Divorce (Mc)Court drama could impact Dodgers
LOS ANGELES – Frank McCourt picks up the phone on a cold and gray day and there is lightness in his voice.
He has vacationed recently with his four sons, he says, which has filled his heart. And now, after an unusually dark winter, the Los Angeles Dodgers owner is looking forward to spring.
“I can’t wait to get out to Camelback,” he says of the team’s year-old spring training facility in the Arizona desert. “And I can’t wait for opening day.”
If the empire does indeed come apart, it will be draped in red, white and blue bunting.
In the months since Frank and Jamie McCourt announced their separation, an early-evening press release followed closely by Frank firing Jamie as CEO of the Dodgers, and three days later by Jamie filing for divorce, much of it accessorized by random gunning for each other’s knees, concern for the future of the Dodgers has gripped the city like a rush-hour hail storm.
As if to honor the murky taillights ahead, the club sat out the bidding for every major free agent and did not engage when high-end players became available by trade, inactivity viewed by anxiety-prone, post-O’Malley Dodger fans as signs the team would soon be swallowed whole by community property laws, attorneys’ fees, paper fortunes, marital-property agreements and locksmith bills.
Amid speculation otherwise, Frank McCourt insisted he is financially secure and so are the Dodgers, that he had no plans to take on minority partners, and that he would not be forced to share ownership of the club with anyone, including – or especially – his wife.
“I have no trepidation whatsoever,” he said. “I think we’re in a great situation right now with the club. I think the results speak for themselves.”
Further, he said, “I fully expect my boys to own the team someday.”
A court could decide from which parent the Dodgers would be passed down.
Through her representatives, Jamie McCourt declined to be interviewed. Her attorney, entertainment lawyer Bert Fields, argued a custody battle for the Dodgers will not harm the franchise, unless it concludes with Frank as the sole owner.
“Unlike Jamie, I don’t think Frank is willing to spend what Jamie will to keep them competitive,” Fields said. “You might ask him how much money he took out of the organization last year. You might be surprised. Rather than spend it on pitching.”
Through a spokesperson, McCourt said he would not engage in a point-by-point defense of his finances or ownership practices.
In preparation for her return to her Dodger Stadium office, the one she was locked out of in October, Jamie McCourt, Fields said, has lined up “well-funded partners” in order to meet Frank’s price. The Dodgers, Frank said, are not for sale.
At the center of it all is a postnuptial contract signed by both McCourts more than five years ago, in which – Frank’s attorneys allege – Jamie would cede the Dodgers to Frank if the two divorced. In return – they say – Jamie would receive the couple’s many real estate holdings, including two properties each in Malibu, Cape Cod and the Holmby Hills section of L.A., along with a condo in Vail, Colo., and land in Montana and Cabo San Lucas.
While the current value of the real estate cannot be precisely determined, the McCourts purchased the nine properties from 1998 to 2008 for about $115 million. In April 2009, Forbes magazine estimated the Dodgers to be worth $722 million, $300 million more than what the McCourts paid for the team six years ago. In court filings, Jamie estimated the couple’s worth at $1.2 billion.
Jamie’s lawyers suggest she was coerced into signing the contract and claim she is co-owner of the Dodgers. Courts overturn such agreements, Fields said, “all the time.”
Frank says the contract is “very clear, simple, straightforward and binding,” and that his estranged wife has no legal claim to the ballclub. A trial that will determine the validity of the agreement is scheduled to begin May 24 and could redirect the course of the franchise. The sides have agreed to decide other issues related to their divorce at a later, undetermined date.
According to Nicholas Tepper, an L.A.-based attorney who specializes in family law, a postnuptial agreement can be overturned if one of the parties failed to disclose assets or did not consult with an attorney. Also, Tepper said, an agreement could be ruled invalid if it does not comport with numerous legal requirements or if one of the parties is determined to have signed under duress.
“It is possible and it does happen,” Tepper wrote by email, “but it is generally very unusual for a court to invalidate such an agreement.”
Major League Baseball has kept its distance, saying only that it recognizes Frank McCourt – and only Frank McCourt – as owner of the Dodgers.
“He’s the control person,” an MLB source said. “She’s not. Frank’s lawyer, [Marshall] Grossman, says he’s got an enforceable property-division agreement. That’s good enough for us.”
Baseball sources believe neither McCourt has the financial wherewithal to buy the other out.
Meantime, the game moves ever onward. Dodgers pitchers and catchers begin workouts in Glendale, Ariz. on Feb. 21. The team has won consecutive National League West titles and advanced to the NL championship series in both seasons, on-field prosperity unseen since the late ’80s. Young stars – center fielder Matt Kemp(notes), right fielder Andre Ethier(notes), starting pitcher Clayton Kershaw(notes) and closer Jonathan Broxton(notes) – mingle with icons such as left fielder Manny Ramirez(notes), manager Joe Torre and his presumed 2012 successor, hitting coach Don Mattingly.
Always a draw, Dodger popularity has resisted the weak economy. The Dodgers drew 3.76 million fans (more than 46,000 per game) in 2009, becoming the first team other than the New York Yankees to lead baseball in attendance since 2002. As a whole, MLB experienced a 6 percent attendance decline over 2008. The Dodgers gained 30,000 fans. Mannywood, named for the eccentric, dreadlocked outfielder who helped fuel the Dodger revival, is booming, and the organization has regained its generation-gone footings of competitiveness and relevancy, all but lost when the O’Malleys sold the team to Fox after the 1997 season.
