Tuesday, August 31, 2010

Afternoon wrap.

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The afternoon's action wasn't quite as spectacular as the morning's. After Leah Bishop found herself on the ropes against Steve Susman early in the day, she staged a remarkable rally. Bishop, still wavering, managed to dodge Susman's several efforts to pin her down in an inconsistency concerning Jamie's understanding of the MPA.

Per her story, and despite Leah's knowledge of the MPA, Jamie didn't grasp the full scope of the document until the summer of 2008. If true, this goes against Frank's claims--backed up by several of Jamie's own e-mails and statements to Bishop--that Jamie always knew what was up. She finds herself in a tricky spot: the record is clear that she wanted the assets separated, but mixed on the question of whether and when she knew what that meant.

Jamie's side intends to prove that she never intended to sign away her rights to the Dodgers. Rather, she trusted those around her--people she had known for periods ranging from years to decades--to handle things with fairness and friendly concern.

Frank McCourt took the stand with little time left in the day, and he said even less. While he slipped up on occasion--he fumbled a timeline early and then admitted the MPA wasn't the result of any sort of bargain--he was largely coy. I guess.

He's going to set a record for the most variations of "I don't recall" ever said in a 24-hour period. In one instance, David Boies was questioning Frank about how ling a particular conversation took. "It could have been more than an hour," Boies stated flatly, "it could have been less than an hour. Is that your testimony?" Frank McCourt: "Yes."

When asked why Frank couldn't recall any details of a day he conversed with both Jamie and Larry Silverstein about the MPA, Frank said, "I was highly programmed at the time, so I don't recall what I did that evening." Shades of Men in Black, no?

My guess is that we'll never feel worse about Frank's chances than we will tomorrow. If Boies can manage it, keeping Frank as a defensive witness on the stand for the entire day would be a masterstroke. It's just how it works: Boies will make Frank look silly, and Susman will do the same to Jamie. Both of those attorneys could easily do the same to me.

Back in the morning, like today, with notes and a preview for the morning to come.
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A Fast start.

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A day that started with fireworks ended with Frank McCourt practicing his recitation of "I don't recall." Here's a quick rundown of what happened before lunch:

--Frank's attorney made his appearance, introducing himself as "Steve Susman and his assault team," referencing an article referring to him as a litigation assault weapon. (L.A.W. Get it? No, really, do you get it?)

--Minutes later, Susman corrected the way the court reporter recorded the trust meant for the McCourt personal assets. She typed 'Boies'R'Us' rather than 'Boys'R'Us.' Judge Gordon then called Susman an assault team leader and spelling monitor.

--Susman, cross-examining McCourt estate planning attorney Leah Bishop, broke out a document in which Jamie wrote to Bishop, "My fault, I guess, for not having read the post-marital agreement." Oops.

--Letter from Bishop to Jamie, once Jamie ackowledged an understanding of the true effect of the MPA: there are only two tools at your disposal--a civil conversation or a nuclear bomb. "They needed to start talking to each other." Didn't happen.

--Frank had once explained to Bishop that he needed to save the businesses, and in order to do so, he needed to find another interest that would take Jamie out of the office and out of the Dodgers. He was "fine with (her getting the) glory, but not if she really believes it."

--The exchange of the day was when Susman asked Bishop to comment on a hypothetical scenario. Bishop responded, "Are you asking me to speculate?" Susman came back, "Give it a shot." "Objection!" Mike Kump interjected. "Calls for speculation." Judge Gordon: "Overruled." Granted, it happened for evidentiary purposes, but: classic Susman.

Holy cow, I'm only through my morning notes and I said today's recap would be more digestible. More later tonight.
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Midday update.

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This morning was a solid win for Frank, as his attorney, Steve Susman, elicited a great deal of testimony from Leah Bishop showing Jamie's understanding of the Massachusetts agreement. Even after the McCourts' move to Los Angeles, Jamie was concerned about her assets' safety if Frank borrowed on them to pay business expenses. It was also revealed that Frank had taken at least $100 million out of the Dodgers assets for Jamie's use.

Leah Bishop testified that Jamie understood the MPA to segregate the couple's assets, and that she had intended to do so. Later, as the marriage was in some stage of disintegration, Jamie began to express a concern that "everything in Boston was to be held jointly," and that she was "really clear on what the distributions were supposed to be." And while Frank explored the concept of making all the assets community property--even going as far to have Bishop draw up the documents--he never advanced past the consideration stage.

Susman asked Bishop pointedly, "if Frank had already agreed to community property, why (did you) give her family law lawyers' numbers?" He also asked her that, given the body text of the MPA, wouldn't she have raised an alarm if the California Exhibit A been attached? Jamie never mentioned an erroneous Exhibit A.

In one document displayed from December 2007, Jamie asked Leah, "Is there anything I have signed to date that I should be regretting?" Bishop replied, "Don't stress about any of this. Eat a spring roll and be merry."

