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MLB: Frank McCourt looted the Dodgers of $189 million

Oct 25, 2011, 11:06 AM EDT

File photo of Frank McCourt leaving Stanley Mosk Courthouse after testifying during his divorce trial in Los Angeles

The implication from Major League Baseball has always been that Frank McCourt extracted many millions from the Dodgers, but they’ve never truly called it “looting” and they’ve never given an exact dollar figure.  Until now anyway. Bill Shaikin:

For the first time, Major League Baseball put a specific number on the amount it alleges Dodgers owner Frank McCourt took out of the team — $189.16 million — and described the distributions as “looting.”

Given how ugly this has all gotten — both MLB and McCourt are using Bryan Stow in arguments to show the other side’s mismanagement or shamelessness — I’m surprised it took this long.

Of course, given that there are likely several other clubs which the owners use as personal piggy banks, I can see why MLB would be loathe to make this all sound so stark.  Only difference is that McCourt’s use was likely larger in scale and, unlike the other owners’, was unable to be managed within the team’s budget.

Preliminary hearings are now over.  Next week Bud Selig and Frank McCourt take the stand in a multi-day trial.

  1. vanmorrissey - Oct 25, 2011 at 11:24 AM

    Wow, like wow.

  2. halladaysbiceps - Oct 25, 2011 at 11:36 AM

    I’m sorry, but no one has convinced me that this man “stole” or “looted” any money from a team that he clearly owns. He OWNS the team. Did he mismanage his team? Sure. There’s no doubt about that. Mismanaged his team is the proper phrase to use. Looting sounds like the guy is a criminal.

    • tomemos - Oct 25, 2011 at 11:41 AM

      Biceps, the Dodgers are a franchise. The owner of your local McDonald’s isn’t allowed to do whatever he wants with that brand to enrich himself without corporate getting involved. Neither can McCourt do that.

      By the way, does it not seem at least somewhat criminal to you that he didn’t pay taxes on most of the fabulous wealth he extracted from the team?

      • halladaysbiceps - Oct 25, 2011 at 11:49 AM

        Tax evasion is a different thing. If that’s the case, it’s the first time I’m hearing about it. Then he should be brought before a federal court and tried for tax evasion. If convicted, it’s a jail-able offense.

      • dlevalley - Oct 25, 2011 at 2:07 PM

        Yep, there’s at least rumors of an IRS investigation, as neither Frank nor Jamie paid any Federal income tax last year.

        Link: http://www.tmz.com/2011/04/20/jamie-frank-mccourt-investigated-irs-internal-revenue-service-los-angeles-dodgers-mlb-major-league-baseball-audit-tax/#.Tqb5ct77h5U

        @biceps: There’s also a fundamental principle of business that equity gets paid last. There’s nothing wrong with an owner of a business (even a ‘franchise’) taking as much profit as they can get their grubby hands on from the business.

        BUT: If the owners (equity) takes money out of the business before paying all creditors in full, that’s where things get sticky.

        The difference here is that none of the other Baseball owners are in Bankruptcy. No-one cares (except the fans) if an owner takes every dollar he can from the team. The law cares a great deal if those dollars are coming at the expense of unpaid creditors.

    • gammagammahey - Oct 25, 2011 at 12:26 PM

      If you run a company and charge personal expenses to corporate accounts, you’re essentially getting paid tax-free. If he paid himself a $50m/year salary from the team and paid taxes on it, that would be more akin to bad business practice in the name of greed.

      • henryd3rd - Oct 26, 2011 at 5:04 PM

        Bernie Ebber is currently serving a 25-year prison term at Oakdale Federal Correctional Complex in Louisiana for doing the same that at World Com; so there is a precedent for the Government getting involved.

