Sunday, November 25, 2012
Bankruptcy and Baseball
The historic and prominent Los Angeles Dodgers professional baseball team has filed for Chapter 11 bankruptcy protection. After a tumultuous divorce, the owner of the Los Angeles Dodgers baseball team, Frank McCourt, had no other choice but to file for bankruptcy. McCourt and his wife of thirty years, Jamie McCourt, have decided to split and unfortunately for Frank, he can no longer afford to keep the team. Frank desperately struggled to keep the dodgers but after an unsuccessful agreement with the fox television network over broadcast rights, there was not enough cash to keep up with the team’s various expenses. ...view middle of the document...
The settlement was dependent upon Major League Baseball approving a 17-year television contract between the Dodgers and FOX Television. The discussion set aside the Dodgers ownership issue until a scheduled one-day trial on August 4, whereupon if the judge sided with Frank he would keep the team and pay a settlement fee to Jamie and if the judge sided with her the team would be sold. However, on June 20, baseball rejected the television deal and the settlement agreement fell apart. The McCourts finally reached a settlement in their divorce case where Jamie would receive about $130 million and relinquish her claims on the Dodgers. This ended what is widely believed to be the costliest divorce in California history.
The McCourt family has a profitable association with real estate and construction in the Boston area. In 1977, Frank McCourt founded The McCourt Company, which specializes in the development of major commercial real estate projects, particularly parking lots. In the late 1970s McCourt acquired 24 acres in South Boston from the bankrupt Penn Central railroad and developed the property into parking lots. The McCourt company headquarters moved to Los Angeles in 2004 in connection with the family relocating to Los Angeles. Before buying the Dodgers, Frank made a bid to buy his hometown Boston Red Sox but was ultimately unsuccessful. If he had won the bid, he had planned to build a new stadium on the land he owned and used for parking lots on the South Boston waterfront. McCourt had also tried to buy the Anaheim Angels and Tampa Bay Buccaneers before he bought the Dodgers. McCourt is not the first member of this family to own part or whole of a sports franchise, his grandfather was part-owner of the Boston Braves.
In 2004, Frank McCourt bought the Dodgers in a highly leveraged $430 million deal that was the second highest for a baseball team at the time. He became the fourth owner in franchise history, and the sale marked the return of the team to family ownership, although the McCourt clan has been nothing like the O'Malleys whom owned the Dodgers or a stake in them for more than 50 years. All problems were kept in-house, and employees were treated like family. Peter O'Malley's father, Walter, was the team's lawyer when he gained a controlling interest in the Brooklyn Dodgers in 1950. The team, a fabled fixture of New York's borough of Brooklyn since the 19th century, broke baseball's color barrier when it signed Jackie Robinson as the first black major league player in 1947. The Dodgers delighted their New York fans by winning their first World Series in 1955, then broke their hearts three years later by moving to Los Angeles, an act never entirely forgiven. In Los Angeles, the winning ways continued, with World Series championships in 1959, '63, '65, '81 and '88. The O'Malley family sold the Dodgers in 1998, when News Corporation bought the team, signaling the beginning of changing times for the franchise. Since then,...