Morally Bankrupt Owner Now Has Financially Bankrupt Team
June 27, 2011 at 6:44 am | Posted in Frank McCourt | 57 CommentsSo here’s a thing that happened this morning: the Dodgers have filed for Chapter 11 bankruptcy protection. Craig Calcaterra, former lawyer and current baseball writer, is in the perfect position to explain what this means:
Obviously the situation is fluid, and more details will stream in as the morning and day progresses, but for the time being, this could buy McCourt some time. Why? because a bankruptcy filing puts a halt on all legal action with respect to the bankruptcy estate (i.e. the Dodgers). McCourt will certainly argue that this will prevent a takeover from Major League Baseball, though the court may decide differently when it gets a chance to weigh in, likely in the next few days.
The problem for McCourt is that the kind of bankruptcy the Dodgers have certainly filed is designed to reorganize the financial house. Frank McCourt, however, does not have a plan available to him to do such a thing or else he would have already done it. The filing isn’t yet circulating, but my guess is that he’s going to ask the court to order that the Fox TV deal be executed — assuming Fox wants to still do it, which it has been reported it may not — thereby providing funding.
The problem with that, of course, is that the bankruptcy court won’t approve of anything that is not seen as in the best interests of the Dodgers, and it’s obvious that Major League Baseball and others would come in and make a strong case that the Fox deal is disastrous for the Dodgers or, at the very least, not the best deal they could make.
If McCourt can do no better, the court may very well order a sale of the team. Perhaps auctioning it off, Texas Rangers-style. Which, by the way, would also put Major League Baseball in the same position it was in with respect to the Rangers: less-able to control who owns the team than it would otherwise be. Mark Cuban bid on the Rangers, after all. If his or some other non-chosen person’s money looked green to the bankruptcy court in such a scenario, Bud Selig would be hard-pressed to stop them from participating in a team auction.
But let us not get ahead of ourselves. For now, we simply have Frank McCourt where he was inevitably headed: bankruptcy court. And some time has been bought. A little anyway. The end game for McCourt, however, doesn’t look all that better than it did before.
We’ve also got McCourt’s usual ludicrous, out-of-touch statement on the matter (emphasis mine):
“The Dodgers have delivered time and again since I became owner, and that’s been good for baseball,” McCourt said. “We turned the team around financially after years of annual losses before I purchased the team. We invested $150 million in the stadium. We’ve had excellent on-field performance, including playoff appearances four times in seven years. And we brought the Commissioner a media rights deal that would have solved the cash flow challenge I presented to him a year ago, when his leadership team called us a ‘model franchise.’ Yet he’s turned his back on the Dodgers, treated us differently, and forced us to the point we find ourselves in today. I simply cannot allow the Commissioner to knowingly and intentionally be in a position to expose the Dodgers to financial risk any longer. It is my hope that the Chapter 11 process will create a fair and constructive environment to get done what we couldn’t achieve with the Commissioner directly.”
I mean… good lord. I know this is all legal and public posturing, but it’s almost like he doesn’t realize that he’s the guy who took over $100m out of the team for his own personal use. Get a clue, Frankie.
You can read the entire bankruptcy filing here. I’m not a lawyer and don’t pretend to understand it all, but what really caught my eye is the list of creditors. It’s no surprise that they still owe Manny and friends for deferred payments, but I think there’s a few names that will jump out at you. The list goes down to 40, and even includes Vin Scully at one point, though I’m just going to show 12 for reasons you’ll soon see…
List of unsecured creditors and amount of claim
- Manny Ramirez, $20.992m
- Andruw Jones, $11.075m
- Hiroki Kuroda, $4.483m
- Rafael Furcal, $3.725m
- Chicago White Sox, $3.5m
- Ted Lilly, $3.423m
- Zach Lee, $3.4m
- Kaz Ishii, $3.3m
- Juan Uribe, $3.241m
- Matt Guerrier, $3.090m
- Juan Pierre, $3.050m
- Marquis Grissom, $2.719m
You see the same thing I do, right? Marquis Grissom hasn’t played for the Dodgers since 2002, Kaz Ishii since 2004… and yet they’re still owed about $6m between them. I can’t even put all of that on McCourt, because he didn’t own the Dodgers when Grissom played, so that’s just opening up an entirely new can of worms into the Dodger financial history. (Update: since a few people have asked me already, the White Sox and Pierre are listed separately because they owe Pierre deferred money from his years as a Dodger and also sent money to Chicago for the remaining years on his deal.)