    • cleareye1 - Oct 25, 2011 at 2:55 PM

      Yeah, it seems he won’t go to jail for what he did, but maybe we should take another look at the matter.
      Selig also has responsibility, Fox too!
      The Dodgers wer one of the finest organizations in professional sports until Fox got their hands on them. Peter O’Malley must be blamed too.
      Now we have an embarrassing situation where the fans have walked away until new ownership comes in and not even Vin Scully can get them back. What is the most disgusting element here is that Scully, in his 80s, must wind down an amazing career in the employ of such a sleazy owner.
      Hopefully, some hero will step forward and throw enough money towards McCourt that he will go away and we can get back to Dodger baseball!

    • Jeff M. - Oct 25, 2011 at 4:25 PM

      Biceps, it seems pretty clear that you do understand exactly why there’s a problem – you just don’t agree with the reasonable point of view that knowingly driving your business into the ground is a bad idea.

      Frank McCourt took money out of the team in such a way that the team was unable to properly function. He later filed for bankruptcy protection, and claimed that MLB was picking on him.

      Most reasonable people recognize that McCourt is both a very poor businessman that operates in a fairly shady way, and a person of low character. The fact that you are unwilling to admit these facts fascinates me.

      • Old Gator - Oct 25, 2011 at 8:06 PM

        “– you just don’t agree with the reasonable point of view that knowingly driving your business into the ground is a bad idea.”

        Sure he does. He says so explicitly: “Did he mismanage his team? Sure. There’s no doubt about that. Mismanaged his team is the proper phrase to use.”

      • Jeff M. - Oct 25, 2011 at 8:45 PM

        That’s a good point, Gator. I was trying to point out that if an owner knowingly deprives their baseball franchise of capital that it needs to function normally, that’s not really any different than “looting.” I obviously did a poor job explaining that, sorry.

  3. sknut - Oct 25, 2011 at 11:41 AM

    MLB could stand the first 189 million but they had it when he crossed the line and took the .16 million.

    Is there any clauses in the bylayws to be an owner that prevent this sort of thing? Or has this never been an issue.

  4. Kyle - Oct 25, 2011 at 12:06 PM

    Good lord this man is a grade-A POS.

  5. steveohho - Oct 25, 2011 at 12:11 PM

    MLB just like NFL, NBA are controlled by the owners for the owners. MLB’s own commissioner is an owner. The NFL, and NBA’s commissioners are water carriers for the owners. To accuse one owner of stealing from his team is like accusing one of stealing from his wallet. Selig made a poor decision in allowing Murdoch to sell the team to McCourt in the first place because McCourt financed the purchase mostly with debt. Maybe he liked what the purchase did for the market value of the other clubs? You reap what you sow Bud.

    • gammagammahey - Oct 25, 2011 at 12:27 PM

      Air Bud isn’t an owner anymore. The commissioner usually isn’t, he just was for a while during his term as “acting” commissioner.

  6. cur68 - Oct 25, 2011 at 12:33 PM

    “Looting”? I’m a little careful with that term. Implies taking what isn’t yours or what you’re not entitled too. More like failed in his fiduciary responsibilities as an MLB owner and enriched himself at the expense of the quality and environs of what he was selling. So not looting as such; more greed, executive incompetence, and poor personal management IMO.

    • aaronmoreno - Oct 25, 2011 at 1:11 PM

      How about embezzling?

      • cur68 - Oct 25, 2011 at 2:24 PM

        Could be, but I’m not sure, merely sating opinion. Were the funds his or not? Embezzlement pretty much = looting, doesn’t it?

      • bigharold - Oct 25, 2011 at 9:37 PM

        “How about embezzling?”

        You can’t embezzle what’s yours already.

        biceps nailed it he’s a lousy owner but to state that someone “looted” anything implies they took something that they were not entitled to. The Dodger’s are not a publicly traded company so his fiduciary responsibility pretty much ends with him. And, unless it can be proven that he took money out of the company and was intent on allowing it to fail thereby leaving his creditors holding the bag than saying that he looted the Dodgers could be considered slander which could have civil penalties. Imagine if he sued MLB and won enough money to hold onto the Dodgers? Don’t think it’s not possible. Al Davis sued the NFL and won.

