Thursday, February 25, 2010

That pesky jet.

Last weekend, I posted this excerpt from Jamie's spousal support request filings:

Let's flesh out line item 5 a bit:

Now, is anyone really going to begrudge Jamie the $880 each month for social club dues? The Dodgers should have been paying for her phones, some meals, board fees, security, and makeup. Those are all completely reasonable expenses to pay for a high-level employee, which she was. Same goes for the tables at various charity events--it's good for the brand to put her out there. She was the face of the Dodgers, after all.

Where it gets sticky is the jet lease. Per Jamie's forensic accountant:
Jamie McCourt's personal flights accounted for approximately 44%, or 159 hours, of the total flights taken by Jamie McCourt and/or Frank McCourt. Jamie McCourt's business related flights and flights that Frank took without Jamie McCourt are excluded from my analysis of Jamie McCourt's usage.
It's important to note that the $248,778 monthly NetJets perk isn't Jamie's half of the total Dodgers bill for the service; Jamie's forensic accountant did not split the $225,000 monthly lease payments and aircraft management fees for the team's 37.5% interest in a Gulfstream IV. Rather, he included that entire portion as a perk the Dodgers paid to Jamie, in addition to the approximately $24,000 per month of usage fees she incurred by her personal flights.

This is probably appropriate; I'd imagine the benefit to owning a private jet isn't so much about the flights themselves, but the availability of a flight at all times. Still, it's fair for us to ask: is this a reasonable business expense? Were Jamie and Frank taking their own jet to away games in lieu of flying on the team charter? Is that reasonable? How often was the jet flown with many empty seats?

Company aircraft have come under fire during the recession, and I'm not here to tell you which side is correct. I understand that flying by private jet can be extraordinarily expensive, even when compared to flying first class at the last second. But I also recognize that such travel can be much more efficient than commercial airlines--and hey, time is money. So I'll let you decide how you feel about the Dodgers spending millions each year to have a G-IV at their disposal.

I will tell you, though...the monthly perks to Jamie McCourt would look a whole lot less shocking without a quarter-million bucks devoted to travel by private jet.

Tuesday, February 23, 2010

So just how much are the Dodgers worth?

In the last 18 months or so, there have been three different valuations of the Los Angeles Dodgers, each made in different circumstances.

"Multiplier" refers to the number by which a team's annual revenue figure is multiplied to reach a quick-and-dirty estimate of franchise value. In recent years, the Cubs were sold for 3.1 times revenues; the Padres' sale occurred at a 3.6 multiplier.


Valuation 1, September 2008

Asset: the Dodgers
Multiplier: 3.0

Value: $872,100,000
+stadium and land: $1,355,700,000

Valuation 2, May 2009

Asset: the Dodgers only (stadium and land not considered)
Multiplier: 3.2

Value: $963,000,000

Valuation 3, June 30, 2009

Assets: the Dodgers, Dodger Stadium, and the surrounding land
Multiplier: 2.4

Value (including stadium and land): $859,400,000


So what's going on here? How were the Dodgers, Dodger Stadium, and the rest of the 276 acres of Chavez Ravine worth less on June 30, 2009 than the team alone was worth the month before? Chopping 0.8 off the multiplier certainly doesn't explain this precipitous drop in value. Understanding the jarringly different figures first requires some information about what went into the valuations.

In the first two valuations of the club, the potential tax liability upon a sale was not recorded. Frank's CPA had asked about including that figure, but was told "it wasn't necessary because the assets aren't being sold." Adding that potential liability to Frank's financial statement reduces his assets by over $113 million. I don't have a hard figure for how much of that liability also hit the value of the Dodgers, but it is surely a significant amount, a major factor in the rapid devaluation of the team.

The second contributor to the seemingly-calamitous decline in value is that, in preparing the June 30, 2009 documents, Frank's CPA was told to "'collapse' the stadium and land into the value of the Dodgers." This, according to Jamie's filings, simply erased $324.2 million in assets which had appeared in previous valuations of the Dodger assets. Frank's CPA offers no explanation for the sudden change in accounting methods.

I haven't seen figures for the stadium and land as of the May 2009 valuation, but the combination of the lower multiplier, tax liabilities, and elimination of separate values for the stadium and land reduced the value of the Dodgers by $496.3 million from September 30, 2008 to June 30, 2009. 

