03 May 2011
- Written by Jack Humphreville
DODGER DOG MOSTLY BALONEY - The impeding cash crisis of the Dodgers is avoidable according to Frank McCourt (“The Boston Parking Lot Attendant”) if only Bud Selig, the consensus building Commissioner of Baseball, would approve the Dodgers $3 billion, 17 year media rights deal with Fox Sports. As part of this transaction, Fox Sports will advance the Dodgers $285 million, all of which Frank pledged to invest in the Dodgers.
But the Commissioner is right to defer judgment on the Fox Sports media rights deal until he has a better understanding of why there is a cash crisis.
In his announcement appointing a Monitor to oversee the business and the finances of the Dodgers, the Commissioner said that his office “will continue its thorough investigation into the operations and finances of the Dodgers and related entities during the period of Mr. McCourt’s ownership.”
This investigation should include not only past dealings and promises, but detailed financial projections for the next five to ten years. It should also include a thorough analysis of all the debt of the Dodgers and related entities, including those related to Chavez Ravine and the already pledged parking revenues. This would include any debt and personal guarantees of the McCourt family and related entities, including the Los Angeles Marathon. Such analysis would include the nature of the debt, the interest rates, the maturities, and any related covenants.
Needless to say, this investigation will be very revealing as to how Frank and Jamie essentially looted the Dodgers for over $100 million to support their billionaire life style, depriving the Dodgers of two or three key players.
The Commissioner would also be prudent to wait until the ownership of the Dodgers is settled, especially after the recent court decision that ruled that the agreement supporting Frank’s sole ownership claim was invalid.
The Commissioner also needs to get a better understanding of the rumored interest of the Internal Revenue Service in the tax returns of the Dodgers and the battling McCourts.
The Commissioner must also analyze the media rights agreement and any other related agreements, such as Frank’s 35% interest in Fox’s Prime Ticket regional sports network.
Of particular interest is the use of the $285 million that Fox Sports is advancing to the Dodgers at the signing of the contract. While Frank says that it will all be invested in the Dodgers, he has also said that this contract would pay for his divorce settlement with Jamie. The rumored settlement of $150 million to $200 million is hardly an investment in the Dodgers.
This would essentially increase the Dodgers debt to around $600 million since this advance is the equivalent of debt.
Furthermore, the current lenders who are owed anywhere from $425 million to $500 million will have their hands out since their approval of the media rights deal is more than likely required, especially since the Dodgers are in default on their current indebtedness.
And given the current banking environment and higher level of scrutiny by bank regulators, the existing lenders will more than likely require that a significant portion of the continuing media rights payments be directed towards repayment, not the team.
In addition, the Dodgers are Frank’s major source of cash. And he needs this money to pay his high priced lawyers, to maintain his Big Dog lifestyle of multiple estates and private planes, and to repay any personal debts, such as the $30 million personal loan from Fox Sports which he used to meet payroll.
So, at the end of the day, how much is going to be invested in the Dodgers? Not much.
Ever since the Commissioner announced that he was appointing an overseer of the Dodgers, Frank has suddenly become more visible and vocal, providing some great sound bites for the media, including that the Commissioner’s actions were un-American. These comments, and those of Steve Soboroff who called the appointment of a Monitor “irresponsible,” only infuriated the Commissioner and a number of the owners.
But this past week, The Boston Parking Lot Attendant had gone to charm school, apologizing to the Dodger fans for his embarrassing behavior, saying in an interview with Bill Shaikin of The Los Angeles Times that he has learned his lesson and deserves a second chance. (Link)
But that is all baloney. Frank will say anything to get his hands on the cash, regardless of the consequences. This is not dissimilar to our corrupt Mayor Villaraigosa who has short changed the underfunded pension plans and failed to fund the maintenance and repair of our lunar crater streets.
Frank is not to be trusted. The evidence is overwhelming: the Fox Sports media rights transaction, the $285 million advance, the $30 million personal loan where he failed to consult with the Commissioner, the looting of the Dodgers to support his billionaire life style, and his litigious and less than ethical business dealings back in Boston. And if that is not enough, just look at the way he treated Jamie, his wife of over 30 years and the mother of their four sons.
The Commissioner is right not to approve the Fox Sports media rights deal until he has a better understanding of The Boston Parking Lots Attendant’s long term operational and financial plans that provide for continuing investment in the team and a sizable investment of new equity to pay down debt and buy out either Jamie or Frank.
The alternative is to encourage the sale of the Dodgers and their related assets to a well capitalized ownership group with a long term investment horizon that will be able to field a championship team and win back the support of the True Blue Dodger fans.
In the meantime, we are fortunate to have an experienced baseball and trustworthy executive as the Monitor to oversee the operations and finances of the Dodgers and protect the team and its fans from the un-American and irresponsible con artist from Boston.
Vol 9 Issue 35
Pub: May 3, 2011