McCourt divorce trial Q&A
Dodgers' ownership as stake as Frank and Jamie McCourt head back to court
Molly Knight has been reporting on the divorce proceedings between Los Angeles Dodgers owner Frank McCourt and his wife of 30 years, Jamie, for ESPN The Magazine. With the trial set to begin again Monday, Knight tackles some of the looming questions in the case, with insight from court documents, interviews with the McCourts' attorneys and testimony.
How is all of this affecting the Dodgers?
Frank McCourt and his wife, Jamie, have taken the Dodgers into hundreds of millions of dollars of debt in the six years they've run the team. According to Frank McCourt's testimony, a lot of this was done to fund his family's extravagant lifestyle -- including the acquisition of eight multimillion dollar homes, a personal hairstylist who worked for the couple five days a week and millions of dollars on private jet travel.
It was reported in the Los Angeles Times recently that every dollar Dodgers fans spend on tickets, hot dogs and parking goes toward paying off the interest on those debts. McCourt is having a difficult time getting banks to loan him money. (In July he told the court he had to borrow hundreds of thousands of dollars from his brother to pay Jamie her monthly spousal support.)
Unless this divorce case is resolved swiftly, the Dodgers' ability to spend money on big-time (or even medium-time) free agents this offseason (and keep control over many of the young players coming up on free agency) does not look good.
Can you sum up what I need to know about this trial in a paragraph?
The trial is happening in two parts. Part 1 (where we are right now) is to determine the validity of the postnuptial agreement the couple signed before taking over the Dodgers. Frank McCourt's attorneys argue that agreement expressly gives Jamie McCourt control of the couple's homes and gives him control of the businesses -- including the team. Jamie McCourt's attorneys say the document was drawn up solely to put the homes in her name, so that in the event creditors came after Frank's businesses they wouldn't be able to take the houses. Jamie says she never signed a document giving Frank the Dodgers. Judge Scott Gordon's job is to determine whether the Dodgers are Frank's separate property or whether the couple jointly owns the team. Once this is decided, the next phase of the trial (the division of the assets) will start.
If Jamie says she never signed a marital property agreement giving Frank the Dodgers, what did she sign?
Both parties have said that on March 31, 2004 -- the day before the McCourts moved from Boston to Los Angeles -- Larry Silverstein, an attorney for the couple in Boston, went to the McCourts' home to have them sign the marital property agreement he drew up.
Jamie has testified that she didn't know what she was signing and that she didn't have separate representation. She maintains she thought she was signing a document that put the family homes in her name, arguing that ever since the couple fell on financial difficulties in the early '90s -- Frank has testified that bad business deals and economic troubles in New England led his financial advisors to tell him he should file for bankruptcy, but he opted not to -- the couple put the titles of their homes in her name to protect them from creditors.
Jamie McCourt says she did not know the document also gave her husband the team, and had she known she never would have signed it.
Then why did they need a marital property agreement? Why couldn't they just move and put the homes in her name?
Frank McCourt testified that the couple was told that because California is a community property state, simply putting the homes in Jamie's name was not enough, and that they needed to draw up a contract that gave her the homes.
If they signed a contract, then why are we here?
Both parties have said that Silverstein presented them with six copies of the marital property agreement. Three of those copies included the Dodgers on the page that listed Frank McCourt's separate property, but the other three copies excluded the team from his take. Jamie McCourt signed all six copies in the couple's home in Massachusetts the day they were presented. Frank signed three that day and the other three two weeks later in California.
Silverstein said in a deposition that he was trying to cover his bases by having Frank sign the three copies in California. Frank testified he didn't know why so many copies of the agreement existed.
When Jamie filed for divorce and Frank produced the marital property agreement that said he alone owned the Dodgers, Jamie said she would have remembered signing a contract that gave her husband sole control of the bulk of the family's assets.
Forensic attorneys were hired, and it was determined that three of the copies of the marital property agreement were compromised after they were signed by the couple and notarized. Specifically, the three copies that excluded the Dodgers from Frank's take had been changed to give Frank the Dodgers.
Frank and Jamie have testified that they were not informed of the switch. Frank's side argues that it was simply a case of a lawyer noticing a typo (in this case, the difference between "excluding" and "including") and correcting it. Frank testified this week that he didn't know about the switch until a month ago, and that he didn't order it.
Is Larry Silverstein going to testify?
That remains to be seen. Frank McCourt's side says it plans to call Silverstein as its first witness. Since Silverstein lives in a different state the judge has no authority to compel him to come to L.A. and tell his side of the story.
How can Frank McCourt keep the Dodgers?
It's tough for anyone to say. If he wins on the marital property agreement, that's huge for him. Still, he'll be forced to operate a team in a world in which banks no longer loan him hundreds of millions of dollars. He's going to have to figure out how to generate more cash flow to keep things running. If he does lose on the marital property agreement he will have a chance to appeal it all the way to the California Supreme Court. That could take years. And as this trial has shown, he's bounced back from near financial death before, so don't count him out.
How does Jamie McCourt get the Dodgers?
In theory she could put together a group of investors to buy Frank out if the judge awards her half the team, but I'm told by a baseball source that Major League Baseball would likely not approve her as an owner at this point. And since it doesn't look likely that this couple could own anything together, Jamie could try to force Frank to sell the Dodgers to give her half the value of the franchise -- similar to what happened with the Padres a few years back.
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If I'm Team Frank, what are my arguments?
That Jamie was the driving force behind the marital property agreement, and that she wanted no part of the businesses. Also, that when the document was signed, she took the homes because real estate was a better bet than a baseball team. And that when the housing market tanked in 2008 and she realized the Dodgers were worth eight times what the homes were worth, she tried to get Frank to undo the agreement to make everything community property.
If I'm Team Jamie, what are my arguments?
That there's no way she would knowingly sign over the Dodgers, and that the only document Frank's side can produce to say she did has two versions: one giving Frank the Dodgers and one that excludes the Dodgers from his separate property. What's more, that the copies of the MPA that kept the Dodgers as community property were tampered with after the fact to give the team to Frank only.
Can Major League Baseball step in and force a sale?
Only Bud Selig knows the answer to that, and for now he's staying out of it.
What about a settlement?
Originally the couple's attorneys thought the two-week recess would be a great time for the sides to get together and reach a settlement, but then Frank spent three days on the stand getting grilled by Jamie's attorney, David Boies, and his side hasn't had a chance to cross-examine Jamie yet.
After Frank McCourt's lawyer, Steve Susman, gets to question Jamie, and if Larry Silverstein testifies, we should have a better sense of which side has the upper hand. At that point, if one side appears to be clearly ahead, the other side would probably be compelled to try to settle. Though with the animosity these two people appear to have for each other, this might go all the way to the bitter end.