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Why did Selig reject the Dodgers-Fox deal? Because it was more looting of the team by Frank McCourt

Jun 20, 2011, 5:10 PM EDT

Combination of file photos of MLB commissioner Bud Selig and Los Angeles Dodgers owner Frank McCourt

The primary reason the Dodgers are in the boat they’re in right now is because Frank and Jamie McCourt took some $100 million out of the organization for personal use, carved up the team into individual components and leveraged it all to the hilt.

Bud Selig has just released his official statement regarding why Major League Baseball has rejected the Fox deal that Frank McCourt claims is critical for the Dodgers.  He is a bit more polite about it all, but his reasons are basically the same: the Fox deal would have put money in Frank and Jamie McCourt’s pockets, and would not have benefited the team.  In saying so, he cites “the best interests” power that Commissioners have always had, but which is so very rarely cited so explicitly:

Pursuant to my authority as Commissioner, I have informed Los Angeles Dodgers owner Frank McCourt today in a detailed letter that I cannot approve the club’s proposed transaction with FOX. This decision was reached after a full and careful consideration of the terms of the proposed transaction and the club’s current circumstances. It is my conclusion that this proposed transaction with FOX would not be in the best interests of the Los Angeles Dodgers franchise, the game of Baseball and the millions of loyal fans of this historic club.

Mr. McCourt has been provided with an expansive analysis of my reasons for rejecting this proposed transaction. Critically, the transaction is structured to facilitate the further diversion of Dodgers assets for the personal needs of Mr. McCourt. Given the magnitude of the transaction, such a diversion of assets would have the effect of mortgaging the future of the franchise to the long-term detriment of the club and its fans.

As I have said before, we owe it to the legion of loyal Dodger fans to ensure that this club is being operated properly now and will be guided appropriately in the future. This transaction would not accomplish these goals.

What has gone on with the Dodgers under McCourt’s watch is an atrocity.  What’s worse, it’s now being reported that even if Major League Baseball seized the Dodgers, McCourt would still own the parking lots and all manner of ancillary income.  McCourt is clearly using this as a buffer against MLB action, saying in effect,”if you take my team, I’ll be your new owner’s landlord.”  Which could certainly serve to depress buyer interest in the club.

Of course, the fact that that business arrangement is even allowed (i.e. an owner parsing out what should be team assets away from potential MLB control) is Major League Baseball’s fault.  As was letting McCourt into the club in the first place, so let us not weep too much for Major League Baseball here. Letting in clearly unqualified owners with questionable motives is something that never should have occurred, but which in any event needs to end now.  You can’t claim the best interests of baseball now when, a few years before, you weren’t all that damn diligent about it.

So where does it go from here? It would almost have to be litigation, one would assume, with Frank McCourt suing baseball for not approving the Fox deal or demanding that it be ratified immediately via some sort of injunction.  Baseball’s best bet is probably to simply take over when McCourt fails to make payroll at the end of the month and hope that they can swing it to a posture where the team and the ancillary assets could both be wrenched from McCourt’s control so as to make the Dodgers a more attractive asset for some billionaire.

But it’s going to get darker, it seems, before it gets light again.

  1. Kevin S. - Jun 20, 2011 at 5:16 PM

    Out of curiosity, did baseball actually approve McCourt’s asset division, whenever that took place?

    • scareduck - Jun 20, 2011 at 5:31 PM

      Yes, it was approved at the time it was proposed. Bad idea, Bud.

  2. Panda Claus - Jun 20, 2011 at 5:27 PM

    It’s rare for me to support Selig but I’m 100% behind him against McCourt. Right now he’s a parasite on the entire Dodger’s organization.

    See you in McCourt, McCourt!

    • halladaysbicepts - Jun 20, 2011 at 5:30 PM

      “See you in McCourt, McCourt!”

      McCourt? Isn’t that the courtroom that they try the Hamburglar in when he’s caught stealing cheeseburgers?

      • Panda Claus - Jun 20, 2011 at 5:38 PM

        Even Mayor McCheese would probably agree McCourt’s in McTrouble when it comes to meeting the Dodgers’ next payroll. Maybe that wouldn’t be the case if they hadn’t super-sized Manny’s contract.

