Frank McCourt Must Go (UPDATED)


UPDATE: Major League Baseball has announced that it has rejected the proposed TV deal between the Dodgers and Fox. The reasons given by MLB include many of those stated below: the deal is not in the best interests of baseball, it diverts too much money away from the Dodgers and to the McCourts and their proposed divorce settlement, it mortgages the future of the franchise, and so forth. Keep an eye on DodgerDivorce.com for a complete analysis. Also, please comment below if you’d like to see more here at IIATMS on the Dodger situation.

This information in this piece was compiled with the assistance of Josh Fisher at DodgerDivorce.com, though the conclusions here are mine and not Josh’s. Josh is one of the great guys on the baseball internet, and if you’re interested in the saga of the Dodgers and Frank McCourt, you should make Josh’s site a must visit.

Over the next two weeks, Bud Selig will face the defining moment of his career as Commissioner of Major League Baseball. Selig can approve a proposed contract between Fox Television and the Los Angeles Dodgers, effectively allowing Frank McCourt to continue to run the team. Or Selig can veto the deal, initiating what should be an ugly court battle with McCourt over who controls the Dodgers’ franchise.

Here’s the situation in a nutshell: the Dodgers have a tentative agreement in place with Fox, where Fox would pay something like $3 billion in exchange for the TV rights to Dodgers games for the next 17 years (though there’s some dispute that the deal is this rich). The Fox deal includes a $385 million “loan” to the Dodgers, with a bit more than $200 million of this loan going to the Dodgers, $80 million going to pay down unspecified indebtedness, and the remaining $93.5 million going to the McCourts individually or to the cost of a proposed settlement of Frank McCourt’s divorce case with his ex-wife Jamie. If baseball approves the Fox agreement, then the proposed settlement would require a one-day trial in August before Superior Court Judge Scott Gordon to determine if Frank McCourt owns the team outright, or if the team is community property and must be sold. If baseball rejects the Fox deal, then Frank and Jamie McCourt’s proposed divorce settlement is nullified, we’re back to square one, and we’re in for an orgy of litigation.

There is no doubt: Commissioner Selig should reject the Dodgers-Fox contract, seize control of the Dodgers, and sell the team to a responsible owner who will (with the grateful help of millions of my fellow left coasters) restore the team to its former greatness. Selig must act to prevent Frank McCourt from continuing to plunder the team. Selig must act before the team is saddled with even greater debt, while the team’s reputation can still be salvaged and the team is still marketable to a worthy owner.

The issues involved extend beyond the Dodgers, and affect everyone in baseball, including the Yankees. What’s at stake is whether baseball’s Commissioner can protect the “best interests of baseball” against the determined opposition of an individual and greedy owner. What’s at stake is whether the Commissioner can act to prevent a single owner from bringing chaos to a flagship franchise, before that franchise is stripped of all value and the cost of restoring order becomes so prohibitive that the Yankees and the other teams in baseball would have to foot the bill.

My case for the termination of the ownership of Frank McCourt follows after the jump.

If you don’t closely follow events west of the Rockies (or west of the Hudson), here are the basic facts about McCourt’s ownership of the Dodgers. McCourt bought the Dodgers from News Corp (Fox Sports) with $150 million he borrowed from Bank of America, $75 million he borrowed from Major League Baseball (MLB) and a $196 million debt package from Fox. That’s $421 million of debt.

After the purchase, McCourt rearranged this debt to his liking. McCourt traded his Boston parking lots to Fox in exchange for forgiveness of some of the Fox debt.  Then he caused a Dodger affiliate, Dodger Tickets, LLC, to borrow $250 million to refinance most of the remaining acquisition debt. Plus McCourt cashed in on $50 million of “rebates” from Fox. With this rearrangement, McCourt effectively purchased the Dodgers – for a final purchase price of between $355 million and $371 million – in exchange for parking lots and $300 million (more or less) of debt. By all reports, McCourt put not one dime of his own into this purchase.  Moreover, McCourt did not himself have to borrow the money used for the purchase – he got the Dodgers to do it for him.

It’s been frequently reported that McCourt “bought the Dodgers on a credit card”. That’s only half the story. The other half of the story, the more important half, is that McCourt bought the Dodgers on the Dodgers’ credit card.

Once McCourt had control of the Dodgers’ credit card, he continued to use it, this time to finance his family’s cost of living. Then Dodgers’ Executive Vice President Jeff Ingram (now team Vice Chairman) testified that the Dodgers built their team budgets around the personal cash demands made by the McCourts – from a financial standpoint, the team’s top priority was to raise the funds required by the McCourt family. Ingram described it like this: the “family and business checkbooks were largely one and the same.”  Ingram actually testified that the family used the team like a “credit card”.

In an email disclosed in Jamie McCourt’s divorce filings, Ingram describes Jamie McCourt’s attitude towards the Dodgers as follows: “why have a family business but to support the family lifestyle.” Remember, Jamie McCourt was the team’s CEO. Jamie McCourt had the power to reach for the Dodgers’ checkbook and sign the checks herself.