        McCourt is a world class dirt bag but people representing MLB might want be more circumspect with regards to how they portray him. He’s in a deep enough hole as it is, stay out of the way and let him keep digging.

  7. jeffro33 - Oct 25, 2011 at 1:10 PM

    Sell the team deadbeat. What a total debacle to a storied franchise.

    PS – they’d have never put up with this BS in Brooklyn.

  8. roycethebaseballhack - Oct 25, 2011 at 2:39 PM

    What I think we’re seeing, based upon what I’ve read on this over the the course of the year, is McCourt being slapped down for being an idiot. A few points:
    – Even though The McCourts were highly leveraged with their purchase offer, Selig and the other owners saw a few things that likely (I have no evidence of this..), swayed them into agreeing to their purchase of The Dodgers:
    1) The Dodgers have a remarkable fan base, and what I would guess, is a healthy cash flow. Even the more pedestrian clubs in the league routinely funnel hundreds of millions in and out of the organization annually.
    2) McCourt comes from a wealthy family. Historically, wealthy families tend to teach each other how to get rich and stay that way. If your dad was a mechanic at a Chevy dealer for 25 years, I’m sure you know more than a little about what a positive traction rear end is. Even if you never wanted to know it, you likely picked up on it from the day to day exposure to your dad.

    Therefore, even though McCourt may not have had the cash Selig & Co. would have preferred, they likely thought that, being heavily leveraged, he would muster the common business sense he was either schooled with, or endeared to him by his upbringing, to run the place modestly until his debts were cleared to a manageable level.
    That was clearly not the case. Evidence suggests McCourt pillaged heavily. He likely got lost in the churn of egos and hype, glamor and whatnot, got weak, lost whatever common sense he might have had, and feel deep into the muck.

    – With the millions flowing in and out of these baseball teams, assume that a portion of the owners engage in some type of ‘skimming’, that McCourt is accused of; a house in Vail here…a Bently there…a loan to a college buddy there…it happens. It has to – there is too much money in those buckets and too few people guarding them. Masked behind a veil of secrecy, which is, by the by, firmly locked down by our buddies in Congress, they simply self-enforce their standards, try to be selective about who’s in and who’s out to minimize the collateral damage of something like this, and make their millions. Sometimes, things don’t work out that way.

    McCourt has not worked out. Selig gambled on endorsing his friend for ownership of The Dodgers, and it backfired. As hard as McCourt will try to litigate his way out of this, he has no chance; MLB, and the owners have too much at stake to let his dreck ooze any further beyond the boundaries its surpassed. Some owners pillage their coffers. The League likely finds out about it, but, unless it starts to contaminate the value of a brand, like, say, The Los Angeles Dodgers, they take care of it themselves, and go on about their business.
    Sadly, McCourt surpassed boundaries that average wonks like us never see. Once that happens, once one of these rich guys exceed unwritten limits of behavior, the very machine that sustains them starts to eat them alive. The MLB machine will be spitting out McCourt’s corpse in due time.

  9. cleareye1 - Oct 25, 2011 at 3:01 PM

    It’s a shame that all of this had to happen to such a nice couple.

  10. jraggio - Oct 25, 2011 at 7:35 PM

    He owns the team people!!!!! If he wants to take money out of the team he can….he owns it. It does not say anywhere you are not allowed to make money when you own a sports team. MLB aka Selig just does not like him He is not a Selig GUY. Look how long it is taking MLB (Selig) to approve the sale of Houston. Again because the high bidder is not a Selig GUY.

  11. lanflfan - Oct 25, 2011 at 11:40 PM

    Those who defend Frank McCourt or believe owners have the right to take money out of a franchise to the detriment of said franchise answer me this:

    Would you want Frank McCourt to own your favorite team?

    • Old Gator - Oct 25, 2011 at 11:58 PM

      Those are two completely different issues. You might not want someone like McCourt to own your rooting interest, but that has no bearing on whether or not he is entitled to take his money out of a business that he owns. That’s a legal issue that bears on his contractual obligations to the rest of MLB, not on his relationship with his customers.

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