While Frank McCourt still owns the Dodgers, Major League Baseball appointee J. Thomas Schieffer may be in the on-deck circle.
Commissioner Bud Selig has described Schieffer's current role as one of oversight, with the task of approving any Dodgers expenditures over $5,000, but McCourt's financial troubles may lead Schieffer into a different role in the weeks to come.
It has been reported that McCourt may struggle to meet obligations as soon as May 15, which might all but force Selig to seize the club. In the meantime, Schieffer must begin unravelling Dodgers finances, rehabilitating the club's public image, and working with a budget and alongside general manager Ned Colletti to augment a promising-yet-flawed team on the field.
No mean feat. Let's consider what might be on his to-do list for starters:
1. Establish control
Schieffer finds himself in the uncomfortable position of coming into a skeptical organization. Those loyal to McCourt will likely view him with resentment, and those more wary of McCourt's struggling regime may not know how to express loyalty to MLB without risking their jobs in a post-Schieffer world. Schieffer's first task is to be clear about his authority and expectations.
If at all feasible, Schieffer would do well to integrate into the Dodgers' existing power structure rather than imposing his own. The transition from full McCourt control to MLB intervention is sure to be an awkward one, and Schieffer should offer normalcy wherever possible. Still, he must not be shy about doing his job. He is in place because the Dodgers appeared close to foundering, and his role is to keep the organization afloat until MLB's concerns are allayed.
2. Stop the bleeding
According to documents filed by Jamie McCourt in connection with the McCourt divorce last year, the sparring couple took at least $108.9 million out of the organization since purchasing the club in 2004. In an exhibit to the same filing, the family's banker once characterized Jamie McCourt's philosophy as "why have a family business but to support the family lifestyle?"
Frank McCourt has recently blasted the $108.9 million figure as grossly inflated, claiming the McCourts have really taken only about $50 million of salary and distributions from the club. However, in his calculations, Frank does not include the Dodgers' de facto guarantee of a nearly $50 million dollar loan to the McCourts, which is secured by two parcels of land currently used as Dodger Stadium parking lots.
When an issue central to the divorce went to trial last fall, further evidence of how the McCourts viewed the Dodgers came into focus. At one point in the preceding years, the couple strategized about how to fund their $15 million-plus annual budget to support their lifestyle. Unable to set aside $250 million to invest for that purpose, Jamie McCourt took a note during a meeting with a financial adviser: "[R]ather, we will bake the annual number into our operating budget."
It is clear that the McCourts did not separate their personal finances from club operations, and figuring out how to keep Dodgers revenue inside the organization might be both Schieffer's most important and most difficult task. Potentially complicating his efforts are the numerous debt instruments encumbering various revenue streams, such as ticket sales.
3. Untangle the web
The McCourt enterprise owns a great deal more than the Los Angeles Dodgers franchise. Indeed, along with the club itself, the McCourts purchased Dodger Stadium -- 276 acres of prime Los Angeles real estate -- and the rights to televise Dodgers games. Those assets (and many more) have been partitioned into a complex corporate structure.
As of last spring, a flowchart depicting this structure showed 22 distinct entities. Schieffer is now responsible for investigating the relationship between them all. For instance, one McCourt entity paid another $14 million in rent for Dodger Stadium last year. In previous years, the McCourts had at least contemplated whether one of their companies would charge the others management fees, which would offer potential tax benefits. Schieffer must figure out how cash is flowing within the structure and evaluate the propriety of operations.
4. Communicate the operating budget for the rest of the season
Largely overshadowed by the off-the-field circus the Dodgers cannot seem to escape, the team is actually playing baseball. Through games played yesterday, the Dodgers stood 15-16, good for second place in the NL West. Outfielders Matt Kemp and Andre Ethier have produced 1.7 and 1.6 wins above replacement (WAR), respectively, according to advanced statistics generated by Fangraphs The starting pitching has been adeqate enough enough to keep the team in games.
Still, the club has clear needs at first base and in the bullpen. Both of those areas are usually ripe for a midseason patch, but it is unclear whether the Dodgers have the financial flexibility to swing a deal. Schieffer must make those details clear, at least, to Colletti.
The general manager cannot be asked to negotiate a trade and then seek approval from MLB's representative. Schieffer must arm Colletti with this information immediately, especially if baseball is unlikely to allow the Dodgers to add payroll. In this respect, bad news is better than no news at all.
5. Be transparent
For too long, Dodgers staffers and fans have dealt with uncertainty. Schieffer should -- within understandable limits, given a potential McCourt lawsuit against MLB -- be open and honest with the club's employees, fans, and media. He should also communicate to the greatest extent possible with Frank McCourt. This will improve the club's relationship with all stakeholders.
Schieffer would be well-advised to follow the textbook strategy of telling people what to expect, acting on that intention and then describing what he has done. There are certainly baseball reasons to be a bit cagey -- you do not want opposing executives to learn too much about the Dodgers' potential resources in a trade, for instance -- but all will be served well by fostering a more open dialogue both inside and outside the club's front office.
6. Focus on the Dodgers' baseball operations
Perhaps the most distressing aspect of the drama of the last 18 months is that attention has been focused everywhere but the space between the white chalk lines. Yes, there is tension and turmoil in the owner's box. There is still a baseball team to be run, with games to be played and young talent to be developed. Schieffer will do well to make his motivation clear: He is in place to ensure stable club operations and protect the team's future.
Schieffer can achieve this task in two key ways. First, he should consistently frame his actions with respect to their effect on short- or long-term Dodgers baseball goals. Schieffer should communicate that his role is, ultimately, to run a good baseball organization, not to turn a profit. Second, Schieffer should simply never communicate with Frank McCourt through the media. The team and its fans have endured a generation's share of public controversy. Schieffer should provide stability and confidence by projecting a consistent message, and that message should never address any disputes with McCourt.
7. Have a disaster plan.
In recent months, McCourt has deviated from the goal of starting a Dodgers-centric TV network. Instead, he has proposed a life-preserver deal with Fox that would provide him with enough cash to operate the Dodgers for the pendency of his divorce. However, Selig has been reluctant to approve that plan, and speculation is that McCourt will again struggle to meet payroll in the coming weeks.
For now, Schieffer has been called merely a monitor of Dodgers operations. However, if McCourt runs out of cash altogether, MLB almost certainly will expand its influence on the Dodgers to something much greater than oversight. Schieffer would be the public face of the club's immediate future as a ward of the state, and he must be preparing those contingency plans long before they are necessary.