Blog Entry

More trouble for McCourt as Bud nixes deal

Posted on: June 20, 2011 4:59 pm
Edited on: June 20, 2011 7:14 pm
 
Frank McCourt's slim chances of holding onto the Dodgers keep getting slimmer.

As expected, commissioner Bud Selig has turned down McCourt's proposed television deal with Fox, which means that McCourt's divorce settlement with wife Jamie is now "null and void" (meaning the divorce is back in court), and also that McCourt's money problems are neither null nor void.

The Fox deal would have provided McCourt with more than $300 million in up-front money, enabling him to keep the Dodgers running. Without that money, there's a very real chance that McCourt won't be able to meet his June 30 payroll, and that baseball will step in to pay the players, keep the Dodgers running -- and then take over the team with the intention of forcing a sale.

There's also a real chance that McCourt will respond with a lawsuit, and McCourt seemed to hint at that with a counter-statement issued two hours after Selig's official rejection. If he sues -- or even if he doesn't -- McCourt will claim that Selig's rejection of the Fox deal was unfair.

Selig, though, has in effect claimed that the proposed deal was unfair -- unfair to the Dodgers, to any future Dodgers owner and to other owners whose interest includes making sure TV rights are never undervalued.

In a statement issued late Monday afternoon, Selig said that he was uncomfortable with the "further diversion of Dodger assets for the personal needs of Mr. McCourt."

"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," Selig said in his statement. "This transaction would not accomplish these goals.”

According to the terms of the divorce settlement (filed last Friday), only $235 million of the $385 million Fox payment (which is described as a loan) would actually go to the Dodgers. And even out of that $235 million, as much as 10 percent ($23.5 million) could go directly to McCourt, theoretically to repay personal money that he had "loaned" to the Dodgers.

That means that $173.5 million of the $385 million (45 percent) could have been funneled directly to the McCourts and their lawyers, even though McCourt had pledged last month that 100 percent of the money would go to run the Dodgers.

The divorce settlement, of course, no longer holds. The McCourts made their settlement contingent on Selig's approval of the deal, even though it was obvious by then that the commissioner had no intention of approving it.

Without a settlement, and without the Fox money, it's hard to see how McCourt can hang on, which is why it seems more and more possible that he will eventually head back to court to try to save his ownership.

"We plan to explore vigorously our options and remedies," McCourt said in his statement Monday.

McCourt has claimed that the Fox deal would be worth more than $3 billion over 17 years, but the Los Angeles Times reported that because of the way it was structured, baseball considered it to be worth only a little more than half that. Even if McCourt actually did get $3 billion, it's very possible that he was underselling the rights for his personal gain; agent Scott Boras told the Orange County Business Journal earlier this month that baseball thinks those rights should be worth $4.5-5 billion.

"And I agree with them," Boras told the paper.

McCourt continues to claim that the deal would be good for the Dodgers and said in his statement Monday that Selig's rejection of the deal "is not only a disappointment, but worse, is potentially destructive to the Los Angeles Dodgers and Major League Baseball."

He said the deal would have made "the Dodgers financially secure for the long term and one of the best capitalized teams in Major League Baseball."

McCourt also repeated his previous positions, insisting that he had done everything MLB asked him to do in regards to the deal, including coming to last week's agreement with Jamie, in which she agreed not to contest the Fox deal.

In McCourt's view, baseball gives him a test, and then when he passes it, comes up with another test. In baseball's view, McCourt continues to operate with only his interests in mind and ignores the long-term interests of the Dodgers or of the game in general.

In baseball's view, McCourt was presumably willing to accept this deal because it was one of his few remaining ways -- maybe his only remaining way -- to keep the cash-poor Dodgers solvent. Even the stripped-down payment would have allowed McCourt to easily make payroll for months to come, and presumably would have taken away Selig's best case for seizing the team and forcing its sale.

Now the countdown to the June 30 payroll will resume, but it's not even clear that will be decisive. Even if baseball does take over, the possibility of a McCourt lawsuit would remain.

As I wrote last week, the circus goes on.


Category: MLB
Comments

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More trouble for McCourt as Bud nixes deal

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More trouble for McCourt as Bud nixes deal

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Since: Nov 19, 2011
Posted on: December 3, 2011 8:42 am
 

More trouble for McCourt as Bud nixes deal



Tomly
Since: Oct 21, 2011
Posted on: October 21, 2011 9:52 pm
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Since: Oct 7, 2011
Posted on: October 12, 2011 9:11 am
 

More trouble for McCourt as Bud nixes deal

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Since: Jul 9, 2009
Posted on: June 21, 2011 5:28 pm
 

More trouble for McCourt as Bud nixes deal

the TV dfeal with Fox is worth I believe 238 million dollars after the loan of 150 million which would go directly to the McCourts which even if it's a 10 year deal is peanuts

Bison, I take it your numbers are for, say, one year or something?  It's my understanding that the loan from Fox was to be for $ 385 million and that the total deal--which I understood was to be for 17 years, not 10--is valued at 2 to 3 1/2 billion, depending on whom you believe.