There will be more throughout the day, no doubt, as people far more qualified to break down legal briefs than I weigh in. One thing hasn’t changed, however, and it’s what we’ve been saying for months: this is going to get a lot worse before it gets better.
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My anger with McCourt is shifting to Selig. Frank is doing what almost anyone else in his position would do. Bud allowed this to happen.
Comment by Warren— June 27, 2011 #
Selig absolutely made a huge mistake in allowing McCourt to buy in back in 2004, and I can’t forgive him for that. He’s done what he needs to do over the last year though.
Comment by Mike Scioscia's tragic illness— June 27, 2011 #
He allowed McCourt to buy the team, divide up the assets, create multiple shell companies, etc. Everything I’ve read says he signed off on all this nonsense.
Comment by Warren— June 27, 2011 #
Right, but I think we’re saying the same thing. All of that happened when McCourt bought the team in 2004, and it’s all on Selig – unforgivable. But over the last year he’s taken the steps to try to rectify that.
Comment by Mike Scioscia's tragic illness— June 27, 2011 #
Agreed. I guess my point is who among us wouldn’t do what Frank is trying to do? If your marriage was over, kids grown, and the only real asset you had in the world was being squeezed away who wouldn’t fight like hell to keep it? As a Dodger fan I want this over with yesterday. As a human I can get where Frank is coming from. Therefore I blame the guy who put us all in this position, Bud. He defends himself by saying they had no other serious bidders in ’04. Fine. MLB should have controlled the team for a year or two until enough bidders were lined up. Whatever happens from here is on Bud. You can’t expect Frank to just give up and walk away.
Comment by Warren— June 27, 2011 #
I can’t see the human side of what Frank’s doing. At some point he has to realize the best deal for everyone, including himself, is to get as much money as he can for the team, and go live quietly and lavishly somewhere far away from LA. He needs to pull his head out of his ass and realize that Bud isn’t fucking him now, Bud fucked him 7 years ago, and he’s only made it worse since.
Comment by Dave— June 27, 2011 #
The “Human Side” of me, would sell the team, pay off my debts, and retire to a peaceful life in Aspen fly fishing. The fact of the matter is, I built this marriage, and this businees into what they became… Not Bud Selig. Thankfully, I own half of a business that can be sold to satisfy my debts and leave me with enough capital to either retire or start a new business should I see fit. Then again, some people have different “Human Sides”, which for some mysterious reason have nothing to do with personal responsibility, accountablility, or honor.
Comment by Garduno— June 27, 2011 #
By the same token, who among us would take a franchise beloved by millions of people and turn it into a financial racket, eventually going bankrupt? You’re acting like McCourt is a chimpanzee, meaning he has no moral responsibility, and Selig is the responsible agent who should have seen how bad it would become and should have prevented it. Because McCourt is human, however, he deserves 100% of the blame for the crap he pulled. Selig deserves blame for not preventing it, but who do you throw in jail if screwing over the Dodgers were a crime?
Comment by Bip— June 27, 2011 #
Dave — the “get as much as he can for the team” part is what’s driving his increasingly over-the-top behavior. He wants to make it as hard as possible for MLB to take over the team.
Comment by Rob McMillin— June 27, 2011 #
Rob, I meant in selling the team. He’s trying to hold on to at least some of the pieces so he can keep raping the team.
Comment by Dave Pomerantz— June 27, 2011 #
The difference now is that:
a.) with the divorce Frank will lose half of his marginal assets
b.) in 2004 he had not demonstrated his complete financial and moral incompetence and siphoned millions into his own personal accounts
c.) the DA, Attorney General, and IRS weren’t building their respective cases to take him down
d.) Frank has almost zero fan support and back then we were hoping for another O’Malley family ownership scenario. (how wrong were we!)
Comment by SamAdams— June 27, 2011 #
Keep in mind, that Fox vetted McCourt for only one reason, keeping the TV rights. In 2004, Bud needed Fox. Time Warner and Comcast were not in the baseball game, yet. Now, Fox needs the MLB and will not upset the apple cart. Sure, Bud paved the way for an underfunded and morally challenged charlatan to own the team, but Bud was ably abetted by Fox, who held the purse strings.
