McCourts, divorce and the Dodgers
The ownership hangs in the balance as Frank and Jamie McCourt's divorce trial looms
You know the story of Frank and Jamie McCourt. How could you not? Since the couple's divorce lit Twitter on fire in late October like baseball's postseason only wishes it could, no sports fan has been able to avoid the McCourts.
You know of their excesses; more than a quarter of a million dollars per month spent on private jets. You know of their schemes; Frank wanted an NFL neighbor for the Dodgers, Jamie wanted the presidency of the United States. And you know about the seven-page agreement that will, should Frank get his way, leave him with the team and her with a bunch of empty houses.
Heck, you probably even know about that document's staples.
Media coverage of the divorce and its surrounding storylines has been thorough, but there is no shortage of issues to analyze as the Aug. 30 court date approaches. What follows is not meant as a comprehensive breakdown of every facet of the divorce. Rather, it is a discussion of what's happening now, what's coming next and what it all means.
What is the current status of the litigation?
The trial to determine ownership of the Dodgers will begin in a little more than a month. The heart of the matter is that marital property agreement (MPA), which Jamie is quite busy attacking. From standard contract law principles (such as mistake of material fact) to bizarre twists (such as forensic staple analysis), Jamie has no choice but to throw a bunch of legal theories at the wall and hope one of them sticks. If the MPA stands, Frank will likely emerge from the divorce several hundred million dollars wealthier than Jamie. She really has nothing to lose, which makes her a dangerous foe.
Will the divorce even make it to trial?
It is hard to say whether Frank and Jamie can reach an amicable agreement before trial. The incentives to settle are strong. Frank does not want to risk losing the Dodgers, and Jamie does not want to risk losing everything. A settlement might be the best solution as far as the team is concerned, as well; Frank and Jamie would get to choose what to do with the Dodgers. That might not be ideal, but it would certainly be cleaner than a court-ordered sale of the club. A settlement would also offer Frank and Jamie much more control over information than a judgment in court. Both the Dodgers and the divorcing couple have been exposed by the discovery process leading up to trial, and everyone involved might want to stop the bleeding while there is still an opportunity to do so.
What could keep the McCourts from settling?
Pride, for one thing. Each McCourt has undergone intense scrutiny over the past several months, and it is not unrealistic to think the only acceptable outcome for either is to own the Dodgers. Frank shows no willingness to cede control of the club, and Jamie makes sure the public knows the only thing she has ever wanted is to own a baseball team. Unless Jamie has been pursuing an aggressive misdirection campaign, in which she feigns interest in the club to sweeten her payday, it is difficult to imagine either McCourt agreeing to let the other own the team. While nothing will hasten settlement quite like the inevitable approach of the trial, both parties seem invested in seeing the litigation through at this juncture.
So if not a settlement, then what?
Then the court will try the issues, most notably the MPA. Jamie's fall-back position is that, if every specific legal attack fails, the MPA should be set aside because it would result in an inequitable distribution of marital property. If nothing else, she will likely argue, she should be entitled to her half of the substantial increase in the Dodgers' value since the club came into the McCourts' hands. Frank will contend that the document is doing exactly what it was meant to do, and that Jamie consciously surrendered her take in the assets' upside to protect herself with the "safer" real estate assets. A bad business decision, Frank will say, should not be sufficient reason to overturn the validly executed MPA. The trial is anticipated to stretch through the month of September, when Dodgers fans surely would prefer the focus to be on the field.
What if Frank wins at trial?
Life goes on, mostly as usual. Yes, he'd likely have to pay Jamie a pretty penny as a going-away present. Still, he would have the team, and that is what counts. Despite rumblings last fall that he would look to get out of the Dodgers as soon as this mess was resolved, it is safe to expect him to stick around for quite a while. Fox's broadcast rights for the club expire following the 2014 season, and no owner in his or her right mind would sell the Dodgers before that valuable asset comes back in-house. Short of a settlement, a Frank victory at trial is the quickest and most decisive outcome available.
What if Jamie wins at trial?
