Day eleven wrap, part two.

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The first of two former Bingham lawyers of the day, Aaftab Esmail, headed up the real estate due diligence connected to the McCourts' acquisition of the Dodgers. He also did some work for Jamie personally, mostly related to the two Charing Cross homes purchased in her name. On the stand, Esmail testified that the residential real estate was always intended to be Jamie's sole and separate property, and the businesses were held by Frank alone. Esmail also noted that Jamie was concerned about the Dodgers purchase, due to the club's recent history of losing money and the high degree of leverage required in the acquisition. Esmail also found Jamie to be "smart, sophisticated, and well-informed."

After the noon break, Reynolds Cafferata, also formerly of Bingham McCutchen, retook the stand. The bottom line Jamie's attorneys wanted to hammer home was that no one walked Jamie through the consequences of the MPA in a divorce. Her representatives also used Cafferata's return to the stand to demonstrate several flaws in the process of creating the MPA, including the lack of alternatives to the MPA presented to Jamie. As her argument goes, there were other ways to protect the home than simply to give her the real estate and Frank the team. Lawyers and law students would recognize Jamie's approach here as something similar to strict scrutiny: she says the MPA, as drafted, went beyond the scope of the problem being addressed and failed to take advantage of less drastic means.

The other two witnesses of the day offered information perhaps more interesting to Dodger fans. Peter Wilhelm, the club's CFO, took the stand in the morning. He described documents showing that the Dodgers lost more than $140 million from 2000 to 2002 under Fox ownership. He characterized the work required of the McCourts as "a Herculean effort to turn [the club] around." Among the risks of the acquisition, Wilhelm listed expenses that exceeded revenues, Fox's practice of raising ticket prices, and a bloated payroll. Wilhelm testified that Jamie felt Frank was being too aggressive in his bid for the Dodgers, and that she was unsure about the viability of the turnaround.

Jamie's lawyers, on cross-examination, elicited testimony that the Dodgers outperformed Wilhelm's projections. By this, they meant to show that Wilhelm's forecasts had been unduly gloomy. They also attempted to get Wilhelm stuck between points; if he thought the acquisition was inappropriately risky, the question went, why did he recommend it? Wilhelm countered with a question in return: "Appropriate for me? Frank? Jamie? The fans? Who?" He noted that, while he found the risk level tolerable, Jamie was against the deal as late as the waning weeks of 2003.

The final witness of the day (and, indeed, the trial) was a McCourt financial advisor named Jeff Ingram. He'd been with the family businesses since 1999, and described the McCourts as consistently "asset-rich, cash-poor." He characterized his job as mining that asset value to generate cash flow. It wasn't always easy; in 2001, he informed the McCourts that they had six to eight months before they ran out of cash. He also wrote, on an itemized list of McCourt to-do's, "Stock smelling salts in the office. I'm going to need them." As far back as 2001, the McCourts were spending $75,000 per month while bringing in just $68,000. "Don't rely on the company as a bottomless source of money," he wrote.

Just months before the McCourts finalized their bid for the Dodgers, Ingram titled an email to the couple "Here we go again," referring to their cash-flow issues. He recounted Jamie as saying at the time, "[Frank] could make a billion dollars or lose a billion dollars, as long as I have my nest egg, I don't care." Ingram recalled that Jamie was unwilling to expose her assets to the risks associated with Frank's business ventures.

The debate of the day was Jamie's comfort level with the riskiness of the Dodgers acquisition. Frank's lawyers used their witnesses to document both risk of the transaction itself and Jamie's consistent desire to be insulated from that risk. Jamie's attorneys fought to show that, first, the purchase wasn't as risky as it looked and, second, that Jamie was ok with the risk. To which Frank's lawyers would say: Of course she was! Her homes were protected. She, herself, risked nothing. Jamie would say that's misleading; the couple protected the homes so the couple could engage in risky ventures. She cared deeply that the businesses succeeded.
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