Category Archives: Frank McCourt

Frank McCourt Will Haunt Your Dreams Until The Last Possible Second

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Ever since news broke that Frank McCourt had finally agreed to stop fighting MLB and sell the Dodgers, we’ve been somewhat cautious in our jubilation. Sure, the idea that there might finally be a light at the end of the tunnel after the years of litigation and embarrassment was fantastic – but who among us actually trusts this man to do anything he says? It’s massive distrust like that which makes hysterical conspiracy theories like this one actually seem viable. While the idea put forward there that McCourt might actually just be playing a long con to keep the team through the court system was probably never close to realistic, we’ve always been concerned about the provision in his agreement with MLB that allows him to keep the parking lots around Dodger Stadium, if he so chose. (You can chalk that up to sin #2 on his large list of offenses, splitting the team and property into a variety of different entities, thus allowing him to claim that the parking lots weren’t under MLB’s overview.)

It’s this potential pitfall which serves as the focus of the first of two ownership-related Bill Shaikin stories in the Los Angeles Times today:

The Dodgers are in bankruptcy, but the McCourt entity that controls the Dodger Stadium parking lots is not. In order to get McCourt to sell the team without a round of litigation over the parking lots, Major League Baseball agreed to grant him “sole and absolute discretion” over whether to keep or sell the land.

The agreement stipulates that prospective buyers “may submit bids that include the purchase of the parking lots.”

If the lots are not sold with the team, the new owner would lease them from McCourt for $14 million a year. The annual lease payment would rise in 2015, and every five years thereafter.

As Shaikin goes on to detail, there’s competing schools of thought on this, one side claiming that McCourt is just using this as a tactic to drive the price up, and the other suggesting that he’d attempt to develop the land in an effort to further bolster his bank account and restore his horrible local reputation. My gut feeling is that McCourt probably will sell the lots, take his hundreds of millions, and wipe his hands of the entire thing, but until every last contract is signed I won’t stop worrying that we’ll never actually be rid of him. And who would actually want to go park in the lots, knowing that the cash you hand to the attendant would go right to McCourt?

Shaikin also follows up with news on a few of the potential groups we looked earlier this month, suggesting that Peter O’Malley’s group might team up with the Stanley Gold / Disney family group to make a bid. That’s mildly interesting, but here’s something a bit more juicy:

Also Wednesday, federal agents arrested Jon Horvath, a New York technology analyst; he is charged him with insider trading. The Wall Street Journal reported that Horvath works at a division of SAC Capital Advisors, whose founder Steven Cohen is bidding for the Dodgers.

Two former SAC fund managers have pleaded guilty to insider trading charges, but this is the first time such charges have been leveled against a current SAC employee, according to the Wall Street Journal. Horvath’s attorney said his client has done nothing wrong.

Neither Cohen nor his firm has been charged. Still, the development is particularly ill-timed for Cohen, as Major League Baseball conducts investigations on potential Dodgers bidders. The league has agreed to approve up to 10 bidders, after which outgoing owner Frank McCourt will select the winner.

Despite possibly being the most wealthy bidder in the field, I’ve been pretty pessimistic about Cohen from the start. Here’s to hoping this news torpedoes his candidacy before it even gets started.

For Potential Dodger Owners, How Much Is Too Much?

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Somewhat lost in all the ownership hoopla of the last few days was this interesting tidbit buried in Bill Shaikin’s Saturday Los Angeles Times story on Stanley Gold & the family of the late Roy Disney potentially teaming up to bid on the team:

With Fox Sports and the Dodgers still in litigation, a mediator recently broached the idea of Frank McCourt selling the team to Fox so that McCourt could get a guaranteed sale price and Fox could secure the Dodgers’ long-term television rights, according to a person familiar with the talks.

Under that plan, Fox then would have facilitated a sale to another party, but the trial balloon was shot down over the potential price McCourt might accept to forgo an auction. According to the person familiar with the talks, Fox proposed a price in the range of $1.2 billion, McCourt proposed a price in the range of $2 billion, and neither side expressed much interest in meeting halfway.