      • halladaysbicepts - Jun 20, 2011 at 5:45 PM

        Panda Clause,

        Lol!. Yeah, I forgot about Mayor McCheese. Also, Manny can be guilty of super-sizing his arms as well.

    • Old Gator - Jun 20, 2011 at 5:44 PM

      I also find myself in agreement with Bud Light on this one. It is a reeling world, indeed, my lord.

  3. chomsky66 - Jun 20, 2011 at 5:31 PM

    So only Selig is allowed to loot baseball properties?

    • halladaysbicepts - Jun 20, 2011 at 5:33 PM

      Exactly. He does it by allowing revenue sharing and luxury taxes.

      • chomsky66 - Jun 20, 2011 at 5:40 PM

        actually no – by being the ringleader of an exclusive group of organized crimelords, extorting billions from taxpayers for their own gain.

      • halladaysbicepts - Jun 20, 2011 at 5:47 PM

        Well, chomsky66, owners and commisioners have been doing that since the beginning of sports time. Only difference is that Selig is extremely blatant about it.

    • thekcubrats - Jun 20, 2011 at 5:36 PM

      Him and Loria.

      • thekcubrats - Jun 20, 2011 at 5:45 PM

        Actually, let me add, him and all his cronies, who mistakenly thought McCourt was one of their own; McCourt is just trying to out-Selig the Seligs, he just happens to be woefully bad at it. Jeffrey Loria, anyone?

  4. churchoftheperpetuallyoutraged - Jun 20, 2011 at 5:36 PM

    Maybe this is a question for Maury Brown, but you, and others, keep mentioning that if he doesn’t make his 6/30 payroll, MLB will take over the team. Are there any other recourse(s) that could facilitate a faster removal of the McCourts? Could the owners vote him out*?

    *I’d assume you’d need a buyer already in place, or MLB

  5. dodger88 - Jun 20, 2011 at 5:41 PM

    Who would own Dodger Stadium if the team were seized from McCourt? Would the new owners be in a position to move the team to a new stadium? I would hate to see the Dodgers play anywhere but Dodger Stadium but a possible move to a new stadium would weaken the value of the parking lot and other ancillary income.

    • aaronmoreno - Jun 20, 2011 at 6:40 PM

      Nope. I’m sure Frank has a horrendous lease in place, where the Dodgers pay a ton in rent, with huge penalties for breaking the contract.

      Wayne Huizenga, remember.

      • Kevin S. - Jun 20, 2011 at 7:09 PM

        He actually does have a horrendous lease in place. I’m not sure what the Dodgers pay the stadium shell company, but I know they pay the parking lot shell company $6-9 million per year. Unfortunately, the only legal recourse I’m aware of for MLB to bring the splinter assets back under the Dodger umbrella would be if California has a law against intentional asset devaluation.

    • koufaxmitzvah - Jun 20, 2011 at 7:17 PM

      I agree with you, 88. It’s an awful end to Dodger Stadium. Frank McCourt is an ass and a pain, and you know he will drag everybody through court exploiting his manipulations all the while charging $15 a car. LA is going to have to get a new stadium– look for it downtown, by the Staples Center, as another jewel in the renovation of dt– and Frank will build some friggingly obnoxious housing development + shopping mall.

      This all goes back to the City’s refusal to grant Peter O’Malley the ability to build a football stadium in the D.S. parking lot, and I’m bitter. But I’m ready for it. Chavez Ravine had been a native Mexican-California neighborhood and enclave. Papa O’Malley bought the land and LA used eminent domain to build the Stadium.

      In L.A., memories are buried.

  6. bobulated - Jun 20, 2011 at 5:54 PM

    Maybe they can use the All-Star Game to settle this.

    • thekcubrats - Jun 20, 2011 at 6:01 PM

      Best. Comment. Ever.

      • chomsky66 - Jun 20, 2011 at 6:03 PM

        +1. I’m dying here

  7. redsghost - Jun 20, 2011 at 5:57 PM

    Thank god he got the Dodgers rather than the Red Sox who he tried to purchase.