The afternoon won't likely be as favorable to Frank. After Susman finishes with Bishop, which is expected to take an hour--David Boies will get first crack at Frank.
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Day two notes.

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At some point today, Frank McCourt will take the stand. It is sure to be a highlight of the trial, and I'll pass along information as possible. McCourt's examination under oath won't begin until the parties finish with Leah Bishop, who is still under direct examination by Jamie's attorneys. Some other notes:

--Superstar trial attorney David Boies, working for Jamie, said he believed this part of the trial could be concluded by the eighth scheduled day, which is September 22. His co-counsel Dennis Wasser was surprised to hear this prediction, saying only that anything could happen. After this week, the parties have a scheduled two-week recess designed to encourage friendly talks.

--Wasser and Susman spent several minutes yesterday in a private meeting with Judge Gordon. The topic of the meeting was the potential availability of the McCourts' Boston attorney, Larry Silverstein. While Judge Gordon came out of the meeting expressing optimism, neither Wasser nor Michael Kump expect Silverstein to be made available. This is unfortunate because of his integral role in the case; his drafting error (or perhaps something worse) is a key issue.

--Jamie was much more animated during yesterday's session, not surprising given her style in handling the press in the months leading up to trial. She would occasionally shake her head when Susman made a statement she disagreed with, and she preferred to look straight at him from her seat. Frank was more reserved, oriented more toward the front of the courtroom.

--Wasser said that if his client, Jamie McCourt, won her case, she would be unable to buy Frank out herself. He also said the sides aren't close on a settlement, and that he doesn't expect the entire issue to be resolved this month. If Frank loses on the MPA, it is suspected he will advance another line of argument based on events that happened prior to the couple's 1979 marriage.

Like yesterday, I'll update as possible. Twitter is easiest. And I'll try to make the day's wrap-up a bit more digestible.
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Monday, August 30, 2010

Day one wrap.

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One day into the McCourt divorce trial, this much is clear: Larry Silverstein's conflicting designations of whether the Dodgers are within the scope of the MPA was either an act of cold deceit or potentially the costliest scrivener's error in American legal history. If I'm getting ahead of myself, here's the context: there are two versions of the McCourt MPA. One of them specifies that the Dodgers are Frank's and Frank's alone. The other specifically excludes the Dodgers from the assets made Frank's by the MPA. Resolution of that issue will likely--but far from conclusively--determine the outcome of the litigation.

The day began with Judge Gordon ruling on a series of motions in limine. In English, this meant that he decided on some sorts of evidence which would or would not be admissible in trial. The first motion decided was perhaps the most confusing; each side claimed victory. Judge Gordon ruled that extrinsic evidence will not be allowed as to the MPA. It's not quite that simple, though; the ruling, as I heard it, covered only whether transmutation did or did not occur. Again, in English, outside evidence can still be allowed when relevant to prove or challenge other aspects of the MPA.

The remaining preliminary motions were a bit more straightforward. Both parties stipulated to the admissibility of the two versions of the MPA, which was expected. Jamie then lost on three consecutive points. First, Judge Gordon declined to admit the expert testimony of a lawyer Jamie brought in to testify on legal ethics. Judge Gordon informed Jamie that there were more than enough lawyers in the room to work through that point. Jamie also lost on a bid to admit the current value of the Dodgers assets into evidence. Judge Gordon said that the only relevant valuation at this stage concerns the time the documents were signed, though it might come into play later in the asset division context. Lastly, Jamie lost her argument to examine the MPA under Massachusetts law. This here's California.

Jamie's case in chief began with one of her attorneys, Dennis Wasser, quoting Sir Walter Scott: "Oh what a tangled web we weave, / When first we practise to deceive!" Spoiler alert: he's suggesting Frank cheated Jamie out of the Dodgers. He proceeded to score on a series of body blows; it didn't look good for Frank McCourt when Jamie's team displayed a copy of Larry Silverstein's handwritten notes with variants of the word "exclusive" showing up twice. "The evidence will show," Wasser said, "that [Jamie] questioned the original [version of the MPA]."

Frank's side, of course, disagrees. He says that the Exhibits--clearly described as "for courtesy"--don't hold nearly the same weight as the body of the MPA, which simply cares about title to the various properties. In fact, Frank's lead trial attorney, Steve Susman, called Jamie "likely the first such highly-educated, former CEO of a multi-million dollar corporation to try to get out of a contract she claimed she didn't understand." He didn't stop there, though. "Jamie is seeking to become the first spouse ever in the state of California to invalidate an MPA she proposed."

Perhaps the most surreal aspect of the litigation was something we've seen before: the absurd positions each side needs to take. Frank purchased the Dodgers "with zero experience [and] limited liquidity," one attorney said. Problem: that was Frank's attorney. Susman also characterized the supposed MPA drafting mistake as "insignificant and innocuous." If true, of course, we wouldn't be here today. He also said that "a junior high school student could understand" the effect of the MPA. Susman's a character, and brought a delightful sense of humor to an otherwise-stale proceeding. "Your honor, Jamie's testimony might be the most incredible thing this court has ever heard," he added.

