Monday, August 9, 2010

The beginning of the end.

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.


  1. Molly Knight's final summation foretold such an event like this happening. The one major sticking point, however, is this future revenue/land development divide the two sides have. The problem is that Gordon would most likely rule that the current value trumps future value, thus potentially cutting out the legs from under Jamie. I think we are in the home stretch of a settlement. However, is there any reason to believe that the Dodger payroll will substantially increase prior to either a Dodger DTV channel or new Fox contract? Or could the end of the acrimony portend more financial focus and loosing of purse strings from Frank? I, for one, am dubious. I do think this is best for the Dodgers and their fans. An ownership change could be disastrous, particularly if Frank is forced to sell. The devil you know...
    Let's get this thing over with and get Adam Dunn.

  2. The Sticking point is the valuation of the Dodgers and future valuation of the Dodgers. Jamie's side thinks it will be $1.5 billion, including Cable TV Channels in English and Spanish. Frank's side probably want the valuation around half of that $750 to $800 million.

    From some of Gordon's words and rulings, he wants them to be more in the present, and at least pay off their outstanding bills.

    If I were Jamie, I would be hesitant in agreeing to any future earnings, because Frank could use them for more loans, and the broadcasting rights could be re-signed to Disney or back to Fox for quick cash. Frank will control the broadcasting deal. I think Jamie should go to trial, because she has nothing to lose, she will get over a $100 million in properties if she loses, and perhaps not obligated to pay off much of the $400 million or more in debt tied to the Dodgers, however, she is still going to have a huge capital gains/loss tax headache, for either the properties or the Dodgers

    Second the whole argument of "keeping the ballclub in the family, so their sons can take over" is so hackneyed. Frank has a huge debt pile, more than $400 million, with some pretty tough interest rates. If he cared about his children, he would stop with some of the pettiness in how he runs the Dodgers, and the business practices of using debt to kick the problems down the road to the future. Sooner than later, their has to be a decision of what to do about Dodger Stadium, whether to do a major renovation, or tear it down, which means money.

    If a deal is made between the McCourts, It was smart on both sides, and incredibly stupid to let the sniping go on for 10 months, which also expose how precarious Frank McCourt's financial situation is to Southern California.

    If anyone or group that will pressure a McCourt sale of the Dodgers, it will be his creditors, and it will be when Frank can't get anymore more loans, or is lock in to a debt spiral of taking more loans out at higher interest to pay previous loans.

  3. This news makes me sad. I honestly despise these people so much and it pains me to see this franchise in their hands.

  4. Future valuation?

    Man, am I glad my ex-wife didn't know about that. She could have had half of my net worth for the rest of my life?

    Isn't a "divorce" about "dividing" and going your separate ways? How can Jamie legally claim future dividends if the relationship is ending now? And, ending now means Frank has to pay her off somehow - and if that means $650,000 a month, add that to the cushion he gives his sons out of the Dodger til, how does this man afford the improvements that are necessary?

    Where is a real commissioner when you need one.

  5. Jamie is trying to get a larger settlement, and trying to increase the valuation of the Dodgers with future revenue from still hypothetical Dodger owned cable channel.

    As this article states, it isn't so easy to project future revenue from the cable channel..

    It still looks like this will go to trial, unless both sides agree to settle. It appears the big sticking point is how much Jamie wants "half" of their total assets in money terms.

    Frank and Jamie don't have much cash lying around, much of their assets are land or Dodger ownership. So any settlement is going to include annual payments to Jamie, or if the Judge splits all the assets 50/50 or the cash equivalent, There is going to be selling of properties, with some time so some of the property can be sold at a higher value.

  6. opps, I got the wrong link to the LA Times article about potential broadcasting revenue.. here is the correct link,0,6656896.story