How did the Dodgers manage to fund the McCourt lifestyle?  Let’s start with salaries: Jamie McCourt received up to $2 million annually for her services as Dodgers’ CEO. Frank McCourt received up to $5 million annually from one or more businesses affiliated with the Dodgers. The Dodgers also paid up to $600,000 in annual salary to two of the McCourt children, one of whom was attending Stanford University and the other of whom had a full-time job at Goldman Sachs.

But $7.6 million a year was not nearly enough money to meet the needs (estimated at over $2 million a month) of the McCourt family. The McCourts spent money at a rate that turned heads, even in Los Angeles. Best known is the McCourt appetite for real estate. After buying the team, the McCourts proceeded to buy four homes in Los Angeles – two in Malibu, two near the Playboy Mansion – at a combined cost of around $89 million. This figure includes the estimated cost of McCourt “improvements” to these homes, including a roughly $14 million bill for tearing out tennis courts at one property and replacing them with a swimming pool. Then there were the other expenses: the vacation properties, the private jet, the private drivers, the hairdresser who worked exclusively for the McCourts five days a week … the list goes on and on. Here’s an expense that’s one of my personal favorites: over one 18-month period, Jamie McCourt paid over $100,000 to various florists, and charged the Dodgers for the expense.

The McCourt lifestyle unraveled when Frank McCourt fired his wife as Dodgers’ CEO, claiming that Jamie McCourt was having an affair with her driver. (Naturally, the driver’s salary was being paid by the Dodgers; Frank McCourt has alleged that his ex-wife and her driver spent 2½ weeks together on vacation in France, with the Dodgers once again paying the tab.) In turn, Jamie McCourt filed for divorce, and claimed half ownership of the team.  But the McCourt’s wild spending did not stop with the divorce filing. Despite the McCourts’ owning four homes in Los Angeles, Frank McCourt currently lives in a suite in the newest luxury hotel in Beverly Hills, at a cost north of $30,000 a month. Meanwhile, Jamie McCourt reportedly uses one of the McCourt’s multi-million dollar homes “exclusively for swimming”, while a second is used to store furniture. Plus each McCourt has hired floor-fulls of lawyers and accountants to fight the divorce. Remember: the Dodgers are ultimately paying for all this, because neither McCourt has any other source of income.

How much have the McCourts managed to extract from the Dodgers? Well, if we ignore the debt the Dodgers took on so that the McCourts could buy the Dodgers but include the McCourt salaries, the McCourts have withdrawn from the Dodgers anywhere from $109 million (Frank McCourt’s estimate) to $141 million (Jamie McCourt’s estimate). The truth is, the real amount the McCourts plundered from the Dodgers may be more than $141 million – at the moment, all we have to go on is what each McCourt has been willing to admit to.

(In case you were wondering, during their ownership of the Dodgers the McCourts have paid not one penny in income tax.)

How have the McCourts managed to extract money from the Dodgers in addition to their salaries? The Dodgers do not earn enough money after expenses (including revenue sharing) to pay for all this (particularly since the Dodgers must ultimately fund the interest payments on the debt borrowed by the McCourt enterprises). Once again the McCourts made use of the Dodgers’ “credit card”.  Whatever money the McCourts needed, the Dodgers borrowed for them.  To facilitate this borrowing, Frank McCourt blew up the Dodgers into 20-odd separate businesses. The Dodgers’ organization chart looks like this:

The Dodgers team is owned by a company called TeamCo, which in turn is owned by four other companies, the last of which is owned by Frank McCourt. If you follow a different branch of the enterprise tree, you’ll find Blue LandCo, the company that owns the Dodger Stadium parking lots. Blue LandCo owns these parking lots because McCourt caused the Dodgers to give these parking lots to Blue LandCo. The Dodgers got nothing for this give-away, but they now pay anywhere from $6 million to $9 million a year in rent for these parking lots. With this rental stream as security, McCourt was able to borrow somewhere between $60 million and $70 million through Blue LandCo, most of which went to “fund the lifestyle” of the McCourts.

In similar fashion, LA Real Estate, LLC (RealCo) owns Dodger Stadium, because McCourt caused the Dodgers to give the Stadium to RealCo. The Dodgers now pay rent on a Stadium they used to own outright. In all likelihood, RealCo has borrowed money, too.

The most significant of these give-aways is one in favor of Dodgers Tickets, LLC, the company that borrowed the $250 million I mentioned above to finance the team purchase debt. Dodgers Tickets, LLC has since borrowed an additional $140 million to fund both Stadium improvements and McCourt family “lifestyle” expenses. Dodgers Tickets, LLC owns the Dodgers’ right to sell tickets to Dodgers games. These rights have in turn been pledged to the lenders who funded the $390 million of aforementioned debt. In all likelihood, the Dodgers’ tickets proceeds now flow into a “lock box” account controlled by these lenders – the Dodgers probably see none of their own ticket revenues unless and until the demands of these lenders have been satisfied.