Dodgers spokesman Robert Siegfried and Fox spokesman Chris Bellitti each declined to comment on the mediation. Bellitti, however, wanted to make one point clear on behalf of Fox.

“The company has no interest in ownership of the Dodgers,” he said.

Let’s say that this is true, and while we can’t know for sure that it is, Shaikin’s reporting has rarely been wrong throughout this whole ugly saga. If this is information is accurate, it could be an early indication that the sale price of the team might be quite a bit higher than any of us had originally thought; for some time, the prevailing public opinion (at least in my view) has been that the team and stadium could fetch between $1-1.2b. Now it seems that McCourt may have turned his nose up at a real, not just perceived, offer of $1.2b; as Shaikin notes earlier in the story, McCourt may think somewhere around $1.6b is doable. ESPN’s Buster Olney looked at the heavyweights involved and went further, suggesting that the sale price could be somewhere close to two billion dollars.

If that sounds like an obscene amount of money, well, it is. If you had two billion dollars in singles and stretched them end-to-end from here to the moon… you’d still have an absolutely ludicrous amount of money despite having wasted so much of it an unnecessary example of your wealth. To date, the largest sale price in MLB history is the $845m the Cubs (along with Wrigley Field) were purchased for in 2009, and that also included a 25% piece of Comcast SportsNet Chicago. I think you can certainly wonder if the Dodgers are really worth potentially twice as much as the Cubs went for, because while there’s no doubt that the Dodgers are a crown jewel of Major League Baseball, it’s not like the Cubs are exactly the Charleston Chiefs. I get that there’s Hollywood money and the appeal of looking like a savior to rescue a devastated franchise, but even so, that seems like an enormous leap in franchise valuation.

On its own, that doesn’t really bother me so much, other than the fact that McCourt probably gets to walk away from this being richer than ever. If that’s the price the market will pay, then that’s what it will pay, especially when the latest potential bidder, Thomas Barrack, can only be described as “cartoonishly rich”. (No, really, just look at the final section of his Wikipedia page: “As of September 2011, he is the 833rd richest person in the world, and the 375th richest in the United States, with an estimated wealth of US$ 1.1. billion. He owns a Gulfstream IV and lives on a 1,200-acre mountain ranch near Santa Barbara, California. In the summer, he lives in a castle in the South of France.” A castle!)

But I think it’s worth asking, what comes next after that kind of outlay? It’s not as though you purchase the team and then that’s the last check you ever have to write, especially if you want to win fans back with increased player payroll and stadium upgrades. That’s a whole lot of money, enough that even Thomas Barrack – shown at right – couldn’t afford to do it on his own. In order to make this work, the new owner is going to have to come up with the funding needed to purchase the team plus likely have dozens or hundreds of millions available beyond that. And most importantly, we’re going to need to make sure that this deal isn’t over-leveraged on debt, which was the mistake that got Frank McCourt into all this trouble in the first place. Obviously, a big appeal of buying the team is expecting the riches you’ll get from a new television contract, though that’s not necessarily an immediate income.

There’s always a bright side, and in this case, it’s a significant one: it’s hard to believe that a new owner would spend all this money to get the club and squander all that goodwill by not spending to improve the team. While it’s all but certainly not going to come in time to get Prince Fielder, we could see that influx coming by the July trade deadline or at the latest by next winter’s free agent market. It’s just another info point we have to keep in mind when observing the bidding process; simply being “a billionaire” might not be enough.

Blake Hawksworth Set For Shoulder Elbow Surgery

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Dylan Hernandez reports:

Dodger right-hander Blake Hawksworth will undergo arthroscopic surgery tomorrow on his right elbow to clean up scar tissue and a spur.