Importantly to the litigation, Susman also claimed that Jamie McCourt "never saw a draft with an error in it." If true, that's a powerful point. The day dragged on, and drew to a merciful close with the couple's estate planning attorney, Leah Bishop, on the stand. Bishop testified that she "snapped" at Frank about the McCourts' lack of individual representation in the execution of the MPA, and that Jamie "had a fundamental misunderstanding" of its effect. She also claimed that Frank told her the MPA he now seeks to enforce was "not what it was supposed to be." Frank's attorneys will counter that those words had to do with something entirely different.

He'll have his chance soon enough. Once Susman cross-examines Bishop, Jamie's attorneys are expected to put Frank McCourt himself on the stand. David Boies, who earned a DNP: Coach's decision today, may well conduct the direct examination of Frank McCourt. Susman explained on the courthouse steps that he is excited for the opportunity to cross-examine Frank, as it is when his true story will come out.

I'll be back late tonight or tomorrow morning with some additional nuggets on the first day's events, as well as a preview of tomorrow's. If this post has seemed rambling, lengthy, and incoherent...well, it's about how I feel. Been a long day. And it gets longer: I will be on the Fox 11 10:00 news this evening to talk about the divorce from the fan's perspective. Gloria Allred will also be in studio, which will certainly be a new experience for me.
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Let me know if you prefer this comprehensive sort of post, or if you would prefer several more focused ones. Today, this was the only way to go given other obligations, but I want to make the site as helpful as possible. In that vein, feel free to consult and pass along the viewer's guide a couple posts down. As always, I try to be as reachable as possible. Submit any questions or comments, and shoot me an e-mail if you'll be in the courthouse. There was certainly some room to spare this afternoon.

Lastly, look for a chat here featuring Molly Knight tomorrow afternoon. It's not finalized yet; she still needs to sign my Exhibit A that says I get to keep all the traffic she's bound to drive my way.
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Early action

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As the McCourt trial kicks off, each side has struck blows. Frank won on several motions to limit the evidence and exhibits admissible at trial, while Jamie's counsel had an uninterrupted half hour to talk about Frank's alleged document switcheroo. This is only the beginning of what looks to be a long trial, despite a passing buzz about the possibility of a quick settlement. Much more later. Follow on Twitter for quick updates.
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Sunday, August 29, 2010

Friday, August 27, 2010

Counting down, and what's to come.

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Exactly ten months ago, Jamie McCourt filed for a divorce from her husband of nearly 30 years. From the outset, the dispute centered on a short document, signed by the couple in the Spring of 2004, called a Marital Property Agreement. The contract, which purports to give Frank the Dodgers and Jamie the couple's residential real estate holdings in a divorce, will be tested for enforceability beginning next week.

If this isn't the end, you can at least start to see it from here. After several months of haggling over issues large (private jets) and small (staples), the McCourt divorce comes down to the validity of a few pages of boring, neat legal text. And though a settlement appeared to be growing in likelihood only weeks ago, every indication remains that the trial will start Monday as scheduled.

So what can you expect from me?

Sunday, I will post a comprehensive preview of the trial. You know the basics: if the MPA holds, Frank keeps the team, and Jamie walks. If the MPA is struck down, the McCourts would have to work together to keep the team in the family, or--more likely--would be forced to sell the team. With the trial preview I'm posting Sunday, the goal would be for you to know pretty darned well what's going on if you happened to find yourself in the courtroom. Think of it as a viewer's guide to the McCourt trial.

During the week, I will post updates here as possible, likely multiple times each day. Quicker notes and nuggets are easier to share via Twitter, where you can find me listed as @DodgerDivorce. If you're not into Twitter but still want to stay abreast, just point your browser to www.twitter.com/DodgerDivorce. This works for other people who will have news and notes, too, like @Molly_Knight and @dylanohernandez.

We'll also try to do some fun stuff too, so check back here for updates. Finally, if there's anything you want to talk about, or would like me to cover in detail before the trial, please let me know in the comments, by e-mail, or through my Twitter account. I have little idea exactly how the next few days will play out, logistically, but it's exciting to know that, one way or the other, the Dodgers short- and mid-term future will be resolved shortly.
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Wednesday, August 25, 2010

Why haven't the McCourts settled?

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Only four days remain before the McCourts will face off in court to determine ownership of the Los Angeles Dodgers, and every indication is that the trial will begin as scheduled. While it appeared that the possibility of a settlement was gathering momentum only a couple weeks ago, my sources are insistent that the trial will go forward. Other observers are hearing the same thing, and I now feel confident enough that I have booked flights and hotel down the street from the courthouse.

So why have the McCourts been unable to reach a settlement? Principally, I think it has to do with how Frank McCourt does business. A line of Frank's trial brief sums it up nicely:
Frank is an entrepreneur at heart and has an extreme tolerance for risky ventures that, potentially, could have big returns.
While that sentence was written to provide background for how the McCourts got rich and why Jamie supposedly wanted the MPA, I think it applies here, too.

