Tuesday, November 30, 2010

Frank accepts settlement proposal, but no agreement reached.

Looks like we might just see this one through to a decision after all. Breaking weeks of silence, Marc Seltzer, an attorney for Frank McCourt released the following statement:

Frank fully supported the mediation process in the hopes that it would result in an agreement that would bring long-awaited closure to this matter. 
It is clear that Judge Lichtman, who acted as the settlement judge in this matter, went to great lengths to bring the parties together.  He presented a thoughtful, detailed proposal that clearly took significant time, energy and expertise to prepare. 
After considerable deliberation, Frank accepted Judge Lichtman's proposal.  He felt it was the responsible thing to do for his family, the Dodgers organization and the entire community. Unfortunately, Judge Lichtman has declared the parties to be at impasse.  We can only conclude that Jamie rejected Judge Lichtman’s settlement proposal and is allowing this matter to drag on further.
A few quick thoughts--to start, we have no hard facts about what the package looked like. If Frank was prepared to accept Judge Lichtman's proposal, it's likely the proposal didn't involve selling the team. In settlement discussions prior to the trial, Frank had balked at any scenarios which would in some way diminish his ownership of the team.

Next, I don't doubt for a moment that Judge Lichtman's proposal was indeed thoughtful and detailed. As was reported last week, the law firm involved in the document confusion, Bingham McCutchen, was a party to settlement discussions. Presumably concerned about potential liability stemming from the saga, Bingham might have been willing to pay both Frank and Jamie to agree not to pursue the firm later. Add in that piece to the several other moving parts--the TV rights, debt obligations, tax considerations--and there is no doubt that any potential settlement agreement was going to be pretty darned complex.

Finally (for now), if Frank's side's characterization of Judge Lichtman's view is correct--that the parties are, indeed, at an impasse--that tells me the disagreement concerns fundamental issues, not structuring. Remember, though, that this thing can still be settled prior to a decision.

Back later with more.

Tuesday, November 23, 2010

Rumblings from the volcano?

According to this TMZ report, the McCourts' divorce has officially been docketed--we can drop the soon-to-be from ex-wife and -husband. While settlement talks remain confidential prior to Judge Gordon's ruling on the property issues in play, the TMZ report suggests the parties have been given an ultimatum: figure it out by the end of the month, or the decision will be made for you.

It looks like we're getting closer to finding out whether cooler heads truly can prevail before a decision renders them powerless to determine their own fate. At issue, of course, is just how to deal with ownership of the Dodgers in such a way as to allow the team to prosper and Jamie to get the money coming to her. Disposing the team is an unappealing option, for several reasons.

First, there's little indication either McCourt doesn't want the team to be in the family. It's a wealth-generating machine, and it has funded their lifestyle for over a half-decade. Further, selling the team would be to rob the asset of much of its value to the McCourts, as a variety of tax consequences would likely eat into the significant increase in value the team has seen since the McCourt purchase. Finally, a sale now would come at a low point, prior to the so-close-you-can-taste-it TV rights coming back to ownership.

Strictly from an operational perspective, the Dodgers have been pleasantly generous since the summer signing of first round pick Zach Lee. Resolving the core issue of the divorce--just who is going to own the Dodgers long-term--would provide much-needed stability as the major league roster appears destined for a massive overhaul over the next couple seasons.

Wednesday, November 3, 2010

After a decision.

Los Angeles Superior Court Judge Scott Gordon has had all the issues in the post-nup trial on the table for over a month now, and the parties filed their proposed findings several weeks back. While Gordon has until just about the new year to announce a decision, no one really expects him to stretch this out toward the deadline. Indeed, many--myself included--look for a ruling on the validity of the post-nup before Thanksgiving.

A decision could well serve as a catalyst for serious settlement discussions. The validity of the MPA is the greatest variable in the divorce, and taking it out of play gives each party a more certain position from which to negotiate. Whichever side wins on the MPA will try to play that victory as a trump card in discussions. The losing side will, in turn, seek to use the threat of additional litigation as leverage.

And it's the specter of continuing litigation which is both most vexing to fans and the greatest reason the parties will have to settle the thing. Both parties have likely already considered their strategy on appeal, and each can make noise about the next step in the litigation over the Dodgers. For Frank, it will be the way he purchased the Dodgers--with proceeds from an asset acquired before marriage. It's not great; if it was, it would have been his first bullet. But it's something, and it would cost time and money.

Jamie's next step would be the issue of support; even if the Dodgers are nominally Frank's, isn't he still obligated to pay her enough to support her marital lifestyle? And how would he come up with that cash? And Lord help us all if, as Jamie's lawyers believe might happen, we end up in another trial to characterize each and every of the couple's assets as separate or community property. That would take, well, if not forever, damn close.

The takeaway is that Gordon's ruling only ends this mess if the parties want it to. And they haven't shown any particular affinity for working together to this point. Maybe resolving the MPA issue changes that. But maybe their expected outcomes would still be so far apart that Gordon's decision still isn't enough motivation to put this behind us.

In the past, Frank had been unwilling to compromise in any way that would affect his control and the operation of the Dodgers. This would include selling off a chunk of the team or making long-term financial decisions based, in large part, on his obligations to Jamie. Losing on the MPA might change his mind on that, but still: any settlement that results in the sale of the Dodgers is no worse than a loss in all the litigation anyway, so why settle?

For this to end anytime soon, both Frank and Jamie McCourt will have to want it to end. They didn't last year, at least not enough, when they could have prevented much of the damage done by the divorce. They didn't again, at least not enough, when lawyers from each side met to discuss settlement multiple times in the months leading up to trial. And they didn't again, at least not enough, on the eve of trial, before it became the spectacle it did. From a fan's perspective, I hope solving the MPA is enough. I hope they settle, and quickly. I just don't see any reason, based on the McCourts' inability to work together over the last two years, to expect a clean resolution.