Trying to Dodge a Bullet

By Varney and Co

Things are not looking up for embattled Dodgers owner Frank McCourt.

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After two years of intense legal battle with his estranged wife Jamie, the fight for control of the Los Angeles Dodgers rages on. On Monday, Bud Selig and Major League Baseball rejected a long-term FOX media deal that would have allowed Mr. McCourt to make payroll on June 30th.

If Mr. McCourt does not make payroll, he could face two lengthy and expensive litigation cases — one against his wife and another against the MLB Commissioner. Mr. Selig, who already runs the Dodgers day-to-day operations, would be forced to seize control of the team, stadium and other assets.

This morning on Varney & Co., former Mets General Manager Steve Phillips said that it would be extremely difficult for Mr. McCourt to keep control of management and remain the sole owner of the team.

“On June 30th, when [Dodgers Management doesn’t] meet payroll, [the MLB] will pay the salaries for the players, they will take it over and likely force Frank McCourt to sell the team,” he said, saying that the question really is whether or not McCourt is going to try and sue the MLB despite having signed a clause that prohibits him doing so.

According to Forbes, the Dodgers are valued at $722 million, making them the fourth most valuable franchise in baseball. Mr. McCourt bought the team from News Corporation, the owner of FOX Sports and the FOX Business Channel, in 2004 for $430 million. Since then, the organization has accumulated more than $433 million in debt and is on the verge of insolvency.

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Stuart Varney and Chris Cotter questioned why the MLB did not allow the $3 billion FOX TV deal to go through, which would have allowed McCourt to make payroll and keep control of the team. Phillips believes that “Bud Selig does not trust Frank McCourt. He looks at the situation that the Dodgers are in right now and realizes that Frank and Jamie McCourt have taken out over $100 million for personal interests.”

Mr. McCourt’s use of funds that should have been used to pay the players raises the question of where the TV money will go. Will it be used to continue to fund the two-year divorce lawsuit or actually fund the team allowing them to make payroll?

Despite being the current owner of the Dodgers, McCourt cannot act in his own interests for a number of reasons. Phillips explains that the Dodgers “have to meet certain financial constrictions that Major League Baseball has in place. Bud Selig is looking at the fact that one of the preeminent franchises in baseball cannot meet payroll right now and he has no belief that the money coming in will go to the team.”

With the deadline less than a week away, Mr. McCourt and Dodgers management still have a few days to find some sort of solution. Phillips deems it unlikely, however, that a solution will be found and says that “he is going to go down fighting, but he is not going to come out prevailing.”

With the deadline less than a week away, Mr. McCourt and Dodgers management still have a few days to find some sort of solution. Phillips deems it unlikely, however, that a solution will be found and says that “he is going to go down fighting, but he is not going to come out prevailing.”