Settling is safe. Trial is risky. But the rewards of winning at trial are enormous. He'd preserve his vast net worth. Dodgers ownership would seem to be safely in McCourt hands for generations to come. And Jamie's name and image would be in the dumpster. Winning at trial represents the best possible outcome for Frank, and, as his attorneys tell the court, he has an extreme tolerance for the risks associated with litigating this matter until the end.

As for Jamie's part, she, too, feels well-prepared for trial. Her argument relies on several theories that, she argues, should lead the court to conclude that the MPA either never existed or should be enforced. As we did with Frank above, let's look at an excerpt from Jamie's trial brief that has meaning beyond its context:
Jamie trusted Frank as her marital and business partner to make decisions with respect to the way their businesses were structured, finances were arranged, and regarding tax planning matters. Jamie trusted Frank [and Bingham attoryney Lawrence Silverstein] not to present her with something that took away her rights to the very thing that was a life-long dream for her--owning a baseball team, which also represented the vast bulk of the parties' marital estate.
Later:
Jamie is an intelligent business woman who would never have knowingly given up her interest in the Dodger Assets in return for the "protection" of residential properties worth far less.
The emphasis is Jamie's attorneys'. And it is here we reach the impasse: Frank builds his case on the notion that Jamie had always sought protection from Frank's risky business ventures, which included the purchase of the Dodgers. Jamie contends that she never meant such protection to strip her of the assets in the context of the divorce, and that she never considered the Dodgers all that risky, anyway.

It's impossible to say how much of this is real, and how much is posturing. I do know that an awful lot of damage has been done, and each party is pretty well entrenched. Frank sees, in the trial, the opportunity of a lifetime, and he fervently believes the facts and law are on his side. Jamie feels aggrieved, wronged, and cheated. She believes that the court can come to no valid conclusion other than to rule the MPA null and void.

And that's why we're here today, counting down the hours to trial. Might it be settled in the eleventh hour? Perhaps. But Frank wouldn't hit his home run, and Jamie wouldn't get her vindication. A settlement remains the safe play, but Frank doesn't play safe. A settlement remains the quiet play, but Jamie doesn't play quiet. It's a fluid situation, but it sure looks like we have busy weeks ahead. My bags are packed.
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Tuesday, August 24, 2010

Having cake and eating it, too.

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In recently filed court documents related to the divorce, Frank McCourt essentially argues that Jamie wanted the protection of the MPA with none of its restrictions. Jamie has attacked the MPA, which purports to leave her with no claim to the Dodgers, under several legal theories. One of her favorite positions during the litigation has been that her lifelong dream has been to own a baseball team. She uses this to demonstrate that she would never knowingly sign away her rights to Dodgers ownership.

Frank's latest filings, several details of which are available in this TMZ report, claim that Jamie did not support the purchase of the Dodgers, at least on the terms of the transaction. As you know, Frank McCourt bought the club largely, if not entirely, on credit. Uncomfortable with the riskiness of the transaction, Frank claims, Jamie was eager to protect her own interests using the same division of property the couple had put in place for other business ventures. The couple's residential real estate holdings would be Jamie's property, and the business entities Frank's.

Of course, the sequence of events following the Dodgers purchase was, if not entirely unpredictable, still massively shocking. The world turned upside down; the Dodgers have about doubled in value, while the real estate market is in shambles. It is here that Frank suggests Jamie developed a sense of opportunism. He contends that, in 2008, Jamie asked for the couple's agreement to be modified to give her half the Dodgers. Frank rejected her request, and the couple separated the following summer.

It would be inappropriate to label only Jamie with the "opportunist" tag. Whether the culmination of years of planning or simply by way of happenstance, Frank essentially found himself in a pretty spot. What he got in the MPA--the Dodgers--had grown in value, while his soon-to-be-ex-wife's prospective take had shrunk dramatically. Refusing to revisit the MPA surely doomed the marriage, as he must have known it would.

Nothing all that new comes out of what I've seen from today's filings. The takeaway is this: to the extent the McCourts' intentions matter in determining the validity of the MPA, how the parties felt some time after executing the document is irrelevant. Their actions and words in the contemplation and construction of the MPA matter. The downstream consequences of the MPA do not. Put it this way: in this situation, cause means more than effect.
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Friday, August 20, 2010

A bit of a misconception.

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Never say that Jamie's side doesn't handle the media well. In several articles that ran yesterday and today, Jamie's legal team claims to have discovered a document that shows she owns an equal share of the Dodgers. Unless I am missing something, that document is nothing more than the version of the MPA without Exhibit A--the addendum to the MPA which specifically designates the Dodgers as Frank's property.

While this iteration of the MPA is certainly important--it might be helpful to Jamie's allegation that Frank misled her with respect to the scope of the agreement--it is hardly a piece of paper affirmatively stating that Jamie is entitled to an equal stake in the team. As we discussed yesterday, the issue will turn on whether the absence of Exhibit A was a clerical error--as Frank contends--or a deliberate attempt to get Jamie's signature on one document while trying to enforce another.

