In a blow to the proposed divorce settlement between Frank and Jamie McCourt that could have cleared up the tangled finances of the Los Angeles Dodgers, MLB Commissioner Bud Selig has rejected a Fox loan against broadcast rights to Dodgers game — the proceeds of which would settle Jamie’s claims and help the team make payroll at the end of the month.
The deal would have Fox loan the Dodgers an advance for the next 17 years of television rights for the Dodgers, bringing down the annual rights fees. Fox would loan the Dodgers and the McCourts $385 million, with $211.5 million going to the Dodgers (allowing the team to make payroll at the end of the month) and the rest going to pay off various McCourt debts. This includes $23.5 million back to Fox to pay off a previous personal loan to McCourt (allowing him to make payroll last month), $80 to pay down team debt (the Dodgers are in violation of MLB’s debt rules), $10 million to pay legal fees incurred by the McCourts in the court of their divorce, and $10 million with no earmarks attached, spent at the discretion of the McCourts.
As you can divine from that, McCourt is taking money from a very lucrative source — broadcast rights, which, considering the size of the Los Angeles market, should be among the highest in baseball — and borrowing against them for a comparative pittance to pay off personal debt. It’s something that concerned Selig in the past, and he wasn’t shy about rejecting the deal. In a statement, Selig laid out the rationale for his decision:
“Pursuant to my authority as Commissioner, I have informed Los Angeles Dodgers owner Frank McCourt today in a detailed letter that I cannot approve the club’s proposed transaction with Fox. This decision was reached after a full and careful consideration of the terms of the proposed transaction and the club’s current circumstances. It is my conclusion that this proposed transaction with Fox would not be in the best interests of the Los Angeles Dodgers franchise, the game of Baseball and the millions of loyal fans of this historic club.
“Mr. McCourt has been provided with an expansive analysis of my reasons for rejecting this proposed transaction. Critically, the transaction is structured to facilitate the further diversion of Dodgers assets for the personal needs of Mr. McCourt. [emphasis ours] Given the magnitude of the transaction, such a diversion of assets would have the effect of mortgaging the future of the franchise to the long-term detriment of the club and its fans.
“As I have said before, 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 these goals.”
It’s pretty clear that Selig’s main objection is the diversion of more Dodger money to McCourt’s pockets at a time when the team is financially struggling: it’s been reported the McCourts have already raided Dodger accounts to the tune of $100 million to fund a lavish lifestyle.
McCourt’s attorney, Steve Susman, was quick to issue a press release in response:
“We are extremely disappointed with the Commissioner’s rejection of the proposed Fox transaction which would inject $235 million into the Los Angeles Dodgers. As Commissioner Selig well knows, this transaction would make the Dodgers financially secure for the long term and one of the best capitalized teams in Major League Baseball.
“For weeks Major League Baseball has consistently made public pronouncements asserting that Jamie McCourt’s agreement of the Fox transaction also was needed; that the Court adjudicating the McCourt divorce grant its approval of the transaction; and the Dodger organization provide all data requested by Major League Baseball to satisfy the so-called investigation ordered by Commissioner Selig last April — the latter also being the excuse he gave at that time for delaying his approval of the proposed Fox transaction.
“All the requirements for the Commissioner to approve the FOX transaction were put in place by last Friday: Frank and Jamie McCourt entered into an agreement based on the proposed transaction; the Court ordered, among other things, that the Fox transaction is ‘in the best interest of the Los Angeles Dodgers and should be consummated immediately;’ and all information requested by Major League Baseball under its so-called investigation has been provided by the Dodgers.
“Commissioner Selig’s letter of rejection is not only a disappointment, but worse, is potentially destructive to the Los Angeles Dodgers, and Major League Baseball. Accordingly, we plan to explore vigorously our options and remedies with respect to Commissioner Selig’s rejection of the proposed Fox transaction and our commitment to protect the long-term best interests of the Los Angeles Dodgers.”
Such remedies may include a lawsuit in federal court to prevent Selig from taking total control of the team should payroll be missed; Selig has already taken partial control of the Dodgers and installed a trustee, Tom Schieffer, to oversee all business matters.
The rejection by Selig would also seem to throw a wrench into a proposed divorce settlement worked out by lawyers representing the McCourts. A tentative agreement had Frank McCourt buying out Jamie if a) Selig had approved the loan and b) a California judge ruled that Frank owned the team free and clear, providing Jamie with a $50 million buyout. Now, without the Selig approval, that agreement is null and void, leaving the fate of a hearing before Judge Scott Cooper up in the air. More from The New York Times and the Los Angeles Times.
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