I suppose I should tell you a few things about these three valuations at this juncture. V1 was prepared as part of Frank's personal financial statement as of September 2008. There is nothing too notable about it; it was used for, among other things, tax planning and credit application/maintenance. V2 comes from the proposal to the Chinese investment bank CITIC to join a Global Sports Partnership. It is understandably optimistic--marketing as much as anything else.

The third valuation is a little more curious. It was completed on January 20, 2010, though it represents the situation "as of June 30, 2009." Frank's financial statements from this particular CPA had traditionally lagged no more than three months behind their "as of" date. As you know, there were some fairly significant events in Frank's life between June 2009 and January 2010. The McCourts separated on July 8, 2009.

Jamie's lawyers, of course, aren't terribly thrilled with the newly-diminished value of the Dodgers. The lower Frank's net worth, the less she can get in spousal support; she's seeking nearly $1 million monthly. In her filings, Jamie characterizes the "as of June 30" financial statement as a "sham." She claims this statement was fabricated in direct anticipation of litigation and should be disregarded. Her lawyers assert the following:
[I]mmediately after learning that a copy of that financial statement had been emailed [...] to a banker who had requested a more current financial statement for Frank -- and only eight minutes after [it had been emailed] to that banker -- [Frank's lead financial advisor] sent his own email to that banker advising him that the numbers on that financial statement had been "scrubbed."
[Frank's financial advisor] adamantly denied that by using the term "scrubbed" he meant that the values had been "doctored" or otherwise lowered. He can deny it all he wants. Jamie is confident that this Court knows precisely what [Frank's financial advisor] was attempting to convey to the banker, who otherwise quite understandably could have been very distressed by a purported 80% drop in the net worth of a customer with whom the bank had a substantial outstanding loan. 
Now, I should be clear: there are often perfectly valid reasons for producing back-dated financial statements. If, for instance, Frank's advisors determined that the tax liabilities should have always been included in valuations of the team, amending prior financial statements to reflect that accounting decision might be appropriate. "Scrubbed" could mean, as Frank's money guy contends, most accurate. What would not be very acceptable, however, is fabricating a financial statement which dramatically devalues Frank's assets in anticipation of litigation over spousal support.

It's not prudent to draw conclusions based on Jamie's assertions alone. Her filings are one-sided, as they should be. Frank will have a chance to tell his side of the "as of June 30, 2009" story, and this issue will play a huge role in resolving the spousal support issue.

As for the Dodgers, I'm inclined to believe they're currently worth around $900 million, not including the stadium, land, or tax liability. Not a terrible return on a $371 million investment.

Monday, February 22, 2010

Debt and taxes.

Two parts of Jamie's most recent filing have folks sort of rankled up. The first has to do with Jamie's assertion of how much the McCourts have taken out of the franchise (and how little they've given back):
From 2004 through 2009, the McCourts received in excess of $108,000,000 in what was characterized as "ownership distributions" from the McCourt Enterprise. . . . Further, those funds were not reduced by any income tax liabilties because the parties have not paid any federal or California income taxes since they moved to California in 2004.
Now, this seems awfully inappropriate, doesn't it? However, everything's not quite what it seems. The "ownership distributions" don't come from profit, but from debt. Basically, proceeds from loans aren't taxable as income. And what's more, paying off debt is an expense which can be used to offset income. So what is this mystery debt?
On a recurring and systematic basis, large loans have been obtained, several of which were secured and/or paid by such future income streams. Substantial portions of the proceeds of those "monetizations" and other capital events then were used in whatever manner directed by the McCourts. When needed by the parties, millions of dollars of those funds were distributed to them. 
So what exactly was going on? The Dodgers would incur massive amounts of debt --  $390 million to this date, with another $125 million facility structured but mothballed for now -- secured by ticket sales and other revenue streams. A large portion of the loan proceeds would then be paid directly to the McCourts for their personal use. Of the most recent $140 million loan, for example, $20 million went to the McCourts. The debt service on this $390 million, which comes to about $30 million annually, is then a deductible business expense for the McCourt Enterprise.

