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Dodgers' status could remain in limbo for foreseeable future

A legal challenge by Frank McCourt to baseball's decision to take control of the team, as well as the McCourts' divorce case, would slow attempts to transfer the Dodgers to a new owner.

April 21, 2011|By Bill Shaikin
  • MLB Commissioner Bud Selig and Dodgers owner Frank McCourt disagree on the financial health and business practices of the club.
MLB Commissioner Bud Selig and Dodgers owner Frank McCourt disagree on… (Reuters )

In the 18 months since Frank and Jamie McCourt filed for divorce, beginning the legal proceedings that exposed the couple's extravagant lifestyle and the financial stress that subsequently plagued the Dodgers, Commissioner Bud Selig had remained silent.

In a two-paragraph email distributed by his office Wednesday, Selig not only ended his silence, but also took a decisive first step toward ending McCourt ownership of the Dodgers.

Yet the finale of McCourt era is neither imminent nor guaranteed, despite Selig's announcement that he would appoint a trustee to run the club because of his "deep concerns regarding the finances and operations of the Dodgers."

In fact, in a statement late Wednesday, McCourt challenged Selig's decision and signaled he would not surrender ownership without a fight.

"Major League Baseball sets strict financial guidelines which all 30 teams must follow," McCourt's statement read. "The Dodgers are in compliance. … On this basis, it is hard to understand the commissioner's decision."

Selig has anticipated the possibility of a legal challenge by McCourt, which could delay any ownership change, according to two parties briefed on Wednesday's announcement but not authorized to discuss it publicly.

In addition, the McCourts' divorce has yet to be settled. Jamie McCourt has asserted her claim of 50% ownership of the Dodgers, based on California community-property law. Those claims could take some time to resolve as well.

Selig generally prefers that owners live in the community in which a team plays and that they have some familiarity with Major League Baseball. The two parties most often mentioned as interested buyers, each of whom lives in Los Angeles, are Milwaukee Brewers owner Mark Attanasio and Chicago White Sox executive Dennis Gilbert.

In the interim, with McCourt stripped of financial authority, the Dodgers must get the approval of Selig — or whomever he appoints as trustee — for any significant expenditures on or off the field.

That procedure might not necessarily cripple the Dodgers' ability to improve the team during the season. The Texas Rangers, operating under league auspices for part of last season, received approval to make payroll-boosting trades for ace Cliff Lee, catcher Bengie Molina and infielder Jorge Cantu.

There was no last straw for Selig, according to the parties briefed on his decision. "It was an accumulation of everything," one of those parties said.

The Dodgers have drawn record-low crowds in the McCourt era this season. The team has sold barely more than 17,000 season tickets, down from 27,000 four years ago, according to court documents and people who have reviewed MLB attendance data.

The Angels have sold about 21,000 season tickets this year and could outdraw the Dodgers for the first time in the 51 years the clubs have shared the Los Angeles market.

Last week, Selig dispatched a six-man task force to review Dodger Stadium security practices in the wake of the beating of a San Francisco Giants fan in a stadium parking lot on opening day. The Dodgers have not had a full-time head of security in four months, and the Los Angeles Police Department essentially took over ballpark security at McCourt's expense.

McCourt needed a $30-million loan from Fox in order to meet payroll last week, secured with funds he does not have and might never have.

In the event McCourt cannot repay Fox, he has promised the company $30 million from any settlement with or judgment against Bingham McCutchen, the law firm that drafted the since-invalidated agreement that McCourt had relied upon to establish his ownership of the Dodgers. The arrangement was disclosed to The Times by two individuals granted anonymity because they were not authorized to speak publicly about it.

Bingham has sued McCourt, seeking a judicial declaration that the law firm is not responsible should McCourt lose control of the Dodgers. There is no guarantee McCourt will get any money from Bingham, but Fox accepted that promise to securitize the loan.

"No accountant would even let you put that on your balance sheet," said Raman Sain, principal at Holthouse, Carlin & Van Trigt, a Southern California accounting firm that reviewed the Dodgers' financial records for The Times last year.

Sain said the nature of the loan — as opposed to McCourt getting a traditional bank loan or line of credit — indicated that the Dodgers' financial situation was "pretty dire."

On April 5, Frank McCourt presented Selig with a proposal from Fox for a 20-year television contract worth at least $3 billion, a deal McCourt said could provide funding to settle his divorce, manage the Dodgers' stiff debts and improve the team.

Selig has neither approved nor rejected the proposal. Since court papers revealed the McCourts had redirected more than $100 million from Dodgers revenues for personal expenses, Selig was loath to approve any deal in which significant revenue would not go into the team, according to numerous baseball officials.

In addition, according to the parties briefed about Wednesday's announcement, Selig had not received written assurance from Jamie McCourt that she had agreed to settle the divorce if the commissioner approved the Fox contract.

Jamie McCourt remains interested in buying all of the Dodgers, although it is uncertain that Major League Baseball would approve an ownership group with which she is involved, even as a minority partner. In a statement, she said: "As the 50% owner of the Dodgers, I welcome and support the commissioner's actions."

bill.shaikin@latimes.com

twitter.com/BillShaikin

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