I wondered a few weeks back how Jamie McCourt felt about the advance Frank McCourt took on the Dodgers/Fox deal. Well, if that ticked her off, Frank's attempt to collateralize the 2014-17 TV rights rendered her just about apoplectic. Here's Shaikin, in what can only be described as one of the more entertaining stories to come out of the divorce thus far:
Jamie and her advisors were "shocked" to read that report, according to the filing. Her lawyers called it "outrageous" that Frank had not disclosed the Fox discussions to Jamie and "equally outrageous" that she needed Selig to "protect the franchise's best interests given that California law imposes that very duty and obligation upon Frank, since he runs the Dodgers."
In the filing, her attorneys asked that the court order Frank to turn over all documents related to the Dodgers' broadcast rights negotiations, cash advances, loan applications, financing arrangements, debt payments and schedules, and audited financial results.
You can bet that Jamie's got a squadron of forensic lawyers and accountants ready to take a good, hard look into just how money's been flowing in and out of the constellation of entities that make up the McCourt Enterprise. And I have little doubt about her ability to seek all kinds of information. As I wrote a couple weeks ago, California Family Code calls for a spouse managing a community property business to give the other spouse equal access to information about the business upon request. That duty seems to run, in the divorce context, until the marital assets are properly divided. But don't take this law student's word for it: here's Jamie's lawyers' work instead!
It is outrageous that Jamie and her counsel have to rely upon the news media for information that Frank is affirmatively obligated under California law to provide before the fact. It is equally outrageous that Jamie has to rely upon the good offices of the MLB Commissioner to protect the franchise's best interests given that California law imposes that very duty and obligation upon Frank as the spouse with primary management and control of the Dodgers assets.
So yeah, Jamie's upset. And she ought to be: pledging the 2014-17 television rights would necessarily restrict the creation of a potentially lucrative regional sports network. Frank's lawyers have not had a chance to file a formal response to Jamie's motion, but their letters indicate they believe Jamie's requests overly broad, presumptuous, and in themselves potentially damaging to the Dodgers, in that "sensitive business matters" ought not be discussed in public.
Frank's lawyer, Sorrell Trope, expresses a willingness to exchange some of what she is looking for, provided such exchanges can be done privately and confidentially; i.e., outside the media's gaze. And for good reason: revelations of how the Dodgers have been run under the McCourts have rarely been favorable to ownership. Remember the list of Jamie's perks? Or the whole taxes thing? Or buying the Dodgers entirely on credit? Right or wrong, fair or unfair, it's indisputable that most of the information revealed about how the McCourts ran the club has been quite damaging.
So I totally understand why Frank's side, to the extent it will cooperate with Jamie's requests, wants to do so in a confidential way. After all, no one wants another of Jamie's notes about the idea to "bake" the McCourts own expenses "into the operating budget" made public. Ok, ok, I'll stop. Just saying that exposing the Dodgers' books for all to see hasn't worked out so well to this point.
And just what does Jamie want to see, anyway? Well, the list is long, and it includes:
- everything related to the proposed collateralization of TV rights
- everything related to anything related to TV rights, really
- where the Fox advance money went
- any financial machinations outside the ordinary course of Dodgers business
- a debt/equity breakdown for the complete array of Dodgers- and McCourt-related entities
- documents related to any deferred tax liability
- any distributions to Frank McCourt from any of the entities
- any plans to develop land around Dodger Stadium
- all documents concerning matters outside the United States, "including, without limitation, matters in China and the United Kingdom."
All requests go back to January 1, 2007. I urge you to remember that, knowing the skill and savvy of the attorneys involved, it seems likely the 55-category list of requests was designed with media consumption in mind. Still, it is clear that Jamie McCourt is concerned with how the Dodgers are being run in the time between the souring of the marriage and its undated final disposition. The scope of the information she gets is one question. What she does with it is another.
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I'm no lawyer, Josh, but it does seem that Jamie has the law about 99% on her side. Without Frank getting Bud to back him the way Bud backed Wilpon (which really is a very different situation - Wilpon did not create his own hell so much as get taken by a shyster, and he has a generation of good behavior behind him to warrant support now), I don't see how Frank can navigate all this. Sure - there are ways to raise money - but he's up against two hurdles: 1) Jaimie's legal blocks by claiming he's depressing the value of the Dodgers by selling off rights that could earn more if handled differently, and 2) Selig's MLB blocks of simply saying "no" to his maneuvers. Either way, Frank seems screwed. And it really is his own doing. If you see a way out for him - a realistic, legally navigable (and within the strictures imposed on him by MLB). I'd love to hear it.
ReplyDeleteThe Dodgers are at the limit of the MLB CBA Debt Limit. Therefore Bud properly denied the $200 mil loan. If Jamie is not ready to settle then what did Frank need the loan for? Certainly not to buy out Jamie's unknown value under Pereira or Van Kamp. She wants a lot more than $200 mil. Umtil the Commissioner makes a decision regarding the ownership of the Dodgers Frank has very few rights and significant responsibilities. GO Jamie!
