22 Apr 2011
- Written by Jack Humphreville
DODGER STEW - Holy cow, did you see that move! Selig picked off McCourt, preventing Frank from stealing another $100 million from the Dodgers and their loyal but beleaguered fans.
On Wednesday, Bud Selig, the Commissioner of Baseball, announced that he will appoint a representative to “oversee all aspects of the business and the day-to-day operations” of the Dodgers. The Commissioner’s Office will also “continue its thorough investigation into the operations and finances of the Dodgers and related entities during the period of Mr. McCourt’s ownership.”
This move was finally precipitated by Frank McCourt’s flagrant breach of trust when he personally borrowed $30 million from Fox Sports to help the Dodgers meet payroll (and probably a few personal obligations) without consulting with the Commissioner. That is a real No-No.
While unprecedented, this drastic action is warranted given the systematic looting of the Dodgers by Frank McCourt to support his family’s billionaire life style. Now the Dodgers have an unsupportable amount of debt and lack the financial flexibility to properly fund the team’s operations and payroll.
The need for cash to service the increasing mountain of debt and fund the family’s over the top life style resulted in business decisions that led to the increase in sales of beer and booze and the cut back in the presence of uniformed LAPD officers and overall security, creating an attractive venue for gangbangers and abusive, foul mouthed drunks.
This alcohol and drug infested environment finally resulted in the highly publicized unprovoked assault on Opening Day of Byran Stow, a 42 year old Giants fan from Santa Cruz, in the parking lot after the game. The resultant adverse publicity has caused a 27% decrease in paid attendance for the last seven home games, resulting in a loss of about $3.4 million in highly profitable, incremental admission, parking, and concession revenue.
No wonder the Dodgers are having problems meeting payroll.
Of course, Frank is baffled by Selig’s action since he believes he is in compliance with Major League Baseball’s financial guidelines. Even his new best friend, Steve Soboroff, launched a spirited defense of the Boston Parking Lot Attendant, saying that the Commissioner’s actions were “irresponsible” and that Frank was “financially fine.”
Of course, that is inconsistent with the fact that Dodgers are in default on their banks loans. And Frank is on the hook for those loans because of his personal guarantee.
It also seems inconsistent with the fact that all Frank had to pledge as collateral for the Fox Sports $30 million personal loan was the anticipated proceeds from his potential lawsuit against Bingham McCutchen, the Boston based law firm that bungled the ownership agreement between Frank and his ex wife, Jamie. However, the Bingham law firm launched a lawsuit against Frank in Massachusetts seeking to bar him from suing the firm for malpractice, claiming that Frank was responsible for his own problems.
Unfortunately for Frank, there are other interested parties in addition to Major League Baseball that do not trust Frank and his Boston malarkey.
Jamie McCourt, his ex wife, for example, issued the following comment. "As the 50% owner of the Los Angeles Dodgers, I welcome and support the Commissioner's actions to provide the necessary transparency, guidance and direction for the franchise and for Dodgers fans everywhere."
And you can bet the banks that own the Dodgers defaulted loans are none too pleased with the shenanigans at Dodger Stadium. If attendance is off 25% this year, that is a $35 million hit to revenue, resulting in a situation where the Dodgers financials would be covered with red ink. The Dodgers would be hard pressed to make their cash interest payments.
One of the consequences of the Commissioner’s action to control the Dodgers and its cash is that it may accelerate the collapse of Frank’s house of cards.
With the Commissioner and the banks controlling the cash, Frank will not have adequate resources to meet his other obligations, such as alimony, upkeep of his multiple estates (including real estate taxes and mortgage payments), personal loans, and his and her legal bills. This will result in other creditors surfacing, filing claims and heading to the courthouse to protect their interests.
Frank’s life is further complicated by the interest of the Internal Revenue Service and the California Board of Equalization in his tax returns, his aggressive tax strategies, the personal use of over $100 million of Dodger funds, and the no show jobs for his sons.
The Boston Parking Lot Attendant will not give up without a fight. However, unlike his shenanigans back in Boston, he is battling with adversaries that have significantly more resources than the cash constrained McCourt who will not be able to rely on the Dodgers cash flow to pay high priced lawyers, tax accountants, and the other costs of litigation.
More than likely, Frank will have to file for personal bankruptcy to protect the value of his assets and give him time to rearrange his affairs in an orderly manner that respects all of his creditors.
But fortunately, the bold and proper actions of Commissioner Bud Selig to “protect the best interests of the Club, its great fans, and all of Major League Baseball” will separate the daily operations of the Dodgers from the meddling of Frank and Jamie McCourt and their financial demands.
Commissioner Bud Selig also has the power to force the sale of the Dodgers (and their related assets such as the Stadium and parking lots), an event that would be welcomed by Dodger fans, the players, the Dodger organization and all of its employees, and all Angelenos.
This Bud is for you, the true Blue Dodger fans. Thank you.
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Vol 9 Issue 32
Pub: Apr 22, 2011