One remaining wildcard in the matter is whatever transpired during the depositions of Frank and Jamie McCourt, as well as other key players. Limited information is available at this point, but some nuggets are out: Jamie's lawyers find it remarkable that Frank remembers little about the days the various versions of the MPA were signed, except that Exhibit A was described and discussed in detail. And Frank's attorneys rely on Jamie's testimony that "she wanted the homes to be her separate property to protect them from the risks of Frank's business and for the business (including the Dodgers) to be Frank's separate property."

There is surely yet more testimony coming from the depositions that will provide key insights into the remaining issues of the case. Whether these admissions, claims, and justifications will see the light of day depends on whether the trial begins as scheduled--in ten days.
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Thursday, August 19, 2010

More MPA drama.

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It's the little document that keeps on giving. Making its rounds in the news today is a motion filed by Jamie's legal team essentially asking the court to recognize her version of the post-nup--the one that does not specifically divest her of any interest in the Dodgers properties. According to her filing, the post-nup she signed in California--which did not include the now-famous Exhibit A listing the Dodgers as Frank's--should control. She argues that enforcing that particular document renders the team community property, entitling her to half its value.

For its part, Frank's legal team has two main counter-arguments. First, every version of the MPA--with or without Exhibit A--contemplates property specifically titled in each McCourt's name to be that McCourt's property in a divorce or creditor attack. Before we even get to the presence or absence of Exhibit A, the argument goes, the body of the MPA explicitly designates that "property titled in FRANK's name shall be FRANK's property, and property titled in JAMIE's name shall be JAMIE's property." Frank, of course, is the sole designated "control person" of the Dodgers, and the residential property is titled in Jamie's name.

That doesn't put the issue to bed, though. California family law judges have extremely broad discretion when it comes to these matters. If there was deceit involved, as Jamie alleges, Judge Gordon may well throw out the MPA altogether. I have to believe that if Jamie's team was able to prove that sort of bad faith dealing, the MPA--however strong--wouldn't stand a chance.

And that's exactly what Jamie says is going on here. According to her lawyers, she was presented the Exhibit A-less MPA to sign in California, which she did believing she was not signing away her rights to the Dodgers. After pen met paper and the document got back to the attorneys, she claims, the Exhibit was tacked on covertly.

Frank contends that not presenting the Exhibit along with the California MPA was a clerical error, corrected by attaching it afterwards. Frank and his attorneys claim that Jamie was fully aware of the effect of the MPA; indeed, they say, the MPA is directly in line with Jamie's wishes to build a nest egg safe from the perils attendant the family's businesses. According to someone close to the situation, Frank is prepared to go to trial on the issue, and is comfortable in his ability to support his version of the facts.

There's much more to this, but I think the takeaway is something we've known all along: Jamie's chances are best if she can prove some sort of deceit on Frank's part. Misleading her as to the scope of the MPA would qualify, and the issue is one of fact which must be determined at trial. Unless, of course, everyone decides they've had enough and can come together for a settlement.
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Hope to delve into this more in a day or two, but I've got to get out to the Ravine. Shoot me an e-mail if you'll be at the game this evening and want to say hi. Looking forward to a spectacular sunset, and--hopefully--a win!
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Monday, August 16, 2010

Renting out Dodger Stadium

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According to the Times' Bill Shaikin, the Dodgers have been paying tens of millions of dollars of rent on their own land. This year's tab to use the property the club already owns? $14 million. So what is this figure, and what does it really mean? Well, first a technical detail, then a breakdown of the money:
In 2006, two years after purchasing the team, Frank McCourt divided the stadium property into three parcels and established Blue Land Co. to own two of them. Those two parcels, parking lots immediately surrounding the ballpark, serve as collateral for a $60-million loan, court records show.

The Dodgers pay rent to Blue Land, which is not involved in stadium operations.

[...]

[Dodgers CFO Peter Wilhelm] said Blue Land expects to allocate $5 million of this year's rental fees to McCourt, about $4.5 million to debt service and about $4 million to construction managers.

The money for construction is to go primarily to another McCourt entity, the John McCourt Co., that has two employees — Geoff Wharton, the Dodgers' chief operating officer, and his assistant.

The key factor here is that much of the financing the team has arranged caps direct payments to ownership at $5 million per year. This figure became important in the early stages of the divorce, as Frank pointed to restrictions on his income when arguing for a lower support obligation to Jamie. Payments from Blue Land to ownership, however, are outside the scope of the financing-related cap on ownership's take from the team.

So why rent? First, it's beneficial for tax purposes. It is usually deductible as a business expense. From a tax perspective, it is often better for businesses to rent or lease than it is for them to own property. Rent and lease payments are expenses, whereas property ownership is treated as a long-term asset. This dynamic is what leads to the very common sale/lease-back mechanism, in which one sells an asset and then leases it back. You get the benefits of ownership and renting.

