MLB's Fire Sale of the Los Angeles Dodgers

by John M. Curtis
(310) 204-8700

Copyright June 1, 2011
All Rights Reserved.                                         

            With the clock ticking down to make a $30 million payroll for the Los Angeles Dodgers, owner Frank McCourt continued to borrow from Peter to pay Paul, convincing Fox Sports to advance the cash against a $3 billion TV deal.  Getting Fox to cough up the cash against future sponsorship deals, McCourt ran out of conventional lending circles.  Major League Baseball Commissioner Bud Selig warned the McCourts that failing to meet the team’s payroll would result in the immediate seizure of the coveted sports franchise.  Since appointing a monitor Tom Schieffer April 27, the McCourts have continued to battle for the Dodgers in divorce court, with Franck scrambling to find alternative financing to keep the franchise.  Since buying the Dodgers from Fox for $430 million in 2003, the McCourts’ went on an epic-spending binge leaving the franchise near bankruptcy.

            Apart from the ugly public divorce in which Frank and Jamie battled for control of the Dodgers, they spent $108 million between 2004 and 2009 on extravagant real estate purchases in posh areas of Los Angeles.  “This is the darkest chapter in Dodger history these last couple of years,” said William McNeil, author of “Miracles in Chavez Ravince,” blasting the McCourts’ for gross mismanagement.  After leveraging the cash from their 24-acre Boston waterfront property, the McCourts bought the Dodgers from Fox Sports.  Watching the McCourts’nouveau riche extravagance sickened ordinary Dodger fans.  “It’s the only period when the fans don’t have a good sense of optimism about the team,” said McNeil, echoing fans’ disgust at how the McCourts, from Day 1, mismanaged the franchise.  Using the franchise as their own ATM, the McCourts abused MLB’s franchise agreement

            Lashing out at Selig’s decision April 28 to appoint a monitor as “un-American,” Frank shot himself in the foot, displaying the same classless behavior that prompted MLB to finally step in to save the franchise.  Frank and Jamie knew  that when he signed the MLB franchise agreement in 2004, it wasn’t the same as owning their own business.  “No one handed me the Dodgers and no one is going to take it away from me,” said McCourt, rejecting MLB’s attempt to restore order and dignity one of MLB’s premier franchises.  Since buying in the Dodgers from Fox and moving to Los Angeles, the McCourts embarked on a wildly extravagant in-your-face lifestyle.  Frank and Jamie had no compunction about buying two homes in Bel Air near the Playboy mansion and two more in Malibu for $70 million.  Court papers show Frank paid $60 million out of the $108 million loan to pay mortgages.

            Frank and Jamie didn’t stop with extravagant real estate purchases, paying $225,000 a month for a private jet, not to mention’s $10,000 a month on Jamie’s hair stylist, thousands more on clothes, Super Bowl trips and lavish Caribbean vacations.  No one begrudges the McCourts their due but when all the extravagance is aired in public and hurts the franchise’s cash-flow, MLB has a right to question ownership’s appropriate management.  “I think it was very—very uncomfortable, very nice and very family oriented and we had a lot of nice things,” Frank admitted in court documents.  “I think it became out of—out-of-control, unsustainable and very uncomfortable lifestyle,” admitting that both he and Jamie, like two addicts, were beyond the pale.  Frank likes to point out how he increased Dodgers’ revenue from $156 million in 2004 to $290 million in 2009 to justify his extravagance.

            Frank rejects Selig’s attempt to provide accountability to Dodger ownership, believing any type of wheeling-and-dealing works with MLB.  What Frank doesn’t get is that there’s protocol in getting the privilege, not the right, of owning a MLB franchise.  No one would care about his extravagance had it not impacted his ability to meet the team’s payroll.  MLB wants to prevent the McCourts from squeezing every drop of equity of the franchise by borrowing heavily against future TV revenues.  Given the McCourts’ unseemly behavior, it’s a matter of time before MLB demands new ownership.  Even the most conservative judges won’t buy Frank’s argument about private property rights.  Frank doesn’t quite get that “money” is not the only thing that talks or counts with MLB.  Ownership, too, must not embarrass MLB and shame America’s favorite pastime.

            Whatever happens with McCourts’ divorce, neither Frank nor Jamie is fit to run a MLB franchise.  Borrowing from Peter to pay Paul is no way to meet payroll, regardless of how the McCourts manage their personal finances.  MLB must prevent Frank from squeezing more equity out of the franchise, something that would no doubt cost MLB when seeking new ownership.  Allowing Frank to borrow against future TV revenue would weaken the franchise to the Dodgers’ next owners.  When the dust settles and new owners are eventually found, Selig must answer why his Ownership Committee failed to vet the McCourts’ properly in 2004.  MLB knew then that the McCourts’ mortgaged their Boston parking lot business to buy the Dodgers.  Given their extravagant lifestyle, it was only a matter of time before they’d run out of cash.  Now MLB must fix the problems and start over.

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.

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