If you don’t closely follow events west of the Rockies (or west of
the Hudson), here are the basic facts about McCourt’s ownership of the
Dodgers.
McCourt bought the Dodgers
from News Corp (Fox Sports) with $150 million he borrowed from Bank of
America, $75 million he borrowed from Major League Baseball (MLB) and a
$196 million debt package from Fox. That’s $421 million of debt.
After the purchase, McCourt rearranged this debt to his liking. McCourt
traded his Boston parking lots
to Fox in exchange for forgiveness of some of the Fox debt.
Then he
caused a Dodger affiliate, Dodger Tickets, LLC, to borrow $250 million
to refinance most of the remaining acquisition debt. Plus McCourt cashed
in on $50 million of “rebates” from Fox. With this rearrangement,
McCourt effectively purchased the Dodgers – for a final purchase price
of between
$355 million and
$371 million
– in exchange for parking lots and $300 million (more or less) of debt.
By all reports, McCourt put not one dime of his own into this purchase.
Moreover, McCourt did not himself have to borrow the money used for
the purchase – he got the Dodgers to do it for him.
It’s been frequently reported that McCourt “
bought the Dodgers on a credit card”. That’s only half the story. The other half of the story, the more important half, is that
McCourt bought the Dodgers on the Dodgers’ credit card.
Once McCourt had control of the Dodgers’ credit card,
he continued to use it, this time to finance his family’s cost of living. Then Dodgers’ Executive Vice President Jeff Ingram (now
team Vice Chairman)
testified that the Dodgers built their team budgets around the personal
cash demands made by the McCourts – from a financial standpoint, the
team’s top priority was to raise the funds required by the McCourt
family.
Ingram described it like this:
the “family and business checkbooks were largely one and the same.”
Ingram actually testified that the family used the team like a “credit
card”.
In an email disclosed in Jamie McCourt’s divorce filings, Ingram
describes Jamie McCourt’s attitude towards the Dodgers as follows: “why
have a family business but to support the family lifestyle.” Remember,
Jamie McCourt was the team’s
CEO. Jamie McCourt had the power to reach for the Dodgers’ checkbook and sign the checks herself.
How did the Dodgers manage to fund the McCourt lifestyle?
Let’s
start with salaries: Jamie McCourt received up to $2 million annually
for her services as Dodgers’ CEO. Frank McCourt received up to $5
million annually from one or more businesses affiliated with the
Dodgers. The Dodgers also paid up to $600,000 in annual salary to two of
the McCourt children, one of whom was attending Stanford University and
the other of whom had a full-time job at Goldman Sachs.
But $7.6 million a year was not
nearly enough money to meet the needs (
estimated at over $2 million a
month)
of the McCourt family. The McCourts spent money at a rate that turned
heads, even in Los Angeles. Best known is the McCourt appetite for real
estate. After buying the team, the McCourts proceeded to buy four homes
in Los Angeles – two in Malibu, two near the Playboy Mansion – at a
combined cost of around $89 million. This figure includes the estimated
cost of McCourt “improvements” to these homes, including a roughly $14
million bill for tearing out tennis courts at one property and replacing
them with a swimming pool. Then there were the
other expenses:
the vacation properties, the private jet, the private drivers, the
hairdresser who worked exclusively for the McCourts five days a week …
the list goes on and on. Here’s an expense that’s one of
my personal
favorites: over one 18-month period, Jamie McCourt paid over $100,000
to various florists, and charged the Dodgers for the expense.
The McCourt lifestyle unraveled when
Frank McCourt fired his wife
as Dodgers’ CEO, claiming that Jamie McCourt was having an affair with
her driver. (Naturally, the driver’s salary was being paid by the
Dodgers; Frank McCourt has alleged that his ex-wife and her driver spent
2½ weeks together on vacation in France, with the Dodgers once again
paying the tab.) In turn, Jamie McCourt filed for divorce, and claimed
half ownership of the team.
But the McCourt’s wild spending did not
stop with the divorce filing. Despite the McCourts’ owning four homes in
Los Angeles, Frank McCourt currently lives in a suite in the newest
luxury hotel in Beverly Hills, at a cost north of $30,000 a month.
Meanwhile,
Jamie McCourt reportedly uses
one of the McCourt’s multi-million dollar homes “exclusively for
swimming”, while a second is used to store furniture. Plus each McCourt
has hired floor-fulls of lawyers and accountants to fight the divorce.
Remember: the Dodgers are ultimately paying for all this, because
neither McCourt has any other source of income.
How much have the McCourts managed to extract from the Dodgers? Well,
if we ignore the debt the Dodgers took on so that the McCourts could
buy the
Dodgers but include the McCourt salaries, the McCourts have withdrawn
from the Dodgers anywhere from $109 million (Frank McCourt’s estimate)
to $141 million (Jamie McCourt’s estimate). The truth is, the real
amount the McCourts plundered from the Dodgers may be
more than $141 million – at the moment, all we have to go on is what each McCourt has been willing to admit to
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