 million.
2009 Phoenix Coyotes
In May 2009, the Coyotes filed for bankruptcy due to low attendance and problems related to owner Jerry Moyes’ Swift Transportation business. Moyes had a plan to sell the team to Research in Motion co-CEO Jim Balsille, who would move the team to Canada, but NHL commissioner Gary Bettman didn’t want to move the team.
After bankruptcy hearings that went on for months, the league finally bought the team for $140 million at the start of the 2009-10 season. After discussions with many prospective owners, the league has still not sold the team.
2010 Texas Rangers
In early 2010, Texas Rangers owner Tom Hicks – who defaulted on his loans — agreed to sell his team to Nolan Ryan and attorney Chuck Greenberg for $525 million. When creditors didn’t approve that sale, the team filed for bankruptcy.
In an August 2010 auction that lasted for about 12 hours in front of the court, Ryan and Greenberg won the team for a reported $593 million after beating out Dallas Mavericks owner Mark Cuban and Houston magnate James Crane. The team played in the 2010 World Series, becoming the first to do so in the same year that it filed for bankruptcy.