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Tuesday, November 03, 2009

DodgersDivorce.com: How the McCourts came to own the Dodgers.

Under the terms of the agreement, Fox was also obligated to kick in rebates of $50 million over the first two years of the financing, effectively reducing the purchase price to $371 million.

So, if you’re counting at home, the above adds up to $421 million in financing…for a $371 million purchase. That, friends, is a little scary. And there’s more. In May 2005, McCourt announced a new, $250 million 25-year note which took out B of A and what remained of the debt to Fox (after the foreclosure on the Boston property). This increased the debt load to $521 million on a $371 million purchase. This financing, known as a private placement, was provided by an unidentified group of institutional investors, such as pension funds and insurance companies. The terms of the loan—5.66% fixed for 25 years—are relatively favorable to McCourt. The collateral for this new loan was reportedly the 300 acres of real estate surrounding Dodger Stadium—not the club itself. Importantly, one of the provisions of the private placement was that control of the Dodgers would not change hands.

The McCourts’ equity in the Dodgers is likely somewhere in the $250-350 million range. Assuming Jamie’s $400 million estimate of the couple’s other assets is correct, that makes the couple’s net worth approximately $700 million, not quite the $1.2 billion suggested by Jamie. And is it that unreasonable to think that her $400 million “other assets” figure might have omitted debt, just as the $800 million Dodgers figure did? It’s entirely possible the couple’s net worth is much closer to $500 million—still a very healthy amount, but one that poses significant problems for either of the two to own the Dodgers without the other. We don’t know nearly enough about the McCourts’ other personal assets to draw any hard conclusions, but all of the significant residential assets are mortgaged or otherwise pledged in various financing facilities.

Click the link for details.

Tripon Posted: November 03, 2009 at 04:27 PM | 20 comment(s) | Login to Bookmark
  Related News: GeneralBusinessLA Dodgers

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   1. Craig Calcaterra Posted: November 03, 2009 at 06:21 PM (#3376428)
Best part of the post: Josh, the author, includes a safety word at the beginning for those who may get too bogged down in the details. It's not often that you find wonky and clever in the same package.

In other news, I now realize why the McCourts each want the Dodgers. Neither of them have any damn cash.
   2. Shooty: Applying to be Fearless Leader Posted: November 03, 2009 at 06:25 PM (#3376437)
In other news, I now realize why the McCourts each want the Dodgers. Neither of them have any damn cash.

This explains a lot of their behavior. They're both treating the team like an ATM. That is SOOOOO 2007 people!
   3. RJ in TO Posted: November 03, 2009 at 06:31 PM (#3376447)
In other news, I now realize why the McCourts each want the Dodgers. Neither of them have any damn cash.

I also don't have any damn cash. Does this mean that I also qualify for ownership of a MLB franchise?
   4. Shooty: Applying to be Fearless Leader Posted: November 03, 2009 at 06:33 PM (#3376451)
I also don't have any damn cash. Does this mean that I also qualify for ownership of a MLB franchise?

Can you say "Yes, Bud" no matter what is asked of you? And I mean WHATEVER is asked of you...
   5. phredbird Posted: November 03, 2009 at 07:13 PM (#3376497)
somebody said something a while back in one of these threads that really resonates now ... that bud selig and the other owners were happy to let mccourt acquire the dodgers because he wasn't flush with cash like o'malley or murdoch and thus not in a position to throw his weight around among the owners.
i've always felt like the owners purposely set themselves up as barely surviving and all that as a bargaining tactic with the players union but the way things are going it is becoming apparent that mccourt isn't among the more well-heeled in that club.
that site is pretty interesting by the way. one of the pages quotes from an article written by a guy who works at the same paper as me.
   6. Home Run Teal & Black Black Black Gone! Posted: November 03, 2009 at 07:36 PM (#3376520)
This site was filled with people fearing that the McCourts were taking on excessive debt to finance their purchase of the Dodgers. I don't think anyone said "divorce," but it was evident that any single event resulting in financial stress or pressure could break this team.

This is the nightmare, Dodgers fans. Dodger fans. Dodgers fan. Dodger fan.
   7. Frank McCourt's Gold Stars are in bankruptcy court Posted: November 03, 2009 at 07:44 PM (#3376528)
This is the nightmare, Dodgers fans.
Yet I am not afraid.
It's apparent that neither McCourt can own the team on his/her own - so they'll have to sell.
   8. RJ not in TO Posted: November 03, 2009 at 07:51 PM (#3376533)
Yet I am not afraid.
It's apparent that neither McCourt can own the team on his/her own - so they'll have to sell.


Maybe Loria is looking to trade franchises again...
   9. Shooty: Applying to be Fearless Leader Posted: November 03, 2009 at 07:57 PM (#3376536)
Why did Fox sell the team in the first place? Baseball rakes in the cash and the Dodgers are one of its most valuable properties.
   10. Home Run Teal & Black Black Black Gone! Posted: November 03, 2009 at 08:15 PM (#3376549)
It has been pointed out in these somber pages before that Loria acted out the plot to Major League. It is vital that I reassert this, for it amazes me.
   11. RJ not in TO Posted: November 03, 2009 at 08:21 PM (#3376561)
It has been pointed out in these somber pages before that Loria acted out the plot to Major League. It is vital that I reassert this, for it amazes me.


Are you suggesting that the Marlins' 2003 WS run included a cardboard cut-out of Loria?
   12. Home Run Teal & Black Black Black Gone! Posted: November 03, 2009 at 08:25 PM (#3376567)
It did in my house.
   13. phredbird Posted: November 03, 2009 at 08:47 PM (#3376589)
Why did Fox sell the team in the first place?


news reports said he needed cash to finance direcTV but i think another factor was -- not sure where i heard it -- he didn't enjoy owning the team. claimed it lost money, and it wasn't winning.
   14. Shooty: Applying to be Fearless Leader Posted: November 03, 2009 at 08:49 PM (#3376592)
news reports said he needed cash to finance direcTV but i think another factor was -- not sure where i heard it -- he didn't enjoy owning the team. claimed it lost money, and it wasn't winning.

I wonder what he must think of MySpace then.
   15. SoSH U at work Posted: November 03, 2009 at 08:58 PM (#3376606)
Good post, though the idea that there's an entire site devoted to the McCourt's divorce is a bit troubling.
   16. GregQ Posted: November 03, 2009 at 09:00 PM (#3376607)
I thought that the tax advantages to owning a team run out in 5 years, something about double deductions for players salaries. Maybe Fox did it just for the fast buck.
   17. aleskel Posted: November 03, 2009 at 09:07 PM (#3376614)
Why did Fox sell the team in the first place?

with all things Murdoch, my default answer is "the Chinese government told him to"
   18. Robinson Cano Plate Like Home Posted: November 03, 2009 at 09:11 PM (#3376621)
As you can imagine, [parking lots] are cash cows of investments in robust economic times, because they double-pop: as the land value increases, you can raise parking prices while growing equity in the property itself.

Not sure how this is different from any income-producing real estate.
   19. bads85 Posted: November 03, 2009 at 09:37 PM (#3376659)
Why did Fox sell the team in the first place?


Fox bought the Dodgers to expand their cable TV market in Los Angeles while keeping Disney at bay. Once they won that war, they had no need for the Dodgers. Back then, baseball was making TV ashtray money, and the Dodgers weren't nearly as profitable as McCourt has made them.
   20. God Posted: November 03, 2009 at 09:44 PM (#3376667)
That, and it turned out Chase Carey wasn't a very good GM.
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