McCort has ruined the Dodgers

[CameronFrye]

Just got this sent to me from a friend.

Frank McCourt Must Go (UPDATED) | It's About The Money

It's a very interesting read that tells about all the backroom dealings the McCourts have enabled for themselves through the Dodgers and how Frank has essentially robbed the Bums of what has made them so valuable all these years - the Dodgers no longer own Dodger Stadium or the land (read: parking lots) around the ballpark. They are tenants, just like most other teams.

I imagine that Walter O'Malley is rolling over in his grave right now at what has happened to his team.

That baseball team is in a world of hurt over the next few decades. It's going to be sad to watch, if only because we all know how intense the rivalry has been all these years. It's going to be tough to keep the rivalry going if the Bums are working on a $40 million payroll.

 

[filosofy29]

Cam do you hate the letter "u"? Most notably in your thread titles. What's the deal?

 

[gp956]

Yes, the Dodgers interlocking entities look convoluted, and probably are to some degree. But a lot of companies I've analyzed as takeover candidates are similarly "structured". I don't see anything completely crazy in what McCourt did with the structure. It makes some sense to break out separate revenue streams (and potential liabilities) into separate entities.

That said, MCourt was definitely extracting equity out of the structure and was setting himself up to walk away a much wealthier man - even as the Dodgers would have been left in bankruptcy. There probably is some fiduciary responsibility he abandoned in there somewhere - perhaps criminally.

 

[tzill]

Yes, the Dodgers interlocking entities look convoluted, and probably are to some degree. But a lot of companies I've analyzed as takeover candidates are similarly "structured". I don't see anything completely crazy in what McCourt did with the structure. It makes some sense to break out separate revenue streams (and potential liabilities) into separate entities.

That said, MCourt was definitely extracting equity out of the structure and was setting himself up to walk away a much wealthier man - even as the Dodgers would have been left in bankruptcy. There probably is some fiduciary responsibility he abandoned in there somewhere - perhaps criminally.

Well, it wouldn't be a criminal suit, it'd be civil. To defend against breach of fiduciary duty for a non publicly held company you've got a pretty low bar to hurdle -- the "reasonable business person" standard. It's pretty tough to get a judgment against a business owner on that...I'm not sure anyone would even have standing to sue.

What will bounce McCourt is the "best interests of baseball" clause that the Commissioner can wield. Even then, he'll sue for restraint of trade on the $3BB TV deal. The real question will be: does he have standing given MLB's anti-trust exemption. Now THATS a great legal point.

 

[calsnowskier]

As a Giants fan, I LOVE to see this. Maybe a short-sighted opinion, but you love to see your rival squirming on the ground in agony.

As a baseball fan, I HATE to see this. It is one thing to see the Padres, Marlins, Rays, etc fall into this kind of problem. To see the Yankees, Red Sox, Dodger, Giants, Cubs, Cardinals, Tigers, etc do it is something else entirely. We have already seen a similar fate fall upon the Pirates, and the Commissioners office has not done much/anything to restore that once-proud organization. Maybe they have learned from that and are stepping in on the Dodgers before the become the Pirates-West.

 

[Robotech]

There's a part of me that says who cares, but there's also a part of me that wants to see the Dodgers be successful because they are an important part of baseball history and our rivalry. I don't mind if the Dodgers are successful so long as our Giants are more successful.

 

[Robotech]

And my first ever baseball game was at Dodger Stadium when I was a kid, so it will always hold a special place in my heart despite it being the home of our hated rivals.

 

[gp956]

Well, it wouldn't be a criminal suit, it'd be civil. To defend against breach of fiduciary duty for a non publicly held company you've got a pretty low bar to hurdle -- the "reasonable business person" standard. It's pretty tough to get a judgment against a business owner on that...I'm not sure anyone would even have standing to sue.

What will bounce McCourt is the "best interests of baseball" clause that the Commissioner can wield. Even then, he'll sue for restraint of trade on the $3BB TV deal. The real question will be: does he have standing given MLB's anti-trust exemption. Now THATS a great legal point.