At the end of the day, this arrangement works for everyone involved. Frank and Jamie got tax-free cash. The McCourt Enterprise enjoys tax benefits. And it's difficult to see how this could have a negative impact on the team. Yes, borrowing money costs money. But so does incurring tax liability. As structured, this monetization of future ticket sales serves to push the tax bill back to the time at which the assets are sold. And an expensive sale it would be; Frank's CPA estimates that disposing all of the McCourt Enterprise assets would result in a $113 million tax hit.

This is just one piece of the financial workings of the Los Angeles Dodgers (and the McCourt Enterprise in general). "Debt" is a scary word, but from my perspective, there's nothing overly concerning about this. Sure, it might be a little frustrating to hear that Frank and Jamie have taken $108 million out of the Dodgers without paying a dime in income tax, but that's a systematic issue not unique to this couple.

There's oodles more to talk about, Shaikin's latest detective work being on the front burner. Doubling ticket costs without raising payroll? That's not going to sit well.

Saturday, February 20, 2010

Jamie's perks.

Oh, it all makes sense now!

Prepared by Jamie's forensic accountant, David J. Swan. "TMBLP" is The McCourt-Broderick Limited Partnership.

The Los Angeles Gorillas?

Another quick nugget from Jamie's filings:
The proceeds from [a planned $125 loan] were intended to get the McCourt Enterprise to 2013, at which time its intention is to launch the [Regional Sports Network]. . . . As set forth in [Frank's financial advisor's] email, the McCourt Enterprise intended to use part of the loan proceeds to cover the cost of "entitling" the land in Chavez Ravine for "Gorilla," the name given by the McCourt Enterprise to the contemplated stadium project for a new Los Angeles-based NFL team.
I suppose Gorilla could just be the code word for the stadium itself. Which is good, because Los Angeles Gorillas doesn't make a whole lot of sense.

I'm still getting through all the docs, but we'll have some fun things to talk about later this afternoon.

Friday, February 19, 2010

A note from Jamie's filings.

In a big hurry this afternoon, and this week in general. But here's something to tide you over for the afternoon:
[P]erquisites paid directly by the McCourt business [Dodgers included--Josh] constituted a very significant element of the marital lifestyle, averaging an additional approximately $800,000 per month.
The emphases are Jamie's legal team's.

Matt Kemp and Clayton Kershaw combined to make $871,000 in salary for the 2009 season.

Thursday, February 18, 2010

Filings running wild (updated).

It was about time for some new divorce news, though I didn't expect the newest developments to be this explosive. Let's start with the Wall Street Journal's John Emshwiller
In Thursday's court filing, Ms. McCourt said that her husband's personal financial statement as of Sept. 30, 2008 showed his net worth at $834.9 million. However, a follow-up personal financial statement showed that as of last June 30, Mr. McCourt's net worth had dropped to $163.4 million. Ms. McCourt's filing contends that the second financial statement was prepared after the couple separated and its results were "fabricated" through "blatant balance sheet manipulations" to show a much lower level of wealth. Ms. McCourt's filing contended that the "net equity value" of the assets of Mr. McCourt's enterprises was in excess of $2 billion. 

In filing for divorce in October, Jamie McCourt asked for $488,000 per month in temporary support. The revised request -- for $988,845 per month -- reflects property-tax bills as well as additional records that her lawyers claim can show the couple averaged $2.3 million per month in salaries, distributions and perks starting in 2004, when the McCourts bought the Dodgers.
Frank McCourt still would have $1.3 million per month to maintain his lifestyle, her lawyers wrote. 
"Jamie fully recognizes that the . . . award which she will be seeking will be viewed by many people as being astronomical," according to the filing. "That may very well be the case. But Jamie's request also has been thoroughly documented . . . as being wholly consistent with the parties' marital lifestyle." 
As we've discussed, Jamie's legal position demands that she go after every available dollar. Greedy? Yes. Justifiable? Absolutely. Back to Emshwiller for a moment
Ms. McCourt's attorneys included in their filings a private placement memorandum, dated May 2009, where Mr. McCourt appears to be proposing to sell a share in the Dodgers as part of the creation of a global sports enterprise. The memorandum said that an entity---Global Sports Partnership LLC, to be run by Mr. McCourt's operation---would own the Dodgers and professional soccer teams in England and China. 
And let's close for the night with Shaikin, on perhaps the most important Dodgers news, which concerns more local revenue streams: 
The Dodgers intend to launch cable channels in English and Spanish in 2014, after the expiration of their contract with FSN, with annual profit projections of at least $150 million, according to documents in the filing. Alternatively, the Dodgers estimate they also could sign a five-year extension with FSN for $300 million, according to the deposition of a club executive. The Dodgers remain interested in building an NFL stadium adjacent to Dodger Stadium, and in persuading City Hall to lift zoning restrictions and allow "over a million square feet of mixed-use developments" in the stadium parking area, according to the filing.
Both pieces discuss how much the McCourts were taking out of the Dodgers (approximately $2.3 million each month) and the financial maneuvers required to do so tax-free. Needless to say, there's a ton to discuss about these most recent filings, and we'll get there tomorrow.


