If you cover sports for a living, most of the successful ones will tell you that the ability to present a balanced view will give you longevity. As they say, there’s two sides to every story.
If you’ve followed the saga of Frank and Jamie McCourt and the Dodgers, it’s been hard to find a sympathetic chord. Heaven knows, I’ve tried.
But now, at least the two have decided to settle their differences. The fallout? The most expensive divorce case in California history. Jamie has given up on keeping an ownership stake in the Dodgers, and in exchange, she wants Frank to come up with $130 million... by Springtime.
When Bill Shaikin ran his story on the McCourt divorce settlement, I scratched my head, and quickly typed up an email. “Bill,” I asked, “Where is Frank McCourt going to find a spare $130 million in the couch cushions?”
At the time, you couldn’t figure out where he would come up with that kind of coin. After all, he’s fighting for the Dodgers. He can’t unload assets in it as they are under control of the bankruptcy courts… maybe he’s going to liquidate part of his other assets?
You had to wonder how he was paying other bills, as well. The Dodgers hired a PR firm because Frank thought he and the Dodgers were being portrayed falsely in the media for living an opulent life style that many might say is on the “grossly opulent” spectrum. So, while the Dodgers are in bankruptcy, and had to take on $150 million in debtor in possession (DIP) financing to keep the club afloat during the court battle, from June-Sept. the PR firm racked up nearly $350,000 in billable hours.
So, as Shaikin further reported, we now know that even if Frank were to somehow beat Bud Selig and the league in court, he most certainly winds up losing:
If the court orders the Dodgers sold, Jamie would get the first $130 million of net proceeds. The debt load and tax liability in such a sale could be so high that the net proceeds do not exceed $130 million. That could leave Frank with nothing from the sale.
If the court permits Frank to auction the Dodgers' television rights, he could use $130 million from those proceeds to pay Jamie. If the court grants the auction but mandates the money be used only for the Dodgers, then Frank could try to sell a minority share in the team or some of the land surrounding Dodger Stadium. However, Selig almost certainly would oppose any such sale if the money were not put back into the Dodgers.
This is what arrogance hath rot. McCourt loses, even if he wins. There seems no “balance” in this. There is nothing that leads one to believe that some outcome on Frank’s side betters the state of the Dodgers or signals an outcome where if he wins, he profits from the deal. At this point, it’s going through the legal process for the sake of saying, “I won,” while handing over the spoils of victory.
There will be outcomes from this whole mess that will be referenced for years to come. By the end of the year, Judge Gross will have determined whether the face of broadcast contracts will have changed – the McCourt challenge to auction off media rights even while FOX is still under contract and is suing to stop any such action. The case will either erode or solidify the powers of sports leagues and the agreements that prospective buyers agree to to become part of the ownership brethren.
But mostly, it will redefine what “bankruptcy” really looks like. It was hard to imagine the Texas Rangers being part of a bankruptcy case. The notion that the Dodgers would become bankrupt is to say that they are the Titanic – something deemed unsinkable. The Dodgers will be dredged back up. That’s certain. Frank McCourt will be leaving the Dodgers, sooner rather than later, and a new ownership will take over the helm. Then, and only then, will we get back into discussions as to whether those that are guiding the good ship Dodgers are good and bad. As of now, Frank McCourt is really just Captain Queeg.
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, and is a contributor to Forbes SportsMoney blog.. He is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network (select his name in the dropdown provided).
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