Now, it is 2011 and Fox needs MLB more than they need Fox. They are not going to spit in the face of Bud to support a clown. To be honest, I think this will be a slam dunk for the MLB. I am just waiting for Jamie to throw her support with the MLB. The thing is, Frank could actually get some money if the team goes to auction. If Burkle, Gores and Cuban get to bidding and if the MLB can included all of the assets (parking lot, land, etc…) it is not inconceivable that a billion dollars could pass hands. But, it all depends on if the claim that Frank is some $775 million in debt and how he can structure his settlement with Jamie.
Comment by grabarkewitz— June 28, 2011 #
I understand the concept of the time value of money, but these deferred payments are ridiculous. Not all McCourt’s fault, but this method of operating beyond your means will catch up eventually. Of course, there are plenty of McCourt/Colletti guys with deferred payments on the list.
Manny, Andruw and Juan…what an outfield!
Comment by The Count— June 27, 2011 #
On a random and unrelated note, because it actually involves baseball and not the evil Frank McCourt, here’s the latest on Zach Lee’s doings in Lo-A ball:
Last 10 Games: (Current team only)
Date OPP W L ERA G GS CG SHO SV IP H R ER HR BB SO GO/AO AVG
Apr 13 @WM 1 0 1.80 1 1 0 0 0 5.0 7 1 1 0 1 7 1.33 .333
Apr 18 SB 1 0 1.80 1 1 0 0 0 5.0 5 1 1 0 3 9 1.00 .250
Apr 25 @LAN 1 0 1.59 1 1 0 0 0 5.2 4 2 1 0 2 4 1.80 .182
Apr 30 @BG 0 0 0.00 1 1 0 0 0 5.0 5 0 0 0 2 2 0.71 .263
May 05 WM 0 0 1.50 1 1 0 0 0 6.0 5 1 1 0 0 1 1.29 .227
May 29 @FW 0 1 81.00 1 1 0 0 0 0.2 3 6 6 1 2 1 0.00 .750
Jun 03 PEO 0 0 9.00 1 1 0 0 0 3.0 4 3 3 1 0 4 1.50 .308
Jun 09 @CR 1 0 1.80 1 1 0 0 0 5.0 4 1 1 0 2 5 1.25 .222
Jun 15 @LC 1 0 9.00 1 1 0 0 0 5.0 7 5 5 3 0 3 2.33 .350
Jun 24 @LAN 0 0 0.00 1 1 0 0 0 5.0 3 2 0 1 0 3 1.60 .158
Totals 5 1 3.77 10 10 0 0 0 45.1 47 22 19 6 12 39 1.33 .264
Splits: (Current team only)
Three bad outings out of 10 starts. Could be worse. The source for this is the minor league baseball website:
http://web.minorleaguebaseball.com/milb/stats/stats.jsp?pos=P&sid=milb&t=p_pbp&pid=545346
Comment by Steve— June 27, 2011 #
3+Ks per walk as a 19 year old… I can’t help but salivate a little bit.
Comment by Dave— June 27, 2011 #
Second time in a row McCourt BS overshadows a brilliant Kershaw start. I see a trend here.
Comment by The Hatch— June 27, 2011 #
What a circus. These clowns are putting on a clinic in mismanagement. May it end soon.
Comment by McColletti BeGone— June 27, 2011 #
Sadly, the Times is reporting that, far from lacking interim funding, Frank has $150M lined up.
Comment by scareduck— June 27, 2011 #
To be a little more exact, they’re reporting that Frank -says- he has $150 million lined up. He may well have it, but his word is garbage, as far as I’m concerned.
Comment by Bill Grabarkewitz— June 27, 2011 #
Levy Restaurants? P2 (the bobblehead guys)? Continental Airlines? KABC? Were these the guys that forwarded the money for the prior paydays?
Comment by Tony M. Fernández— June 27, 2011 #
Write it all down people so we know who to boycott.
Comment by DodgersKings323— June 27, 2011 #
Btw, thanks to Jon Weisman for the catch, but look at the spelling on some of the names.
