31 May 2011
- Written by Jack Humphreville
Unfortunately, after 50 games, the Dodgers had won 22 games while losing 28.
To qualify for the Wild Card, the Dodgers will probably need to win 91 games, just as Atlanta did last season. After the weekend series with the Florida Marlins, the Dodgers would have to play .620 ball to make the playoffs. However, this is unlikely given the inability to score runs, the lack of power, spotty pitching, and key injuries.
The Bums are in a deep hole. They are in fourth place (next to last) in the National League West, 5½ games behind the Arizona Diamondbacks, and in tenth place in the Wild Card standings, 7½ games behind the Marlins and 9 games behind in the important loss column.
The Dodgers are also hurting at the gate because of a lackluster team and the fans’ concern about safety as a result of the senseless beating of Bryan Stow by alcohol fueled gangbangers in the parking lot after the Opening Day win.
Compared to last year, attendance is off 18% (216,000 fans) for the first 28 home games, representing lost revenue of an estimated $8 million. Annualized, the loss of stadium related revenue is at least $25 million, not counting the impact of more “no shows.”
The Dodgers’ profitability is impacted not only by the loss of this highly profitable incremental revenue, but the costs of added security and the costs of litigation associated with the lawsuit filed by Bryan Stow and his family.
And this litigation may impact the wallet of The Boston Parking Lot Attendant (aka Frank McCourt) since he has been sued personally because of his perceived gross negligence as he diverted money from providing adequate security to support his family’s billionaire lifestyle.
Frank is also having trouble meeting payroll. However, according to Bill Shaikin of The Los Angeles Times, Frank will be able to meet the May 31 payroll, in part by accelerating revenues.
But this Enronesque financial engineering stunt of accelerating revenues runs contrary to good business practices and sound financial policy, and should be vetoed by Tom Schieffer, the Monitor of the Dodgers appointed by Bud Selig, the Commissioner of Baseball.
Of course, Major League Baseball may be giving Frank just enough rope to hang himself.
To compound the drama, Jamie has indicated that she will not approve the 17 year, $3 billion media rights deal with Fox Sports because she believes the contract undervalues the true value of the long term media rights.
More importantly, Jamie has asked the divorce court to mandate the sale of the Dodgers, an indication that she does not trust Frank.
The sale of the Dodgers will be very complicated.
Stadium related revenues have been dropping because of lower attendance. On the other hand, the cash flow from the broadcast and media rights is increasing, but the prior sale of these rights to Fox Sports may deter prospective purchasers who want to create a media company, similar to the Red Sox, the Yankees, and the Mets.
There are also issues involving the ownership of Dodger Stadium and the parking areas. These debt encumbered assets are not owned by the Dodgers, but by separate entities owned by Frank and Jamie. These key assets need to be part of any transaction in order to achieve full value for the Dodger franchise since the new owner would not want to deal with Frank and his unreasonable ransom demands.
There is also the value of the Stadium, the parking lots, and the balance of the land in Chavez Ravine. Frank will maintain that the land has significant unrealized values as evidenced by his pie in the sky $500 million development that will turn Dodger Stadium and Chavez Ravine into a pavilion like year round destination with restaurants, retail shopping, and new underground and multilevel parking.
But Chavez Ravine is classified as Open Space land use in the City’s General Plan. This may be an excellent opportunity for Frank to use special relationship with Mayor Villaraigosa and his experience in the construction industry back in Boston to change the zoning.
Frank needs a miracle to survive this financial disaster that he has created.
Will he be able to meet payroll? Will the $3 billion, 17 year media rights deal with Fox Sports receive the necessary approvals from Jamie and the Commissioner? Will the approvals be unencumbered allowing Frank free use of the $285 million of upfront cash? What will the Commissioner’s review of the operations and finances of the Dodger organization conclude? And will Superior Court Judge Gordon order the sale of the Dodgers at the June 22 court hearing?
But the ones deserving of a miracle are the True Blue Dodger fans who need Jamie, the Commissioner, the lenders, and Judge Gordon to force the sale of the Dodgers and it related assets.
We are waiting for next year, without Frank.
Tags: Dodgers, McCourt
Vol 9 Issue 43
Pub: May 31, 2011