No word yet on whether this is something that had been bothering Hawksworth for a while that he’d been unable to get past or if it’s something new, though I’m inclined to speculate that it’s the latter because of the timing and because Hawksworth’s only injury during 2011 was the hip problem that landed him on the disabled list. While we can’t know for sure, don’t forget that after a relatively solid first half, he was so poor at the end of the year that we often wondered if he was hurt:

Returning in June, he was once again solid, allowing a .542 OPS and a 19/5 K/BB in 19 1/3 innings. Nothing stellar, of course, but certainly useful; this earned him a B in the midseason reviews, where I referred to him as “perfectly acceptable.” But from there, it was all downhill for Hawksworth, as he allowed 16 runs (12 earned) in his final 16 2/3 innings of the season, making many wonder if he was injured again – and culminating in his failure to cover first base (or, you know, get outs) in the September 28 soulcrusher in Arizona.

Still, we don’t know that this is in any way related. It’s also not the first time that Hawksworth has run into shoulder issues, since he had labrum surgery while in the minors and missed almost two entire seasons, getting into just nine games between 2004-05. This sounds much less serious, so even if he’s out for 6-8 weeks that would only sideline him until mid-March, though we’ll have to learn more about what the timeframe is after the procedure.  (Update: yes, I misread “elbow” as “shoulder”. Shows what I get for posting after midnight when I’ve barely slept. My mistake.) If Hawksworth does begin the year on the disabled list that makes it more likely that Josh Lindblom makes the club, though since Lindblom does have options remaining there’s always an excellent chance he gets nudged out by a non-roster invite, perhaps a second lefty to join Scott Elbert.

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The other news of the night comes from Bill Shaikin, who reports that FOX and the Dodgers have come to an agreement that finally exhausts the legal battles between the two. FOX agrees to drop any objection to the sale agreement between the Dodgers and MLB – there was to be a court hearing on that this week, and while it was extremely unlikely FOX would have prevailed, if they had, we’d be blasted all the way back to square one in this mess – and in return, the Dodgers agree to stop trying to market their television rights before the end of their deal with FOX, which never made much sense anyway.

Not to jinx it, but this could be the end of legal hostilities all around, since both MLB and FOX have settled their battles with the Dodgers. That should clear the way towards the sale, which Shaikin also clarified the timeline of; while we already knew bids were due on January 23 and the sale must be completed by April 30, we now also know that the winning bidder will be announced no later than April 1. 81 days!

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One other note: Kenji Nimura, the trilingual translator who joined the Dodgers in 2008 when Hiroki Kuroda signed with the club, will soon be leaving to take a similar position with the Yankees. This news came out in, of all places, a photo caption in Jon SooHoo’s gallery from this week’s prospect development camp. Sure, it’s possible that this is just a coincidence, since the Dodgers don’t look like they’ll have any Asian players on the roster next year, but considering that Nimura has lived in Los Angeles since 1983 and has referred to working for the Dodgers as a dream job, it’s hard not to read this as one giant hint that Kuroda is soon to be a Yankee.

Conspiracy Theory Wednesday: Will We Ever Truly Be Rid of Frank McCourt?

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It’s every Dodger fan’s worst nightmare, even if they haven’t quite considered the possibility yet: what if Frank McCourt was running a long con in order to attempt to keep the team?

When he finally agreed to sell on November 1, we were ecstatic, understandably. If it didn’t quite add up that a career litigator would so abruptly abandon his fight just weeks before his day in court, after years of insisting he’d never sell, we didn’t notice – we were too busy dreaming about white knights who might be interested in purchasing the team.

Yet despite our joy, it’s becoming hard not to notice the inconsistencies in all this that have been piling up over the last few weeks. Despite agreeing with MLB to sell nearly six weeks ago, the filing didn’t make it to bankruptcy court until December 6. We didn’t get concerned, because surely a transaction involving a billion-dollar team could be complicated, and, hey look over there, is that Ned Colletti handing his secretary a backloaded two-year deal? Then, despite giving up all of his Los Angeles-area homes to ex-wife Jamie in their settlement, Frank claimed he had no intention of leaving Los Angeles and actually attended the annual owner’s meetings in Milwaukee, a move that raised eyebrows considering there had to be more than a few people there disgusted at what he’s put the sport through. Besides, even though he had agreed to sell the team, he still had something of an in – the right to keep the parking lots that surround the stadium, thanks to one of his many shady restructurings of the organization.

