Unlike other businesses, for whom a bankruptcy rumor would be a public relations nightmare, Major League Baseball has gone out of its way to make sure people know that some of its franchises are on the verge of going out of business.

In May, commissioner Bud Selig said six to eight teams could close up shop within 18 months. This week, Selig said that one team faced the possibility of missing payroll and another might not last the season.

But completely shutting down a team is significantly different from filing for reorganization. No team in one of the four major leagues -- MLB, NBA, NFL or NHL -- has ever filed for Chapter 7 bankruptcy. Unlike a Chapter 11 filing, Chapter 7 would dissolve the team's assets into cash for the creditors and the team would fold.

It's an important point to make in light of Selig's recent statement that "if a club can't make it, I have to let them go."

Maintaining control

Should a baseball team file for Chapter 11 bankruptcy, the league would have the right to approve the new owner, said Bob DuPuy, chief operating officer of Major League Baseball. Under the antitrust exemption, Major League Baseball can decide where it wants the new owner to locate his team, according to Jim Rill, a former assistant attorney general for the antitrust division, who testified on behalf of Major League Baseball at the congressional hearings on the antitrust exemption. In Chapter 11, the players would still be considered assets of the team, and future contracts would have to be honored, but the team would no longer owe deferred money for play in previous seasons, said a high-ranking baseball source.

Baseball officials already have said they want to eliminate teams through contraction. If arbitrator Shyam Das denies MLB the right to unilaterally contract teams, perhaps the only way the league can gain the upper hand in labor negotiations with the Players Association is to have the threat of a Chapter 7 bankruptcy become real.

"To create the kind of chaos associated with shutting down a team or two would finally create the leverage that baseball has been seeking," said Chad Dale, a bankruptcy lawyer with Gadsby Hannah, a Boston-based firm that represented Pittsburgh Penguins owner Roger Marino in his Chapter 11 filing in 1998. "They would salivate for that to happen."

In a Chapter 7 filing, the team's assets would be liquidated and player contracts voided, effectively rendering all the team's players free agents.

Fans and media have had a hard time believing the cries of poverty, and many players won't believe it until the free-agent market is flooded with players as a result of a complete liquidation.

"It's sort of like Chicken Little," said Richard Brown, who served as president of the California/Anaheim Angels from 1990-1996. "People won't believe the sky is falling until it starts falling."

While John McHale Jr., baseball's executive vice president of administration, said that a couple of teams going out of business "would have an enormous effect on the future of the game," he said that no plan is in the works to pressure team owners to give up.

"Having teams go out of business is not part of our planning," McHale said. "In fact, that prospect is unpalatable to us. Doing that would be like trying to fix a hangnail by amputating your arm."

However, if MLB is serious about contraction, then having a team file Chapter 7 bankruptcy would serve the same purpose. The team simply would disappear. If MLB in fact wants teams to survive but perhaps under new ownership or in a new location, having the team file Chapter 11 would be preferable.

At that point, the franchise's value becomes important. The owner of a struggling franchise is more likely to salvage some of his investment by filing Chapter 11 and selling the team in bankruptcy court than by filing Chapter 7 and liquidating.

Five owners of four teams have filed for Chapter 11 bankruptcy, or reorganization, since 1970, when Selig bought the Seattle Pilots out of bankruptcy for a reported $10.8 million. And each time a team filed for Chapter 11, there were buyers ready to step in.