McCourt-MLB Fight Likely To Be Messy
LOS ANGELES—Major League Baseball seized control of the Dodgers in April, a famed franchise that fans and much of the baseball world had come to see as crippled by an owner who does not appear to have enough money to operate the team.
Commissioner Bud Selig announced on April 20 that he would appoint a trustee to oversee "all business and day-to-day operations" of the club. A week later, he selected former Rangers president Tom Schieffer for the job.
But on the day Schieffer introduced himself to local media, Dodgers owner Frank McCourt went on the offensive against Major League Baseball, defiantly rejecting what he said was the league's effort to oust him from ownership of the Dodgers. "Nobody handed the Dodgers to me," McCourt said. "Nobody is going to take them away."
In an extraordinary 45-minute news conference that almost certainly foreshadowed a legal battle over control of the team, McCourt accused Selig of having a "predetermined" agenda to force him from ownership, including Selig's appointment of Schieffer.
"Somebody coming in to run my business? I'm not going to accept that," McCourt said.
Selig's move was prompted by a number of issues surrounding the Dodgers, including McCourt's receipt of $30 million personal loan to meet the first payroll of the season, and the parking-lot attack at Dodger Stadium on March 31 that left a Giants fan in a coma, according to a league source.
"This has been like watching a soap opera unfold," said Gary Toebben, the president and CEO of the Los Angeles Area Chamber of Commerce. "We want a financially solvent Dodgers. We want a winning team."
Schieffer must approve any club expenditure of more than $5,000. This puts the franchise on the path to being sold—though apparently not without a fight from McCourt.
The commissioner's move adds to the turmoil surrounding a team that had already been dragged down by divorce proceedings between McCourt and his wife Jamie, who is seeking joint ownership.
News of Selig's decision generally drew the support of Southern California fans who had grown suspicious of the McCourts' stewardship of a ballclub struggling in the standings and facing decreased attendance this season.
Selig echoed those worries in a strongly worded statement.
"I have taken this action because of my deep concerns regarding the finances and operations of the Dodgers and to protect the best interests of the club, its great fans and all of Major League Baseball," he said. "My office will continue its thorough investigation into the operations and finances of the Dodgers and related entities during the period of Mr. McCourt's ownership."
The baseball world had viewed McCourt with suspicion almost from the moment he and Jamie McCourt engineered a highly leveraged purchase of the Dodgers in 2004. McCourt needed a $145 million loan from Fox, the team's previous owner, to finalize the deal, putting up his Boston parking lots as collateral. Fox essentially foreclosed on the property and sold it two years later.
At first, the new ownership brought happier days to the Dodgers, who advanced to the playoffs in four of the next six seasons. In 2008, they won their first postseason series in two decades.
The team also acquired slugger Manny Ramirez. His arrival helped the team reach the National League Championship series in 2008.
Public opinion of the Dodgers' ownership—lukewarm in the best of times—turned chilly when court documents from the McCourts' divorce proceedings revealed that the Dodgers had been charging themselves millions in rent each year, with some of that money going toward the couple's personal expenses.
The couple had made numerous real estate purchases, including side-by-side homes, and paid Russian physicist Vladimir Shpunt to channel positive thoughts toward the team.
More recently, McCourt tried to arrange a $200 million loan from Fox, using the team's cable-television broadcast rights as collateral. Selig rejected the proposal. The commissioner has yet to rule on a proposed 20-year television contract between Fox that McCourt presented as a long-term solution to settle his divorce, manage the Dodgers' debts and improve the team and the stadium.
Meanwhile, season-ticket sales have fallen from 27,000 in 2007 to about 17,000 this season, according to court documents and baseball sources.
Baseball is not accustomed to the commissioner taking such bold action against one of its owners. Even the controversial Marge Schott, accused of making racially and ethnically offensive statements when she owned the Cincinnati Reds through the 1990s, was able to retain ownership after negotiating a one-year ban and a $25,000 fine. She subsequently agreed to sell the team.
Last season, Selig threatened to take control of the Rangers as their owner, Tom Hicks, dealt with creditors over a large debt. A Major League Baseball executive monitored the Rangers, who subsequently reached the World Series under new ownership and lost to the Giants. In 2002, the league purchased the Montreal Expos from owner Jeffrey Loria for $120 million. That franchise was moved to Washington, D.C., and transferred to new ownership.
The players, now accustomed to fielding questions about ownership, reiterated that they would ignore any outside distractions. "I can't control that," center fielder Matt Kemp said. "I can't control front-office stuff."
Not Letting Go
McCourt, however, gave no indication that he planned to let the franchise go easily. When Schieffer arrived in Los Angeles, McCourt was not there to greet him. He was in New York meeting with representatives from the commissioner's office, primarily to make one last pitch for approval of a television contract with Fox that would serve as his financial lifeline.
Selig did not attend the meeting and has refused to meet with McCourt, in part out of concern that any of his remarks might be used against him in a potential lawsuit. One longtime major league executive said he is convinced nothing McCourt might say could sway Selig from moving toward new ownership of the Dodgers.
"I've never seen him more determined," said the executive, who declined to be identified because of the possibility of a lawsuit.
McCourt said the Fox deal would provide the Dodgers with $300 million now and could be worth "in excess of" $3 billion over 17 years, providing the team with "the financial wherewithal to compete at the highest level in baseball for years to come." McCourt said he would invest the $300 million into the team and said he had signed an agreement that none of that money would be used to settle his divorce or for any other personal purpose.
Those statements angered Selig and his lieutenants, already upset that divorce proceedings revealed the Dodgers had taken on more than $400 million in debt while the McCourts had taken more than $100 million from team revenue for personal use.
"Now he wants you to say, 'Yay, you're going to put money into the team instead of using it for something else?' " said one person familiar with Selig's thinking.
Selig rejected a proposed $200 million loan from Fox to McCourt last winter, in part because the repayment terms could have devalued the media rights for the Dodgers and, in turn, for other teams in the league. McCourt said he was told during his meeting with MLB officials that Selig had rejected the new television contract with Fox.
McCourt made an "implicit litigation threat" during the meeting, according to one person familiar with the meeting but not authorized to discuss it publicly. In McCourt's news conference, he did not say specifically that he would sue. "I'm going to protect my rights," he said.
Rob Manfred, the executive vice president who led the MLB delegation that met with McCourt, said in a statement that McCourt's public recounting of the meeting was "not accurate." Manfred said McCourt had been told Selig would make no decision on the Fox agreement until an investigation into the Dodgers' finances was complete.
Fox, which needs to keep the Dodgers from leaving for the new Lakers/Time Warner channel, has indicated the proposed deal with McCourt would be available for any new Dodgers owner. Selig was angered that Fox extended McCourt a personal loan to meet his payroll obligations, and for now Fox has left McCourt to fight his own fight.
In his statement, Manfred said McCourt had been sent an eight-page letter setting forth Selig's concerns and the basis for the investigation. In their meeting, Manfred said McCourt had not asked "a single, specific question" about Schieffer's role.
"There has been no seizure of the Los Angeles Dodgers," Manfred said.
That quote outraged McCourt and his executives, since Schieffer said in his news conference that he would control the Dodgers.
"The commissioner has the right in the best interests of baseball to take control of a franchise," Schieffer said. "That's what the commissioner has done, and I'm his representative."