I'm not sure that's what's going on here, but you can be certain that the tax, finance, and accounting benefits of making rent payments led to this arrangement. The issue, of course, is the true nature of the payments. Given that the rent is well above market price, and only about a third of the rent payment goes to servicing the debt encumbering the property in question, it sure appears that this is a (now) transparent way of moving money within the Enterprise in a way to make soft payments appear proper.

Several times throughout this saga, we've had a glimpse into the way ownership used the complexities of the Enterprise to its advantage. Whether it's payments outside the finance caps, keeping McCourt sons on the payroll, or classifying soft distributions as rent, it is clear that McCourt and Dodger lawyers and accountants are taking every advantage of the complex structure of the Enterprise. Such arrangements, while not at all uncommon, have certainly left a bad taste in fans' mouths.
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To those of you who have contacted me about a small get-together in Los Angeles during my trip this week, I'll have something for you shortly.
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Saturday, August 14, 2010

A fraying organization making a play for Zach Lee?

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According to this Steve Henson article on Yahoo! Sports, the Dodgers are set to make a strong offer to first round pick Zach Lee. Lee, you may recall, is also an incoming freshman quarterback at Louisiana State University, more commonly (and fear-inspiringly) referred to as LSU. Notably, it came out a few days ago that the Dodgers had yet to even contact Lee, who was viewed as more and more of a lock to spurn the Dodgers for the Tigers. Not so fast my friend:
The Dodgers insist they are intent on locking up the 6-foot-4 right-handed pitcher from McKinney (Texas) High School. They believe Lee’s clean mechanics, command of three pitches and superior feel for pitching make him an especially good gamble not only to become a major league pitcher but to enjoy a long and successful career.
[...]
The day of the draft, the Dodgers called Lee to inform him he’d been picked. Since then, Lee said, he’s never heard from them. It’s not for a lack of interest, however. The Dodgers felt that pressuring him, even bringing him to Los Angeles for the customary walk through the clubhouse and luxury box tickets, would be counterproductive.

Meanwhile, LSU football coach Les Miles released a statement after meeting with Lee following the draft that read in part: “He wants to come to LSU, get a degree and play football and baseball for the Tigers.”
The Dodgers wanted to avoid speaking for Lee because their assessment of his mental makeup is that he is strong-willed and independent enough to take offense to it. Lee is a good student and his parents want him to go to college. But sources said they will be open-minded when the Dodgers make their pitch.
I get the mental image of Logan White rubbing his chin, murmuring "It's all going according to plan." And maybe that's exactly right. Maybe the Dodgers did read Lee just right, knowing that putting him through the dog-and-pony show most picks suffer would only serve to sour Lee on the organization. Heck, maybe they even worked a network of contacts and deduced--correctly, according to Henson's piece--that Lee would have a rougher go of LSU training camp than he might have expected.

I certainly hope that's true. But if you're to believe this article at Bleacher Report (warning: bring your salt shakers), the Dodgers are coming apart at the seams organizationally. But now that an end to the divorce drama is seemingly in sight, maybe the Dodgers are indeed willing to spend. And Lord knows the organization needs it; you know as well as I do there is next to no premium talent in the system. Pulling off a coup by signing the thought-unsignable Lee would be exactly the type of bold move the organization needs to replicate several times over to remain competitive on a budget.

Of course, it could just be smoke. The Dodgers want us to think they're not hamstrung when it comes to team spending, and the club has gone to great lengths before to convince us that is not the case. Getting Lee would be gratifying, both in the actual sense and also as representative that a corner might have been turned. If the Dodgers do sign Lee, don't view him as a savior. He's not Clayton Kershaw, and he's probably not Chad Billingsley. But, at the very least, he'd be a step in the right direction for a club that has neglected its farm system for far too long.
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I'm suffering through some spotty internet access at the moment, and I'm very much looking forward to being back in Southern California for a week beginning tomorrow afternoon. Some of you have written in and asked if I had plans to get together with other folks interested in this situation. To be honest, I hadn't really thought of it. If you have interest in something along those lines, shoot me an e-mail and we'll see if anything can come together.
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Friday, August 13, 2010

One long argument.

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As the trial grows closer, and time for settlement becomes precious, several national outlets have cast their gaze back toward the McCourts. Through Business Week's Richard Siklos comes a detailed, engaging profile of Jamie. Visiting the office much more willing McCourt, Siklos describes a trip to Jamie Enterprises:
She pulls out a tribute video from happier days, before her husband of 30 years, Frank McCourt, fired her as chief executive officer of the Los Angeles Dodgers baseball team: Vin Scully, the team's legendary announcer, praises her "brains and energy"; Tommy Lasorda says "she does a wonderful job"; and the dean of UCLA's business school gushes that she is a role model for women who is a "gorgeous, energetic, smart, brilliant person." Jamie is shown hugging players and her sons, and swimming her morning laps at the McCourts' Beverly Hills mansion. At the end, the petite, now 56-year-old blonde says to the camera: "There's that myth about having it all at one time. I don't think that's true, but you can have a lot." 
That's pretty much Jamie McCourt, isn't it? Self-promotion is a wonderful tool, and it has served Jamie--and countless other extraordinarily successful people--quite well. But there's something just a bit off about showing a reporter a promotional video. Trying to play the media is one thing; trying to sell yourself to it is another.