Pandemonium. Should her legal team prevail, the MPA will be disregarded, and each spouse will have to leave the marriage on similar terms. This means that, considering an unimaginable number of factors, Frank and Jamie's estates must be reasonably equivalent in value. It is difficult to imagine either party accepting any agreement that leaves the other with the team, so a victory for Jamie at trial likely means the end of the McCourt era at Chavez Ravine.
What about an appeal?
Should the case reach judgment and one of the parties chooses to appeal, the appellate court would review only the trial court's legal conclusions. California law affords family court judges a great deal of flexibility in evaluating issues at the trial level, and an appeal could only overturn the trial court's decision if that court applies the law incorrectly. In the McCourts' case, the issues surrounding the enforceability of the MPA present the possibility for error at the trial court level. However, because of the complexity and noteworthiness of the case, the record has been thoroughly developed. The actual review of the case on appeal would be relatively straightforward, although the process could be cumbersome. Until the trial court rules on the issues before it, speculating on the effect of an appeal is haphazard at best.
How and when could a sale transpire?
There are two ways the Dodgers might be sold following a resolution of the divorce issues. First, and probably best, the club could be put on the market with no hard deadline for a sale. An open-ended sale would allow for a much more thorough process, the benefits of which are obvious to Texas Rangers fans. A court-ordered sale would pose the risk of depressing the price so much that a bidder without the financial wherewithal to operate a large-market team might end up owning the Dodgers. Fans of the team have been there before, and are not eager to be back in that situation. As far as timing goes, it is possible that the Dodgers could be under new ownership by the beginning of the next baseball season. On the other hand, the end game could take on a life of its own, not unlike the divorce itself.
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Has the divorce affected the team on the field?
During the offseason, the Dodgers declined to offer arbitration to Randy Wolf and Orlando Hudson. The team did not pursue any high-profile free agents, nor did it make any meaningful international signings. The Dodgers have been thin all season, and have yet to add pieces to bolster the major league roster. In the first round of last month's draft, the Dodgers took Zach Lee, a right-handed pitcher viewed as highly unlikely to sign. It has been common to attribute these sorts of moves to financial constraints due to the divorce. Such a conclusion is unwarranted. The Dodgers have kept the purse strings tight for several years. The club has been a non-factor in amateur free agency, and has not spent aggressively in the draft. It has developed a reputation for shipping out top prospects to induce other teams to pick up salary. In documents filed related to the divorce, it has been revealed that the Dodgers' business plan calls for the club to remain close to a $100 million annual payroll, despite dramatic increases in ticket prices. It has been reported that Frank McCourt feels a payroll along those lines is sufficient to compete for division championships, so there is little incentive to raise payroll. While such a philosophy might hit the rocks as the team's top young talent gets more expensive, the Dodgers' reluctance to spend began long before the divorce.
What does the Texas Rangers' bankruptcy case mean for the Dodgers?
One very significant aspect of the Rangers' foray into bankruptcy court is that the judge has ordered the team sold at auction. This conflicts with Major League Baseball's constitution, which requires the affirmative vote of at least 75 percent of ownership before allowing control of a team to change hands. Should the court-ordered sale go through, MLB's ability to restrict sales by requiring ownership approval will be weakened. This is good news for Jamie McCourt, who is unlikely to ever gain the votes necessary to own a team under the current system. She has maintained her ability to assemble an investment group capable of buying out Frank's interest in the Dodgers. If the court orders the club sold, and Jamie can pony up the cash, she might rely on the Rangers' sale to get past ownership approval.
When will the situation ultimately be resolved?
It could be tomorrow, it could be a couple years. Settling the case prior to trial offers the McCourts the best chance to keep the Dodgers in the family. Exposing themselves and the organization to the hazards of open court dramatically increases the possibility of the team's sale. This outcome might delight the majority of Dodger fans, but the cost is certainly high. One of the most storied franchises in professional sports could be bound for its fourth ownership group in 13 years, and, as Dodger fans have learned too well, change is rarely easy.