Confused? In a fundamental sense, all this is simple to understand. The only thing on the above chart that generates money is the Dodgers. Nearly everything else on the chart feeds off the Dodgers. In turn, the McCourt family feeds off the chart. Frank McCourt likes to refer to his “overall businesses” – for example, McCourt claims that his $5 million annual salary “wasn’t from the Dodgers, but it was from my overall businesses.” But McCourt’s “overall business” is the Dodgers.

The McCourts lived very nicely off the Dodgers for a number of years, but eventually the Dodgers “credit card” had to max out. However, no one expected the card to max out so suddenly. At an early point this year, it became apparent that Frank McCourt was struggling to meet the team’s payroll. He borrowed $55 million from Fox to meet the team’s expenses through April. He got sponsors to pay their sponsorship fees in advance, at a discounted rate (once again, McCourt mortgaged the future to pay for the present). He tried to sell Time Warner the naming rights to Dodger Stadium. As McCourt has scrambled, the team’s debt has climbed, reportedly to $525 million. But in truth, we don’t really know the full extent of the debt owed by the McCourt enterprises, any more than we know the amount the McCourts have withdrawn from the Dodgers over the years.

We also don’t know why the Dodgers are suddenly so cash-strapped. McCourt has said publicly that the team had scheduled “capital requirements” – this is probably a thinly disguised reference to some requirement to pay back debt. We know that McCourt has been trying to raise money since the middle of last year, possibly to refinance debt that was about to come due. But Bank of America turned down his request for a $125 million loan. A bank in Beijing would not agree to become a private equity investor in an “international sports partnership” that would have included the Dodgers. McCourt’s last hope is the proposed deal with Fox.

But the Dodgers’ financial woes can be understood in a different way. McCourt has systematically stripped the team of much of its value – the team no longer owns its Stadium or its parking lots or even its ticket revenues.  The Dodgers don’t have much left in the way of revenues: just the sponsorship income and whatever Bud Selig allows the team to extract from Fox.

But the Fox deal is not a good one for the Dodgers. As Maury Brown pointed out over at bizofbaseball.com, the model Fox TV deal is the one Selig approved last year with the Texas Rangers, with a cash up-front payment that the Rangers used exclusively to sign ballplayers and fund capital improvements. McCourt’s deal with Fox is a different animal. Brown states it simply: under the proposed deal with Fox, “money that should be going to the Dodgers funnels into the divorce.” That is, unless Selig blocks the Fox deal, as he should do.

Blocking the Fox deal will not be easy for Selig, as McCourt is not likely to go quietly. If Selig seizes control of the Dodgers, McCourt will almost certainly challenge this action in court. At this moment, I’m not entirely certain about the grounds for such a lawsuit – most likely McCourt will claim that Selig is exercising his power in violation of an implied covenant of good faith and fair dealing. McCourt will claim that he’s being singled out unfairly, in effect that other teams (i.e., the Mets) have also been run into the ground by their owners. The thinking in some quarters is that Major League Baseball will have to release heretofore confidential financial information in order to defend this suit, and that the released information could be used by the baseball players’ union as ammunition in upcoming labor negotiations.

If this strategy doesn’t work, McCourt has other legal options. McCourt could drag the Dodgers into bankruptcy. Or McCourt could allow Selig to run and eventually sell the Dodgers’ team, while McCourt retains ownership and control over Dodger Stadium, the Stadium parking lot, even the Dodgers’ ticket revenues.  What would the Dodgers be worth if they were sold apart from these key assets? Who would buy the Dodgers if doing so meant becoming McCourt’s tenant?

Selig may be tempted to throw up his hands and walk away from this mess, leaving Frank McCourt as owner of the team (at least until Judge Gordon decides if the team is community property) and the Dodgers to their fate. But if he does so, a precedent will be set. Baseball team owners will be able to thumb their noses at the Commissioner’s office, incur debt exceeding baseball’s rules, and loot their teams for whatever they might be worth. Every baseball team will reorganize its ownership structure, so that the team’s most valuable assets are owned by outside companies, and the team itself is just a shell consisting of player contract liabilities and other obligations. The next Commissioner who wants to suspend a George Steinbrenner or force out a Marge Schott will have to do what Selig was unwilling to do, and prove his case in court.

Moreover, we should not expect that version 2.0 of Frank McCourt’s ownership will be any different from version 1.0, even if Jamie McCourt loses her claim to Dodgers ownership and disappears from the picture. Frank McCourt may promise to scale down his lifestyle, but remember that his idea of a scaled-down lifestyle is to live in a suite at the Montage Hotel. Per the court-approved settlement proposal, Jamie McCourt will walk away with all four L.A. mansions; Frank McCourt is going to need an appropriate place to call home when all this is over. Frank McCourt may say that he can be trusted, but in May he stated “that all of the proceeds from this transaction with Fox would be put into the team and … none of them would be used for my personal situation however you want to define that.” McCourt claims that he made this promise to the Commissioner’s Office – it took him less than two months to break this promise. We can bet that other promises will be broken if McCourt is permitted to retain ownership of the Dodgers.

