Was the last straw for MLB a Dodgers loan against nothing?
That Frank McCourt needed a $30-million loan from Fox in order to meet payroll last week was concerning enough to Major League Baseball. That the loan was secured with funds that McCourt does not have and might never have was entirely disconcerting.
If McCourt could not repay Fox, he 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 sources 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. Bingham has hired an all-star team of lawyers outside its firm for representation and has signaled it has no intention of surrendering to McCourt. There is no guarantee McCourt will get a penny 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, Van Carlin & 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 the Dodgers' financial situation was "pretty dire."
For Fox, the short-term loan -- even if never repaid -- represented a reasonable risk toward the greater interest of trying to secure the Dodgers' long-term broadcast rights. News Corp., the parent company of Fox, had $33 billion in annual revenue last year, according to the News Corp. website.
Fox was concerned that McCourt would turn for financing to Time Warner, the rival entertainment company that is about to launch a Southern California cable channel featuring the Lakers. Fox and McCourt already had agreed upon a 20-year extension of the Dodgers' television rights, worth at least $3 billion, in part a preemptive strike against McCourt striking a long-term deal to move the Dodgers to Time Warner.
"The Lakers deal with Time Warner changed the game in this market dramatically," said Bob Wagner, who negotiated sports broadcast contracts with Fox as a former top executive for the Angels and Ducks.
A Time Warner spokeswoman did not return a call for comment.
Commissioner Bud Selig still has the proposed Fox deal on his desk. Fox is believed to be willing to extend that deal to a new Dodgers owner, in the increasingly likely event of an ownership change.
Fox spokesman Chris Bellitti declined to comment beyond a prepared statement.
"A long-term solution to the Dodgers' current challenges is in the best interest of all parties, and we will work with both Major League Baseball and the Dodgers to be a part of that solution. The goal is to have a viable, financially stable and ultra-competitive Dodgers team in Los Angeles," the statement read.
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-- Bill Shaikin
Photo: Commissioner Bud Selig (center) chats with Dodgers owner Frank McCourt as they sit with Angels owner Arte Moreno during the groundbreaking ceremonies for Major League Baseball's academy in Compton. Credit: Jeff Gritchen / Long Beach Press-Telegram
Lenny Dykstra would be proud of the Dodgers' ability to get a "loan against nothing" and I'm sure that he'd like to apply.
Posted by: rblev6 | 04/20/2011 at 05:31 PM
Dude sell a couple of houses for payroll... OH Jamie owns them - HUH?? Well.. pack your bags get on a Greyhound ( can you afford cab fair?) and leave OUR TOWN!!!!
Posted by: Dodger Steve | 04/20/2011 at 05:34 PM
Listen - this what you do. Somehow shift the whole thing over to Capital Group / American Funds, and they'll mobilize their office in Zurich. They need to get bailed out of their investment in Citibank at $26/share, and probably they want out big time, so you can count them in. Then get the legal controversy in front of Judge Real, and he'll give an opinion to the effect that up is down, down is up, and that whole thing, whatever it is, does not exist. Any remaining clean-up, take care of that via the Capital Group / American Funds' fast food store portfolio in the Caribbean. There - problem solved, California-style!
Posted by: Matt Lechner | 04/20/2011 at 05:54 PM
could not have happened to a better person. Good luck McDork
Posted by: JohnnyB | 04/20/2011 at 05:59 PM
That earthquake you felt was all of the past great owners and executives and players either rolling over in their graves or running into brick walls in anger. What was once the premier baseball franchise is now being run by Bud Selig. Bud Selig! Woe is Dodger World.
Posted by: Norman | 04/20/2011 at 06:00 PM
then get the media to cover it up
out there in California you know how to do that
Posted by: Matt Lechner | 04/20/2011 at 06:06 PM
LA and california deserve this...good luck with all your liberal reps and senators
Posted by: gemini61 | 04/20/2011 at 06:11 PM
This is what happens when you play with other peoples money. The McCourts' spending habits were ridiculous! He's going down and taking the Dodgers with him.
Posted by: Christopher Ford | 04/20/2011 at 06:20 PM
just lie and cheat your way out of it
that's California finance
what's the matter ?
you do it with your pension and retirement plans
Capital Group / American Funds probably even has a "how-to" booklet on it
but you can't do it for a baseball team ?
there must be someone you can lie to
someone you can cheat
no ? oh well
maybe the lying and cheating is ok for your pension and retirement plans, but not for a baseball team
maybe that's it
Posted by: Matt Lechner | 04/20/2011 at 06:23 PM
Great news! Glenn Beck can now replace Vin and tell how left handed players conspire against the Dodgers.
Posted by: oldtimer | 04/20/2011 at 06:23 PM
Dodgers suck, Giants baby!!!!
That's right the Giants own the Dodgers now, and I'm not just talking about on the playing field, the Giants organization literally owns a portion of the Dodgers. Kiss Kemp, Ethier, Loney, Kershaw, and Billingsley good bye.
This is going to be fun, now you guys wont have to show up in the 3rd and leave in the 7th, you can just not show up at all!!! And I won't have to shout "hey Dodgers fans, whats the final score?" because it looks to me like the Dodgers are gonna lose.
my prediction, there is gonna be a lot more Angels fans in la come this time next year, as no one knows how to jump from a sinking ship just to ride the band wagon like la sports fans.
Posted by: dollabillwill | 04/20/2011 at 06:49 PM
Hey Matt, name a state that doesn't have a corporation that was founded in it that didn't lie and cheat people out of their pension plans.
What state do you live in that's so awesome, it must be pretty lame if you spend your time on the la times website critiquing california. get a life you loser
Also if you weren't such an idiot you wouldn't use your real name as your screen name Matt Lechner.
Oh...Almost forgot...the Dodgers, they suck (apparently so does Matt Lechner). Giants world Champs!!!
Posted by: dollabillwill | 04/20/2011 at 07:10 PM
Its' about time Bud Selig reacted. I hear he is going to bring in Pete Rose to run the day to day operations for the Dodgers. Next time I call the Dodgers I'll get someone that says Hello This is Peggy how can I help you?
Posted by: Dodger Richard | 04/20/2011 at 11:58 PM
This is what it was like trying to get Nixon to resign. He finally did when a close friend, Bebe Rebozo, told him it was time to go for the good of the country. Lasorda needs to step up here & tell McCrap it is time to go fo rthe good of the Dodgers & MLB.
Posted by: KoufaxFan | 04/21/2011 at 08:59 AM
Help! When I first read that the Dodgers were purchased by Frank McCourt, I thought the author of "Angala's Ashes", the wonderful and thoughtful novel about an Irish lad, has purchased the Dodgers and Rupert & co. had been replaced Goodie!! Unfortunately now the only ashes remaining are our Dodgers the McCourts have left us.
THANK YOU Mr. Selig for your gift to all Dodger fans!!
Posted by: OlRamFan39 | 04/21/2011 at 02:43 PM