Frank McCourt is in one heck of a bind. A man, now living hand to mouth (or, at least as “hand to mouth” as one that owns an MLB club can), is grasping for anything solid to ground himself to, only to find his islands of safety forever shrinking. Forever coming fewer in-between.
I said it early today, but it’s worth the visual: I envision Frank McCourt center ring of the circus. He's juggling 5 or 6 items at once, while the ringmaster releases alligators into ring.
A better analogy might be this: Frank McCourt is rearranging deckchairs on the Titanic.
Early this morning word started trickling in that a divorce settlement had been reached between Frank and his estranged wife, Jamie.
The settlement is tied directly to MLB’s approval of the 17-year, $3 billion television contract extension with FOX. That deal sees $385 million funnel into the Dodgers.
But, there’s a catch.
In reading the settlement terms, out of that infusion, “each party will receive $5 million in attorneys’ fees and costs… each party will receive $5 million to use has he or she desires.” From there, approx. $235 million will go to the Dodgers, but the caveat is that includes repayment back to Frank to advance the Dodgers in 2011, a sum that is not to exceed $23.5 million. An additional $80 million would be used to pay down indebtedness, and the remaining amount of approx. $50 million would be put into an account subject to McCourt’s orders.
“I fully expect MLB to approve the Fox transaction," Frank McCourt said to reporters after the settlement was reached. “MLB has taken the position that before they approve [the deal], they wanted to see a settlement of the divorce, approval from Jamie [on the deal] or an order from the judge. They asked for one of the three, and we've given them all three today.”
In reading the terms of the settlement, one would be hard pressed to understand why MLB would approve the deal.
Look at the Rangers television extension that was approved and you make sense of the criteria for passing or failing. In that instance, the up-front money in the deal with FOX went to try and retain Cliff Lee, sign Adrian Beltre, and make capital improvements to Rangers Ballpark. For McCourt, no matter how to try and frame it, money that should be going to the Dodgers funnels into the divorce. Whether money from the TV deal goes into the Dodgers, and other funds go to Frank or visa-versa, it’s a matter of semantics.
And here’s another thing: Judge Scott Gordon still has yet to rule on whether Jamie is co-owner of the Dodgers as part of California’s community property laws. That will occur Aug 4th. So, even if MLB were to approve the FOX deal, the issue of clear ownership is still muddy.
If MLB does not approve the FOX deal, then there’s little hope for McCourt holding onto the Dodgers. He could file for bankruptcy, or try to sell the Dodgers while holding onto Dodger Stadium and its surrounding property, but once again…. It’s rearranging deckchairs on the Titanic.
But, if Frank were to somehow retain the Dodgers as sole owner, Jamie receives $100 million (non-taxable). Pursuant to the FOX deal, Jamie would receive $5 million at the time of the potentially approved TV extension, $50 million would be paid within 10 days after the court ruling, and the remaining $45 million would be paid off within 24 months.
Now, go back and read how the FOX television money is setup. Notice that there’s $50 million “put into an account subject to McCourt’s orders.”
In the midst of all of this, while Frank is paying off Jamie, she continues to receive $650,000 per month until the first $55 million is paid off, and $325,000 per month after until the remaining balance on the $100 million is paid off.
Frank, you’re on the edge. The only thing saving you from losing the Dodgers is the FOX deal. There seems little reason for the league to approve it. It’s clearly needed to deal with a personal matter, not improve attendance at the ballpark or the team on the field.
Frank, you’re rearranging deckchairs on the Titanic now to meet payroll each month. There’s little hope MLB will be willing to let you do so with the FOX television extension.
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Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, as well as a contributor to FanGraphs and Forbes SportsMoney. He is available for hire or freelance. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.
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