At the time, Mike DiGiovanna of the LA Times briefly asked why McCourt was choosing to sell:

But after a bruising two-year battle to keep the Dodgers, why not wait a few more weeks to see if he won in court?

“I had personal reasons to make the decision that I’m not at liberty to share at this time,” McCourt said.

As November continued, the story largely shifted to the legal battle between FOX and the Dodgers, as McCourt attempted to persuade the court to allow him to market the club’s television rights immediately, despite the FOX contract clearly stating those rights were exclusive until the end of the 2012 season. McCourt argued that getting a current valuation of those rights would allow for higher bids of the team than if the prospective buyers were uncertain what their worth would be; playing on the bankruptcy court’s sympathy towards making sure creditors get repaid above all other concerns, the court agreed over FOX’s obvious objections. The ruling seemed dubious at best, since even if McCourt was able to secure a higher bid for future television rights, any new owner would not be obligated to abide by that deal, and could simply re-open the bidding again. This is the part that’s most troubling, because it’s not hard to think that media rights could be worth more a year from now, when the team might have a new owner and a whole hell of a lot more positive press than it does right now.

With the ruling in hand, McCourt can proceed in soliciting rights bids while simultaneously working to sell the team… except with purchase bids due by January 13, buyers have reportedly still not seen the “bid book”, a confidential document outlining the Dodger financial state, despite a December 1 report that said the book would go out “next week”. (i.e., last week.)

This all caught the eye of local legend Ross Newhan, now blogging independently, in a December 2 post I linked to last week:

 ”This has been going on more than a month and no one has seen a book, including the top league officials who, I presume, would have to approve it,” one of the sources said. “It makes you wonder.”

What he and others are wondering would provide Oliver Stone with a conspiracy script that would shock Dodger fans.

The question he and othes are asking is this:

“Does McCourt really intend to sell or is he still seeking a way to retain ownership?”

Though Newhan admits the idea is far-fetched, he lays out the path that McCourt could take if this was his goal, and wouldn’t you know it, the first item is “get permission to sell media rights,” a week before that decision occurred.

Fred Roggin of NBC Los Angeles picked up on the scent yesterday (h/t to Philip for the link), and though his piece was laughably titled “exclusive” (presumably by a headline writer who has never heard of Ross Newhan), he backs up the story that buyers are unsure of where this process is taking them:

I’ve talked with a number of prospective buyers who are all perplexed because they don’t have the book with the Dodger financial information.

Here’s the best part, however. Newhan posted his story on December 2, and Roggin chimed in yesterday, December 13. About a month ago, on November 13, I received an email that I admittedly didn’t think much of at the time. (Yes, it’s largely because half of it was written in caps, and I’m a snob like that.) It’s from a reader who will remain anonymous, in response to Bill Shaikin’s story about McCourt attempting to convince the court to let him sell the media rights, and he may have been the only one to see all of this from the very beginning:

WHAT MCCOURT IS TRYING TO GET AWAY WITH:  He is still trying to sell the tv rights (may the judge save us by refusing to order another corporation, Fox, to give up their negotiated privilege not to do so under duress) so when, according to McCourt’s scheme, the tv deal is negotiated by Blackstone (McCourt) sometime this winter, McCOURT CAN HALT THE SALE OF THE TEAM, WITH THE AGREEMENT IN HAND TO RECEIVE THE FUNDS TO PAY OFF THE CREDITORS, GET THE DODGERS OUT OF BANKRUPTCY AND KEEP THE TEAM.  THAT’S WHAT HE’S TRYING TO PULL HERE, BILL, and no journalist, let alone the braindead octogenarians running MLB, gets that.