If Selig approves the Fox deal, then the amount extracted by the McCourts from the Dodgers will more than double, to over $200 million, not including the debt incurred by the Dodgers that allowed McCourt to buy the team in the first place. (Steve Dilbeck at the L.A. Times has analyzed the proposed settlement and concluded that the $80 million debt payment would go for Frank McCourt’s personal use and would not benefit the Dodgers. So per Dilbeck, the Fox deal would bump the McCourts’ withdrawal of Dodger cash to around $300 million.)  But the McCourt looting of the Dodgers will not end with this Fox payment. Under the proposed divorce settlement, if Judge Gordon awards ownership of the Dodgers to Frank McCourt, Jamie McCourt is entitled to an additional $45 million payment within two years. Until Jamie McCourt is paid in full, Frank McCourt is required to pay her millions of dollars in additional support. Where will this money come from? From the Dodgers, of course: the Dodgers are Frank’s McCourt’s sole source of money. If Frank McCourt is permitted to control the Dodgers going forward, then we can be sure that an additional $50 million or so will be withdrawn from the Dodgers to make the final payments owed by Frank McCourt to his ex-wife.

The looting of the Dodgers may not end with these payments. Remember that the proposed Fox deal would pay over $200 million up front to the Dodgers. What stops McCourt from withdrawing that money for his personal use? For that matter, what prevents McCourt from borrowing additional sums against the new Fox contract, effectively mortgaging the Dodgers’ future for additional “lifestyle” cash? What, in fact, prevents McCourt from bleeding the Dodgers dry, to the point where the team (once again) will struggle to make payroll, and the Commissioner’s office (once again) will have to intervene to make things right?

When do we, as baseball fans, have the right to say “enough”?

Only one thing prevents Frank McCourt from looting the Dodgers until nothing is left, and that is the power of the office of the Commissioner of Major League Baseball. Bud Selig will never have a better opportunity than he has today to exercise his power. He must reject the Fox contract, seize control of the Dodgers, sell the team to a responsible owner, and leave the McCourts to their lifestyles. His legacy as Commissioner is at stake. He should do what’s right, and say “enough!”

Larry Behrendt covers the financial and economic side of baseball for It’s About the Money, Stupid! You can follow Larry on Twitter, and follow IIATMS on Twitter and Facebook. This post was originally published on 6/20/2011.

87 thoughts on “Frank McCourt Must Go (UPDATED)

  1. jay_robertson

    I did not know ANY of the above…Excellent work and Thanks.

    • LarryAtIIATMS

      Thanks Jay. Any time I read a NYer complain about the Wilpons, I shake my head and think "if only you knew!"

      • David

        At least when I complain about the Wilpons, I know in my head/heart that the McCourts are worse! :D

    • Midwest guy

      The parking lot beatdown should have been on McCourt with all Dodger fans watching and helping as needed. Not a fan of the Dodgers as I am a midwest guy but still go to Dodger games for love of the sport. Even if only 1 percent of the above is true its enough to remove McCourt from baseball permanently.

  2. Marty

    Wow – this is really well written and makes this entire situation with McCourt a lot clearer for me than it ever had been. Thanks!

    • LarryAtIIATMS

      You're welcome Marty.

  3. Kudos, Larry. This is the most cogent, compelling explanation of the McCourt con I've read up to this point. Leverage everything to the gills and bet on a bailout. Is that what passes for a business model?

    • LarryAtIIATMS

      By one description in the divorce trial, McCourt regarded the Dodgers as something like a parking lot. The idea is to leverage the equity in the parking lot for living expenses, tax free naturally, maybe develop the lot (in his Boston days, McCourt was a "developer" who talked a lot but developed very lttle), then flip it in a tax-free exchange for something else and repeat the process. Naturally, this requires property values to rise at a rate faster than the developer's cost of living.

      McCourt's ultimate plan was to develop the land around Dodger Stadium (he picked up quite a bit of undeveloped land when he purchased the Dodgers), perhaps build LA's long-sought after pro football stadium there, otherwise something like LA Live at the Staples Center. Also he had plans for his own version of a west coast regional sports network, and a group of sports teams like Henry et. al. seem to want to build in Boston. None of this came to pass, or will ever come to pass. Even if Selig decides he has to learn to live with McCourt a while longer, it will be damn near impossible for McCourt to attract another equity investor or business partner.

      • In your research, have you found any suggestion of legal recourses? I don't know who the plaintiffs would be, but raiding the company coffers for personal expenses is, at least theoretically, toes the line between ownership and embezzlement. Obviously, McCourt has been cagey enough to cover his tracks in many ways, but, as you said, when recession hits, that is usually when frauds get exposed, because there is no longer enough liquidity to disguise the various bezzles (see Madoff, Bernie). If Selig does agree to open up MLB's books, which I expect are something of a Pandora's Box anyway, is there any chance McCourt not only faces bankruptcy, but perhaps criminal charges as well?

