If you have not been following this… basically Frank McCourt made his money in the Boston real estate market specializing in the development of major commercial real estate projects, particularly parking lots.
I guess he loved parking lots so much, that he first tried to buy the Chicago Red Sox which has a large one, and then the Anaheim Angels and Tampa Bay Buccaneers; before finally succeeding in 2004 and bought the Los Angeles Dodgers for $430 million from NewsCorp, Rupert Murdoch’s flagship enterprise.
McCourt’s purchase of the Dodgers was financed mostly by debt, with McCourt’s South Boston parking lot property was used as collateral for some of the financing to acquire the Dodgers from News Corp.
The Dodgers assets acquired by McCourt included significant real estate assets related to the stadium in Chavez Ravine, including stadium parking lot land. Plans have been announced for new real estate developments at Dodger Stadium. Hmm… Condos? Parking garages? A hospital for the elderly?
To offset the purchase, McCourt has raised ticket and concession prices every year. By 2010, the Dodger team and its related assets, in which McCourt had invested heavily in improvements, had increased in value to $727 million according to Forbes. Yeah, value gotten from the high ticket prices that the fans had to endure in order to go see a game.
What started it all, was that Frank McCourt decided to divorce his wife of 30 years – mega-businesswoman, Jamie “First Female CEO of a Baseball Team” McCourt. This bloody court fight exposed a lot of problems with the Dodgers finances, but it also threatened to saddle the team with the burden of a family feud in the owner box. In the end, they settled out of court.
Unfortunately it was contingent on Major League Baseball approving a 17-year television contract between the Dodgers and FOX Television. However, this month the MLB rejected the television deal and the settlement agreement fell apart.
Later last year it was revealed that the California Attorney General was opening an investigation into the team’s charitable foundation – the Dodgers’ Dream Foundation. It seem that according to tax returns, the charity’s chief executive Howard Sunkin, earned a salary of nearly $400,000 per year!! This is almost a quarter of the foundation’s entire budget. Sunkin is a close associate of McCourt and has worked with him during his divorce proceedings. The California courts awarded the funds to be repaid. McCourt personally repaid $100,000 – but, seriously!! What a scumbag!!!
HERE AND NOW
Today, Los Angeles Dodgers issued a statement that owner Frank McCourt has obtained $150 million in interim financing, and if the Delaware bankruptcy court approves the financing at a hearing on June 28, 2011.
It seems that McCourt could meet payroll and remain in charge of the team, but Major League Baseball is expected to challenge McCourt’s move. McCourt said the financing would stabilize the financial future of the team. The move also could extend the battle for ownership of the Dodgers well beyond this season, making it a long slow torture for us all.
“The action taken today by Mr. McCourt does nothing but inflict further harm to this historic franchise,” MLB Commissioner Bud Selig said in a statement.
Under the MLB constitution, the act of filing for bankruptcy enables the commissioner to strip McCourt of ownership. But bankruptcy court proceedings generally override MLB rules. If McCourt secures a favorable decision, he could keep the team and attempt to secure a lucrative, long-term television contract that would allow him to pay his bills.
Manny Ramirez is the Dodgers’ largest creditor, according to the bankruptcy filing. The Dodgers owe their former left fielder $21 million, followed by New York Yankees outfielder Andruw Jones ($11 million), Dodgers pitcher Hiroki Kuroda ($4.5 million) and shortstop Rafael Furcal ($3.7 million), and the Chicago White Sox ($3.5 million, for outfielder Juan Pierre).
The list of creditors also includes much of the current Dodgers roster, Hall of Fame broadcaster Vin Scully ($152,778), the city of Los Angeles ($240,563 in tax debt), and two players yet to play for the Dodgers (prospects Zach Lee at $3.4 million and Alexander Santana at $499,500).
In their bankruptcy filing, the Dodgers said they owed almost $40 million this week alone, including $20 million in current and deferred salaries and $18.7 million to fund future deferred payments, in accordance with baseball’s collective bargaining agreement.
In his statement, Selig said the Dodgers’ financial woes were “caused by Mr. McCourt’s excessive debt and his diversion of club assets for his own personal needs. We have consistently communicated to Mr. McCourt that any potential solution to his problems that contemplates mortgaging the future of the Dodgers franchise to the long-term detriment of the club, its loyal fans and the game of baseball would not be acceptable.”
So, what will happen with the Los Angeles Dodgers? I don’t know which will be better, McCourt keeping the team, or the MLB Corporate machine getting control of the team.
All the fans want is a good schedule, great play and wins. Something McCourt hasn’t done, even though he raised ticket prices.