Why Frank and Jamie Mccourt Ruined the Los Angeles Dodgers
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Why Frank & Jamie McCourt Ruined the Los Angeles Dodgers
Abstract
Frank and Jaime McCourt purchased the Los Angeles Dodgers from Rupert Murdoch and the Fox Entertainment Group in 2004 for $421 Million dollars. Five years later Frank fires his wife Jaime as CEO of the team, and five days after that Jaime files for divorce from Frank. Two years later Frank is forced to file for chapter 11bankruptcy to protect the team and him during his pending divorce, and dirt hits the fan about the McCourt’s using the money made from the team to buy houses, private jets, etc. Now the Dodgers are looking for a new owner to bring the team back to life and bring the fans back into the seats. This paper will break down the demise of the Los Angeles Dodgers and its owners Frank and Jaime McCourt.
Why Frank McCourt Ruined the Los Angeles Dodgers
The Dodgers franchise goes all the way back to the late 1800’s. Dodgers.com (2012) breaks down the history of the franchise, which officially started 1890 when Ferdinand Abell started what is now the eighth oldest franchise in Major League Baseball history named the Brooklyn Bridegroom, which later became the well-known Brooklyn Dodgers. In 1958, the owner Walter O’Malley decided to move the team from Brooklyn to Los Angeles. Walter was the sixth owner of the team. He passed away after owning the team for twenty-seven years. His son Peter took over ownership and kept the team for another nineteen years before selling it. It was under the ownership of the O’Malley’s when the team won all six of their world championships.
In 1998 Peter O’Malley sold the team to Rupert Murdoch and the Fox Entertainment Group. It was at this point the team started to decline. Murdoch wanted to take complete ownership by basically getting rid of the team that Peter O’Malley built, by trading away franchise players and signed free agents who were well beyond their prime. This team never thrived, not once making the playoffs. In 2004, after six years of owning the team, Rupert Murdoch decided it was time to sell the Los Angeles Dodgers. The highest bidder were little known Boston real estate developers named Frank and Jaime McCourt. Frank and Jaime loved baseball, “Frank’s grandfather had been a part owner of the Boston Braves, and Jamie, a Baltimore Orioles fan and a jock in school, has claimed that when she was nine years old she told her parents she would be a baseball owner someday” (Grigoriadis, 2011, para. 12).
The McCourt’s purchased the team for $421 million dollars. Little did we know they purchased the team without paying any cash upfront. The McCourt’s had land and secured loans various entities. Fisher (2009) broke down how Frank and Jaime funded the purchase of the team. $150 million came from a commercial loan from Bank of America. $125 million came from the seller Fox Entertainment Group. The conditions on this loan included land in which the McCourt’s owned in Boston. If the McCourt’s defaulted on the loan, Fox would take the land, $75 million from Major League Baseball, and two separate loans of $40 and $31 million from Fox Entertainment Group. Yet seven years later this great franchise would file for bankruptcy because of the owner’s spending spree with the teams money.
The Good Frank and Jaime McCourt did for the organization
Frank and Jaime took over a franchise, which failed to reach the National League Championship Series, or even win a postseason game in the previous fifteen years. In their first season as owners, the team won their division and made the postseason for the first time in seven years. Even more impressive, the team won their first postseason game in fifteen years. They eventually lost the series to the St. Louis Cardinals. The team won back-to-back division titles in 2008 and 2009 and won their first round postseason series, both against the Chicago Cubs. Both years the team ended up losing to the Philadelphia Phillies in the National League Championship Series.
The way the McCourt’s built a winning team was pretty impressive. They showed they believed in the utilitarianism theory, where the greatest good means the greatest happiness. Prior to the Fox Entertainment Group, this organization was an organization, which didn’t rely on signing big name free agents, or trading away their minor league roster for an all-star player. The McCourt’s wanted to run the team similar to the way the organization did when the O’Malley’s owned the team. The O’Malley’s relied on the philosophy of drafting and developing players. It was such a success in the ninety’s when the team set a major league record with five straight rookie of the year winners. Four of them were players they had drafted and/or developed through their minor league system, the other player was signed from Japan.