Siklos' excellent piece offers another glimpse into the differences between the McCourts when it came to finances. He writes:
Unlike her husband, Jamie is a self-described "big worrier" when it comes to money. She was horrified, she says, when, early in the marriage, a sheriff appeared at their door to collect a debt related to her husband's business and when a lien was later taken out against their house. Because of this, the McCourts decided that their residences would be put solely in Jamie's name.
They were also dogged by money woes. A May 2003 internal memo to Frank and Jamie from a senior McCourt lieutenant entitled "here we go again" warned of a looming business and personal liquidity crisis if they didn't watch their spending. 
Nothing all too surprising here, is there? This fits with everything we've seen to this point. Jamie, for all her salesmanship and aggressive self-promotion, certainly seems a bit wiser when it comes to spending--relatively speaking anyway. That May 2003 memo is a bit disconcerting; as you'll recall, the McCourts purchased the Dodgers several months later.

But then again, the McCourts personal liquidity had little to do with their acquisition of the Dodgers. Though Siklos' piece again supports Frank's point that separating the assets was Jamie's idea, he also relates, through a source, that Jamie was often sharper and more pointed when it came to negotiations for the club. From the beginning, Jamie has painted the picture that she had a role something greater than ornamental. At least in the preliminary stages of McCourt ownership, that looks to have been accurate.

Siklos' reporting also reveals an interesting interplay between the attorney who drafted the MPA, Larry Silverstein, and the attorney the McCourts engaged to review it, Leah Bishop:
In one e-mail exchange between Bishop and Silverstein, the Boston lawyer who wrote the original MPA, Silverstein told Bishop that there hadn't been a mistake in the original MPA, writing, "I recall [Jamie] saying in those days she didn't care about the business assets so long as she had her separate pool." In response to Silverstein's e-mail, Jamie angrily wrote that this was "preposterous....Don't forget, I was a divorce lawyer there and I am really clear on what the intended distributions were to be...my fault, I guess, for not having read the post marital document and believing that you were preserving the status quo." 

That's sort of what we've been saying all along, isn't it? "My fault, I guess, for not having read the post marital document and believing you were reporting the status quo." As a lawyer, Jamie is held to a higher standard in negotiations like this. She is presumed to have knowledge greater than a non-lawyer, and failure to mind her p's and q's, as it were, is a glaring misstep.

But that's not all there is to the picture. Is it fair to hold her to that standard when dealing with her husband of more than two decades? While the McCourts' marital relationship had always seemed contentious--they have been portrayed as arguing all the time--that's just how it works for some couples. Countless couples. The existence of conflict does not necessarily mean the absence of love, and I believe it entirely possible Jamie did trust Frank not to put her in this position.

Which raises a difficult question: who should suffer for their mistake? Frank for his alleged deceit? Or Jamie for her alleged naivete?
As the trial looms, Jamie knows firsthand how intractable Frank can be. "I'm disappointed, not surprised," she says. Neither, presumably, is Frank. In better days, he once said of their four-decade partnership: "It's been one long argument, actually."
While the bitterness and animosity might not fade, the long argument, at least, is soon to conclude.
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Monday, August 9, 2010

The beginning of the end.

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According to several people I spoke with this weekend, and as has been ably reported by Bill Shaikin, Jamie McCourt is ready to drop her press for the Dodgers. This move essentially maps out the wind-down of the divorce, and ensures the team will stay in the McCourt name, even if Jamie doesn't. There are two primary motivating factors at work.

First, both McCourts have been clear about their desire for their four sons to own and operate the team. That, obviously, can't and won't happen if the Dodgers are sold in the divorce. It's been a bitter, contentious few months--if not years--but it appears both McCourts are now looking toward the future. And that future is certainly well served by putting personal discord aside and ensuring that the marriage's crown jewel--the Dodgers--is not sacrificed in the process.

Which brings us to money. A sale--court-ordered or otherwise--would devalue the team a great deal. It's a stressed asset at the moment, and neither McCourt would win if it had to be sold. Maybe the Dodgers will stay in the family for several generations, or maybe they'll sell out only a few years down the line. Either way, the point is the only smart move available is to keep the team in the family for now. Both McCourts know that, and that's precisely why there is so much momentum for a settlement now.

"Both McCourts." I think I've used that phrase more in this post than throughout the entire saga. While nothing is certain, and there are yet roadblocks ahead, it seems that both McCourts are interested in controlling their futures, rather than leaving them in the hands of the legal process. The only way they can guarantee the club stays in the family is to work together, and it looks like that's just what's happening.
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Thursday, August 5, 2010

A battle with several fronts.

