SBD/Issue 231/Franchises

Dodgers Charging Themselves Rent On Dodger Stadium Property

Court Filings Show Dodgers Were Charging
Themselves $14M Rent At Dodger Stadium

The Dodgers have been charging themselves rent, including $14M this year, "on Dodger Stadium property” the team owns, according to Bill Shaikin of the L.A. TIMES. The arrangement is documented in public court filings connected to the divorce between Dodgers Owner Frank McCourt and his estranged wife, Jamie. The amount of rent is “unusual in that it is far greater than what has been paid by teams with an independent landlord.” The Red Sox own their stadium like the Dodgers do, but they “pay no rent on Fenway Park.” Among teams playing in community-owned stadiums, the White Sox will pay $1.4M in rent this year and the Brewers and Mariners will each pay $900,000. The court documents show that the Dodgers “assessed themselves rent amounts far greater than any claimed expenses.” By deducting that amount "from team revenue, the team has amassed a surplus pool" of about $24M. David Boies, an attorney for Jamie McCourt, said that “at least some of that money ‘absolutely’ could have been used to improve the team.” Shaikin noted Frank McCourt in ’06 “divided the stadium property into three parcels and established Blue Land Co. to own two of them.” The Dodgers “pay rent to Blue Land, which is not involved in stadium operations.” Boies said that the rental payments “offered the McCourts the options of working around restrictions on receiving cash directly from team coffers.” Dodgers CFO Peter Wilhelm indicated that Blue Land “expects to allocate $5 million of this year’s rental fees to McCourt, about $4.5 million to debt service and about $4 million to construction managers.” Smith College sports economist Andrew Zimbalist said that the Dodgers “could have legitimate reasons for paying rent, including a loan requirement that certain revenue streams be used to pay off debt.” But he added the amount of rent the Dodgers paid was “way out of line” with the rest of the sports industry (L.A. TIMES, 8/15).

SIGN OF THE TIMES? In L.A., Kevin Baxter noted the Dodgers in June selected Zach Lee in the first round of the MLB First-Year Player Draft despite the LSU signee “telling anyone who would listen that he was more interested in playing college football then professional baseball.” Baxter: “The story raises some interesting questions. Why, for example, did the Dodgers use their precious top draft pick on a guy the rest of baseball considered unsignable?” A “popular theory says the cash-strapped Dodgers selected Lee ... because he was unlikely to sign, saving the team more than $1 million in bonus money.” But Dodgers Assistant GM/Amateur & Int'l Scouting Logan White said, “We didn’t draft anyone to go cheap.” Baseball America Executive Editor Jim Callis: “I can’t believe that they’re actually going to run their business to where you’re never going to sign the first-round picks.” But Baxter wrote no matter how the Dodgers “spend their money, it’s clear they’re not investing nearly as much in either the draft or international free-agent signings as they did in the past.” No team "has been cheaper in the draft" over the last two seasons (L.A. TIMES, 8/15).

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