        • LarryAtIIATMS

          Hippeaux, the McCourt Enterprises are mostly a series of single owner limited liability companies. It all boils down to Frank (or Frank and Jamie as community property) owning everything outright. Frank can't embezzle from himself. If you're looking for legal liability, and I'm not saying there IS any, there are two places I'd think to look: tax fraud, and McCourt defrauding his lenders.

          • Thermhere

            "Fraud" is the wrong word when talking about McCourt's actions and lenders, but I think it is extremely likely that he broke a ton of covenants contained in those debt commitments

          • LarryAtIIATMS

            Thermhere, it's also possible that some of McCourt's representations and warranties weren't 100% correct. But to stress, we have no evidence of any fraud against lenders.

          • thermhere

            True, some of his reps might have been knowingly false.

          • mpn213

            This speculation you are doing is BS. You are all begging the question, that is. "I know he's a crook, so he must have committed crimes."

  4. jetfaninla

    Really good article. Great recap and I found out things I didn't know, such as that the parking lot, stadium, and ticket revenue deals.

    I do have to say though that my favorite (meaning most hated) McCourt expense was when they had a 71 year old Russian pyschic, who lived in Boston and knew nothing about baseball, on the payroll from 2004-2008 to send good vibes to LA (and I want to say that they paid him 6 figures each year).

    • LarryAtIIATMS

      Forgot about that one. Vladimir Shpunt, a psychic now living in Boston, and a guy with three degrees in physics (supposedly). But technically, that was not a McCourt family expense. The Dodgers paid for that one. I don't think the amount of the payments was ever disclosed.

      • The Dude Abides

        The best part of the Vladimir Shpunt saga was the fact that the Dodgers had a promising young outfielder who had an excellent 2004 season but hurt his wrist at the start of the 2005 season. He had surgery, but it didn't heal properly. So he wanted to go get a second opinion from a wrist and hand specialist at the Mayo Clinic. The McCourts refused to grant him permission, saying they wouldn't pay. They suggested that the promising young outfielder visit Vladimir Shpunt to see if Shpunt could use his psychic powers to heal the wrist. The outfielder refused and was about to take the team to court when they relented. He had surgery again at the Mayo Clinic, and the team released him. This outfielder's name is Jayson Werth, who would look pretty good in an outfield with Matt Kemp and Andre Ethier.

  5. DSinSoCal

    Excellent work, Larry. You did a great job making sense of the jumbled mess McCourt has created with this team. I thoroughly enjoyed the article.

  6. scareduck

    Great piece. Especially I like the catch on McCourt saying he'd use the entirety of the Fox TV revenues for the Dodgers earlier, and then turning around and allocating carve-outs to rectify his divorce. This was wholly predictable; I don't remember believing a word of it after word of Frankenjamie's looting of the team was brought to light by the divorce proceedings. This pair needs to be booted out, and hopefully, sent on the next flight back to Boston, preferably in the luggage hold.

  7. John

    Great piece Larry. As usual. What this brought to light for me is how much excess wealthy people have. Think about all the good the McCourt's could have done with the millions they spent on mansions, vacation homes, and personal hairdressers. How many lives could they have changed for the better? Hundreds? Thousands even? It's a total disgrace.

    • LarryAtIIATMS

      I read one report where one of the 4 McCourt houses is used exclusively by Jamie to do the laundry. Not sure if I can take that report seriously.

      I'm not trying to judge the McCourts as people. Just as owners, hopefully past owners, of the L.A. Dodgers. But the McCourts have laid their lifestyle open for everyone to see, and that lifestyle is an ugly sight. Thanks for your comment!

      • berkowit28

        Swimming only. Not laundry. It has a better pool than her other houses do…

  8. Matt Koehne

    This is a lot like how Mayor Daley ran Chicago for the past 20 years. Great piece.

  9. Damien

    Excellent work Larry. As a lifelong Dodger fan who was introduced to the team by my grandfather, I am truly grateful for the work you put into this piece. Outstanding! This piece should be the bilble for anyone who wants the McCourts removed as owners. These are the facts and we should confront anyone who thinks we should cut the McCourts some slack.

  10. Chas

    This is just unbelieveable what Frank ‘Parking Lot’ McCourt and his jeezabel ex-wife have done to the Dodgers…I live in LA and knew from day one this man had no money to buy and run ‘ANY’ major league team period!…But, he turned this in to a ‘shell corporation’ that makes what Bernie Madoff did look like child’s play….One more thing about ‘Fast’ Frank is he has gone on record and lied to the media and fans about what he is ‘going to do’ and ‘what he really is doing’ regard to the Fox money and running of the Dodgers….MLB must strip this team from this scam artist…..

  11. I fail to get my head around one line in particular:

    the needs (estimated at over $2 million a month) of the McCourt family.

    Wow.

  12. Damian

    Excellent, very clearly written, post. Any analysis of the McCourt situation would be very much appreciated.

    It's amazing to me that the purpose of owning the Dodgers for the McCourts was neither to win nor to profit. As fans of the Yankees, we can see that the Steinbrenners appear to be dedicated to both. Some other owners seem to care only about profit margins. The McCourts, however, in what appears to have been a state of delusional ecstasy, used their ownership of the Dodgers for anything but winning or profiting–profit in the real wealth-accumulation sense and not the "i just used corporate funds to buy a $10MM mansion to use exclusively for swimming" sense.