    • bobwsc - Jun 21, 2011 at 10:44 AM

      he’d have gone missing by now

  8. spudchukar - Jun 20, 2011 at 6:11 PM

    Craig, do you see this devolving into litigation over Baseball’s Anti-Trust Exemption?

    • scareduck - Jun 20, 2011 at 6:15 PM

      I doubt it does. The real threat is that it might end up with Frank threatening to go through discovery with the 29 other clubs’ books in a countersuit.

      • paperlions - Jun 20, 2011 at 8:36 PM

        Which would be fantastic for the fans. It is easy for people to call players greedy, we know exactly what they make….many would be shocked at the machinations owners use to hide profits and avoid paying taxes….there is a lot in there that the owners never want to see the light of day.

    • Roger Moore - Jun 21, 2011 at 11:14 AM

      The anti-trust exemption is not going to be overturned by the courts. Ain’t going to happen. There are two reasons:

      1) The Supreme Court has already ruled on the issue. They ruled quite specifically and with good legal argument that overturning the anti-trust exemption would be a wrong ruling; applying anti-trust law to MLB must happen legislatively. A legislative change would only apply to future actions, while a court ruling would apply retroactively to things MLB did in the good faith belief that they were legal. The courts hate doing that kind of thing, so the chances are basically nil.

      2) The Curt Flood act removed the anti-trust exemption specifically for labor matters. A specific legislative application of anti-trust principles to one part of MLB’s business implies that the rest of the business is exempt*. If Congress chooses to exempt most of MLB’s business from anti-trust law, the Supreme Court can’t reasonably decide to overrule that decision. It’s certainly unlikely to decide to extend the reach of anti-trust law by fiat given the current composition of the court.

      *This is the original meaning of “the exception proves the rule”. If Congress passes a law saying “anti-trust law applies to MLB labor matters”, that proves the opposite- anti-trust law does not apply- to the rest of MLB’s business.

  9. cosanostra71 - Jun 20, 2011 at 6:16 PM

    gotta feel bad for the Dodgers right now… McCourt is just a slimeball.

  10. jsally430 - Jun 20, 2011 at 7:13 PM

    And they won’t let mark cuban a mlb team owner???anyone else see that being a screwed up situation

    • jimbo1949 - Jun 20, 2011 at 7:41 PM

      They’re afraid of Cuban’s adverse publicity……..BWAAAHAHAHAHAHAHA.

      • FC - Jun 21, 2011 at 12:24 PM

        He’s got to be a media Darling by now, his Dallas Mavericks toppled “King” LeBron and the hated Heat.

  11. koufaxmitzvah - Jun 20, 2011 at 7:25 PM

    Added motivation to finish building the WayBack Machine(TM) and get City Council to pull their heads out of their asses in order to allow Peter O’Malley the rights to build his Stadium.

  12. visnovsky - Jun 20, 2011 at 7:44 PM

    So move the Dodgers to NY to play in Citi Field and New Yankee on Yankee and Met off days. See how long McCourt can last without revenue stream from Dodger games. I bet 1 season and he would be completely penniless and bankrupt.

  13. scatterbrian - Jun 20, 2011 at 8:04 PM

    “Letting in clearly unqualified owners with questionable motives is something that never should have occurred, but which in any event needs to end now.”

    A’s fans agree!

  14. lanflfan - Jun 20, 2011 at 8:05 PM

    Slimebucket McCourt can use whatever tricks he wants, but MLB will take control sooner rather than later. And I would have to imagine MLB’s has far more financial leverage then McCourt does. And I don’t buy that the individual sham companies could stand on their own. Without each other working together, they make no sense. Thus, he can make all the pretty little sham companies he wants, his little ploy won’t work.

    MLB needs to find a skeleton in his closet and shake it loose.

    • adenzeno - Jun 21, 2011 at 7:46 AM

      The skeleton is divorcing him…

  15. wrg885 - Jun 21, 2011 at 9:22 AM

    “….so let us not weep too much for Major League Baseball here.”
    No. This shouldn’t be about Selig, McCourt, McCourt, or MLB as a whole. This is about the LA Dodgers and it’s fans. THAT is what the weeping should be/is for.

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