When the Fox Entertainment Group owned the team, they went away from that philosophy and spent money on big name players, and trading away their franchise players as well as part of their minor league system. Murdoch was a believer of Immanuel Kant’s philosophy; his motivation to improve the team was the right thing to do by any means necessary. They thought they were doing the right thing by bringing more than one big name player. Little did they know, it caused problems in the clubhouse and even more problems when players would get hurt and the team didn’t have sufficient back up players on the roster to help keep the team winning.
Because of the mess the Fox Entertainment Group left behind, Frank and Jaime made it a point to refocus the direction of the team back to building the team from within the organization. Their goal was to develop players in the minor leagues to become big contributors to the team. That’s what the team did, with a few players who have become some of the biggest names in baseball today. Players like the 2011 Most Valuable Player runner up Matt Kemp, all-star Andre Either, 2011 Cy Young Award winner Clayton Kershaw, and this season is projected to be the break out year for Dee Gordon, the teams starting shortstop.
Shortly after the McCourt’s took over the organization, they decided to renovate the aging Dodger Stadium. “Recent improvements include replacing all of the seats in the stadium bowl; installing a new playing surface, including drainage improvements; renovating concourses with new and expanded concessions and other amenities; reconfiguring the parking lots to improve traffic flow (including a new transportation center); doubling the size of the Dugout Club; renovating the Stadium Club; creating two new Baseline Box Clubs; making significant upgrades to the video in-game experience; and completing numerous structural and voluntary seismic upgrades”(dodgers.com, 2012, para. 5 ). With the combination of the on the field team’s success and the renovations of Dodger Stadium, the fans started coming out in record numbers, averaging 3,587,102 fans per year. (See Table 1.)
In 2009, The McCourt’s brought a major change to the organization. For the 60 years, from 1948 to 2008 the organization called Vero Beach, FL their home for Spring Training. McCourt opened a new state-of-the-art training facility in Glendale, AZ, called Camelback Ranch. The McCourt’s brought the spring training home closer to California. It gave Dodgers fans on the west coast a chance to actually go and watch the team during spring training.
Frank and Jaime did a great job in portraying that they truly cared about the team and the fans. They made sure “the good” got out to the media and the public. They made the right speeches about how they were going to bring the “Dodger Tradition” back, which caught the attention of the fans. With an aging stadium the renovations were a must. Although they didn’t get everything done they wanted to. I have to admit, it is a much nicer ballpark then it was in the 80’s and 90’s. Risling (2011) reported in an article, that financially “the team’s revenue nearly doubled under their management from $156 million in 2004 to $290 million in 2009” (para. 19). Thank you Frank and Jamie McCourt.
When the Funk hit the Fan
Fox Sports.com (2011) shared a timeline of events that lead to the “funk hitting the fan”. The date was October 14, 2009; the Dodgers were on the verge of playing the Philadelphia Phillies in the National League Championship Series. Frank and Jamie announce they are separating. The reason for the separation was a little foggy but speculation was that Jamie was having an affair with her personal driver. To this day this hasn’t been confirmed. The day after the separation was announced, Jamie announces that despite her and Frank’s separation, she still plans on owning the team and continue to be the CEO of the team. Seven days after the separation announcement, Frank fires Jamie as CEO, causing uproar with her and the team. That very same day, October 21, the team is eliminated from the postseason by the Phillies. Six days later Jaime officially filed for divorce.
In the divorce filing she asked for half the team and asked to be reinstated as the teams’ CEO. It was clear her goal was to wipe out Frank. She asked “the court to order Frank McCourt to pay her more than $320,000 per month in spousal support if she is reinstated as the Dodgers’ CEO and $487,000 per month if she is not” (foxsports.com, 2011). Later the court denied her request to be reinstated as CEO but didn’t rule out her ownership stake.
As the next season came around, “the Los Angeles Superior Court orders that Frank McCourt pay Jamie just over $637,000 a month. The total is broken down as $225,000 in temporary spousal support and $412,159 to pay mortgages on the couple’s properties” (foxsports.com, 2011). This ruling was made until the official divorce trial began. It was also around that same time the team got word that their slugger Manny Ramirez had failed a drug test and would miss 50 games. Nothing but bad news for the organization, as the team struggled throughout the season, failing to make the postseason that season, and the McCourt divorce trial began.
