Alright….you are correct…it’s been more than a while since I posted. A serious case of writer’s block…
I haven’t been totally asleep…..I’ve watched the Mets mess…with David Einhorn jumping forward to make what seems like a creative investment…and way….for him to eventually control the club once the Wilpon/Katz team falls under the Irving Picard sword. You will recall they are being sued for $1.0 billion by the Trustee of the Madoff account for “profits” they “knowingly” took and invested in other businesses tied to Madoff’s Ponzi scheme.
Einhorn’s actions, in my opinion, seem to point toward gaining eventual control. Einhorn hasn’t called for Jeff Wilpon’s head as a condition of investing $200 million in the business….because he knows Daddy’s Boy is inept and that Jeffie’s failures as President, COO increase the odds that the Mets operations continue to lose big money and fail to meet their multiple financial obligations.
I also think that Einhorn will sit idly by as the Wilpons push Sandy Alderson to decimate the roster, and save real cash, by first trading Carlos Beltran and Frankie Rodriguez and then letting fan favorite Jose Reyes escape CitiField through free agency. All three are having great seasons…but they are also a significant part of the Mets payroll….and their movement out of Met uniforms, particularly Reyes, will cause further fan anger and result in further attendance declines. And that all plays into Einhorn’s hand.
The Mets are a mess, for sure, but a quiet one when compared to what’s happening out West. I’ve also been keeping an eye on the Dodgers….my favorite middle age adult team.
Let me say this…Dodger owners Frank and Jamie McCourt are disasters. Their very public divorce proceedings pointed out to all of Los Angeles how greedy the couple has been since purchasing the team in 2004. They always promised to continue investing in the club payroll as a means of justifying severe increases in ticket prices and parking, but when the divorce testimony smoke cleared, the facts pointed otherwise. The McCourts had re-directed over $100 million dollars from Dodger finances to fund an over-the-top lifestyle that included 7 luxurious, multi-million dollar homes while also borrowing heavily to eventually sink the Dodgers into far deeper debt over time.
Frank’s cash flow demands to meet payments have become severe and he has been forced to reach outside the organization for more money. He has tried a few things to date with little success….but has found a willing “bank” if you will at FOX….owners of two LA regional sports cable channels that need his programming to fill hours and drive subscription and ad revenues. In fact FOX’s needs have become more severe since Time Warner announced their plans to create their own local sports cable service after securing rights to the Lakers for 20 some odd years.
The challenges and acrimony has become so loud, between Frank and Jamie as well as between Dodger fans and management, that Commissioner Selig has been forced to get involved.
Frank has negotiated a 20 year local cable tv deal with FOX he has valued as high as $3.0 billion that offers plenty of cash and equity in the channel, including an advanced payment of $285 million to help meet his cash flow needs.
He just needs approval for the deal from the Commissioner’s office and all his troubles will be behind him, he says. But there is the rub…..Selig has said he would not consider approving the Fox deal until he receives the results of an investigation into the Dodgers’ finances, which officials hope to complete this month. Selig is concerned that McCourt will use the upfront $285 million in FOX money to settle his divorce instead of using it to cover Dodger related expenses.
McCourt has assured Selig he would not use any of the $285 million Fox would immediately pay toward a divorce settlement. But without approval of the Fox contract, it is unclear how McCourt could finance his very public divorce settlement from wife Jamie, who claims half-ownership of the club, without selling the Dodgers.
Jamie has placed herself squarely into this entire issue, reserving the right as half owner to object to the Fox contract, prompting Fox to tell McCourt he has no deal unless the company can be assured she would not challenge it.
In the absence of a divorce settlement, Los Angeles Superior Court Judge Scott Gordon is set to hear two motions June 22. Frank McCourt has asked Gordon to rule that Jamie has no say in the television deal; Jamie McCourt has asked the judge to order the immediate sale of the Dodgers.
While all this plays out, McCourt has struggled to make his last three payrolls…..and should he miss just one, forcing the Commissioner’s office to cover it, he can be forced to sell the team.
Back in May, McCourt secured a last-minute personal loan from FOX, guaranteed against no collateral, that allowed him to make mid-May…and then an early payment discount to Dodger sponsors delivered cash to cover needs at the end of May and mid-June. The tab due at the end of June jumps to $30 million and inside Dodger sources say he has little chance to meet it. Part of the $30 million is due to deferred contracts on several players, including $8 million to Manny Ramirez.
Frank’s been very crafty in coming up with money, I’ll give him that….and I can see a scenario where he offers Manny, and others, extra cash if they postpone payment for a few months.
If he is successful once again in meeting salaries, this thing will get really loud and ugly. Dodger fans will never back a team owned by Frank McCourt….they are furious about all the money he and Jamie took out of the team for their own personal lifestyles…..and fans feel as though the McCourts have treated them like fools.
Fans have called for a boycott of Dodger home games and their attendance is off 17% so far this season….interestingly, Dodger declines account for 84% of the total attendance decline in MLB this season to date.
Selig has, in my opinion, very little choice here but to find a way to stall his investigation and see that McCourt is banished. Dodger fans demand it. But McCourt will continue juggling his finances to stay afloat. And then things will get really ugly.
Frank McCourt has built his empire in the courtroom through lawsuits and at the banks through leverage and loans. This whole mess will get much more complicated before it gets better and will provide great theater.
I guess, in the end, I vote the Biggest Mess title goes to the Dodgers. You?
THE LAST BITE
The Ohio State saga continues as more past players come forward and expose cash payments made to them over the years for memorabilia. When this is over, I can see University President Gordon Gee and Athletic Director Gene Smith leaving their posts right along with Jim Tressel. And the NCAA will slap some serious sanctions on the Buckeye program. Maybe now, finally, Michigan can win a game or two in the big rivalry as the state’s best football players leave Columbus for other programs.