    • LarryAtIIATMS

      There's something insane about the whole McCourt story. It's hard to see how they thought they would manage to sustain it all. Also one of the great what-ifs: what if Frank and Jamie had stayed together? How much of this mess would have come to light? Would the new Fox deal have snuck in under the radar? Thanks for a great comment.

  13. LarryAtIIATMS

    I am on airplanes today, and if I do not get a chance to thank each of my commenters personally, let me thank you as a group. I think I'm lucky to write for the audience here.

    Now to see if I can get wifi on the next flight …

  14. Kyle

    Great article. Clearly states the situation at hand. Frank McCourt is a theif, fraud and a genius. Privatizing the parking lots, stadium and ticket sales has to be the most shady cunning move id ever seen from a lawyer. Ridiculous.

    Either way thanks for the awesome read.

  15. ChipBuck

    Larry – This is easily one of the top three or four articles I've read all year. For someone who always has something to say about everything, your articles somehow always manage to keep my speechless. Thank god Selig had the brains to shut down the McCourts once and for all.

  16. Matt

    Well done story. Hopefully the McCourts can be stripped of the Dodgers franchise and run out of town as quickly as possible.

  17. Justin

    Good article !

  18. Mark

    Are there any legal options available for MLB to tie the parking, ticket, etc. companies to the Dodgers? I can't believe that McCourt would be allowed to sell the team, yet keep two of their major sources of revenue.

    • LarryAtIIATMS

      There are some expensive lawyers rolling up the billable hours trying to answer your questions. The truth is, no one really knows what will happen from here. You can read the Yankee Stadium bond prospectus, where these issues are discussed for PAGES. The prospectus reached the conclusion that the MLB Commissioner has broad powers, and no one knows for sure how far they reach.

      It's a chess match from here: if White moves his bishop, Black can counter with her knight. Both sides may threaten to put this mess into the bankruptcy courts. No one knows how this is going to work itself out.

      • MattR

        I've heard that if MLB stepped in to take control, they would take all operations that were sold to the McCourts in the original deal. This would include the stadium, parking lots, etc. I was worried about the same thing too, but upon hearing that I was reassured that my team will one day be back on the road to success.

        On a happier note, great game by Kershaw tonight…a 2 hit shutout. We still have some things to cheer about.

        • LarryAtIIATMS

          Matt, don't count on it being that easy. Josh over at DodgerDivorce.com calls the asset split-up a "poison pill", and I think he's right. MLB will certainly try to put this Humpty Dumpty back together again, but Frank and his lenders may resist.

  19. Josh@IIATMS

    Larry this is awesome. Makes me kind of angry though, this situation is ridiculous.

    • ChipBuck

      I agree Josh. It's unbelievable that MLB has stood by and allowed a once proud franchise to be looted by carpetbagging parasites. There's not a day that I'm not thankful McCourt lost out in his bid to by the Red Sox.

      • LarryAtIIATMS

        Chip, no argument that MLB and Commissioner Selig made some huge mistakes that allowed things to get this far. But the league is simply not set up to oversee the operations of all 30 teams. Plus, Selig is going to lose the support of the other 29 owners if he intervenes too heavily in the way teams manage their operations.

    • No kidding, I couldn't read it all at once because a couple times I found myself feeling very angry and kind of nauseous. This is so disgusting on many levels.

      Thanks for the great overview Larry!

  20. Joe

    "What would the Dodgers be worth if they were sold apart from these key assets? Who would buy the Dodgers if doing so meant becoming McCourt’s tenant?"

    A ownership group out of Brooklyn who would no longer be his tenant.

    • LarryAtIIATMS

      That might require breaking leases and other contracts. That might require the league to put the team into bankruptcy. Not pretty.

  21. Thermhere

    This is pretty incredible, but the one thing I would take issue is saying that Frank McCourt bought the Dodgers with none of his own money.

    That's simply not true. Those parking lots had real value, apparently around $70 million in value. So he totally overlevered the team, and plundered it as well. I think we all agree on that.

    He did put up SOMETHING in return though – and I think you're smart enough to know that parking lots, especially downtown lots, are far more valuable than worthless.

    • LarryAtIIATMS

      McCourt gave up some VALUE for the Dodgers. But no cash.

      • Thermhere

        That's a fair thing to say. Agreed.

    • Matt

      But weren’t the parking lots he put up saddled with debt as well?

  22. BMT

    and what is the status of the IRS and Cal AG investigation of the Dodgers Dream Foundation? I call the foundation, which refers me to PR who refuses to get back to me. I want to know if the McCourts are still officers of the foundations affiliated with the team's name

    • LarryAtIIATMS

      uggh. That could be yet another weekend lost to trying to figure out All Things McCourt. My understanding is that the IRS is conducting a routine audit. I don't know where things stand with the California Attorney General.

