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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.
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Tuesday, November 23, 2010
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Can anyone please explain to me why future cash flows associated with the reversion of TV rights would not be factored into the selling price today? Given the apparent variety of interest in purchasing the team, certainly this should not be a problem. That said, the real value of the team today versus in 2013 should be the same, all else equal. Correct?
ReplyDeleteOn a side note, will residents of the city and fans of the team really accept continued McCourt ownership in light of everything that has come out over the past year?
How could the people of L.A. effectively do anything about the McCourt ownership? There wouldn't be enough fans to stop going to games to make a difference. Besides, most people who won't go to games will probably decide that because either they can't afford them because of economic problems or because the team likely won't be good.
ReplyDeleteThe McCourts have been demonstrated to be not nice people. But are they so evil that people will stay away from the team? They spend a lot of money on themselves, but it's not like they Frank McCourt is Monty Burns.
There are a lot of owners in baseball who are jerks. Probably more who are jerks than aren't.
Mateo- I believe you are correct. McCourt states the team is worth $850M (approx 3x revenue). If a new TV deal would throw off an additional $50M/year the team should be valued at a billion. If a new owner buys the team assuming that asset value, the extra $150M goes out the door to the McCourts and their creditors. That could still leave the team highly leveraged. If McCourt keeps the team there's a better chance the new TV cash ends up on the field. Of course the Eli Broad scenario trumps all of this from the fans perspective, if that was a real possibility.
ReplyDeleteChomping at the bit, I am. This is the first time in a long while that I have been focused on the on-field activities of the organization as opposed to the off. If Frank wins, or they settle, I agree that the overall distractions of the past year and change will be reigned in, for the most part. However, I question whether Bud Selig will allow a lengthy appeals process over a community property win for Jamie that could go on and on. Long term insanity, yet again, is not in the best interests of the game, and I think Selig may have a plan if that happens.
ReplyDeleteHappy Thanksgiving, all.
Whoa!! Did anybody see the Bingham Mucutchen angle on all of this? I certainly didn't think that they would be called on to lubricate the remainder of the gap between Frank and Jamie. What kind of blackmail is this?
ReplyDeleteDodger fans are too hardcore to stick it to McCourt. It's sad that the big TV deal we've all been waiting for will find some way to act as a credit card for this bamboozler, hopefully not. All of these shenanigans along with Bud Selig saying he wants to add 4 Wild Card teams have really turned me off from MLB. Hit um where it hurts people, in the wallet. Stubhub better have a really good deal if we're going to any more games, if not whatever that's what big screen HDTVs are for.
ReplyDeleteI urinate in the general direction of los mccourts............
ReplyDeleteMateo is 100% correct, very much like the price of any publicly traded equity, any sale price today will impound the expected cash flows from a TV deal. The only change in value will come as information becomes known that increases or decreases those expected cash flows (just like an earnings announcement), and ultimately, how close to expectation the deal ends up being.
ReplyDeleteAs for fans boycotting the Dodgers, while I like to think such a thing is possible, there have been thousands of seasons played by sports teams in the four major U.S. sports, many under owners much more distasteful to the fan base than the McCourts, and I am not aware of a single instance of a boycott strong enough to force a sale. However, in the day and age of Flash Mobs, maybe such a thing is now possible when it wasn't before.
I have been a Dodger fan since '58.
ReplyDeleteAs long as McCourt is there, I am not.
Um, I think your post is way off the mark on the financial aspect of the Dodgers..
ReplyDeleteThe Dodgers are not a "wealth generating machine", they are $450 million or so in debt. Pretty much every revenue stream is collateralized/securitized by loans. The McCourt's Blue Land Co. holding company has something like $650 million in liabilities. That isn't a wealth generating business, that is more like any labor intensive business, the overhead is almost equal or close to the revenue, with a small EBITDA profit margin.
A future TV Rights contract wouldn't be a bonanza, there would be an upfront fee, but it would be a yearly income. The Rangers are getting $80 million a year with their deal with Fox Sports, however it doesn't start until 2014. Whatever deal the Dodgers will get depends on the the market and the competion, and Fox Sports did its deal for the North Texas market because they lost out to Comcast in the Houston Area with the Astros.
The real money in a TV deal is setting up a Dodgers' Sports Network. Which means probably $200 million or more in loans, and one or two other teams to agree to be part of the network, that would be the cash cow, because the profits wouldn't taken out by a middleman like Fox Sports or Comcast.
The real value in owning a baseball team is the total value to use as collateral for loans. The McCourts have some pretty hefty loans, like their $60 million loan with the parking lots and fees as collateral which they used for their lifestyle and buying their houses like the Lautner Malibu house.
I thought at first you were a unbias observer, but I am getting to the point that you have some sort of deal with the Dodgers' PR department, given that your posts have become apologies for some of the McCourts' antics.., or thinking that Frank has been a good owner. If they really cared about the Dodgers, they would had made a deal very quietly. Frank can't for one reason. He doesn't have the money to pay Jamie off..
To say that the Dodgers are a "Wealth Generating Machine" after all the loans, debts, gimmicks that Frank and Jamie have pulled while they ran the Dodgers is very disingenuous.
Thanksgiving has come and gone. No news?
ReplyDeleteIt is indeed a great view but definitely dangerous for people. I don't think you will be able to sleep soundly at night when you have an active volcano just outside your door. It wouldn't be safe for the family. To get more info please visit http://writing-essay.org/prices/.
ReplyDelete