The Dodgers Paid for that too! It all seemed to be going great. The McCourt’s worked hard to put a great team on the field. The team was competitive, and fans were coming to Dodger Stadium to support the team in record numbers (Table 1). Little did we know what was really going on off the field, and behind the scenes was the issue. The McCourt’s lavish lifestyle had eventually caught up to them, causing them to get a divorce, and forcing Frank to file for chapter 11-bankruptcy protection. This all eventually led to Frank McCourt putting the team up for sale. When Frank and Jaime bought the team, Frank as the chairman “received up to $5 million annually from one or more businesses affiliated with the Dodgers” (Behrendt, 2011, Fisher, 2011, para. 11). Jaime became the vice chairman, CEO, and President of the Dodgers organization, and made up to $2 million a year (Behrendt, 2011, Fisher, 2011, para. 11). Their lavish lifestyle didn’t become public until the divorce documents became available. Not only did that have their salaries, they put two of their sons on payroll, each receiving $600,000 a year. The messy part about that is, one son is a student at Stanford, and the other son worked full time at Goldman Sachs (Risling, 2011).
It all really started once they moved from Boston to Southern California. “They bought a pair of homes next to each other near the Playboy Mansion and another two in Malibu at a total cost of more than $70 million” (Risling, 2011, para. 8). It’s puzzling how they could afford more than one home after purchasing a team for $421 million dollars. Were they stashing cash in an off shore account or did they do like they did with the team and finance it with multiple loans. They have four sons, were the other three homes for them? The answer was no. The McCourt’s had a no limit lifestyle. Frank was a firm believer of loans and using collateral to get what he wanted. The houses weren’t customized enough for them. According to Risling (2011) McCourt spent “$14 million to rip out tennis courts for an indoor, Olympic-size swimming pool at one of the homes – McCourt has said he took out $60 million (part of the $108 million) on the land around Dodger Stadium to pay down the mortgages.”
Their lavish lifestyles at the expense of the Los Angeles Dodgers included purchasing vacation properties, a $225,000 monthly lease for a private jet, private drivers, a $10,000 per month private hairdresser for Jaime, a personal clothing allowance for both Frank and Jaime, and a personal makeup artist (Risling, 2011). In my opinion that is ridiculous. These are perks I see people like Donald Trump, or the presidential family having.
The Divorce
August 30, 2010 marked the official beginning of the divorce trial between Frank and Jamie McCourt in downtown Los Angeles. During the trial the two parties would fight over who owned the team and all the real estate properties. The battle lasted a year and two months, with Frank and Jamie agreeing to a settlement. Jamie would receive the properties and she agreed to give up her part of the ownership if Frank would put the team up for sale and he would pay her $131 million dollars by a set date in 2012.
The divorce trial brought out all the wrong doings the McCourt’s had done as owners of the team. Once word got out about this, The Dodgers home attendance suffered too. “the Dodgers’ tickets sold for the season finished at 2,935,139 – the first time in 16 years they’ve been under 3 million. Official attendance was down a major-league worst 627,181 from the previous season. With a final season average of 36,236, they averaged 7,743 fewer tickets sold per game compared to 2010” (Dilbeck, 2011, para. 3). Fans started to stay home and watch the games instead of going to the games. Fans did not want to support a team owner who made money by not only purchasing tickets, but also by paying for parking and purchasing concessions.
Chapter 11 Bankruptcy
With all the financial woes coming to the surface, Frank McCourt was in danger of losing the team due to not making payroll obligations to the team. At this point I think he finally realized he had put the team in a financial funk. At this point Major League Baseball Commissioner Bud Selig tried to force the McCourt’s out as owners of the team. The 2011 season was a year where the Dodgers organization was “obligated to pay $92.5 million in guaranteed player contracts, not including signing bonuses, and the team has nearly 300 full-time employees” (Jackson, 2011, Stark, 2011, AP, 2011, para. 13). Of the $92.5 million, about $75 million was owed to former Dodgers players, current players, announcers, and the Chicago White Sox, who share the spring training facility in Arizona (Jackson, 2011, Stark, 2011, AP, 2011, para. 16).