Chad Billingsly
Jonathon Broxton
Kazuhisi Ishii
Nice job to whoever filed this.
Comment by Tony M. Fernández— June 27, 2011 #
Aw, c’mon, Tony. They’re just the hired help. You can’t expect him to actually remember their names, now, can you?
Comment by scareduck— June 27, 2011 #
My hope at this point is for the court to order sale to the highest bidder, limiting Selig’s control over who buys the team so we don’t end up with another McBroke or the guy buying the Astros.
If Frank somehow ends up with the Fox deal and the team, I will say good bye forever to the Dodgers and maybe MLB.
Comment by Scott— June 27, 2011 #
Problem with sale to the highest bidder is that it can allow a crook with a lot of money (like the guy buying the Astros) to get past MLB screening. But it COULD let a guy like Cuban, who would be a great owner that would annoy the crap out of Selig in. Mixed bag, I guess.
Comment by Dave— June 27, 2011 #
The Astros guy is almost borrowing as much money as McCourt did. He is a Selig crony.
Comment by Scott— June 27, 2011 #
With a mighty shady history.
Comment by scareduck— June 27, 2011 #
He is one of the clowns who lost out to the Greenberg/Ryan Group who bought the Rangers and he made a huge stink out of it. I hope the league is doing a better job investigating this clown because he is Frank McCourt Part Deux.
Comment by grabarkewitz— June 28, 2011 #
How come it has everyone’s real names (i.e. Theodore Lily, Matthew O Guerrier, William Casey Blake, etc) but it just says Manny Ramirez.
Comment by johnmano12— June 27, 2011 #
– because I need peds even to pronounce “Manuel Aristides Ramírez Onelcida?”
Comment by Greg Robinson— June 27, 2011 #
Does that mean we should have been calling him “Onelcida” the whole time?
Comment by DodgersKings323— June 27, 2011 #
OK, but if he’s bankrupt, he still can’t make payroll, correct? So doesn’t MLB have to pay the players?
Comment by Mike G— June 27, 2011 #
He’s reportedly lined up money to make the payroll. We’ll see if that’s true.
Comment by Mike Scioscia's tragic illness— June 27, 2011 #
If the bankruptcy judge rules the filing a non-starter and Frank doesn’t have other financing, the league will pay the players. The thing that is scary is that the $150 million he will receive in DIP financing comes with a 10% interest rate. I am sure that the financing is also based on if the court forces the MLB to accept the Fox deal. Given what I have read and the fact that the deal is now for only $1.7 billion, not the $3 billion Frank claims, I can see the court siding with the MLB as they do not have to borrow money to pay the players and run the franchise, plus they have a long range plan. Frank has a plan to take him to July 1. Game, set, match to the MLB.
Comment by grabarkewitz— June 28, 2011 #
And yes, McCourt is directly affecting Kershaw’s Cy-Young bid by overshadowing these great starts. Who knows how much of the media is actually aware of his last 2 games.
Comment by Mike G— June 27, 2011 #
Am I the only one that feels like crying.
Comment by JayDavis— June 27, 2011 #
No, honestly I’ve never felt so close to being done with this team. I know it’s not “The Dodgers”, it’s McCourt, but I feel the team drifting from me more and more.
Comment by Brandon— June 27, 2011 #
How the hell do the Dodgers still owe Marquis Grissom, $2.719m ??
Comment by Fred— June 27, 2011 #
It’s time for an organized boycott. Don’t Support McCourt.
Comment by bfredmcd— June 27, 2011 #
And once again a stellar performance by Clayton Kershaw is obscured and forgotten thanks to Frank McCourt…..
Comment by Andy— June 27, 2011 #
I know it won´t solve anything, but I´d love to see a player criticizing McCourt in public.
Comment by Ricardo Marini— June 27, 2011 #
If I’m reading this filing correctly, there are 5 other McCourt entities that will be filing Chapter 11. One that includes ownership of Dodger Stadium (LA Real Estate Holding Company LLC), but the company that owns the stadium parking lots (Blue Land Company) and its parent (The McCourt-Broderick LP) are NOT going to be in bankruptcy. Looks like The Parking Lot Attendent is trying to keep at least a minor foothold in the Dodgers future no matter what happens in Bankruptcy Court.