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If you had any doubt left about Frank McCourt, businessman, LA Weekly's Gene Maddaus has a story you might enjoy. From a tale full of alleged back-stabbings, several burned bridges, and an unhealthy lack of regard for the present, there emerges an interesting glimpse into the worsening troubles in the McCourt marriage:
[T]he central disagreement in the marriage apparently was between Jamie's desire for security and McCourt's appetite for risk.

[...]

"If you aren't on the same page," [Boston real estate Banker Jeff Ingram] wrote, "I sincerely hope you can have the conversation in the spirit of 'Look what we accomplished' and 'How do we want to spend our time going forward.' Please appreciate the moment and work together to determine what is best for you and your family. ... From a personal perspective, I really hope you can find a common ground."

It didn't happen. In November 2008, McCourt sent an e-mail to Ingram in which he contemplated raising an astounding $600 million in fresh equity to expand the business into a global sports enterprise. He seemed particularly excited because his two oldest sons, Drew and Travis, were onboard and eager to be seriously involved in the family business. This would prepare them for someday taking ownership of the team.

Of the $600 million, $47 million would go to the family, which McCourt thought would give Jamie more "peace of mind."

In reality, McCourt's ambitions could not have been in greater conflict with Jamie's desire for security. Ingram understood this better than anybody. In a one-line e-mail to McCourt, he wrote, "I assume you realize all eyes will be on Mama Bear to see how she embraces new direction."

In the midst of this conflict, the McCourts sat down for an estate-planning session.

There are two ways to characterize what happened next. For Jamie's part, she says didn't understand the full effect of the MPA until well after she signed it. She was shocked and scared to learn the assets would be split so unevenly in the event of divorce, and immediately began working with Frank to make the document comport with their true intentions.

This line of thinking also fits in with the portrayal of Frank as an opportunist above all else. In this sense, think of Frank McCourt as Barry Sanders, making his living by dancing behind the line, risking a loss, but possessing an uncanny knack for spotting the smallest opening and making a big gain. The problem, of course, is that when Frank McCourt wins, it's not at the expense of other teams or their fans...people get hurt.

That's one way of looking at it, anyway. I do think it's important to note that, as has become common, Frank declined to comment for this story. Presumably, he also declined to direct Maddaus to sources which might paint Frank in a more favorable light.

Though it has been to his detriment, Frank's been the much quieter of the two McCourts throughout the saga. His camp seems content to let Jamie and her support team win the headlines, which it has certainly done. It's sort of ironic. In court filings related to the divorce, Jamie says:
I know that Frank is very litigious and that he employs a 'scorched earth' litigation philosophy.
I don't think Jamie's PR campaign in the divorce can be described any other way.

Which, all things considered, is fine. All's fair in love and war, they say, and we've had one turn into the other here. I believe Frank is a ruthless, cunning businessman. I believe he's made a fortune at the direct expense of personal relationships and others' well-being. I believe he might be wired to not care about these things, capable desiring only to beat the guy across the table. And I certainly believe Jamie wants us to believe these things.
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Wednesday, August 4, 2010

Dennis Gilbert: "The team is not for sale."

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Dennis Gilbert, long a fan favorite to purchase the Dodgers, gave that quote to ESPN Los Angeles' Tony Jackson yesterday. He offered it with the proviso, "As far as I know." And he's right in that regard. The team is no more for sale today than it has been at any point since Frank (and, depending on which side you take, perhaps Jamie) McCourt purchased it several years ago. Gilbert, unlike the McCourts, would have one key advantage in the hearts of Angelenos. Jackson:
In addition to running his high-end insurance firm, Gilbert also presently serves as a special assistant to Chicago White Sox chairman Jerry Reinsdorf. Gilbert is a regular presence at Dodger Stadium, as he holds season tickets in the front row of the Dugout Club, directly behind home plate. Gilbert and a group of investors he organized recently failed in their bid to purchase the Texas Rangers.

If Gilbert was to end up with the Dodgers, the symmetry would be simply delightful. Frank McCourt fails to acquire his desired team, ends up three thousand miles away in a completely alien culture. What if the end game is Dennis Gilbert fails to acquire second-choice team, ends up owning his first choice all along? I have little doubt he'd have the fans' support; first, he's a local, and second, he's not a McCourt.

But we're getting a little ahead of ourselves. Let's watch how this Rangers auction plays out. It features former California/Anaheim Angel Nolan Ryan bidding against another fan favorite for Dodgers ownership, Mark Cuban. The significance is that the court seems to be allowing a sale to Cuban without subjecting him to Major League Baseball's approval process. It's entirely possible the McCourt litigation ends up in a forced sale of some manner. The issue will be the degree to which the sale would be under judicial control; Judge Gordon could order a sale outside the court, or facilitate one within it.
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I'll be on ESPN Radio 710 out of Los Angeles at 2:42 with Steve Mason and John Ireland to talk Dodgers. Hope you can tune in!
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