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Around SBN: The Most Dangerous Division in Sports

There are still some people who think that despite the McCourt divorce troubles, the Dodgers as a baseball team will be just fine, they're a cash cow, etc. Well, let's see what they say now. Yes, money comes in. But where does it go?

The Dodgers own Dodger Stadium, but they've been charging themselves rent on their own property since 2006. The article details how much, about $14 million a year. However, charging themselves rent isn't quite the same as paying themselves, or more practically, paying the company they set up to accept the rent. They still "owe" themselves $24 million, which is $24M siphoned off team revenue that is sitting someplace but not given to the company created to accept it. Moreover, this $24M is on top of a drop in payroll already totalling $23 million. In other words, they could have afforded to AT LEAST added back the drop in payroll, but have chosen not to do so.

Where does that money go when it's paid? Roughly, a third of it goes to Frank McCourt personally. Due to bank loans already made, the banks have limited his personal income,meaning, clauses built into the loan contract state that he can only make so much, they want their money back before he just pockets it and buys another house. So Frank set up this company as an end run around that. Another third goes to debt service, and the rest to "construction managers" for projects that have been on hold since 2008 because they can't get loans to finance it.

Other teams charge themselves rent, but not anywhere like this. Some teams that have landlords pay less than a million a year. The strong inference here with the Dodgers is that this is just a sham, another way for the McCourts to suck the team dry for their own personal gain, because they've leveraged everything else to the hilt. They've been embezzling from themselves as a way to still live the high life and pay as little as possible on their huge debt.

Within L.A. family law circles, there's been talk that both sides are coming to the realization that if they go to trial at the end of this month, it will be disasterous for both of them personally and for the team. However, neither one so far is willing to budge an inch. The Dodgers as a baseball team are likely to be very screwed.

almost 2 years ago Camera_3-12-10_010_tiny BeerCub 16 comments 0 recs  | 

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More fodder to chew on for those who think the new ownership will be just fine. These debts should be paid before they take over. From the Bloomberg article:

According to depositions, Frank and Jamie also began taking money out of the company in the form of salary and "distributions"—a total of $108 million during their first six years of ownership. This is a striking figure, because it nearly equals the amount of cash Frank put into the ball club at purchase. Today, according to McCourt insiders, the Dodgers’ debt load stands at around $525 million, the majority of it borrowed against future ticket sales. It appears that much of the money that flowed out went toward financing a real estate shopping spree: Soon after arriving in L.A., the couple (technically, Jamie) bought a $20 million, 15,000-square-foot home across from the Playboy Mansion in Beverly Hills; a $6.5 million “guest house” next door; a $27 million Malibu beach house; and the $19 million house beside that.

"When they signed Fukudome, I knew they were trying to get me fired". - Ron Santo, January, 2008

by BeerCub on Aug 15, 2010 10:15 AM CDT up reply actions  

Jamie McCourt is an attorney...

…and has a master’s degree from MIT and she didn’t understand, nor even read, the post-marital agreement that she signed??? What a joke! These two are perfect for one another!

If the Dodgers’ debt stands at $525 million, bankruptcy proceedings don’t seem too far fetched. My guess is that the court orders the team sold because even if the court rules that Frank is the owner, he’ll never have enough cash to pay her half of the team’s increase in value. Correct me if I’m wrong, but if they bought the team for $421M, and it’s worth $727M now, he’d owe her more than $150M, right?

"I always tell the truth -- Even when I lie" -- Tony Montana

by calicubfan on Aug 15, 2010 4:16 PM CDT reply actions  

If it gets split 50/50, at least that

In their respective fights to take over the team, each of them are allegedly trying to line up minority partners. So far, no one has been identified as potential investors either for real or by rumor.

"When they signed Fukudome, I knew they were trying to get me fired". - Ron Santo, January, 2008

by BeerCub on Aug 15, 2010 7:53 PM CDT up reply actions  

Geeze, who would be dumb enough to be a minority investor with either of them

May as well get the money in small bills and set it on fire. You will have the same amount of money in the end and the fire may help you stay warm in the winter.

by ClarkFan on Aug 15, 2010 8:55 PM CDT up reply actions  

Agreed 100%

Not only do I have trouble imagining either of the McCourts being declared the sole owner by a Judge, I have more trouble imagining either one of them finding a partner stupid enough to go in with them on the purchase. On top of that, Frank and Jamie still need a 3/4 approval from MLB owners — Or is it 2/3? (I always mix these percentages up with Constitutional amendment requirements)

"I always tell the truth -- Even when I lie" -- Tony Montana

by calicubfan on Aug 16, 2010 12:48 AM CDT up reply actions  

I suspect...

there’s some creative accounting going on. It should get more interesting as things unravel further.

"Pinky, are you pondering what I'm pondering?"--The Brain

by brook on Aug 15, 2010 4:35 PM CDT reply actions  

So does this mean we can steal Matt Kemp or

Andre Ethier from them?

I kid.

Maybe next year is finally our year.

by Unique on Aug 15, 2010 8:48 PM CDT reply actions  

Somewhere in Brooklyn

Some old Brooklyn Dodgers fan is laughing at this disaster. Then he remembers that the Dodgers are still in LA and he’s sad again.

RIP Ronnie James Dio (July 10, 1942 - May 16, 2010).

by Ace Venom on Aug 15, 2010 10:23 PM CDT reply actions  

Duke Snider is in his 80's now....

…. and lives in northern San Diego County. Word is he can’t bring himself to talk about it.

"When they signed Fukudome, I knew they were trying to get me fired". - Ron Santo, January, 2008

by BeerCub on Aug 15, 2010 10:47 PM CDT up reply actions  

Robert Moses is still angry I bet!

"I always tell the truth -- Even when I lie" -- Tony Montana

by calicubfan on Aug 16, 2010 1:02 AM CDT up reply actions  

One more thing

In Sunday’s L.A. Times, the Dodgers’ number one pick, Zach Lee, who also is a football player, says he hasn’t heard from the Dodgers since draft day. The common thought is they drafted him with no intention of signing him and spending the money.

"When they signed Fukudome, I knew they were trying to get me fired". - Ron Santo, January, 2008

by BeerCub on Aug 16, 2010 12:29 AM CDT reply actions  

Family Law!

Get me Arnie Becker now!!

"They come to see me strike out, hit a home run, or run into a fence. I try to accommodate them at least one way every game." - Gorman Thomas

by RiskyBusiness on Aug 16, 2010 10:58 AM CDT reply actions  

I do find a delicious irony in MLB trying so hard to keep Cuban out

but approving these idiots.

"Lou Piniella's been a great manager for a long time and I stand by him completely"
Jim Hendry

by Doggie Stalker on Aug 16, 2010 11:38 AM CDT reply actions  

+1

This situation can’t be good for MLB.

RIP Ronnie James Dio (July 10, 1942 - May 16, 2010).

by Ace Venom on Aug 16, 2010 12:30 PM CDT up reply actions  

Got that right.

Their antiquated rules make little sense with who they end up getting. I think most of it is to placate themselves and get owners they want rather than the best for the league for sure.

Starlin Castro singles on a pop up to catcher Jason LaRue.
Ryan Theriot scores. Two out -Gameday 7/23/10

by Sandberg's evil twin on Aug 16, 2010 2:25 PM CDT up reply actions  

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