Frank McCourt Loses more than just his Wife

Today MLB commissioner Bud Selig announced that Major League Baseball has taken over operations of the Los Angeles Dodgers.  While it was stunning that one of the sports’ most iconic franchises has become a ward of the state, given how events have transpired since the McCourts have assumed control of the franchise.  And make no mistake Frank McCourt is as good as gone.

There is plenty of blood on the hands of Major League Baseball and the Commissioner here.  For at least the past decade, and most of baseball history for that matter, there has not been a club that has changed hands where the owner wasn’t either hand-picked by the commissioner, or at least a known quantity.  Tom Werner was the preferred bidder for the Boston Red Sox.  When it became clear that he did not have the cash to compete with the other bidders, Bud Selig arranged the marriage of convenience between Werner’s group and John Henry.  As soon as longtime Braves executive Stan Kasten joined the Lerner family’s bid it was clear that they would win the bidding for the Nationals.  Bob Castelleni the current owner of the Reds was previously a limited partner with the Cardinals.    Bob Nutting’s first move when he assumed control of the Pittsburgh Pirates was to install former MLB executive Frank Connelly as Team President.   And so on, and so on.  In ownership circles baseball is the same old boys network it has almost always been. 

Frank McCourt would have never been allowed to purchase the Dodgers without the consent of the other owners and the commissioner.  Having previously bid on the Red Sox MLB would have been intimately familiar with his finances and would have had a pretty clear idea of how he would run the Dodgers.  In a perverse way the fact that McCourt leveraged himself to the hilt must have appealed to MLB.  The other owners didn’t have to worry about the Dodgers handing out insane deals like the ill-conceived Kevin Brown and Darren Driefort contracts handed out by Newscorp in the early days of their ownership driving up salaries for everyone else.  Undoubtedly the other owners could count on McCourt to be an ally if relations with the Players Association ever became acrimonious.

This still does not excuse how McCourt ran the club.  Leveraged or not the Dodgers play in the second largest market in the country and are routinely at or near the top in attendance.  They should generate enough revenue on their own to have a payroll at or near the top of MLB.  You could give me the team and they would be spending more on players and I surely have less assets than Frank McCourt.  According to ESPN the Dodgers are currently 11th in payroll behind teams you might expect like the Yankees, Phillies, Red Sox, but also SoCal’s step-child the Angels, both Chicago clubs, the Giants who are still paying down debt from actually paying to build their own ballpark, the Mets whose owner is almost as broke as McCourt, the Twins who MLB tried to contract, and the Tigers who play in a city that it so poor they sent layoff notices to every teacher in the public school system.

In the divorce proceedings documents were released that showed the Dodgers planned to LOWER their payroll over the next ten years.  Even if they kept their payroll at exactly what it is now for the next ten years that would be a crime.  Inflation alone would in fact make a payroll freeze a de facto reduction over such a long period.  Surely the other 29 clubs will increase payroll, especially as MLB sets revenue records year after year.  Clearly the McCourts planned on milking the Dodgers for every cent that they could.  That alone might not have been enough for MLB to act, but news that McCourt had to take out a $30m personal loan to make payroll had to have been the final straw.  MLB has done a good job making sure that MLB does not turn into the EPL where clubs are carrying unsustainable debt loads. 

In the end this will more closely resemble the Rangers takeover than the Expos/Nationals kerfuffle.  The Expos had to find a home, and once Washington was settled upon Peter Angelos needed to be placated, and then MLB had to beat up the local politicians to get Nationals Park built.  MLB elected to sell the team after all of this was in place to ensure the highest sale price possible.  In this case the 29 other MLB owners dipped into their pockets to purchase the club and cover operating losses making them anxious to recover as much of that money as possible.

The Dodgers have none of those complications.  Dodger Stadium is still an absolute gem, and revenue should still be strong even if the McCourt stink has stiffed attendance in the early going.  The Dodgers being such an iconic franchise will have no shortage of suitors.  Given that MLB is just operating the club, and not purchasing it, their only incentive to get the highest possible price is that if to show the appreciation of the asset helping the other owners if/when they try to sell.  This motivation is not to be completely discounted, but its not as strong as trying to recoup money that you have actually invested.  For MLB to take this action they clearly want McCourt gone and won’t be overly concerned that the McCourts maximize their return.