  23. Todd

    This is outstanding work.

  24. Russ

    I wonder if I can convince MLB to allow me to buy a team using the team's own future money if I promise to keep my personal expenses under a million a year.

    • LarryAtIIATMS

      How are you fixed for parking lots? ; ^ )

  25. visnovsky

    If the entire Dodger operation can't be pulled from his rotten hands, this is my hope. The Dodgers temporarily leave Dodger stadium causing all of McCourt's enterprises to go bankrupt with no revenue stream. The new owner can then buy back the assets from the creditors with McCourt penniless.

    • LarryAtIIATMS

      There are people in the MLB front office who, in all probability, are now considering scenarios only a bit less drastic than this.

  26. stratobill

    I too thought this was a superbly well-done article. It's really a shame to see the Dodgers used as this jerk's personal ATM machine.

    Selig announced today that he is not going to approve the deal with FOX. This is one of the few things Selig has ever done that I approve. But before we give him too much credit for doing the right thing we need to remember that it was under Selig's watch that this McCourt guy was allowed to buy one of baseball's crown jewel franchises and to do so with highly questionable leveraging. Under Selig's watch we've also had the Rangers near bankruptcy, the Wilpon's relationship with Maddoff, the gutting of the Expos by Loria, etc etc.

  27. sanford Sklansky

    Very comprehensive, But Sports Illustrated also had a pretty comprehensive article last year that covered many of the same points.

  28. Gooner4

    Fantastic work. I've also been a fan of the Dodgers since I was a kid. I decided that I would not support the team, buy any merchandise, attend games or even acknowledge Dodger baseball until Frank is out. I really hope Bud can make the right decision and make all us Dodger fans extremely happy. keep up the good work.

  29. Bob

    Asset rich and cash poor?

    True story. Sitting in a meeting in 1988 between Frank and Jamie, and Jamie's dad Jack Luskin, Baltimore local sleazy appliance magnate. The meeting was between the aforementioned 'owners' of Baltimore's Fishmarket, soon-to-be nightclub/restaurant complex, and the management company hired to run said operation, Opryland USA. I was the Director of Operations for Opryland for the project.

    Item at the meeting: the diner ordered for the complex was sitting on a flatcar in NJ; the builders weren't sending it until they were paid (perhaps they knew Frank's reputation.) We let Frank know that since we were opening in six weeks, it would be good to get the other half of the major restaurant side of the complex in place so we could train staff, etc. Frank sits there listening. Finally he says, 'Why do we need the diner? We have the Fishmarket Grill, right? We can put the diner in later.'

    I see my career flashing in front of my face; I had moved from Ohio to Baltimore just for this project; I was expecting it to be my next step towards becoming a theme park Operations Director.
    "Frank," I said, "We have to have the diner. We're going to have 2,500 people in here every weekend night. I've got to have more than 180 chairs for them to sit in and eat. The alcohol control people have regs on the ratio of dining to drinking outlets in the facility. Without the diner, we can't open the doors. It's pretty much that simple."

    Frank adjusts one of diamond rings and looks across the table at Jack Luskin, who wordlessly nods. Frank says, 'Okay, we'll get the diner."

    After they left the meeting, I looked at the comptroller and said, 'We're doomed.'

    Opryland paid the bills for 90 days per the management agreement, and then turned things over to Frank. Calls from unpaid vendors started shortly thereafter. Opryland had a lot at stake, and Frank knew it, but when Opryland asked Frank for a million dollar guarantee to be repaid in exchange for paying the bills for a year, Frank either wouldn't or couldn't do it, and Opryland closed the doors less than a year after opening them.

    Nothing's changed, obviously.

  30. Rice Lynn Evans

    Incredibly insightful article. One gnawing question for the author or anyone else in the know. MLB had approval/veto power over the Fox TV deal. Makes sense. But MLB does not have to sign off on all the business dealings that led to this calamity? The breakup of the Dodgers into distinct legal entities? The ability to borrow money through these entities recklessly and with impunity? How did any of these shenanigans escape the "best interest of baseball" mantra? Shame on MLB as much as the McCourts. More importantly, what is to prevent this from happening again elsewhere? It's inevitable…

    • jaytrain

      Hopefully the best interest clause allows MLB to unwind these "deals". And even more hopefully the IRS tags this mutt for tax evasion : $600,000 to go to college and the kid at Goldman should pick a new line of work . What mutts . BTW , I totally and always have hated the Dodgers , but their fans don't deserve this .

  31. escalade05vt

    It's too bad they didn't let him buy the Red Sox and run them into the ground. I think the Dodgers need a guy like Mark Cuban though I can't see the Selig letting him in. After this whole situation thats the kind of owner the Dodgers need though. Someone who will be hands on, care about the team, and make winning a priority again.

  32. Chad Thomas

    Awesome article!