Frank went seeking for financial help a made a tentative television deal with Fox. “The deal, which is estimated to be worth up to $3 billion, included a $358 million loan intended to get the McCourts out of financial trouble” (Heyman, 2011, para. 2). But Bud Selig was fed up with how the McCourt’s were putting the team into more debt, rejected this deal. Bud Selig was quoted saying, “Mr. McCourt had 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 the Dodgers assets for the personal needs of Mr. McCourt” (Heyman, 2011, para 3). Because of Selig’s decision to reject the television deal, Frank decided to place the team into bankruptcy protection by filing for Chapter 11 bankruptcy. The bankruptcy guaranteed the team would make payroll. But left the team in more financial trouble.
A Fans Prospective
As a fan I was quite happy when Rupert Murdoch and the Fox Entertainment Group sold the team. Although I had no idea who Frank and Jaime McCourt were at the time, but I quickly became a believer in their ownership. Growing up a Dodgers fan, I believed in the way the O’Malley’s ran the team. They made the right trades at the right time. They signed the right players who could contribute to the team now, and last but not least they truly believed in their minor league system.
I was a torn when Peter O’Malley put the team up for sale. I thought he was being selfish in selling an organization that’s been in his family for over forty years. The news about him selling the team because the city council denied O’Malley’s bid to build a football stadium next door to Dodger Stadium made sense to me. He wanted to bring a football team back to Los Angeles. At that time it had only been two years since the Rams left town for St. Louis. I understood why he did it and was sad that he gave up the franchise. On the other hand I was very happy he didn’t do what the Rams and Raiders did and move out of town.
Once Rupert Murdoch and the Fox Entertainment Group bought the team, they came in with the right attitude but used the wrong methods. Fox intended “to make the Dodgers the dominant team of the first decade of the 21st century” (McNeil, 2003). They shocked the world and especially the fans when Murdoch traded the franchise player Mike Piazza for disgruntled superstar Gary Sheffield in a bizarre seven-player trade. He wasn’t done yet; he fired the manager and the general manager and made at least three more major trades that really messed with the team’s chemistry. In the off-season he continued to make moves. He made a big splash by signing the biggest free agent pitcher in baseball, Kevin Brown. He was a major upgrade to the pitching staff but at the age of 34 we knew he didn’t have that much left in the tank. Why the Dodgers signed him to a 7 year, $105 million dollar contract still remains a mystery. They traded him in 2003. Under his ownership his best season was in 2002, when the team won the most games since 1991.
I hardly went to any dodger games until 2008. This was during the McCourt regime. I purchased a ticket package when I heard the news of the team trading for Manny Ramirez. His immediate splash brought excitement in my family. That season my family and I went to 12 games, all after the acquisition of Ramirez. Not only did I start coming to the games but that season was and the next season were the teams best. I was excited about Dodgers baseball again.
I started questioning the decisions of McCourt when he decided to give Manny a crazy $45 million dollar deal for two years. Yes, he was a great player, but he was old and the decision to resign him to a ridiculous deal. Once the contract was signed, that next year he would get hurt and the following year he would get suspended for failing a drug test. That hurt the team and me because when he was suspended, the team failed to respond.
Once the news about the divorce came out I just like a lot of fans, decided to boycott going to home games. That was hard for me to do. The only time I went to a game was when they played in Anaheim to play the Angels. I didn’t like what McCourt was about and refused to support his habits.
When he agreed to sell the team I didn’t know how to react. At first I was happy but sad at the same time because of the news that he would sell the team but keep the stadium and parking lot. That means he would rent the stadium to the team and still get money from fans that came to see the team play.
Conclusion
What Frank & Jamie McCourt did to the Los Angeles Dodgers was unethical. I really thought they cared about the fans and the organization. Boy did they fool us. It was all about their lifestyle and how much money they could spend on themselves. Luckily for us they really put themselves in a bind. They lived the lifestyle of wealthy people yet at the expensive of the Los Angeles Dodgers.
