Who’s Mess is Bigger…the Mets or the Dodgers?

Frank and Jamie...Goin' Hollywood

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.

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About balleehoo

Happily married to Patty and helping to raise two kids...Kat (23) and Kevin (21). Who is luckier than me?
This entry was posted in Baseball, NY Mets, Uncategorized, Wilpon/Katz and tagged , , , , , . Bookmark the permalink.

6 Responses to Who’s Mess is Bigger…the Mets or the Dodgers?

  1. tophatal says:

    Einhorn is an idiot to have poured $200 million into the Mets when the civil case has yet to be decided and he hasn’t been given any outright guarantees by either Katz or Wilpon . The case goes against the defendants what does Einhorn get in return ? If as is being widely reported Saul Katz and Fred Wilpon may well have moved monies from the Mets to an outside entity ( Sterling Equities Inc ) that they co own , then this crap goes way deeper than first thought.

    As for the Dodgers the whole front office of that organization has been a joke to begin with but what might be even more insidious has been the laissez-faire attitude and the league hierarchy . As always with those morons ….. it’s too little too late ! They’ve simply allowed McCourt , Wilhelm (CFO) and Colletti ruin the organization from top to bottom . As for Selig he has been a pi## poor commissioner whose business acumen borders on being so dumb that it can only be surpassed by his gullibility shown throughout the steroid debacle and his actions there in conjunction with the MLBPA . What a mess ! Is it any wonder why the game faces so many uncertainties from a financial standpoint ?

    A tax sharing scheme that is so inane and that has simply done nothing for the small market teams other than allow the owners there to simply pocket the millions received rather than bolstering the rosters of their respective teams .

    • balleehoo says:

      I don’t know tophatal….Einhorn is pretty savvy if you ask me…. http://www.businessinsider.com/david-einhorn-mets-ownership-2011-6

      • tophatal says:

        Just because he’s a successful hedge fund manager [Green Capital Investments with his own company]means nothing in terms of business savvy ! Simply look at the situation for what it’s worth . He has no idea as to how the verdict will go in this federal case . Were you in his position would you plow $200 million into a franchise on a mere whim without there being any guarantee of actually of seeing a return should the verdict go the plantiffs’ way ? I doubt that either Katz or Wilpon were able to offer that guarantee and I’m sure that Irving Picard as the plaintiffs’ lead attorney would be amenable to any sort of situation where Einhorn would be given any sort of guarantees either .

        Plenty of guys with alleged business savvy have screwed up ………… Tom Ricketts and George Gillette took the both the Rangers (MLB) and Dallas Stars (NHL) into bankruptcy before being forced to sell both franchises to stave off their own financial mismanagement and that of the respective teams. You also had the Chicago Cubs being placed into Chapter 11 protection because of their parent company’s debt (Tribune Group) by billionaire real estate mogul Sam Zell before they too were sold to the Ricketts’ family who founded online trading company TD Ameritrade ..

        The vast majority of the owners in baseball have about as much financial acumen as the idiots within both legislative chambers of Congress. So don’t buy into the crap about some young 39 year old wunderkind who’s made his millions in the financial industry being some sort of savior. Look at Trump twice gone bankrupt ( in the last two and a half decades ) and the vast majority of his businesses (casino & real estate) real now are hemorrhaging red ink as of now . It’s only because of the so called deferments offered with regard to the lenient tax laws that he can regale with his bull#hit !

        tophatal ………………

      • balleehoo says:

        No, I wouldn’t put up a dime without some protection….but neither would Einhorn…..he hasn’t finalized a deal as of yet….and I would be surprised if his investment didn’t include protection. The Sterling boys hope to close the deal by the end of June.

  2. tophatal says:

    If at all interested ? Merely click on the link shown to view .

    http://abritishman.wordpress.com/2011/06/15/cant-knock-the-hustle/

  3. tophatal says:

    What form of protection can the Mets put up ? Their word ? Some form of collateral ? You’re kidding right ? They’re on target to lose in excess of $60 to $70 million if estimates are to be believed for this fiscal year . So unless Katz and Wilpon have family member guaranteeing that money …… this is far from over . Einhorn had better be sure that his lawyers know the hell what they’re doing to begin with. Because sure as hell I wouldn’t trust anyone at all associated with the Mets in their front office !

    Selig says he’s watching this and the Dodgers’ situation closely ? Is that with one eye or both eyes opened ? More to the point how the hell did he not get involved when it was first being reported that both ball-clubs had serious financial difficulties ? . He and the rest of the league hierarchy are a conniving bunch of as_holes !

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