Heads I win, tails you lose.

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Could it really be this simple?

Jamie:

Our [Boston] real estate business was highly leveraged. We had always been concerned that if our real estate development operations failed, and the creditors descended upon the business assets, something would be left as a nest egg for us and our four children. We therefore had previously agreed that title to real property that we purchased would be put in my name and would not be used as security for our business ventures.

Frank:

In mid-to-late 2003, I began the process of acquiring the Dodgers, and Jamie and I were making plans to move our family to California. In Massachusetts, Jamie and I had a long-standing practice of dividing our assets so that our residential properties and various other assets were held as her separate property and my business ventures, including the McCourt Company, Inc., and its related entities, were held as my properties. In late 2003, Jamie became adamant that her assets needed to be protected under the laws and practices in California . . . . She said that she did not want to have any risk of liability if any of my present or future business ventures, including the Dodgers, led to creditor claims against me.

Jamie:

Even though title to real estate was in my name, Frank and I had always considered the real estate to be our property, just like the Dodgers. It was always my understanding that the document we signed in 2004, in anticipation of moving to California, would simply preserve [the protection of the real estate in case of the failure of Frank's business ventures] under California's marital property laws.

Frank's lawyers:

[Jamie] got exactly what she wanted when, in 2004, she thought it was in her best interests to secure sole ownership of prized residential real estate and other assets for herself and to insulate them from the risks associated with her husband's business ventures. She now wants to turn that reasoned decision into a "heads I win and tails you lose" agreement: hiding behind the agreement if her husband's business ventures failed, and denying the validity of the agreement if they succeeded.

Jamie:

By asserting that he solely owns the Dodgers, despite our mutual understanding and despite his accurate and repeated depiction to the public of us as co-owners of the Dodgers, Frank is seeking to take unfair advantage of me and blatantly abuse the trust and confidence I have always placed in him.

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Let's stop for a breather here. That last line gets me a little. She had so much trust and confidence in Frank that she deliberately insulated himself in case his leveraged business ventures failed. I mean--that's how it works, which is fine, but please: call a spade a spade. Jamie was afraid of what would happen to the family wealth if the McCourt Company faltered.

That was probably a reasonable fear. If the McCourt wealth was tied up in real estate development (and not the Los Angeles Dodgers) as of Fall 2008, there would be big, big problems. But it's not. Or, at least, Frank's isn't. Is it really this simple? Did Jamie just get terribly unlucky, like millions of Americans? As Frank would have us believe, she made a decision, and a very reasonable one at the time, that her wealth was safer in real estate than in Frank's businesses. She was so certain of it that she took specific steps to ensure that her net worth was tied to the value of the real estate, not the McCourt Company and, later, the Dodgers.

On August 6, 2008, the couple's estate planning attorneys forwarded to the McCourts the documents necessary to revoke the post-nup. Two days later the Dow was at 11734.32. Two months and two days after that, on October 10, it hit 8451.19.  The market would bottom out on March 6, at 6626.94. Throughout the winter, Frank avoided the revocation of the post-nup, and for good business reasons. In April, Forbes would value the Dodgers at $722 million, nearly double what he paid to purchase the club in 2004. Meanwhile, the assets allocated by the post-nup to Jamie had likely suffered cataclysmic losses.

The market crash, caused primarily by the devastating burst of the real estate bubble, was foreseen by a number of people who truly understood the securitization of mortgages and other receivables--and the problems which would result if home prices fell. Is it that unreasonable to think that mere days before the beginning of the greatest American economic disaster since the Great Depression, Frank McCourt might have been a little wary to put his future back in residential real estate and chop his interest in the Dodgers in half?

For whatever reason, Frank McCourt decided that his marriage was not worth revoking the post-nup, which proved extremely favorable to him. Jamie got stuck in the same boat as millions of others: real estate, once a safe haven and lucrative long-term investment, tanked. Frank's assets had not suffered the same disastrous fate. It was an economic decision of the purest sort: the marriage was worth less to Frank than his assets under the post-nup minus the risk of having the post-nup invalidated in a divorce proceeding. Frank made a fortunate gamble earlier in his life, and maybe he's done the same here.

I'm not going to make a value judgment as to Frank's decision. Breaking up a marriage--especially one with four children--is a terrible thing, generally. But we just don't know enough about the factors leading to the divorce. When Frank ultimately refused to sign the post-nup, he knew he was going down a path which would likely lead to divorce. If his motivations were purely financial--that is, he realized that Jamie was screwed and this was the right time to cash out of the marriage--he sure comes off as greedy. But I'm not willing to dismiss the possibility that the marriage was broken already, and Frank just made a wise business decision to enforce the agreement Jamie had wanted in the first place.

I've defended Jamie in the past for asking for the moon in the divorce, because it's just what one has to do. I'm not going to jump on Frank yet for essentially doing the same.
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I'll be on KFI AM 640 in Los Angeles this afternoon at 2:30 Pacific to talk about the McCourt divorce.
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