  33. kulaid

    I feel for Dodger fans, but the guy owns the team. If he wants to run it into the ground and lose all the value so that he eventually has to sell it for pennies, then that's his right. If the guy is a sleazy businessman and had no other source of income, how did he buy the team in the first place? That's where the problem lies. Selig allowed the original sale to this guy and now he's got to fix his mistake. And it does suck for all the Dodger fans (and I was a big Dodger fan growing up in New Orleans cause we had no other team)

    • Matthew

      Actually, it isn't really his right. That's the thing about franchises. If you mess up, the franchisor can take it away from you because the harm extends past the individual store/team, and affects the entire company/league. If you mismanage a McDonald's franchise, for example, the company can simply terminate your franchise. I can only assume that MLB has retained substantial authority over its franchises. That's part of the Commish's "best interests" power. And yes, MLB did mess this up by selling to them in the first place. Side note: McCourt tried to buy the Angels when Disney was selling. Disney took one look at his finances and said no thanks, and took Arte Moreno's cash deal instead.

  34. Yosh

    Larry, great work, I'd love to see you do a similar piece on how MLB blundered by letting McCourt buy the Dodgers in the first place. Specifically, MLB accepted a faulty appraisal on the Boston parking lots, this appraisal MLB accepted was roughly double two other appraisals. The details of these appraisals came out during Frank's divorce testimony. MLB needs to admit their own role in this disaster, namely not vetting the appraisal of Frank's parking lots
    Frank is a crafty guy, he managed to deceive MLB and buy the Dodgers with no money down. He could put out an infomercial on how to buy sports franchises with no money down

  35. Charlie J.

    Thank you, Larry. Great article. I am a Dodgers fan, and it was really hard for me to explain it to some people, why we need to get rid of that crook /a.k.a. McCourt/. Your writing will help for sure. Although my number 1 point is: He is a Red Sox fan! Ship him back to Boston!! He has no /moral/ right to own the Los Angeles Dodgers period!!! I used to go to a lot of Dodgers games for years. But this year, everytime I think about giving my dollars to the McCourts, the answer is no. If we all do our parts, hopefully we will get rid of him. Mr. Selig please help us!!!

  36. Tom

    Brilliant, brilliant piece of work. Fantastic job, sir.

  37. Rick

    Totally agree that it's a great article that demands a follow up on the circumstances of the original approval by Selig. It was widely reported that a key to approval was McCourt's assurance that he would keep the payroll down, despite the Dodgers' attendance and lucrative market.
    As for McCourt's threats to sue MLB for the right to continue plundering away, if he can't get the case out of Los Angeles, he'll get his greedy head handed to him.

  38. Eddie

    This should be on the front page of the LA Times.

  39. Skip

    I feel really bad for Donnie Baseball. What is the contractual obligation that the team will have to the other McCourt businesses if Selig is able to sell the team? If they were going for a 17 year contract with Fox Sports, I'm assuming that these other contarcts are long term as well.

  40. Andy

    Remember what happened to Louis and Marie Antoinette, Frank?
    Choppy choppy

  41. Clint

    Why did the MLB allow the donations of a parking lot or ticket rights in the first place? It sounds utterly ridiculous. I would have a problem with it as an employee let alone the MLB.

  42. The Dilemma

    Great piece, but this is not "the defining moment" of Selig's career. That happened when he allowed the World Series to be cancelled on his watch. Nothing he ever achieves or ruins can compare to that.

  43. JRB

    As good a business article as I have ever read. I am a CFO of a wealthy real estate developer and I have met several "Frank McCourts" in my business career but none of them match this guy (and his wife).

  44. mpn213

    Nice synopsis, but you are crucifying this guy for simply spending more than you think he should on himself, and THAT IS IT. Meanwhile, the Mets are in enormous financial trouble and are owned by a guy who may turn out to be an accomplice to Madoff,…but he's somehow nicer than Frank and so gets a pass in terms of the personal attacks from you and outright discrimination on the part of Selig. <div style="display: block; margin: 6px 0pt 0pt;"><a class="a2a_dd" href="http://www.addtoany.com/share_save"><img src="http://static.addtoany.com/buttons/share_save_171_16.png&quot; alt="Share/Save/Bookmark" border="0" width="171" height="16">

  45. Guest

    Great article, although I think seizing the team doesn't go far enough. We need to bring back debtor's prisons and have McCourt be an inaugural inmate.

    • LarryAtIIATMS

      Ah, a thumbs up for the used-to-be-obligatory reference to debtor's prison. The absolute best way ever invented to make sure a deadbeat could never pay up!

  46. Well, McCourt bought the team in part on MLB's credit card. Bud is partially to blame for this in the first place.

  47. Great Stuff

    Great stuff

  48. Alan Z

    Dodger ticket-$40
    Parking at Dodger Stadium-$15
    New Ownership-Priceless

  49. Terry

    I'm a lifelong Dodgers fan and this article broke my heart.

  50. JCW

    Words don't come close to describing how utterly nauseating this saga has become. As painful and ire inspiring as it is to read the ugly details, I'm thankful for this piece and for better understanding it all. Great job.

    Also, I have to second the poster that suggested that this be on the front page of the LA Times. Would love it if every sports fan in the Southland read this.

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