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Monday, October 17, 2011

L.A. Times: Frank and Jamie McCourt reach settlement involving Dodgers

Frank and Jamie McCourt have reached a divorce settlement under which she would get about $130 million and relinquish any claim to a share of the Dodgers, multiple people familiar with the agreement told The Times.

The settlement would remove Jamie McCourt as an obstacle to Frank McCourt’s plan to retain ownership of the team by selling the Dodgers’ television rights in U.S. Bankruptcy Court. The agreement also would appear to set up a winner-take-all court showdown for the Dodgers between Frank McCourt and Commissioner Bud Selig.

The people familiar with the agreement spoke on condition of anonymity because the settlement has not been finalized. However, such a settlement would conclude what is believed to be the costliest divorce in California history.

The McCourts incurred $20.6 million in legal bills related to the divorce through July, according to Los Angeles Superior Court filings by each of the parties. To settle the outstanding dispute over whether the Dodgers were the sole property of Frank McCourt or community property could have added at least $14 million to those bills, based on estimates in a filing on behalf of Jamie McCourt.

Tripon Posted: October 17, 2011 at 07:30 AM | 34 comment(s) Login to Bookmark
  Tags: dodgers

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   1. zachtoma Posted: October 17, 2011 at 01:20 PM (#3966016)
Jamie might end up with the winning deal here. According to the LAT a few days ago, Frank's debts and tax obligations make it questionable whether he'll see any profit at all from a sale of the team.
   2. Gold Star - just Gold Star Posted: October 17, 2011 at 04:19 PM (#3966197)
Jamie might end up with the winning deal here.
Concur. Makes me wonder what Frank's angle is.
   3. Tripon Posted: October 17, 2011 at 04:25 PM (#3966203)
Frank probably realized that he was fighting on too many fronts, and needed to protect himself on his backside somehow. Then again, he was always willing to settle outside of selling the team, it was Jamie(as in her right) who wanted to sell the team for max profits.
   4. UCCF Posted: October 17, 2011 at 04:26 PM (#3966205)
$20M in legal bills. Their divorce is a 1%-er.
   5. tshipman Posted: October 17, 2011 at 04:31 PM (#3966212)
This means that some combo of Frank/Jamie recognize the value of the Dodgers after debt as being around 260mm, right?

Can't believe there's that much debt.
   6. Addison Russell T. Davies (chris h.) Posted: October 17, 2011 at 04:51 PM (#3966227)
This means that some combo of Frank/Jamie recognize the value of the Dodgers after debt as being around 260mm, right?

Can't believe there's that much debt.


I think it's worse than that. I read this as Jamie is getting $130m in total, which means that all of their assets combined (after debt) are valued at $260m.

That's not good.
   7. Gold Star - just Gold Star Posted: October 17, 2011 at 05:41 PM (#3966293)
...all of their assets combined (after debt) are valued at $260m.
Makes me wonder if, divorce or not, the McCourts' destiny always was an ugly end. Owning a major-market sports franchise usually is a license to print money, but Frank and Jamie seem to have enjoyed a lifestyle that outstripped the printing press' capability.
   8. Gold Star - just Gold Star Posted: October 17, 2011 at 05:45 PM (#3966298)
$20M in legal bills. Their divorce is a 1%-er.
#OccupyChavezRavine
   9. zachtoma Posted: October 17, 2011 at 05:48 PM (#3966301)
Also where is this money coming from? Frank doesn't have $130m to give to Jamie right now. Is it coming out of the sale of the team, even though it's been reported there won't be much profit to be realized to begin with, and is Frank really ready to consider selling? If not, what else could be? Sale of TV rights? I have to think But would block that move as he's done before. Now that I think about it, I'm pretty confused.
   10. zachtoma Posted: October 17, 2011 at 05:51 PM (#3966306)
#OccupyChavezRavine


...and wait for overzealous police reactions to transform popular opinion of the cause!
   11. There are a lot of good people in alt-Shooty Posted: October 17, 2011 at 05:52 PM (#3966307)
At what point does the IRS get involved? Eventually all that tax free money they pulled out of the Dodgers will have to be taxed, no? I usually don't say this, but come on IRS...bring down the hammer!
   12. Gold Star - just Gold Star Posted: October 17, 2011 at 05:56 PM (#3966316)
...and wait for overzealous police reactions to transform popular opinion of the cause!
Ha!

Actually, the #OWS movement fits in nicely, as it is, at the heart, the protest of wealthy people's abuses of public trusts to make themselves even wealthier.
   13. Addison Russell T. Davies (chris h.) Posted: October 17, 2011 at 05:57 PM (#3966319)
Makes me wonder if, divorce or not, the McCourts' destiny always was an ugly end. Owning a major-market sports franchise usually is a license to print money, but Frank and Jamie seem to have enjoyed a lifestyle that outstripped the printing press' capability.

