Frank McCourt continues to fight
The Los Angeles Dodgers, long a worldwide brand, are now the object of complex, bicoastal litigation. In Los Angeles, Frank McCourt fights for a judicial determination that the Dodgers are his property alone, leaving ex-wife Jamie with the crippled remains of a small residential real estate empire. In Delaware, Frank McCourt fights to keep control of the baseball team he took into bankruptcy about three weeks ago, hoping to stave off commissioner Bud Selig's assault on his ownership. Frank McCourt's still fighting. In other words, it's business as usual.
Here's a progress report on where things stand on both coasts, based on experience in the field, research and information from people with knowledge of the situation.
On Wednesday, Judge Kevin Gross will decide whether McCourt can shepherd the Dodgers through their bankruptcy using McCourt-arranged financing. In McCourt's favor is the strong deference bankruptcy courts usually show debtors who secure their own financing. Working against him is Major League Baseball's proposal to fund the team's operations at a much lower cost. Coupled with allegations of McCourt mismanagement, baseball could increase its influence on the Dodgers by convincing the court to deny McCourt his own financing.
Gross' ruling on the issue has two layers of importance. First, from a technical standpoint, forcing McCourt to accept MLB financing paves the way for Selig to exert control over the Dodgers should McCourt fail to follow baseball's terms. Second, because of the great deference typically shown debtors to exercise their own business judgment in these scenarios, a ruling against McCourt would be a strong message that Gross lacks faith in McCourt's ownership. A pro-MLB decision Wednesday would not end the McCourt era, but it would be a damaging blow.
In the hole
After resolving how the club's bills will be paid for the remainder of the bankruptcy, attention will turn to the club's television rights. Generating significant, immediate capital and providing for long-term financial stability by selling the TV rights for 2014 and beyond is an indispensable aspect of McCourt's post-bankruptcy strategy. If he cannot secure baseball's approval of a new TV deal or persuade the court to allow one over Selig's objections, McCourt will almost certainly not own the Dodgers when the club exits bankruptcy. He can probably keep the Dodgers if he loses tomorrow. The same probably cannot be said if he is unable to monetize the television rights.
Still on the bench
The centerpiece of any complete Chapter 11 proceeding is the development and approval of a formal plan for the debtor to pay its creditors and emerge from bankruptcy solvent and solid. Neither McCourt nor baseball seem to think the club's creditors are in any real danger. Baseball has said it expects all creditors will be paid in full, and McCourt's own filings assert the team is "wildly solvent." Still, the creditors, and then Gross, will approve or deny an eventual plan.
Late last week, McCourt filed a motion asking for a reduction in his monthly payment (more than $600,000) to ex-wife Jamie. Frank argues he should not be forced to pay more than $400,000 per month on seven homes Jamie controls and refuses to rent or sell. Jamie McCourt's camp responded, saying, "Frank's hypocrisy and deceit know no bounds," and suggesting Frank should have sold half the Dodgers' assets if his financial condition was so desperate.
Arguments will be heard in Los Angeles on Aug. 10. Between last week's filing and the eventual hearing, Frank will pay Jamie $637,159, a total of one month's worth of support. Frank contends he's spent less than that amount on himself in the past year. His argument may be one of urgency, as well, as Frank's sources of cash are significantly cut off during the Dodgers' bankruptcy proceeding. Sources indicate he is current on all money owed Jamie to this point, but Frank declared, "I simply cannot afford to support [Jamie's] lifestyle any longer."
In the hole
When the McCourts reached a short-lived settlement in late June, negated by Selig's refusal to approve the Dodgers/Fox TV deal, they scheduled a one-day trial Aug. 4 to resolve the ownership dispute over the team. That hearing was contingent on the settlement agreement, however, and is no longer expected to occur. At some point, however, Judge Scott Gordon will hear arguments and issue a decision on whether the Dodgers belong solely to Frank McCourt or to the couple together.
Still on the bench
There is a small possibility that Gordon rules the Dodgers are both Frank and Jamie's property while the Dodgers bankruptcy is still ongoing. However, it is not likely such a ruling in Los Angeles would materially affect the proceedings in Delaware. On the date the Dodgers filed bankruptcy, Frank McCourt did not need Jamie's approval to take that action. Even if the Dodgers are determined to be community property, the bankruptcy proceeding is about the club's creditors, not its owners. As it was the Dodgers and related businesses that sought bankruptcy's protections, and not one of the McCourts personally, the court's focus will be on the business' operations.Josh Fisher is a contributor to ESPNLosAngeles.com and the author of the blog DodgerDivorce.com.
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