Really? What's the bar for bankruptcy fraud? Perhaps, rather than violating "fiduciary responsibility", you'd accept abusing his position in a principle-agent relationship.

 

[tzill]

Really? What's the bar for bankruptcy fraud? Perhaps, rather than violating "fiduciary responsibility", you'd accept abusing his position in a principle-agent relationship.

Fraud is fraud...that's a seperate (and criminal) charge. Now, if he has investors THEY might have standing to sue if he misrepresented something to them. If he filed fraudulent bankruptcy papers he'd be open to a criminal charge by the State.

Not sure where you're going with the princiPAL/agent thing, though...are you saying he's defrauded investors? I took your original thought to mean that doyerfan could sue him -- I'm pretty sure that wouldn't survive summary judgment.

 

[gp956]

Fraud is fraud...that's a seperate (and criminal) charge. Now, if he has investors THEY might have standing to sue if he misrepresented something to them. If he filed fraudulent bankruptcy papers he'd be open to a criminal charge by the State.

Not sure where you're going with the princiPAL/agent thing, though...are you saying he's defrauded investors? I took your original thought to mean that doyerfan could sue him -- I'm pretty sure that wouldn't survive summary judgment.

The bank borrower relationships is one of principle to agent, whereas the fiduciary responsibility angle was aiming more at him defrauding minority shareholders. And it's all speculation, hypothetical really. That said, if he used the convoluted business structure to weaken and then obscure one, or all, of these business entities financial state, that could be construed as bank fraud.

And you thought I wasreferring to McCourt being criminally responsible for hurting dodger fan's feelings? That's really dumb.

 

[filosofy29]

Ouch!!!

 

[tzill]

The bank borrower relationships is one of principle to agent, whereas the fiduciary responsibility angle was aiming more at him defrauding minority shareholders. And it's all speculation, hypothetical really. That said, if he used the convoluted business structure to weaken and then obscure one, or all, of these business entities financial state, that could be construed as bank fraud.

And you thought I wasreferring to McCourt being criminally responsible for hurting dodger fan's feelings? That's really dumb.

No need to get snippy; it's why I asked for clarification. I've heard of suits brought by fans alleging that mismanagement of the team has resulted in economic harm to the area.

Back on point: if McCourt lied on his loan app/financial disclosure forms he'd be subject to California bank fraud law in criminal court. If he failed to disclose/lied to investors he'd be subject to tortious misrepresentation in civil court. The legal standard on these types of actions is fairly clear: he either lied or he didn't. I'm pretty sure you don't even need to prove intent to lie; merely that the hypothetical falsehood was material.

Hope that helps, and please remember that I've only a 99 IQ so I'm doing the best I can

 

[CameronFrye]

Cam do you hate the letter "u"? Most notably in your thread titles. What's the deal?

It's because of NorCalATL that I hate the letter U..... ;-)

 

[nateistheshi]

GP, tzill...some of us aren't lawyers and have no idea WTF you are talking about...cut it out!...also any bad news for the Dodgers makes me happy.

 

[CameronFrye]

Yes, the Dodgers interlocking entities look convoluted, and probably are to some degree. But a lot of companies I've analyzed as takeover candidates are similarly "structured". I don't see anything completely crazy in what McCourt did with the structure. It makes some sense to break out separate revenue streams (and potential liabilities) into separate entities.

That said, MCourt was definitely extracting equity out of the structure and was setting himself up to walk away a much wealthier man - even as the Dodgers would have been left in bankruptcy. There probably is some fiduciary responsibility he abandoned in there somewhere - perhaps criminally.

It makes zero sense to break out the Dodgers like this. I am sorry, baseball is not a normal business. Part of what has made the Dodgers so successful over the years has been the O'Malleys, Tommy Lasorda, Fred Clarie, et al and their combined knowledge. The Bums were always a very well-run organization in the past, to be sure.

But the biggest reason the Dodgers have been successful is because they were one of the few teams in the game to own their stadium and the land it's built on. While other teams are spending millions on rent each year, the Dodgers were taking all of their ticket proceeds AND the revenue streams from the parking around Dodger Stadium and rolling those into the team. Money has never been a problem for the Dodgers.