Comment by QFR— June 27, 2011 #
Yeah, I also read that on DodgerDivorce. Man, this mess won´t end anytime soon.
By the way, would you guys trust donating your money to ThinkCure?
Comment by Ricardo Marini— June 27, 2011 #
Funny huh? The article of thinkcure bamboozling comes out the day before the telethon. I still donated $5….
Comment by DodgersKings323— June 27, 2011 #
Bud’s comments: “The action taken today by Mr. McCourt does nothing but inflict further harm to this historic franchise.”
Comment by Rob McMillin— June 27, 2011 #
“this is going to get a lot worse before it gets better.”
So at what point may we hit rock bottom? And what will “rock bottom” be?
Comment by Brandon— June 27, 2011 #
Hold Me!!
Comment by DodgersKings323— June 27, 2011 #
Molly Knight tweeted this and it’s absolutely true….
Can we talk about how mortifying it is for a man as private as Vin Scully to have his salary plastered across the Internet?
If McCourt did nothing but this… I’d want him gone… What a piece of shit
Comment by dpwtv— June 27, 2011 #
Scully deserves that money. He deserves more. I feel absolutely horrible that he may feel embarrassed seeing his salary posted on the Internet.
Comment by RedSoxNation3— June 27, 2011 #
@redsox nation- Agree 100%. My hat’s off to you…. maybe red sox fans aren’t so bad afterall!
Comment by Garduno— June 27, 2011 #
To read quotes by Frank McCourt are to read the desperate ramblings of a delusional man.
The things coming out of his mouth outrage me even more. I’ve been able to keep baseball separate most of the year but when he says things that literally seem like he is the only person on earth who sees it that way, it really gets me upset.
The fact that he thinks he is not doing harm, and that OTHERS are the ones hurting the Dodgers, is insulting to everyone’s intelligence.
I just cannot believe this guy. Everything he says is GTFO
Comment by Mike G— June 27, 2011 #
He better friggin’ pay Vin Scully! I mean, Vin’s nothing but class, even the guys I work with (and they’re all Giants fans), love Vin Scully!
I think a shirt should be made saying “Don’t F With Vin”.
Comment by Omer— June 27, 2011 #
Just now got a chance to read this. Great title Mike, well done! That made the entire ugly mess you had to layout after it much more palatable, lol
Comment by Wil— June 27, 2011 #
McCourt was personally named as a Defendant in the Stow case; so were his corporations. He likely had to list Bryan Stow as a potential judgment creditor in the bankruptcy filing, which means that that debt (should it become incurred) could be discharged or financially restructured under the oversight of the bankruptcy trustee. When (not if) Stow wins the case, he will get pennies on the dollar (if anything) from McCourt.
Comment by TrueBlue— June 27, 2011 #
If Frank maintained his insurance payments, the Dodgers end of the suit will be covered by said insurance. Now, Frank, is a different story and I love that the lead attorney for the Stows included him in the suit. Frank is a separate entity and while they will have to wait in line for their money, I am sure that Frank can add that to his list of creditors.
Comment by grabarkewitz— June 28, 2011 #
Good post. I think it’s sad that Frank Mccourt could screw up a team as established, storied and reputable as the LA Dodgers. They play in such a big market and it’s unbelievable that he could file for bankruptcy. It’s amazing that his divorce has caused not only himself but a huge franchise so much turmoil. The Dodgers obviously aren’t going anywhere but it’s pretty bad that he could let this happen. It’s going to be interesting to see who the Dodgers are sold to because that guy or those guys are going to be awful lucky to get such a storied franchise. Also, you think you could check out my blog cuz I really would love to know what you think. http://chrisross91.wordpress.com/2011/06/27/mark-cuban-is-perfect-for-the-dodgers/
Comment by Chris Ross— June 27, 2011 #
Just some “other fan” reactions for you fellas… My buddies and I were talking about this situation and we really wouldn’t mind it if the Dodgers had a Steinbrenner type owner who would skyrocket the payroll. The more elite teams, the better. And for me, this whole situation made me cry, I have been a Red Sox and Dodgers fan my whole life. The two teams are just beautifully similar in terms of personality, grittiness and class. I equally love both teams and it pains me to feel that they have not won a world series since ’88.
Comment by RedSoxNation3— June 28, 2011 #