With the news this week of Frank McCourt agreeing to sell the team to the group led my Los Angeles Lakers’ legend, Earvin “Magic” Johnson. Fans can breath again. This deal brings Justice to the situation. This deal brings justice for the fans and the organization. On the other hand the deal brings an injustice for Frank McCourt. Justice is the virtue of giving people exactly what they deserve, neither more or less. It is the golden mean between two forms of injustice: either giving them less than they deserve, or giving them more than they deserve. Justice has been served, although I believe the price tag is outrageous. $2.1 Billion is a lot of money to purchase a team from an owner who doesn’t deserve a penny.
After watching news reports about the deal, I have to say, Frank McCourt is a lucky man. He acted like a stock broker, and bought low and sold high. He will end up pocketing over $1 Billion dollars. He only has to pay his estranged wife $131 Million and the all the debt he accumulated as the owner will be paid off. Just to top it off. Frank will still get half of the revenue from the use of the parking lot at Dodger Stadium.
I really learned a lot about Frank and Jaime McCourt. Hopefully with all the “money laundering” they did the new ownership will fix it and do things the right way. By putting a competitive team on the field that will bring back the fans to Dodger Stadium. And once again make this franchise a top tier franchise in baseball. References Baseball Almanac. (n.d.).Baseball Almanac. Almanac. Retrieved March 28, 2012, from http://www.baseball-almanac.com/teams/laatte.shtml Behrendt, L., & Fisher, J. (2011, June 21). Frank McCourt Must Go. Frank McCourt Must Go. Retrieved March 28, 2012, from http://itsaboutthemoney.net/archives/2011/06/21/commissioner-selig-frank-mccourt-must-go-a-petition/ Dodger blue bloods: McCourts’ lifestyle hurt team - USATODAY.com. (2011, May 27).USATODAY.COM. Retrieved from http://www.usatoday.com/sports/baseball/nl/2011-05-27-664674472_x.htm Dodger Takeover: Frank And Jamie McCourt’s Lavish Lifestyle Jeopardizes The Dodgers. (2011, May 27). Retrieved March 29, 2012, from http://www.huffingtonpost.com/2011/05/27/dodger-takeover-frank-and_n_868286.html Dodgers All-Time Owners. (n.d.).Los Angeles Dodgers. Retrieved March 29, 2012, from http://losangeles.dodgers.mlb.com/la/history/owners.jsp Dodgers file for bankruptcy after failed TV deal. (2011, June 28).ESPN.com. Retrieved from http://sports.espn.go.com/los-angeles/mlb/news/story?id=6708046 Dodgers’ 2011 home attendance: Down 627,181. (2011, September 23). Retrieved from http://latimesblogs.latimes.com/dodgers/2011/09/dodgers-2011-home-attendance-down.html Fisher, J. (2009, November 2). Dodger Divorce. How the McCourts came to own the Dodgers. Blog. Retrieved from http://www.dodgerdivorce.com/2009/11/how-mccourts-came-to-own-dodgers.html Frank and Jamie McCourt timeline. (2011, April 20).FOX Sports. Retrieved March 29, 2012, from http://msn.foxsports.com/mlb/story/Los-Angeles-Dodgers-Frank-McCourt-Jamie-McCourt-timeline-042011 Frank H. McCourt, Jr. Owner and Chairman. (n.d.).Frank H. McCourt, Jr. Owner and Chairman. Retrieved March 28, 2012, from http://losangeles.dodgers.mlb.com/la/community/executives/fmccourt.html Grigoriadis, V. (2011, August 1). A Major-League Divorce. Vanity Fair, (August). Retrieved from http://www.vanityfair.com/society/features/2011/08/mccourt-divorce-201108 Heyman, J. (2011, June 20). Selig rejects McCourt’s deal with Fox TV. Si.com. Retrieved March 28, 2012, from http://sportsillustrated.cnn.com/2011/baseball/mlb/06/20/mccourt.selig.fox/index.html McNeil, W. F. (2003). The Dodgers encyclopedia. [Champaign, IL]: Sports Pub.