Now, when McCourt loses the Dodgers - and he WILL lose the Dodgers, he is still likely going to have ownership of Chavez Ravine and the parking lots around the stadium. The Bums will have to pay him rent each year and will lose the stream of money that is generated from parking. If you've ever been to the Latrine, you know that there is only one way in and out of that shithole. It's via automobile or one of those stanky buses.

As it is, the team is hundreds of millions of dollars in debt and when the team is finally taken away, the selling price is not going to be nearly what it should be because of the lack of assets owned by the team.

Bottom line is that unless MLB forces McCourt to sell the stadium and the land as a package deal (which he could easily fight in court and win), the Dodgers are not going to be a financially powerful franchise for some time to come.

As much as I want to be happy about that as a Giants fan, I cannot. Having a Bums team that is fighting for division titles alongside my World Series Champions is one of the reasons I am such a passionate Giants fan. Besides the World Series win, some of the most memorable moments in my lifetime have been games against the Bums.

- The Brian Johnson home run
- Joe Moargan's home run to eliminate the Bums in 1982
- Bonds getting 71 against Chan Ho.

etc etc etc.

 

[calsnowskier]

Solomon Torres in '93...

Sorry, nightmares stick with you as well

 

[gp956]

It makes zero sense to break out the Dodgers like this. I am sorry, baseball is not a normal business. Part of what has made the Dodgers so successful over the years has been the O'Malleys, Tommy Lasorda, Fred Clarie, et al and their combined knowledge. The Bums were always a very well-run organization in the past, to be sure.

But the biggest reason the Dodgers have been successful is because they were one of the few teams in the game to own their stadium and the land it's built on. While other teams are spending millions on rent each year, the Dodgers were taking all of their ticket proceeds AND the revenue streams from the parking around Dodger Stadium and rolling those into the team. Money has never been a problem for the Dodgers.

Now, when McCourt loses the Dodgers - and he WILL lose the Dodgers, he is still likely going to have ownership of Chavez Ravine and the parking lots around the stadium. The Bums will have to pay him rent each year and will lose the stream of money that is generated from parking. If you've ever been to the Latrine, you know that there is only one way in and out of that shithole. It's via automobile or one of those stanky buses.

As it is, the team is hundreds of millions of dollars in debt and when the team is finally taken away, the selling price is not going to be nearly what it should be because of the lack of assets owned by the team.

Bottom line is that unless MLB forces McCourt to sell the stadium and the land as a package deal (which he could easily fight in court and win), the Dodgers are not going to be a financially powerful franchise for some time to come.

As much as I want to be happy about that as a Giants fan, I cannot. Having a Bums team that is fighting for division titles alongside my World Series Champions is one of the reasons I am such a passionate Giants fan. Besides the World Series win, some of the most memorable moments in my lifetime have been games against the Bums.

- The Brian Johnson home run
- Joe Moargan's home run to eliminate the Bums in 1982
- Bonds getting 71 against Chan Ho.

etc etc etc.

Never said it made sense for the "Dodgers". Reading comprehension is required around here Cam. But let's not get bogged down in details. I'm sure McCourt can be "paid off" to return all the various assets to the team, if the new owners want them.

BTW, the problem with the piece you linked, is the writer has no understanding of simple things like the fundamental accounting equation. So he sees these breakouts of streams of revenue as the problem, when really it is the extraction of equity. You can't fix the problem if you can't identify it.

 

[gp956]

BTW Cam, if you examine documents the Giants have had to file for various projects, you'll find they are have a somewhat complex structure as well.

 

[tzill]

BTW Cam, if you examine documents the Giants have had to file for various projects, you'll find they are have a somewhat complex structure as well.

^^^^

GP with the early lead for the "Understatement of the Year 2011" award. The Giants structure is byzantine.

 

[gp956]

^^^^

GP with the early lead for the "Understatement of the Year 2011" award. The Giants structure is byzantine.

Byzantine! Nice.