Hey, it's tomorrow! Some quick thoughts:

  • If you're Jamie, aren't you at least a little bit wary of waving your arms in the air and declaring you haven't paid taxes in the last several years? I mean, if her strategy is "it's my stuff too," that would seem to carry over to IRS problems. It could all be kosher, but there's also the public relations side of things. As commenter Mike suggests, it's tough to ask for support from a community you extract millions from without personally paying a dime. Especially in California right now.
  • Emshwiller's article in the WSJ notes that Frank (and Jamie?) have racked up $390 million of debt seemingly secured by ticket sales. This looks, to me, like the mystery debt service piece, and could go a long way to explaining why those season ticket renewals matter so much. I haven't seen the instrument, but it could well be a "floating" line of credit, so the availability of loan proceeds depends on ticket sales. As renewals go up, so does the borrowing base of the credit facility. Layman's terms: your ticket dollars might flow through to a financier; Frank might have already been paid for your future ticket purchases. This piece is something I want to know much more about.
  • Shaikin provides a description of "how Frank McCourt hopes to transform the Dodgers from a baseball team into the anchor of a sports business empire." Emshwiller has a 7% share in that business empire costing $150 million. That puts the value of the whole venture at about $2.1 billion. This strikes me as pie-in-the-sky talk, for now. But interesting, nonetheless.
Lastly, and this is important: remember that all of this comes from Jamie's filings. Frank's will probably be  equally (but oppositely) outlandish, and the truth likely resides somewhere in the middle. Jamie's legal team's job hasn't changed: live on the border of reasonableness. The spousal support issue is one that might very well be settled between the parties. It's in their best interests to make seemingly-outrageous claims at this stage. That's not to say we can't learn a great deal from this part of the process. But it's just that: a waypoint on the journey.

Wednesday, February 17, 2010

Let me take you back...

--- November 5, 2003. Eric Gagne was nine days from winning a Cy Young in recognition of a transcendent season. And Frank McCourt was knee-deep in his bid to purchase the Los Angeles Dodgers. The Los Angeles Times ran a thorough piece by Thomas R. Mulligan and Roger Vincent titled, "Dodgers Buyer Covering All the Bases." A recurring moitf the article is Frank's relationship with the communities playing host to his business ventures. Let's jump right in--I don't know how to link this article in a publicly-available way, so this will have to do for now.

[T]hose familiar with the 49-year-old's track record say that, whatever his ultimate plans, he is bound to let them unfold slowly. That, they say, is because McCourt has learned from experience the importance of handling major undertakings in person and building community support before taking potentially controversial steps.

McCourt is sending another clear signal by moving to Los Angeles. McCourt and his wife and business partner, Jamie, are house-hunting and scouting schools for the younger two of their four sons, Casey, 17, and Gavin, 13.
McCourt, according to people close to him, plans to open a West Coast office of McCourt Co., his Boston-based development firm. To that end, he dispatched his older sons, Drew, 22, and Travis, 20, to the Southland over the summer to gather information on the regional economy.