I don't know whether he'll win his lawsuit either, but he may be saying that the delay alone (i.e., in rendering the decision) caused him some harm.  I'm not saying he'll necessarily win on that issue either, but I've seen stranger results.

By thw way, McCourt may walk away "with a hefty check" as you say, but he may well be concerned with just how hefty that check will be, (especially if he has to engage in a forced sale, which tends to be less than when one is not forced to sell), and maybe that's what all this is about from his point of view.  After all, I suppose he had to issue a "hefty check" to buy the club in the first place.  But that's life in the world of high finance, I guess.




Since: Jul 22, 2007
Posted on: June 21, 2011 4:14 pm
 

More trouble for McCourt as Bud nixes deal

McCourt can try and sue all he likes, the fact is Selig protected himself and MLB by sending McCourt solid reasoning backed up by financial information why the deal is undervalued and how the loan from Fox that would divert 150 million dollars to McCourts personal bank account is not permitted by MLB rules.
They've also had their conservator in the front office for well over 2 months and i'm sure every last piece of paper, every email everything has been submitted to Selig & MLB, i'm sure Selig has had a team of people going through the Dodgers emails & servers getting all the vital information and they WILL have an airtight case against McCourt.
There's too much at stake not to so no, McCourt would not win based on past precedent AND on the mountains of evidence MLB has gathered by now not to mention the AG's investigation in California about the Dodger Dream Foundation it all adds up to Frank losing badly but walking away with a hefty check after the team and all it's assets are sold.



Since: Jul 22, 2007
Posted on: June 21, 2011 4:09 pm
 

More trouble for McCourt as Bud nixes deal

The other issue we have here is that the TV dfeal with Fox is worth I believe 238 million dollars after the loan of 150 million which would go directly to the McCourts which even if it's a 10 year deal is peanuts for the rights to Dodger Broadcasts.
Think about this, LA is the #2 TV market in the country, both the Yankees and Mets who SHARE the # 1 TV market make substantially more individually for their TV rights than the Dodgers would in this deal.
Even before the Yankees started the YES network they were making in MUCH more on their local TV deal which was why so many small market clubs who were garnering a quarter of the Yankees local TV money if they were lucky were clamoring for revenue sharing.
McCourt has too much money being diverted to his personal coffers from this deal, he's again using the club to fill his bank account so he can try and go enrich himself around town, here's an excerpt from the letter Selig released regarding the rejection of the transaction:
"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."

If you have no money to operate your team and must rely on loans to do so - which is different from the Mets situation, they have the money to operate, no danger of not making payroll they just sold a portion of their team to pay off litigation claims so don't go bringing the Mets situation into this.
As I was saying if you can't operate your team, have had books that look suspect, shown a pattern of financial mismanagement - which goes beyond giving a .240 lifetime hitter a 12 million dollar a year deal but rather endangers the day to day operations of the club, devalues the franchise and would therefore devalue other franchises, have a history of shady dealings, haven't put any money back into the team and the ballpark then yes I say Selig SHOULD take the club from McCourt, sell it to the most qualified bidder whom I believe is Dennis Gilbert, give Frank & Jamie a nice fat check and send them on their way.
Frank's going to profit handsomely from the sale of the Dodgers and he can then do whatever he pleases with the money, go buy some more parking lots, give your sons some no show jobs that pay them a million plus a year, anything but stay the hell away from the Dodgers!
There was a reason Goodell never let McCourt's bid for the Buccaneers get too serious, he saw the shaky financial ground McCourt was on and owners in particular Robert Kraft who knew McCourt from the business community in Boston told Goodell what a shyster McCourt was and the league wanted no part of him.



Since: Aug 16, 2006
Posted on: June 21, 2011 3:38 pm
 

More trouble for McCourt as Bud nixes deal

if i owned a burger king and i made a deal to film what happens at my burger king, the chain would have no right to tell me i cant do that.  selig wants him to sell the team so he made it so mccourt cant get the money he needs to make payroll so he can take over.  mccourt will sue and win.


Hmmm, in a sense, you are correct.  BK couldn't stop you from filming what happens at your store.  But, you would need the consent of each employee on tape as well as customers.  You would also need consent from any product label that might be seen in the clips.  Furthermore, you would need consent from BK to show the BK labels and products since they are owned by BK and not you.........even if you owned a store you don't own the product or label. Those are just leased to you and still sbuject to the approval of BK for use in any marketing or filming.


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