ReplyDeleteFrank needs the money because season tickets sales are down and unless this team gets off to a good first half, he will be in bigger trouble
ReplyDeleteOnce she understands the tax ramifications of owning half the dodgers, then forcing a sale ( the capital gain tax would far exceed the cash realized), Jamie should leave the Dodgers to Frank, and take all the cash (upfront or over time) she can get, all those houses and move on with her campaign to be President of the United States!
ReplyDeleteHer rage and her Attnys ego are clouding doing what is best for her, the kids, and the dodgers.
Evaluate (after tax) what she gets by everything being community property and the dodgers being sold vs cash plus houses payout.
She won't have nearly as much PR success with the IRS (after a sale of the dodgers) as she has had with Frank...
A sale between ex-spouses as part of a marital settlement is not subject to income taxes. It is actually a gift for a gift. Her interest in the Dodgers, or her interest in the value of the Dodgers, for a loan from Frank. I sure hope that loan counts as Debt under the MLB CBA and Frank is then forced to sell!
ReplyDeletewhere was all this rath when Peter O'Malley ignored the neighbors, had a long string of losing seasons, and let the physical stadium fall apart.
ReplyDeletejust went to spring training where instead of all this anger and angst, there is a spirit of
"we can win" and "we are proud". Never saw that during the O'Malley losing decades!
Anonymous posters talking about Jamie not understanding taxes and the one ragging on O'malley have to be friends/employees of Frank, right? Very comical so I certainly hope so.
ReplyDeleteInteresting.
ReplyDeleteIANAL, but I think Jamie's lawyer is misrepresenting things a bit. I don't think Frank is "affirmatively" obliged to give Jamie anything. He only is obliged to give if she asks. And I don't think he is obliged to give "before the fact", unless she asks before the fact. Frank is not allowed to hide or deceive, but he is not obliged to go out of his way to inform her either. She is obliged to request information and ask good questions.
@iknownothing ... Jamie signed a document she clearly hadn't read, despite being a licensed and practicing attorney. Slurs of her intelligence and understanding of things legal are certainly in bounds.
Tom
ReplyDeleteEven Commissioner Gordon, in his brief, came as close to calling both of them a liar as I have seen in a long time. May Gordon is a gentlemen.
++++++where was all this rath when Peter O'Malley ignored the neighbors, had a long string of losing seasons, and let the physical stadium fall apart.
ReplyDeletejust went to spring training where instead of all this anger and angst, there is a spirit of
"we can win" and "we are proud". Never saw that during the O'Malley losing decades! +++++++++++
hey einstein, while peter o'malley was at the helm, the dodgers had 6 losing seasons and only 2 in a row. get your facts straight
"just went to spring training"
ReplyDeleteso.... you were one of the 3,000 I saw at the game?
If attendance so far at Camelback is any indication how season ticket sales are going, Frank is in even more trouble.
A sale between ex-spouses as part of a marital settlement is not a taxable event, that is true. But that scenario assumes one can buy out the other. Frank has so far been blocked from accessing additional funds that might help him buy out Jamie and I can't imagine that Jamie has any rich friends willing to pony up the cash for her. So ... there will be a sale to some outside entity and the capital gain from that sale is taxable. Of course there will be all kinds of fancy accounting to minimize the cap gains involved but that's how I see it though IANAL.
ReplyDeleteAgreed but the court often allows the in spouse to buy the value from the out spouse with multi-year debt. The major issue is whether that debt is counted as debt under the MLB CBA. If yes then Bud can say no to Frank's purchase from Jamie and an outsider with all cash, no fool would buy less than 50% from these people, would need to be located to get the Dodgers back into the Debt formula compliance.
ReplyDeleteMaybe its just me, but reading these comments is somewhat like watching a schizophrenic at work. Anonymous is the only poster listed. People, get a profile so we can know who is posting, please.
ReplyDeleteIntriguing to see that the two sides are talking again shortly after Jamie's recent catch of Frank's chicanery. Whatever Frank is doing is now being scrutinized in minutiae. I cannot see how he overcomes all of this. It just seems like he is biding his time now, hunkering down like Kadafi in hopes for a counter-attack that will limit the damage. He will be overthrown, however, there is no doubt at this point. The only word I can see used at this point is "when".
Thank you for an excellent review. I feel "caught up". You expertly clarified the loan situation (11/02/2009) and the taxes (02/22/2010). Here you show the contrary perspective of both groups of lawyers. And I am thankful that someone like you can keep this all straight. Aristotle writes, "The judge tries to restore an unjust situation to equality, since it is unequal" (N.E. 5.4). It's too bad that the husband and wife involved cannot be friendly and restore equality all by themselves.
ReplyDeleteAnother question for Jamie's inquiries --
ReplyDeleteWhich of Commish Bud's fraternity brothers will end up owning the Dodgers?
Very interesting! Keep writing your articles.
ReplyDelete