The rap against McCourt from some hometown critics is that he has repeatedly announced big plans for his South Boston land but has done little more than operate commuter parking lots on it.
Douglas Lemle, owner of the Barking Crab, a waterfront restaurant adjacent to McCourt's property, calls McCourt "a gremmie," a term from Lemle's youth on the beach in Honolulu.
"A gremmie's a guy who sticks his board in the sand and waits for the big one and never surfs," Lemle said.
There's bad blood between the two dating from a 1997 incident when McCourt began towing unauthorized cars of Barking Crab customers from one of his lots. Lemle retaliated by posting a sign directing complaints to McCourt's home phone, resulting in a barrage of angry late-night calls.


Despite sparring with popular Mayor Tom Menino, McCourt has cultivated a strong political and community network around Boston. Away from home, however, his magic touch sometimes has deserted him.
In his wife's hometown of Baltimore, McCourt refurbished a large building in the trendy Inner Harbor, opening several restaurants and nightclubs to great local fanfare in 1989. But the place closed nine months later amid friction between McCourt and the entertainment firm he had hired to operate the facility.
McCourt and his investors took a $30-million bath. The lesson he apparently took from the debacle was never again try to run a business by long distance.
A few years earlier, McCourt had secured a large waterfront parcel in South Portland, Maine, announcing ambitious plans for office and retail development, condominiums, a marina and parkland. Ultimately, faced with grass-roots opposition and a slowing economy, all he finished were the condos and marina, letting options on the rest of the land expire at a loss.
Former South Portland town manager Jerre Bryant believes that McCourt failed to adequately win community support. He never could shake the tag of a big shot from Boston with no feel for local concerns, Bryant said.
McCourt did better advance work for his unsuccessful 2001 bid for the Boston Red Sox. His bid was contingent on moving the team from venerable Fenway Park to a new stadium he would build on his South Boston site.
Support was hardly unanimous in insular "Southie," but McCourt won praise for showing up at neighborhood hearings and otherwise touching all the political and community bases.

McCourt is already well into his Los Angeles networking.
Well, here we are in the Winter of 2010. The Dodgers are reportedly talking about bringing Gagne back on a spring training flyer. And Jon Weisman recently offered what ought to be regarded as the defining evaluation of Frank McCourt in Los Angeles' eyes:

It’s not an act. He’s not just saying the right thing to say the right thing. Every so often, in fact, he says the wrong thing – something that raises more questions about him than answers – because his belief in his good intentions is so strong that he doesn’t always seem to realize when his words leave him open to second-guessing. 
He wants the support of Dodger fans, in part because the support obviously will do him good, but also in part because he believes he’s earned it. He understands that fan dissatisfaction is part of the game any time you're not celebrating a World Series title. He understands that he’s a target, though he doesn't seem to accept all the reasons the red dot on his back has grown into the size of the flag of Japan. He even understands, though he's not one to talk much about them, that he makes mistakes. But he believes he will be vindicated in the end, and he is not planning for that end to be this year, courtroom or not. 

From my vantage point, it sure seems like Frank McCourt expected the Dodgers to be like the rest of his business ventures. Building community support would be key, but, when it all comes down to it, might would make right. So he made a big show of moving to Los Angeles, hobnobbing with the local heavy hitters, establishing a presence, and hammering home the concept of family ownership--he so badly wanted fans to connect to him.

And in the end, might could have made right. Armed with cash and enough political capital to make do, who knows what Frank could have accomplished. Might the Dodgers be playing down the street from Staples Center? Might Chavez Ravine be home to the hottest residential real estate in Los Angeles? Both once seemed eminently possible.

The problem was that Frank's might ran out. The liquidity wasn't there. And baseball teams operate quite differently from normal businesses. Run a small company with an iron fist and the whatever toes you step on probably belong to someone who has to grin and bear it. Run a baseball team in a major market on a shoestring budget, and you run the risk of an entire community turning on you. 

The big question is: could things ever get to the point where people stop showing up? As long as the product on the field is competitive and the sun still sets over the left field bleachers, I'm not sure any amount of fan unrest will affect gate receipts. It's for this reason that, at this point, Frank ought to rethink everything he thinks he knows about community support. How Los Angeles feels about McCourt ownership will, in the end, rest almost entirely on the product on the field.

Sunday, February 14, 2010

A handy refresher.

