MLB, McCourt seem ready for a fight
Set on a collision course, Major League Baseball and embattled Los Angeles Dodgers owner Frank McCourt are preparing for a fight over control of the team.
On Monday, commissioner Bud Selig rejected a broadcasting deal between the Dodgers and Fox that would have allowed McCourt to settle his divorce and potentially secure his position in the owner's box for the foreseeable future. Without the immediate cash infusion from the deal, there is a chance McCourt, who has struggled to make payroll recently, could be unable to make payroll June 30, leading to a likely MLB takeover of the club.
In a statement released Monday afternoon, Selig said of his decision, "We owe it to the legion of loyal Dodger fans to ensure that this club is being operated properly now and will be guided appropriately in the future. This transaction would not accomplish those goals."
As he runs out of options to stave off a complete MLB seizure, McCourt also digs in his heels for a protracted confrontation on baseball's authority to exercise control on anything beyond the team itself.
Sources familiar with McCourt's strategy indicated Monday that significant sources of Dodgers revenue would not be available to Major League Baseball or another owner without McCourt's consent. These are said to include a $21 million annual lease obligation owed from the team to a McCourt entity for the club's use of the parking lots surrounding Dodger Stadium and any ticket revenue in excess of the $6-7 million per year of service on certain McCourt debt, according to the sources. This year's figures were not available, but the surplus cash after debt service exceeded $60 million in 2005. Both of these revenue streams are slated to stay with McCourt for at least 20 more years.
The lease payments and ticket sales revenue could act together as a poison pill discouraging what would be called in the corporate world a hostile takeover. Baseball's recourse would most likely be legal action seeking a determination that such revenue cannot be diverted from team operations. McCourt's counter could be that baseball has always had knowledge of these practices and, indeed, approved the separate sale of the team and surrounding land when McCourt purchased the Dodgers before the 2004 season.
The takeaway for fans is that McCourt likely will make a complete MLB takeover as painful as possible. After all, any money baseball spends running the Dodgers until a new owner is identified ultimately comes from the league's other 29 team owners. Furthermore, the team is likely much less marketable to potential ownership groups if such significant revenue streams do not flow back to the team, but to McCourt entities.
McCourt Divorce Trial
The divorce trial of Frank and Jamie McCourt has been an ongoing court case to determine ownership of the Los Angeles Dodgers, among other assets. Topics Page »
While McCourt struggles to retain control of the foundering franchise, the contractual disposition of Dodgers revenue may indeed be a negotiating position aimed at extracting as much blood from baseball as he can while he still has some leverage. His camp is concerned that baseball will not get sufficient value in a sale of the club, and it is by far the most significant asset he has left.
Rejection of the deal signals both baseball's desire to force Frank out of the game and its willingness to take high risks in doing so. Running the Dodgers without tens of millions of dollars of revenue and subjecting the sport to a potentially damaging lawsuit on the eve of a renegotiation of its labor deal are great costs, but ones Selig is evidently willing to bear.
The next step in this developing saga may be the commencement of that very litigation. McCourt may seek an emergency order barring Major League Baseball from denying the Fox deal and ultimately seizing the Dodgers. Such a lawsuit has likely been on the desks of McCourt's attorneys for weeks, ready for just this sort of occasion.
Today's MLB action also automatically nullified the settlement agreement reached Friday between Frank and Jamie McCourt. A one-day trial in August to permanently resolve whether Frank alone owns the Dodgers or whether the club is community property is now in doubt, and the couple's divorce is as unsettled today as it has been the past 20 months.
Dodgers fans are left, once again, with but a single certainty: the ownership battle that has gripped their beloved team for nearly two years goes on. And this time, it's Selig opposing Frank McCourt.Josh Fisher is author of the website "Dodger Divorce."
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