Saturday, June 18, 2011

Latest McCourt Settlement Continues Greedy Record

Reading all the articles about the latest McCourt settlement is not the way one would want to start his or her Saturday morning. The only thing that isn't confusing or up for question is how the McCourts have "settled" to take care of their extensive needs first and foremost.

First I read Bill Shaikin's piece, "Divorce settlement heightens prospect of a Frank McCourt-Bud Selig showdown over Dodgers", which recaps the divorce settlement news:

Frank and Jamie McCourt have reached a settlement that does not settle the question that has troubled Dodgers fans during a divorce battle that has lasted nearly two years: Who owns the team?

The agreement reached Friday requires Frank McCourt to clear two significant hurdles in order to maintain ownership of Los Angeles' cherished ballclub. The commissioner of baseball has to approve a long-term television contract between the Dodgers and Fox, and a judge has to rule that the team is the sole property of McCourt.

The settlement becomes "null and void" if Commissioner Bud Selig vetoes the television contract — and he is likely to do so, according to two people familiar with the matter but not authorized to discuss it.

Dennis Wasser, the attorney for Jamie McCourt, said he believed Selig would decide promptly whether to approve the Fox deal.

"It is either yes or no," Wasser said. "We should know by Monday or Tuesday."

With a yes, the McCourts would proceed to a one-day trial on Aug. 4, to determine whether the team belongs solely to Frank McCourt.

If the judge instead rules the Dodgers are community property, the settlement says the team "shall be sold." The sale would include the team, the stadium and the surrounding parking lots, with an estimated value of close to $1 billion, and the McCourts would split the proceeds 50-50.

If Frank McCourt is declared sole owner, Jamie McCourt would receive $100 million, the couple's seven luxury homes and indemnity from any tax liability.

So it continues to all hinge upon the Fox lifeline, which is now forced inot the hand of Bud Selig. It is the only way out for Frank McCourt, so he's basically arranged a contingency deal with ex-wife Jamie that allows an outcome no matter how the judge rules on the ownership issue.

But what really got me was the detail on how the two McCourts have agreed to split the $385M cash infusion from Fox, should the judge rule that the Dodgers are community property in this one-day bake-off. As ESPN reported:

Terms of the settlement spell out how the $385 million from Fox would be spent. Each party would receive $5 million for lawyers' fees. Each party would receive $5 million to use as they see fit. Approximately $235 million would be used for the Dodgers (including repayment to Frank McCourt money that was advanced to the team in 2011 but not exceeding $23.5 million). Another $80 million would be used to pay off indebtedness. And the remaining $50 million would be put in an account subject to the court's orders.

So right off the top, $10M that should have gone to the Dodgers will go to pay for the lawyers in the McCourts' spat. And another $10M goes to the owners to do whatever they hell they want to do. And $80M goes to other debts, and $50M goes to a slush fund.

Which leaves only $235M of the $385M--just over 61% of the total payment--to go toward the team. Almost 40% goes to management, including a portion which is just at their whims. And this only comes because the Dodgers are ceding television rights for the future, rights which extend so far out we have no way of knowing whether this was a good deal for the team.

If MLB was actually bothered by the McCourts' avarice--most notably mentioning the ~$100M that the couple had siphoned from the team to pay for their extravagant lifestyle--then Selig needs to consider the merits of this additional siphoning on those grounds as well.

The LA Times' Shaikin posted a companion piece later on in the day yesterday which made this very point, going on to say that it was highly unlikely Selig would approve the Fox deal on these grounds. Steve Dilbeck reached the same conclusion, contrasting McCourt's flag-waving statements of virtue against his duplicitous actions.

I understand McCourt's strategy to try and force Selig's hand. I'm surprised that he isn't bringing his best cards to the table, as well.

7 comments:

Neeebs said...

I could lose McCourt's case against MLB for a fraction of the $5M in legal fees.

rbnlaw said...

I seriously doubt The Bud will approve the Fox deal. A 20 year TV commitment in this day and age makes sense to only one man; Greedy Frank. If the deal is approved (again unlikely), no potential owner would touch the Dodgers, and the fans will leave in droves (with me leading the charge).

This "agreement" is full of booby-traps (it seems to have snared 2 "boobies" already) and is akin to the recent budget shenanigans in Sacramento. Everything hinges on the August 4 trial where the Dodgers will be declared community property (I cannot see any way possible to declare the team Frank's separate property) and the team would be sold anyway.

Bud; as Nancy Reagan would say,
"Just Say No!"

rbnlaw said...

*opens law partnership with Neeebs and solicits MLB business*

Dusty Baker said...

Yep, so things are falling into place. All Bud has to do is wait for a missed June 30 payroll, conclude his investigation, just say no, then the rest will fall into place. This has drawn out way too long, but I hope the end is drawing near. Last night's crowd was one of the most embarrassingly low turnouts I've ever seen.

Mr. Customer said...

I hope the first game after Frank's gone is a sell-out, just to give him a city-wide middle-finger.

Josh S. said...

I'm still left wondering why Fox would think it makes good business sense to partner up with Frank McCourt for 17 years.

Then again, they canceled Firefly, so they're proven stupid.

Steve Sax said...

I am sitting in a beach house overlooking the ocean from the porch, sun shining, cool breeze blowing.

I refuse to let the McCourt chicanery interfere with my afternoon bliss.

Those greedy folks.