If you haven't tracked the situation here from the start, Yahoo! Sports' Tim Brown wrote a lengthy, detailed summary of the McCourt drama. There's not a ton of new information, but for some puffery from Jamie's attorney, Bert Fields. Brown quotes Fields: 
Unlike Jamie, I don’t think Frank is willing to spend what Jamie will to keep them competitive. You might ask him how much money he took out of the organization last year. You might be surprised. Rather than spend it on pitching. 
It should be noted there's nothing wrong with Frank drawing income. While Dodger fans might prefer he put some of his $6 million distribution into the team, that's not required. We can discuss the merits of how Frank uses his own money, but there's no concrete support for an inference that Frank is doing anything improper or illegal.

Yahoo!'s Brown also notes: 
Jamie’s lawyers suggest she was coerced into signing the contract and claim she is co-owner of the Dodgers. Courts overturn such agreements, Fields said, “all the time.”
Frank says the contract is “very clear, simple, straightforward and binding,” and that his estranged wife has no legal claim to the ballclub.
Fields is a character; it doesn't take a great deal of savvy to see through his rhetoric here. He might as well have said courts reverse "many" contracts, or do so "with some frequency." "All the time" means nothing. As we've discussed, I believe Frank is in a very good position with respect to the post-nup, unless he was hiding assets or somehow acting in bad faith. And Jamie would still have to convince the court to look past her legal expertise.
Further down in the piece:
Not only has Fields accused Frank of taking money “out of the organization,” but Jamie’s lead attorney, Dennis Wasser, in mid-December told the court, “Mr. McCourt is not spending all of his income on his family and on the team.”
Frank is not obligated to spend all his income on his family and the team. Aside from vague implications of financial chicanery, there's nothing at all to these quotes, either.
Brown also discusses the Dodgers' immediate liquidity:
Few, if any, believe Frank will be unable to pay his bills in the short term. By now, renewals on season tickets have arrived, and before the large bills start coming due – in spring training – so does the early broadcasting and advertising money, according to other owners. The first player paychecks go out in mid-April. The large majority of players are paid April through September, semi-monthly. By then, the ballpark (and the parking lot) is up and running. The Dodgers, unlike the Rangers and Padres, are equipped to survive a lean time.
These are important points. While the long-term viability of McCourt ownership is very much in doubt, it's highly unlikely the Dodgers are effectively insolvent. 
Fields is by far the most interesting player in this tragicomedy. Brown continues:
The Dodgers will be seven weeks into their season when a judge considers ownership of the team. If the judge honors the marital agreement, Frank would continue as sole owner. If he finds for Jamie, Fields said, she would expect Frank to sell. To her.
“The most desirable way would be that Frank sells his half to Jamie for a substantial amount of money, because the Dodgers are worth a substantial amount of money,” Fields said. “She has a widespread group of owners with a vast amount of money to put up.
In the event Jamie was awarded half the club under community property laws and if Frank did indeed choose to sell to her, Jamie and her partners would be subject to the controlling interests process with MLB. She would have to be approved by other owners, and her net worth – as the controlling party – would be a factor.
Fields is, as I suppose he should be, extraordinarily optimistic. Even if Commissioner Gordon finds for Jamie, striking the post-nup, I have to believe Frank would fight to the death to keep ownership out of Jamie's hands. And it wouldn't be a tough fight; he could argue (quite persuasively) that if he was struggling to support the franchise when he could borrow money on the value of the whole franchise, how could Jamie make it work with little more than half the resources?
As Brown discusses, the ownership approval process would be a beast for Jamie to get through. As publicly embarrassing as this situation has been, selling herself to baseball's other owners seems like a long shot. If she somehow prevails on the post-nup, I would be shocked if Frank allowed her to own the team. While that might be the only way to set his children up as future owners, I cannot see Frank swallowing the bitter pill that would be Jamie McCourt ownership.
All in all, Brown's piece is a great reason to jump back into discussion about the divorce. Nothing has changed fundamentally since the last time we dove into the topic, but as the season draws closer, so does the litigation. Selfishly, I hope Fields ascends to prominence. He's quite entertaining, in the Scott Boras kind of way. He's certainly a zealous advocate.

Thursday, February 11, 2010

More on Weisman/McCourt

More reaction to Jon Weisman's excellent interview of Frank McCourt (available here).

