Friday, July 9, 2010

Just another day...

As you've likely seen, we've got another controversial line item within Dodgers finances. This time, it's Howard Sunkin at issue. Sunkin, one of the Dodgers' highest-ranking executives, nominally works for The McCourt Group, a holding/management company of sorts with its claws in nearly all aspects of the organization. According to a report in the New York Times, however, The McCourt Group hasn't been Sunkin's only source of income. Katie Thomas and Michael Schmidt write that Sunkin was paid...
...more than $400,000 from the team’s charity [the Dodgers Dream Foundation] in 2007, which accounted for one-quarter of the foundation’s nearly $1.6 million budget that year. 
At the same time Sunkin was paid by the foundation, he performed other responsibilities for the team, including acting as a key adviser to the owner Frank McCourt and being the Dodgers’ chief negotiator with politicians and businesses. The Dodgers said they paid Sunkin an additional salary for his work outside the foundation but declined to say how much.
Revelations of the size and source of Sunkin’s compensation come as significant questions are being raised about how Frank McCourt and his wife, Jamie, who are fighting over ownership of the Dodgers in their divorce, used the team’s funds and whether they skirted tax laws.
I reached out to the Dodgers for comment on this story, and Josh Rawitch, the Dodgers' vice president for communications, forwarded me a statement. Here is a brief excerpt; feel free to e-mail me if you'd like to see the whole thing.
Howard expanded the scope of DDF to go beyond Dreamfields. DDF established and designed an award winning school curriculum for hundreds of thousands of Los Angeles students over the last 5 years.  DDF developed a college scholarship program in conjunction with the Jackie Robinson Foundation and 42 scholarships are annually to students of color and need.
Over the 2005-2007 time frame, the payment for Howard's services was shared by the LA Dodgers and  the DDF.  In 2007, the majority of his compensation was paid by the DDF because of the extra ordinary time commitment to the Foundation which was required of him.  That compensation in 2007 included a bonus for achieving over a three-year period the objectives that were given to him.  He spent more time on DDF than anything else that year.  With the building blocks in place, Howard turned his attention back to Dodger and McCourt responsibilities.  He continues to play a role in the DDF at no cost to the Foundation.
Bottom line:  Howard was the only DDF staff person for years.  His efforts have achieved significant results for DDF and the LA community, especially when considering what was inherited at DDF when McCourt purchased the team in 2004.  DDF’s scope is extensive, and thanks to Howard, the building blocks were put in place for long-term success.  
Howard’s compensation was and is commensurate with his portfolio of responsibilities.
Thompson and Schmidt, in the New York Times piece, go out of their way to characterize Sunkin's income from the DDF as extraordinary for the head of an organization its size. The Dodgers' statement, naturally, focuses on why Sunkin's compensation shouldn't be evaluated so superficially. Really, when it comes down to it, the Times wants blood, and the Dodgers are trying to stop the bleeding.

As for me, I guess I see things a little differently. I doubt the sources of Sunkin's compensation were ever supposed to be perfectly proportional to his work. It was likely about accounting as much as anything else, and when you have a web of interconnected organizations as complicated as the Dodgers Enterprise, some things just won't make perfect sense.

That's not to say this wasn't intentional. I don't think the sources of Sunkin's income were accidental; it would be extraordinarily foolish to fudge numbers in this situation. As has been pointed out by a friend, to the extent the Dodgers' charity was paying Sunkin's salary, the taxpayers were subsidizing his paycheck. That fact shouldn't be lost on us, and I'm confident it wasn't on the Dodgers.

Still, we're left with yet another situation implicating the fuzzy intersection of right and wrong. Is it right that the Dodgers Dream Foundation was spending such a large portion of its budget on Sunkin? Is it wrong that two adult McCourt sons are on the organization's payroll? How much do we care that the McCourts used the Dodgers to fund a lifestyle that is out of nearly everyone else's reach?

I think the entire divorce fiasco ought to teach the rich, famous, and powerful a strong lesson. Public Relations doesn't start at the press release and end when the cameras shut off. Public Relations is a 24/7 process comprising every single element of an organization. When operating an organization as notable as a professional sports team, it must be ingrained in each member that every little thing you do faces the public. There is no such thing as "no one will ever notice." 

As the Rangers and Dodgers are both learning, the line between public and private information can vanish in a heartbeat. The Dodgers can't unring the bell on Sunkin, or Shpunt, or the John McCourt Company, or Project Jamie, or $0 in personal taxes, or any of the other dozen or so stories that have chipped away at McCourt popularity since October. It's all out there, and it can't be taken back.

Some of it is noise, some is real, and the distinction between the two is awfully hard to draw from the outside. I'm not upset that the Dodgers Dream Foundation paid Howard Sunkin. Not one bit. It's tough to dispute how much the DDF has accomplished under his leadership, and I give a wide berth to business decisions. I'm disappointed, though, that the Dodgers seemed to have run a great deal of their business with no regard for what might happen if the curtains were pulled back. And pulled back they most certainly are.


  1. This puts the end to any silent auction bids.

  2. That fact shouldn't be lost on us, and I'm confident it wasn't on the Dodgers.

    Or the IRS.

    Having been at the receiving end of a (pointless, fishing expedition) tax audit once, I wouldn't normally wish one on my worst enemy. But here's a case where clearly a bright line was crossed, and there's simply no justification for what the McCourts have done.

  3. Does Manny know he contributed to Sunkin's salary? Part of his deal was to donate a million dollars of his salary to the charity

  4. The players' union grievance succeeded. Manny didn't have to pay into that fund, although he may have anyway.

  5. A question: if Jamie's argument appears to be that the document where she agreed to put the Dodgers in Frank's name only, and four houses in her name only, is null and void because it contradicts California marriage law and can't override it because that would be illegal - then surely this is something that would have really wide repercussions on case law, no matter what the judge's decision.

    Would that not make it pretty well guaranteed to go on to Appeals court and then California Supreme Court, no matter what the judge decides? This could go on and on and on before a definitive final judgment is made, no? What are the chances that the judge's decision would go into effect pending the appeals? I would guess none. I don't see how investors Frank is trying to attract to develop the stadium property, etc. would be ready to go ahead until the final disposal of assets is determined. It looks like a very long stalemate to me. Am I wrong?

  6. "I'm not upset that the Dodgers Dream Foundation paid Howard Sunkin. Not one bit."

    What would upset you? If Sunkin were paid 500K? 1M? The fact is his salary stripped funds that, as far as the I.R.S. and the State of California's AG is concerned, should have been devoted to a "charitable purpose." Both McCourts need all the PR help they can get, but only their lawyers would consider such help charity.

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