What does Fox get out of it? A deal with McCourt, a cheap deal for them, not the blockbuster the next owner would realize from HIS negotiated sale of the rights when the bidding is open to Time-Warner after next November. Fox is currently the only entity ostensibly refusing to go along with McCourt’s request—if they DID agree, it would be OBVIOUS there’s something big in it for them, a MUCH smaller rights fee to pay—so they’re pretending to fight it. When the judge is ready in 2 1/2 weeks to hear their reasons for going against a sale of the tv rights now, all they have to do is show up in court and announce they’re throwing in the towel on the “fight”. Since MLB has already monumentally stupidly agreed to let McCourt have his tv rights sale now, as quid pro quo for agreeing to sell the Dodgers, there will be no one to object to giving McCourt the tv sale now, and the rest of the plan McCourt and Fox have hatched will extend Fox’s telecasts of the Dodgers forever at a bargain rate, and McCourt will keep the Dodgers as a result.

I won’t pretend there’s not a bit of “tin foil hat” going on in there, because clearly this entire conversation is one big conspiracy theory that might be way, way off base. Still, there’s enough smoke there to not dismiss this outright. MLB did agree not to oppose the sale of the broadcast rights, as they otherwise would have, in order to finally get McCourt to agree to sell. And FOX and Time Warner, who have had rights fees wars for years across the country, are, by all indications, gearing up for a massive war over Southern California sports telecasts.

While allowing the two corporate giants to fight over the Dodgers would surely increase the ultimate payoff, if McCourt’s goal is simply to get enough to cover his debts, pay off his ex-wife, and get the team out of bankruptcy, then perhaps he’s less interested in “every last penny” as he would be in “as much as I can get, as soon as I can get” – and not only are the Dodgers and FOX supposedly still negotiating despite the court ruling, McCourt tried something similar in the past, attempting to sell the future rights to FOX for what was considered below market value in order to see an immediate influx. In addition, it’s not like he hasn’t previously been in bed with FOX on prior loans anyway. Besides, if the latest reports are true which indicate that the Dodgers are contractually restricted from creating a new regional network with Time Warner, ESPN, or Comcast are true – i.e., all the big players who aren’t FOX – then that’s just a further incentive to stick with FOX. (That’s a battle which has yet to play out in court, though.)

But it doesn’t have to be FOX. That might be the ultimate goal of getting the court to open up the bidding, to show FOX that even if McCourt would prefer to stick with them, he’s no longer obligated to. Otherwise, FOX would just wait out the ownership transfer and still likely have time to speak exclusively with the new boss before their rights deal expired. Now, they have motivation to strike a deal before the rights get shopped around. So as the theory goes, McCourt could come to an agreement with FOX or someone else on a long-term rights deal, one that would be a step up from what the Dodgers currently get yet still likely below what the results of an all-out bidding war could be, and all of a sudden McCourt could go back to the bankruptcy court and say, “my house is in order, I have the money to pay off my ex-wife, all of my creditors, and operate the team. Throw out the agreement with MLB.”

And that’s what the big, big sticking point in all this is. McCourt has that agreement with Major League Baseball, and another with his ex-wife. By April 30, he has to both sell the team and pay Jamie about $130 million. Even if there’s a hint of truth to any of this, MLB still has the right to approve the new television contract, and it goes without saying that they would never, ever allow McCourt to sign such a deal and collect even a penny of the new earnings. This would set up yet another massive court fight, one bigger than any we’ve seen thus far, and while it may seem unlikely that McCourt and his legal team could convince the court to throw out the agreement with MLB, no one thought he’d be able to convince them to open up the television rights either – the last few legal arguments have all gone Frank’s way.

