LA Dodgers Driven Into Receivership

by John M. Curtis
(310) 204-8700

Copyright April 21, 2011
All Rights Reserved.                                         

              Major League Baseball President Bud Selig seized the storied Los Angeles Dodgers’ franchise from Frank and Jamie McCourt April 20, citing the McCourts’ financial woes, unable to properly manage the team they bought in 2004 for $430 million from Rupert Murdoch’s NewsCorp.  Back then, the Boston-based McCourts tried to buy the Boston Red Sox, Tampa Bay Buccaneers and Anaheim Angeles before settling on the Dodgers for which they mortgaged their Boston-based real estate empire, deeding Murdoch their parking lot business.  Citing “deep concerns for the finances and operations,” Selig stepped into no-man’s-land legally, seizing a private enterprise without clear precedent.  Selig told Frank he would appoint a trustee to oversee all the Dodgers’ business and baseball operations, essentially seizing the team because of incompetent management.

            When the McCourts bought the Dodgers in 2004, MLB had approved the couple’s heavily-leveraged balance sheet, raising red flags back then whether the two had the resources needed to return the team to championship form.  Since buying the Dodgers from the O’Malley Family March 19, 1998, NewsCorp, ran the franchise into the ground, failing to win a pennant or World Series since 1988.  Like most elite sports’ franchises, the Dodgers was a family owned business acquired in 1950 when the late Walter O’Malley obtained majority interest in Brooklyn Trust Company.  Walter handed control to his son Peter in 1970, eventually selling out in 1998 to NewsCorp for a record high sports franchise price of $350 million.  Walter would turn in his grave to see the downward spiral of his once proud franchise, winning six World Series titles and 21 National League pennants.

            Selig’s bold move stemmed from the teams downward spiral due to the McCourt’s bitter divorce starting Oct. 14, 2009, getting ugly when Frank fired Jamie from her title of Dodgers’ CEO, after revelations surfaced about her affair with her driver and bodyguard Jeff Fuller, head of security operations.  “I have taken this action because of my deep concerns regarding the finances and operations of the Dodgers to protect the best interests of the club,” said Selig, announcing his decision to take over the Dodgers.  Appointing a trustee is unprecedented in MLB history.  Selig didn’t remove Texas Rangers’ owner Tom Hicks, before seeking new ownership.  MLB also didn’t appoint a trustee for the New York Yankees in 1990 when they suspended team owner George Steinbrenner.  Nor did they appoint a trustee when MLB forced Cincinnati Reds’ owner Marge Schott to sell her ownership interest in 1999.

            During the acrimonious divorce proceeding, MLB and the public were treated to the McCourts’ extravagant lifestyle, including how collections fancy cars and opulent properties prevented them from spending money on stadium improvements and new player personnel.  “This is one of the great franchises.  It’s hard to imagine a mess like this ever having happened,” said former Commissioner Fay Vincent.  “It’s a very sad situation.  I feel very bad for Baseball and for Bud,” referring to the Dodgers’ historic role in breaking the “color barrier,” bringing the so-called “Negro League” talent to segregated MLB.  April 14, 1947, O’Malley and the Dodger organization brought “Negro League” star Jackie Robinson to play in Brooklyn’s Ebbets Field.  Vincent said nothing about how Selig’s Ownership Committee approved  Murdoch’s 2004 sale to the McCourts without reservations.

            When Los Angeles Superior Court Judge Scott Gordon ruled in Dec. 2011 that  Frank’s 2004 prenuptial agreement establishing sole ownership of the Dodgers was invalid, Jamie claimed 50% interest under California’s community property law.  “As the 50% owner of the Los Angeles Dodgers, I welcome and support the commissioners’ actions to provide the necessary transparency, guidance and direction for the franchise and for Dodgers’ fans everywhere,” said Jamie McCourt, directly at odds with unnamed sources that Frank plans to sue MLB.  Jamie is equally culpable of incompetent management as her husband, Frank. Neither party has the experience and maturity to run the franchise responsibly.  Selig could appoint former Atlanta Braves and Washington Nationals’ executive Stan Kasten,  MLB Executive VP John McCale Jr. or baseball executive Corey Busch as trustee.

            Running out of cash last summer, Frank went desperately to Dodgers’ TV partner Fox Sports for a $200 million loan to meet payroll.  When the loan wasn’t approved by Selig, Frank went back to Fox recently trying to borrow $30 million.  When Selig got wind of the transaction, he had heard enough.  “My office will continue its thorough investigation into the operations and finances of the Dodgers and related entities during the period of the McCourt’s ownership,” said Selig, raising the real possibility of a forced sale.  When the New York Mets ran into similar financial problems, last year, Selig lent owners Fred Wilpon and Saul Katz $25 million.  What makes the McCourts’ situation different is their unsightly divorce, egregious extravagance and embarrassing management of one of MLB’s most coveted franchises.  Both Frank and Jamie have no one to blame but themselves.

 John M. Curtis writes politically neutral commentary analyzing spin in national and global news.  He's editor of OnlineColumnist.com.and author of Dodging the Bullet and Operation Charisma.

©1999-2005 Discobolos Consulting Services, Inc.
(310) 204-8300
All Rights Reserved.