Undoubtedly. Those kinds of spending habits never end well.
   14. Addison Russell T. Davies (chris h.) Posted: October 17, 2011 at 05:58 PM (#3966321)
Also where is this money coming from? Frank doesn't have $130m to give to Jamie right now. Is it coming out of the sale of the team, even though it's been reported there won't be much profit to be realized to begin with, and is Frank really ready to consider selling? If not, what else could be? Sale of TV rights? I have to think But would block that move as he's done before. Now that I think about it, I'm pretty confused.

I was wondering this myself. I suppose they have other assets to sell off, but even so I can't believe Frank is liquid enough to pull this off.
   15. tshipman Posted: October 17, 2011 at 06:00 PM (#3966328)
Also where is this money coming from? Frank doesn't have $130m to give to Jamie right now. Is it coming out of the sale of the team, even though it's been reported there won't be much profit to be realized to begin with, and is Frank really ready to consider selling? If not, what else could be? Sale of TV rights? I have to think But would block that move as he's done before. Now that I think about it, I'm pretty confused.


This is a really good point. I can't believe that Jamie would extend Frank credit.
   16. Swedish Chef Posted: October 17, 2011 at 06:02 PM (#3966331)
Undoubtedly. Those kinds of spending habits never end well.

But they do keep the money circulating better than most, the Fed should give them medals for services to the economy beyond the call of duty.
   17. zachtoma Posted: October 17, 2011 at 06:02 PM (#3966332)
I suppose they have other assets to sell off, but even so I can't believe Frank is liquid enough to pull this off.


They have lots of properties, but some have already been sold to pay off court costs, and I don't see those assets ranging into the hundreds of millions - 2 Malibu beachfront homes, 2 Holmby Hills mansions, one in Massachusetts, and a couple vacay properties - is probably more like around $50 million.
   18. Swedish Chef Posted: October 17, 2011 at 06:05 PM (#3966336)
I can't believe that Jamie would extend Frank credit.

Maybe credit secured by the Dodgers. Or she got real estate or something.
   19. Addison Russell T. Davies (chris h.) Posted: October 17, 2011 at 06:08 PM (#3966341)
They have lots of properties, but some have already been sold to pay off court costs, and I don't see those assets ranging into the hundreds of millions - 2 Malibu beachfront homes, 2 Holmby Hills mansions, one in Massachusetts, and a couple vacay properties - is probably more like around $50 million.

And that's assuming those properties aren't leveraged -- no sure thing with these two.
   20. zachtoma Posted: October 17, 2011 at 06:15 PM (#3966356)
Speculation on MSTI: "My exact thoughts on the matter. It has to be either he’s promising TV Contract money without putting it in writing, so that Selig has nothing to point to, OR he’s paying her on the Manny Ramirez/Andruw Jones/Marquis Grissom plan of “I’m good for it, you’ll get it later… I promise!”"

Could he possibly get away with that?
   21. RB in NYC (Now Semi-Retired from BBTF) Posted: October 17, 2011 at 06:19 PM (#3966362)
Speculation on MSTI: "My exact thoughts on the matter. It has to be either he’s promising TV Contract money without putting it in writing, so that Selig has nothing to point to, OR he’s paying her on the Manny Ramirez/Andruw Jones/Marquis Grissom plan of “I’m good for it, you’ll get it later… I promise!”"

Could he possibly get away with that?
If Jamie (and her lawyers, perhaps more to the point) are willing to go along with the second point, he probably could get away it. I can't imagine his attorneys or hers would allow him to promise the TV money without having something in writing, but who knows?
   22. There are a lot of good people in alt-Shooty Posted: October 17, 2011 at 06:21 PM (#3966367)
Could he possibly get away with that?

Maybe a promise of blood later is the best you can get from a stone so Jamie took it? If Frank doesn't get to sell the tv rights, then they both get nothing, but if he does get to sell them, she has the legal power to get her money. No, I am not a lawyer so if I sound like I don't know what I'm talking about, there's a reason for that.
   23. Ron J Posted: October 17, 2011 at 06:22 PM (#3966371)
Could he possibly get away with that?


Do you really think Jamie would take his word for the direction the sun rose this morning?

And if somehow the good memories clouded her judgment I'm pretty sure her lawyers would be there to insist that everything is in writing.