The McCourts, too, seemed to be gaining momentum. Gradually, painfully, the East Coast interlopers were easing suspicions they were in over their financial heads. The payroll, if not entirely large-market robust, was representative. Frank McCourt’s preference to deal in players and/or prospects rather than cash – the trades for Ramirez, Greg Maddux(notes), Casey Blake(notes) and Angel Berroa(notes) were so subsidized in the summer of ’08 – was balanced by the fact he did, for example, sign Ramirez to a $45-million extension. The team’s facility in the Dominican Republic needed upgrades, as did the club’s presence in Latin America generally, but that, too, is being addressed. Plans to develop the area around Dodger Stadium into an entertainment destination and further refurbish the ballpark – McCourt calls it the “Next 50” – have been delayed because of the economic downturn, he said, but remain an objective.
Most important in L.A., the Dodgers were winning again. Their fans cared less about the new locker room at Campo Las Palmas and the additional scout in Santo Domingo than they did another division title, and more playoff games, and a shot at the club’s sixth World Series championship since it came west. Hardly lavish, the McCourts were making it work, in part because their savvy general manager, Ned Colletti, was making it work, and in part because the market would support – with its hearts and minds and checkbooks – anything that looked like a winner.
On a cool October night came word of the divorce, followed by ample evidence it would not be an amicable one. Up for debate again was whether Frank McCourt really could afford the Dodgers, doubts born in unforgotten fears his leveraged purchase of the ballclub was at least overextending and at most shifty. At the same time, other franchises were failing, perhaps fueling anxieties. The San Diego Padres were stripped down and sold because the club could not survive the divorce of owner John Moores and wife Becky. Texas Rangers owner Tom Hicks was forced to sell because of mounting debt. That Jamie’s lawyers have hinted Frank has used Dodgers profits in other areas – perhaps for his construction company or other personal use – has further muddied the issue.
Not only has Fields accused Frank of taking money “out of the organization,” but Jamie’s lead attorney, Dennis Wasser, in mid-December told the court, “Mr. McCourt is not spending all of his income on his family and on the team.”
Due to their faith in the postnuptial agreement, Frank and his attorneys insist the community-property wrangling that forced Moores to sell in San Diego will not similarly hamstring the Dodgers. After his wife filed for divorce in January 2008, John Moores was forced to sell a majority stake in the ballclub, and he did so to Jeff Moorad. The Moores’ largest community asset was the Padres, and John could only have bought out his wife’s interest by selling the team.
Also complicating John’s hope to continue as majority owner, community-property laws by definition leave no controlling partner, as all assets are divided in half. Major League Baseball requires its franchises designated a single controlling partner.Set against the backdrop of divorce hearings, Jamie’s request for nearly $500,000 a month in support, and Frank’s claim his personal checking account balance had fallen to $167,000, the club made its first significant personnel decision of the offseason. It would not offer salary arbitration to left-hander Randy Wolf(notes), an 11-game winner and the team’s de facto ace for much of the season. The Dodgers had refused to risk a one-year contract for Wolf, who might have drawn as much as $15 million. And they would not receive the two high draft picks if Wolf signed elsewhere, which he did. And they would not be on the hook for the two signing bonuses those picks would be due. Somewhat lost in the analysis was that the Dodgers really needed the pitching.
As the offseason wore on, agents peddling free agents and general managers hoping to talk trade would contact the Dodgers and get the same message: We’re near our payroll limit. We don’t have the money. Thanks, but no thanks.
“They have great core players, but no depth,” one agent observed. “They can’t fill in their team because they don’t have the money.”
Because half of Ramirez’s $20 million salary for 2010 is deferred, the Dodgers are expected to pay about $80 million in salaries, a significant drop from last season’s $100 million or so. While payroll represents only a portion of the club’s overhead, one industry insider estimated revenues at about $350 million. Forbes reported the team’s 2008 profits at more than $16 million.
Few, if any, believe Frank will be unable to pay his bills in the short term. By now, renewals on season tickets have arrived, and before the large bills start coming due – in spring training – so does the early broadcasting and advertising money, according to other owners. The first player paychecks go out in mid-April. The large majority of players are paid April through September, semi-monthly. By then, the ballpark (and the parking lot) is up and running. The Dodgers, unlike the Rangers and Padres, are equipped to survive a lean time.
“I can’t see them running out of money,” one high-ranking National League team executive said. “I don’t think that’s possible in Los Angeles. Their revenue streams should carry them.”
Baseball officials wish it weren’t all so unsightly. But they remain willing to believe Frank not only can afford the Dodgers, but the Dodgers and his divorce, at least until they learn otherwise. After the clumsy start in his first seasons here, Frank has earned that, with the league and with Dodger fans.
The Dodgers will be seven weeks into their season when a judge considers ownership of the team. If the judge honors the marital agreement, Frank would continue as sole owner. If he finds for Jamie, Fields said, she would expect Frank to sell. To her.
“The most desirable way would be that Frank sells his half to Jamie for a substantial amount of money, because the Dodgers are worth a substantial amount of money,” Fields said. “She has a widespread group of owners with a vast amount of money to put up.
“And if Frank takes a dog-in-the-manger attitude … then we have to live with that. They would find a way to work together so as not to destroy it.”
Again, in such an arrangement, baseball would require one to be the controlling partner.
In the event Jamie was awarded half the club under community property laws and if Frank did indeed choose to sell to her, Jamie and her partners would be subject to the controlling interests process with MLB. She would have to be approved by other owners, and her net worth – as the controlling party – would be a factor.
As spring beckons, Fields said, Jamie has kept busy working on the divorce case, setting up a philanthropic foundation, getting started on a book and spending time with her grown sons. She, like Frank, is looking forward to the start of the baseball season, whatever that brings.
Editor’s note: In accordance with Yahoo! Sports’ commitment to full disclosure, it should be noted that Tim Brown has a personal relationship with a former executive of Sitrick And Company who, while at the firm in 2005, provided public-relations counsel to the Los Angeles Dodgers and worked directly with Frank and Jamie McCourt.