09 Aug 2011
- Written by Jack Humphreville
But the odds of the Dodgers making the playoff are slim at best since this light hitting team with middle of the road pitching will need to win about 75% of their remaining 49 games.
Even the prospect of having a breakeven season is remote. The Dodgers would need to win over 29 games, or almost 60% of their remaining 49 games. However, 25 are against pennant contenders: the San Francisco Giants (6), the Arizona Diamondbacks (6), the Milwaukee Brewers (4), the Atlanta Braves (3), the St. Louis Cardinals (3), and MLB’s best team, the Philadelphia Phillies (3).
Only 22 of the games are at Frank McCourt’s Ghost House, where paid attendance is off about 20% from last year. Actual attendance is off even more because of increased no shows, resulting in at least a $30 million hit to revenues, putting a greater strain on the Dodgers already shaky finances.
The great news: our boy Frankie is running out of cash and may be eventually forced to sell Dodgers. Unfortunately, that is not soon enough.
According to Bud Selig’s 11 page letter of June 20 to Frank where he justifiably rejected the Dodgers 17 year, $1.7 billion media rights transaction with Fox Sports, The Boston Parking Lot Attendant had only $264,000 of liquid assets as of December 31, 2010. To put that in the proper perspective, that is less than half of his monthly support payment to ex-wife Princess Jamie.
No wonder Frank is going back to Divorce Court to ask Judge Scott Gordon for relief from supporting the Princess’ royal style and her multiple estates to the tune of over $600,000 a month.
At the same time, Princess Jamie will no doubt ask the Divorce Court to mandate and supervise the orderly sale of the Dodgers or its holding company. She is also requesting that Frank pay almost $10 million of unpaid legal fees, which would then allow her to spend an additional $7 million in legal fees.
Overall, the McCourt divorce legal fees are expected to total $35 million, money that should have been used to strengthen the team’s lineup.
But underlying Princess Jamie’s demand that the Dodgers be sold in an orderly manner is her concern that Frank will lose everything, running up huge legal fees at the same time as True Blue fans are abandoning the Bums.
As it is, the Dodgers are losing money because of the precipitous drop in attendance. The Dodgers are also out of cash, unable to meet payroll. The team has already burned through the prepayments of Fox’s television fees and other sponsor advances. No wonder the Dodgers need $150 million of debtor in possession financing to cover payroll and other operating expenses.
These operating losses are compounded by the burden associated with $700 million of debt which is reliant on the Dodgers’ already strained cash flow. This is the same team that must also invest more in its players in order to be a playoff contender.
And the Princess and her advisors are obviously aware that non-bankable Frank incurred substantial fees and a significantly higher interest rate on Sovereign Bank’s reluctant renewal of its loan to Blue Landco LLC, a McCourt entity that owns the Chavez Ravine parking lot that is not included in the bankruptcy filing, or at least not yet.
Ironically, the Blue Land parking lot appears to be the sole source of cash for The Boston Parking Lot Attendant, providing Frank with $10 million a year after debt service.
While Princess Jamie wants to take the money and run off to Malibu, Frank has adopted a higher risk, bet the ranch strategy, relying on the Federal Bankruptcy Court in Delaware to shield him from Major League Baseball while he negotiates a Hail Mary media rights deal with the highest bidder.
In essence, Frankie is asking the Bankruptcy Court to abrogate the existing media rights deal with Fox Sports prior to its expiration in November 2012. More importantly, he wants the Court to set aside those inconvenient provisions of the Major League Baseball constitution that restrict his ability to continue to loot the Dodgers.
According to Bud Selig’s letter of June 20, Frank would have saddled the Dodgers with over $900 million of debt if he were allowed to proceed with his plan related to the 17 year, $1.7 billion Fox Sports media rights transaction.
But the Federal Bankruptcy Court in Delaware is no pushover.
In its ruling related to the debtor in possession financing, the Court ruled against Frank because of his blatant failure to disclose meaningful information regarding his relationship with the high cost, fast money New York City hedge fund. As a result, Major League Baseball will be providing lower cost debtor in possession financing, but, at the same time, will be able to monitor the finances of the team.
Fox Sports will also oppose Frank’s efforts to enter into a new, long term media rights deal since its existing contract extends through November 2012 and includes a period for exclusive negotiations.
Likewise, the Commissioner and Major League Baseball will oppose such a transaction since it may not represent the best financial deal for the Dodgers and MLB because it is being made under duress by an untrustworthy and broke owner. It may also deter potential purchasers of the Dodgers.
Furthermore, even if the Dodgers were able to enter into a long term media rights deal, the Commissioner would oppose any diversion of funds from the Dodgers’ operations. This would preclude the funding of Frank’s settlement with the Princess and the payment of their legal bills, the repayment of Frank’s advances to make payroll, and the repayment of debt used to finance the acquisition of the team or to loot the team of over $180 million since 2004.
Rather, Major League Baseball will insist that the Dodgers abide by its Debt Service Rules. This would not allow for any diversion of funds and would more than likely require the Dodgers to raise equity from an investor.
Baseball may also try to turn the tables on Frankie by initiating the seizure of the Dodgers and attacking the legitimacy of Frank’s corporate structure, and in particular, the parking fee arrangement where $14 million a year is diverted from the Dodgers to Blue Land, Frank’s personal piggy bank.
Fortunately, the Federal Bankruptcy Court has an excellent reputation and will be able to see through all of Frank’s Boston malarkey, including his inability to separate the Dodgers from his own personal finances. The judge will also be able to understand the contractual rights of Fox Sports and the need to enforce the Major League Baseball constitution.
And as such, the Dodgers will no longer be the personal piggy bank for the over the top McCourts which will mandate the forced sale of the team under the supervision of the Divorce Court.
While Dodger fans have no standing in the Federal Bankruptcy Court, we can continue to boycott the Dodgers and their advertisers and sponsors.
So I guess we will not be going to the remaining 22 home games, flying United or Southwest, or buying a Hyundai or a Toyota. That will hit Frank where it hurts: the wallet.
Tags: Dodgers, All Star Break, playoffs, Frank McCourt, dodger attendance, Bud Selig, Fox Sports, Jamie McCourt, bankruptcy, Federal Bankruptcy Court
Vol 9 Issue 63
Pub: Aug 9, 2011