24 Jun 2011
- Written by Jack Humphreville
He is also carrying on by saying that he will not sell Dodger Stadium, the parking lots, and other related assets that are controlled by other entities in his convoluted, but crumbling, corporate quagmire, hoping to discourage legitimate buyers from buying the Dodgers.
Obviously, Frank has not reviewed the contract he signed with MLB when he and Princess Jamie purchased the Dodgers in 2004.
As a way of background, on Friday, June 17, The Boston Parking Lot Attendant was a happy camper as he and Princess Jamie agreed to a Binding Term Sheet where she agreed to consent to the 17 year, $3 billion media rights deal between the Dodgers and Fox Sports that included a $385 million upfront loan to the Dodgers.
These two lovebirds also agreed to a one day Expedited Trial (presumably on August 4) to determine if the Dodgers and the related assets (the “Dodger Assets”) are community property or Frank’s separate property.
If the Dodger Assets were deemed to be community property, they were to be sold in an “orderly manner” under the supervision of the Court. But Frank would have a natural advantage given his current level of ownership and the convoluted corporate structure.
If Dodgers were deemed to be Frank’s separate property, then Frank would pay the Princess $100 million, $55 million upfront and $45 million over the next two years.
But this whole arrangement which would allow Frank to get his grubby little mitts on all that cash was contingent upon the MLB approving this Hail Mary deal with Fox Sports. Otherwise, the Binding Term Sheet would be null and void.
But the Commissioner did not approve the deal, citing that it was not in the “best interests” of the Dodgers and the game of baseball.
For openers, Frank was “diverting” $173.5 million (45%) of the $385 million loan for his personal needs which has the effect of mortgaging the Dodgers’ future. And this continued looting of the Dodger franchise was contrary to Frank’s previous statements that all money would be invested in the team.
The uses included $10 million for the attorneys; $10 million of walking around money; $23.5 million to repay Frank for his 2011 advances to the Dodgers to help meet payroll; $80 million to pay down Dodger debt that was used to purchase the club; and $50 million to fund an account under the supervision of Court.
At the same time, the Dodgers are one of nine teams that are reportedly in violation of Major League Baseball’s Debt Service Rules. The other eight teams are the Baltimore Orioles, Chicago Cubs, Detroit Tigers, Florida Marlins, Philadelphia Phillies, Texas Rangers, New York Mets, and Washington Nationals.
There is also the belief that the Fox Sports transaction undervalues the media rights of the Dodgers. On the one hand, Frank values this deal at $3 billion while MLB is at $1.7 billion, a considerable difference that could have an adverse impact on all of MLB’s media rights.
The Dodgers are also hemorrhaging cash. Attendance for the first 40 home games is off 20% from last year. But revenues are probably off at least 25% to 30% as a result of increasing no shows, extensive price discounting of tickets, and large discounts offered to corporate sponsors such as United Airlines for early payment. As a result of the loss of this highly profitable incremental revenue, the cash strapped Dodgers are most likely losing money before they even pay the interest on the mounds of debt.
To compound the problem, MLB attendance of off by about 1.5% this year, but the Dodgers account for 77% of that loss.
But the basic issue is that the Commissioner of Baseball does not trust increasingly desperate Frank to be responsible owner and steward of the Dodger franchise.
More than likely, the Dodgers will not be able to meet payroll next week which will precipitate a takeover of the Dodgers by MLB.
Now one alternative that has been floated is that Frank will push the Dodgers into bankruptcy before he allows MLB to seize team. But this will backfire since Frank does not have a well thought out plan or the necessary funds to effectuate a favorable outcome, especially since Fox Sports wants no part of a bankruptcy.
Furthermore, a bankruptcy filing is very long and drawn out affair, costing millions in legal and accounting fees. And to complicate matters, the bankruptcy court may invalidate certain not so arms length contracts that the Dodgers have with various other McCourt controlled entities, forcing these entities to default of their bank debt. As a result, Frank’s house of cards would collapse.
While little Frankie may want to conduct a scorched earth policy, Princess Jamie may have other ideas on how to protect her lifestyle and her nest egg.
And based on her prior actions, she will push to have the Dodgers and all of the related assets sold in an “orderly manner” under the supervision of the Court, as outlined in the Binding Term Sheet.
We can only pray that is the case. So Judge Scott M. Gordon of Superior Court, hear the prayers of all Angelenos and order the sale of the Dodgers (and the related assets).
Frank has said that he wanted to pass the Dodgers down to his sons. However, given the reaction of the True Blue fans, Angelenos, the sports writers and the media, Major League Baseball, and his lenders, the only thing that he will pass down to his family is a legacy that will make Donald Sterling, Bruce McNall, and Bernard Madoff look like choir boys.
So Frank, do the right thing: Sell the Dodgers in an orderly manner. And take the bus back to Bean Town.
Tags: baseball, Dodger, Frank McCourt, Commissioner Bud Selig, Fox Sports, Jamie McCourt, MLB, Major League Baseball,
Vol 9 Issue 50
Pub: June 24, 2011