EDIT: typo
   24. Never Give an Inge (Dave) Posted: October 17, 2011 at 06:42 PM (#3966401)
"My exact thoughts on the matter. It has to be either he’s promising TV Contract money without putting it in writing, so that Selig has nothing to point to, OR he’s paying her on the Manny Ramirez/Andruw Jones/Marquis Grissom plan of “I’m good for it, you’ll get it later… I promise!”"

If the team is in bankruptcy, I think the court will be a bigger obstacle to him pledging the TV money than Jamie or her lawyers will be.
   25. Gold Star - just Gold Star Posted: October 17, 2011 at 07:02 PM (#3966436)
In sum, Frank's entire legal strategy comes down to the Hail Mary of the bankruptcy court allowing the sale of TV rights? To which MLB and Fox have said, "Over our dead bodies?"

He's hosed.
   26. Kyle S at work Posted: October 17, 2011 at 07:23 PM (#3966471)
Frank doesn't have the money to pay her, obviously. He has no liquidity. He can't even pay his lawyers at this point.

Even if he doesn't remain in control of the team and is forced to put it up for sale, equity will see some return. Jamie will get hers out of that money.

What this means for Frank is that he's putting all his eggs into the "Eff Bud Selig" basket. Clearly to be able to afford this deal he'll have to get the judge to approve a deal substantially similar to the Fox deal Bud nixed: the source of cash to fund the exit will be borrowing against the future years of the deal. Which will hamper the team financially for years to come.

It's almost as if the Dodgers signed a 15 year, $215 million* deal with a player named "Jamie McCourt", and immediately put that player on the DL for the duration of the contract. How'd YOU feel if your team did that?



* I'm assuming a 7% discount rate and $130mm PV, which equals 15 years at around $14.5 million per year.
   27. Kyle S at work Posted: October 17, 2011 at 07:29 PM (#3966479)
By the way, I tried to use the word "deal" as many times as possible in that post. Yes, I'm an idiot.
   28. Gold Star - just Gold Star Posted: October 17, 2011 at 07:32 PM (#3966487)
We'll deal with it, deal?

OR, in honor of Jim Harbaugh, What's your deal?
   29. Kyle S at work Posted: October 17, 2011 at 08:21 PM (#3966529)
The other issue with renegotiating the Fox contract (see? I don't need to use the word "deal") is that if McCourt is allowed to do this, Fox will have a large unsecured claim in the bankruptcy for the value of the rights over the foregone period. Assuming he terminated it now, it would be two seasons' worth at the current value, which is debatable. If I'm Fox, I argue it's worth roughly $100 million per season, less what they would have paid the Dodgers according to the old agreement, based on the leaked details from the May/June negotiations (assuming a 17 year term with a present value of $1.7 billion per MLB's valuation of the contract).

What is Fox paying now for the TV rights? A $160 million contract rejection claim, plus Bryan Stow's claim, is going to put Frank even further out of the money.
   30. valuearbitrageur Posted: October 17, 2011 at 10:22 PM (#3966650)
http://latimesblogs.latimes.com/dodgers/2011/10/frank-mccourt-could-beat-bud-selig-still-have-to-sell-dodgers.html

If Frank has not paid Jamie in full by next spring, he has to put the team up for sale.
   31. Adam B. Posted: October 17, 2011 at 10:43 PM (#3966667)
Actually, the #OWS movement fits in nicely, as it is, at the heart, the protest of wealthy people's abuses of public trusts to make themselves even wealthier.
#OccupyHustonStreet
   32. AJMcCringleberry Posted: October 17, 2011 at 11:04 PM (#3966683)
#OccupyChavezRavine

It's not like the fans are taking up much room.
   33. tshipman Posted: October 17, 2011 at 11:24 PM (#3966702)
If Frank has not paid Jamie in full by next spring, he has to put the team up for sale.


Wow. So Jamie *is* giving Frank credit. At least that's how I read that. The deal seems to break down to one of two scenarios:

1. Frank beats Bud, gets the TV deal he wants, borrows off of that and pays Jamie off.
2. Frank loses to Bud, sells the Dodgers, gets enough to pay off the debt and Jamie.

It appears that neither Jamie nor Frank appear to believe that they are at risk for the Dodgers to be sold for a low enough sum to not pay everyone off.
   34. Kyle S Posted: October 18, 2011 at 01:40 AM (#3966807)
Yeah there's definitely $130mm of equity in the team, unless something crazy happens in the bankruptcy like a big contract rejection claim or another fan getting hurt. It's a big gamble by McCourt that he'll get at least double that in the end though. If he ends up selling the team and the sale only returns $170 million to equity, he would have been much better off not settling.

you'd think that his best guess is something like $300mm of equity, otherwise why settle unless he just really loves gambling?

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