On premium free agents: 
First of all, I'm never going to be thrilled about overpaying for a free agent. I think it's not a smart thing to do organizationally, and we haven't made 100% great decisions on some of those signings. It wasn't like we didn't have good intentions, and it wasn't like we didn't think when we signed the player [that] they were going to help the team.  
But the one thing about signing a free agent that is beneficial is, it's just money. It's just money. And if you've signed the right player, that can help you then and there, and you can keep your prospects intact, it can be a very, very smart thing to do. 
This makes my head hurt. Very few things in life irritate me more than evaluating decisions by outcomes. 'Free agent signings are smart if the players end up being good' is little more than a sorry excuse for not having adequate processes in place. 'Free agent signings are not smart if the players don't perform as we expected' is admitting that you're so scarred by the past that you're incapable of carrying out the proper process going forward.

In the end, it's just not that difficult. Are the risks of an acquisition (money, prospects, roster flexibility, what have you) outweighed by the potential benefits, when the probabilities of the various outcomes are factored in? We must not be concerned with the outcome of a decision, but rather whether it was correct at the time of the decision, given the information available at that time. And the failure to avail oneself of key information is every bit as damning as a bad decision itself.

Point is, vis a vis free agents, "all's well that ends well" is a crock. And I worry about an owner who believes that a good result validates a bad decision.

Wednesday, February 10, 2010

Late to the party II

As can happen, life intervened yesterday afternoon. I'd still like to talk a little about Jon Weisman's extensive interview with Frank McCourt (available here and with every header). Let's take it one quote at a time, split over a couple days' posts here:

On Randy Wolf:
To me this is one really good baseball debate, in terms of 'Do you or don't you.'
Is that true? Can that be true? I'm not sure it can. The very worst thing that could happen would have been Wolf accepting arbitration and ending up with something like $10-12 million. That's a lot of money, no doubt. But the Dodgers will pay Vicente Padilla $4.025 million anyway, so the extra money for Wolf would seem to have been well-spent. And, of course, that analysis doesn't factor in the extreme unlikelihood that Wolf would have accepted. But we've had this conversation. Let's move on.

On criticism for not spending on young talent:
[T]he organization is much better off in terms of our development, our ability to meet our goal to have the finest development system in the game by having Camelback Ranch. To me that's much more tangible evidence of our commitment to [development] than not offering Randy Wolf arbitration.
Jon tiptoed around this, but I won't. Building Camelback Ranch is about money. Whatever ancillary benefits it might offer, its most important function should be to generate revenue that is reinvested in the club. I don't buy for a second that the presence of Camelback Ranch makes up for being a complete non-factor in amateur free agency and only slightly more aggressive in the Rule 4 draft. And also:
I think anybody can pick one or two examples and jump to a conclusion.
Frank was speaking about Hudson here, but it goes both ways. You don't get to say that Camelback even makes up for the two lost draft picks if you say that conclusions drawn from the Hudson non-offer are meaningless. Camelback, I'm sure, is wonderful. But it's not about development. It's about revenue. 

On holding on to young talent:
I think that the pressure on the organization has probably been greatest in terms of moving young talent for the quick short-term fix, and I think for the most part we've resisted doing that, and it's paid off in a huge way.
Carlos Santana and Josh Bell say hi. that Jayson Werth waving from somewhere in the back? I also don't buy that the pressure to win now has been greater on the Dodgers than on every other team in the majors. It's simply false. And finally, it's important to remember that it's not like the Dodgers have a ton of young talent they could have moved last year. You're not going to move Kershaw in a Halladay deal; that's a net negative. Same with Kemp/Holliday. There's just not all that much young talent to protect anymore. It either graduated, fizzled, or was traded away. And, as we know, it sure wasn't replaced.

On the Dodgers' resources:
Generally speaking, we do spend at that level just below the Yankees and the Red Sox.
Mmhmm. Two factual problems with this statement. First, nobody spends like the Yankees. Not the Red Sox. Not the Lakers. Not the Cowboys. Not Texas football. Not North Carolina basketball. Hell, not even corporate America can spend like the Yankees any more. The Yankees are such an outlier that to pair them with the second-highest spending team is like an actor saying, "Generally speaking, I am at that level of popularity right behind George Clooney and Colin Farrell." Just doesn't compute.

