Thursday, January 19, 2012

McCourt, Using Parking Lot Leverage, Generates Character Description Understatement Of The Year

No surprise that the Dodgers owner commonly referred to as "the parking lot attendant" in an LA Times column is holding his claim to the Dodger Stadium parking lots as a negotiating chip in the impending sale process:

Frank McCourt has the option to sell the Dodgers but keep the surrounding parking lots, and his interests as landlord and potential developer might not coincide with those of the new owner.

"You want to make the experience at the ballpark the most pleasant experience you possibly can," former Angels President Richard Brown said. "You're not going to be able to do that unless you have control."

The Dodgers are in bankruptcy, but the McCourt entity that controls the Dodger Stadium parking lots is not. In order to get McCourt to sell the team without a round of litigation over the parking lots, Major League Baseball agreed to grant him "sole and absolute discretion" over whether to keep or sell the land.

The agreement stipulates that prospective buyers "may submit bids that include the purchase of the parking lots."

If the lots are not sold with the team, the new owner would lease them from McCourt for $14 million a year. The annual lease payment would rise in 2015, and every five years thereafter.

Someone with microsoft excel could quickly crank out the NPV on a ~$14M/year perpetuity in their sleep. But what was truly remarkable and breakthrough about this article was the assessment of McCourt's wily and clever strategy done by Marc Ganis, president of Sportscorp Ltd (picture at left):

Marc Ganis, president of Chicago-based Sportscorp Ltd., said a buyer might well pay a premium now to eliminate the risk of a future lawsuit against McCourt over development of the property. McCourt has been in court against his ex-wife, his former law firm, MLB and Fox Sports over the last three years.

"He's shown himself to be very contentious and litigious," Ganis said. "That is never a good situation to walk into. I suspect he will use that reputation to command a higher price."

Frank McCourt, contentious and litigious? Wanting to use his assets to command a higher price?

What insight! Thanks, Marc!