If this whole idea wasn’t so deliciously evil – and I’m talking head-thrown-back, maniacal-cackling, lighting-a-cigar-with-a-game-worn-Jackie-Robinson-uniform evil – it’d be brilliant. Now, as I’ve been reminded of by a reader lately (and quite correctly so), I am not a lawyer. I’m far more comfortable discussing wOBAs than CPAs, and when I started this blog over four years ago I never dreamed this would be the sort of thing we’d be spending our time on, so it’s eminently possible that I’m not reading the tea leaves correctly on all this.

So maybe this is much ado about nothing. Maybe I spent my Wednesday morning linking to a dozen Bill Shaikin articles simply because of a crazy, alien-abduction-sounding theory, because I have to admit, this whole thing sounds ludicrous enough that part of me is reluctant to even hit ‘publish’ on the post.

But maybe, just maybe, Frank McCourt is a slimy, court-manipulating evil genius who’ll stop at nothing to get what he wants and attempt to rebuild his name. I just don’t want to say we never saw it coming, and there’s been enough oddities since the deal was announced to wonder just what’s really going on.

Frank McCourt Gets One More Push Out That Door

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The day you never thought would come? Yeah, it’s just about here. One of them, anyway. Bill Shaikin (as usual) with the fantastic news:

Frank McCourt agreed Tuesday to sell the Dodgers, abruptly surrendering the team after fighting to retain it over two years and in two courts.

McCourt and Major League Baseball have agreed to seek approval from the U.S. Bankruptcy Court for an auction of the Dodgers. The sale is expected to include the team, Dodger Stadium and the surrounding parking lots, a package bought by McCourt for $421 million in 2004 and likely to sell for two to three times as much now.

The league hopes a new Dodgers owner can be in place by opening day.

First and foremost: YEAH! I wasn’t sure I’d ever live to see this happen, yet here we are. Remember, this has been going for over two years. Hell, this is what I was writing in October of 2009, well before bankruptcies, Russian faith healers, attempted MLB takeovers and over 50 other sins:

So when the news of your divorce came out on the day of Game 1 of the NLCS, that was troubling enough. In the days since, rather than celebrate the end of the Dodger season and plans for the offseason, we’ve had to listen to quotes like “they’re trashing each other terribly. It’s going to be World War III” and now see the news that Jamie’s been fired from her position as CEO, while promising a lawsuit.

I’ve yet to read an account that doesn’t characterize this as being an extremely ugly situation. And yet again, I don’t really care about the “winner” of this situation insomuch as who gets the two (at least!) mansions you own. Remember, we only really care about how this is going to impact the Dodgers. We’re workaday slobs, you know, so watching our favorite team succeed is the only respite from our otherwise crushing lives. Or something like that.

Don’t let your personal issues get in the way of the enjoyment of millions of Dodger fans around the world, because if – as seems likely – this devolves into a path of scorched earth and courtroom rhetoric that leads to the selling off of assets on the field and a string of losing seasons like in San Diego, you might still own the team, and you might have won in the eyes of the law, but you’ll still be a pariah in the eyes of Dodger fans everywhere.

Fix this quickly and privately, or sell the team. Now. You may be striving for the spotlight, but you’re not bigger than the Dodgers, and it’s your association with them that’s brought you fame – not vice versa.

…and I think we can see how well that worked out, while also reminding us that we couldn’t stand the McCourts well before any news of the divorce leaked. In addition, don’t forget the happy ancillary benefits that could come along with this… namely, the hope that a new owner might want to bring along his own general manager – one who wouldn’t give Juan Rivera $4m, Juan Pierre $44m, Jason Schmidt $47m, amongst a litany of other errors.

This is still a long way from over, of course. As I noted yesterday, there’s still a long way to go from “settlement” to “sale”, and if the reported $1b or more purchase price is scaring off Mark Cuban (who is never getting approved by MLB anyway), we’re definitely going to have to worry about if any prospective buyer still even has money left over after putting that kind of cash down – but that’s a worry for another day. For now, there’s light at the end of the tunnel. (A different tunnel, I would imagine, than the one we hope McCourt gets thrown down.) That’s progress. And that’s worth celebrating.