The Dodgers, conceptually, should have no excuse for not having the capacity to spend as much as any team other than the Yankees. Of course, the Dodgers can't cash flow like the Yankees, Mets, or Red Sox because of those pesky television networks. Frank can't have one because it's what Fox kept in exchange for such a low selling price. And it's that low selling price that allowed Frank McCourt to lever himself into the owner's box. This isn't going healthy places. Let's continue.

On Dodger Stadium and public money:
We're very committed to Dodger Stadium. We're committed to actually doing more at Dodger Stadium, (but) there's no help out here whatsoever in terms of investment in a stadium. It's all done by the owner's checkbook. And it's not like getting the city of New York or the state of New York to build a new stadium, or one of these other cities or whatever.
He has a point here; California's probably more broke than Frank's direst filings. And I can't begrudge Frank the notion that the Dodgers' ticket prices are lower than their "comparable" teams. Of course, McCourt also can't deny that Dodger Stadium holds significantly more parking-spot filling, beer-drinking, Dodger Dog-eating, souvenir-toting, ticket-paying fans than just about every other stadium. Can the Dodgers cash flow like the Yankees? No. But each winter's spending should certainly not depend on that offseason's season ticket renewal rates.

Still to come: Frank's philosophies on free agency, trades, and the draft.

Tuesday, February 9, 2010

Frank speaks.

If there was ever any doubt, I think it's pretty clear now that Jon Weisman won this offseason. I'll be back later this afternoon with some specific reactions to Frank's interview with Jon, which can be found here. Grab a cup of coffee--it's a lengthy one. But well-worth a close read.

Friday, February 5, 2010

The 2010 Maple Street Press Dodgers Annual

Take it away, Weisman...
The [2010 Maple Street Press Dodgers Annual, available here,] which will also be available on local newsstands at the start of March, offers 128 ad-free pages devoted to the Dodgers, including a review of the 2009 season, a thorough series of player profiles and articles previewing the coming year, a 25-page section on the farm system and another 25 pages of historical features. Here are some of the highlights: 
  • So Close, Again (2009 season in review), by Eric Stephen of True Blue L.A. 
  • Disorder In McCourt (an analysis of the impact of the McCourts' divorce) by Joshua Fisher of Dodger Divorce 
  • The Collected Colletti (a Q&A), by Josh Suchon of KABC AM 790 
  • Aces Are Wild Cards (The last word on No. 1 starters), by Eric Enders, baseball historian 
  • Prospect Park (Top 20 prospects in the Dodger farm system), by Dodger prospect expert Richard Bostan 
  • Individually Packaged (how the Dodgers develop young arms), by Josh Suchon of KABC AM 790 
  • Sweep And Low (the end of the 1980 season), by Dodger Thoughts commenter BHSportsGuy 
  • The Great Dividers (the 20 most controversial Dodgers of the 2000s), by Jon Weisman
Petriello also wrote the bulk of the player profiles, along with BHSportsGuy and another Dodger Thoughts commenter, CraigUnderdog.
If you enjoy this site (and maybe even if you don't), you won't want to be without this annual.

Jon's last sentence is meant for his Dodger Thoughts readers, but I think it applies here, too. You can pre-order the annual here, and at $12.99, you're paying barely more than a dime a page for material from your favorite Dodgers writers. Suffice it to say I feel honored to be in the group.

Some assorted odds and ends...
  • Via an e-mail from the Times' Bill Shaikin, I've learned that yesterday's $1.4 million payment wasn't a brand new development, but rather the same interim financial support the couple had amicably agreed upon in December. We're really crawling along, aren't we?
  • Frank McCourt is no longer on speaking terms with T.J. Simers, as noted in Simers' Page 2 column here. I've spent many thousands of words here questioning the McCourt ownership, and I bet Frank would rather me interview him than Simers. (If you're reading, Frank,
  • Might as well get all the week's self-promotion out in one post. I'm developing quite the reputation at The Hardball Times for being very pro-greed. I discussed Evan Longoria's pitiful contract in this article, and addressed the Joe Mauer and Albert Pujols situations in blog posts here and here.