Dodgers owner Frank McCourt was notified today that MLB will not approve the 17-year television rights contract with Fox, reported Yahoo's Tim Brown. Bud Selig's decision comes as no surprise.
Now, McCourt's divorce settlement is off and the Dodgers are unlikely to meet payroll at the end of the month. If the Dodgers cannot meet their payroll obligation, MLB will seize and sell the Dodgers, though perhaps not without a legal battle from McCourt.
In celebration, check out this Academy Award Winning Best Animated Short Film by Don Hertzfedlt called Rejected.
UPDATE:
Hold on there. Bill Shaiken tweets that MLB has not notified McCourt of anything yet. Is this a valid leak or just a rumor that is starting to spread throughout the internet like wildfires? 
UPDATE II:
I guess it is now official. Shaiken writes,
I guess we are on to the next stage.Selig rejected the contract on the first business day after the McCourts announced a settlement contingent upon approval of that contract.
Selig did not strip Frank McCourt of ownership of the Dodgers. However, McCourt has said for months that approval of the Fox contract was critical for the Dodgers' financial health.
It was not immediately clear whether Selig would publicly explain his decision. He had said earlier that he would withhold a decision pending an investigation into the Dodgers' finances and operations.
But Selig was said to be aghast over a provision in the divorce settlement that would divert almost half the immediate payment from that television contract for the benefit of the McCourts rather than for the benefit of the Dodgers.
UPDATE III:
Here is the official Press Release from MLB.
"Pursuant to my authority as Commissioner, I have informed Los Angeles Dodgers owner Frank McCourt today in a detailed letter that I cannot approve the club's proposed transaction with FOX. This decision was reached after a full and careful consideration of the terms of the proposed transaction and the club's current circumstances. It is my conclusion that this proposed transaction with FOX would not be in the best interests of the Los Angeles Dodgers franchise, the game of Baseball and the millions of loyal fans of this historic club.
"Mr. McCourt has been provided with an expansive analysis of my reasons for rejecting this proposed transaction. Critically, the transaction is structured to facilitate the further diversion of Dodgers assets for the personal needs of Mr. McCourt. Given the magnitude of the transaction, such a diversion of assets would have the effect of mortgaging the future of the franchise to the long-term detriment of the club and its fans.
"As I have said before, we owe it to the legion of loyal Dodger fans to ensure that this club is being operated properly now and will be guided appropriately in the future. This transaction would not accomplish these goals."
Thank you, Bud.
UPDATE IV:
Them are fightin' words! Here is a statement from McCourt's lawyers.
“We are extremely disappointed with the Commissioner’s rejection of the proposed FOX transaction which would inject $235 million into the Los Angeles Dodgers. As Commissioner Selig well knows, this transaction would make the Dodgers financially secure for the long term and one of the best capitalized teams in Major League Baseball.
“For weeks Major League Baseball has consistently made public pronouncements asserting that Jamie McCourt’s agreement of the Fox transaction also was needed; that the Court adjudicating the McCourt divorce grant its approval of the transaction; and the Dodger organization provide all data requested by Major League Baseball to satisfy the so-called investigation ordered by Commissioner Selig last April – the latter also being the excuse he gave at that time for delaying his approval of the proposed FOX transaction.
“All the requirements for the Commissioner to approve the FOX transaction were put in place by last Friday: Frank and Jamie McCourt entered into an agreement based on the proposed transaction; the Court ordered, among other things, that the FOX transaction is “in the best interest of the Los Angeles Dodgers and should be consummated immediately;” and all information requested by Major League Baseball under its so-called investigation has been provided by the Dodgers.
“Commissioner Selig’s letter of rejection is not only a disappointment, but worse, is potentially destructive to the Los Angeles Dodgers, and Major League Baseball. Accordingly, we plan to explore vigorously our options and remedies with respect to Commissioner Selig’s rejection of the proposed FOX transaction and our commitment to protect the long-term best interests of the Los Angeles Dodgers.”
