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SBD/Issue 244/FranchisesPrint All
Accountants Says McCourts Would Only Get
10 Cents On The Dollar If Dodgers Sold Today
Since buying the Dodgers for $430M in '04, Frank McCourt has "so heavily leveraged the team -- $433 million in debt as of last year -- that he has struggled to find additional financing," according to Shaikin & Reckard of the L.A. TIMES. The debt load has "limited how the Dodgers can pay their players and could affect the team's ability to sign talent." Documents filed in his ongoing divorce case with his estranged wife, Jamie, reveal that Frank was "turned down at least three times -- by Citibank, by a Chinese investment group and by a Southern California infomercial king -- in trying to secure additional financing last year." The documents also show that under McCourt ownership, the Dodgers' revenue has "nearly doubled -- from $156 million in 2003 to $286 million last year." Raman Sain, a Principal at accounting firm Holthouse Carlin & Van Trigt, calculated that the Dodgers had $29M in "free cash before debt service last year and said virtually all of it went toward interest payments, hampering the team's ability to acquire players." In response, McCourt spokesperson Steve Sugerman said in a statement, "There's a commitment to winning, and that continues." HCVT concluded after its analysis that if the Dodgers "were sold today and the McCourts were to split the proceeds, the debt and tax burdens would be so great that each of the McCourts might walk away with about 10 cents on the dollar." If Frank McCourt retains control, however, the Dodgers "could get an immediate cash infusion from Fox Sports." The Dodgers' TV deal with Fox Sports expires in '13, but sources indicated that McCourt has "discussed a long-term extension with Fox, in which he would abandon the plan for a Dodgers channel in exchange for a front-loaded deal that could significantly increase the Dodgers' annual revenue from television rights" (L.A. TIMES, 9/2).
BLUE MAN GROUP: The L.A. TIMES' Shaikin & Reckard report in his search for additional investment, Frank McCourt offered to Guthy-Renker co-Founder Bill Guthy an "array of enticements: game tickets, preferred parking, employee discounts on team merchandise, invitations to news conferences" and a Championship Ring if the team wins the World Series. McCourt proposed a deal in which he "would receive $25 million right away," and then would have "five years to either pay the money back, with interest, or convert the loan into a tiny share of team ownership." Guthy "rejected McCourt's overtures." McCourt in a court deposition said Guthy told him he would prefer "less risky investments" (L.A. TIMES, 9/2).
ON THE STAND: In L.A., Hall & Shaikin report Frank McCourt took the stand again yesterday, revealing that he "planned to substantially cut the Dodgers' player payroll during his first two years of ownership in order to help restore the team's profitability." Frank also testified that he was "willing in 2008 to consider a new legal agreement that would have made Jamie a co-owner of the team." David Boies, one of Jamie McCourt's attorneys, presented additional evidence that "Frank considered Jamie a partner in the Dodgers, including two bank loan applications listing her as an owner." Regarding the couple's purchase of the Dodgers, Boies asked Frank if Jamie was a "key member of the acquisition team." Frank said, "Yes, sir, she was." Hall & Shaikin note during his testimony, Frank "spoke in a voice so soft he could sometimes barely be heard." He was "polite and unflinching under hours of questioning." But he "treated most every question on the issue of the marital property agreement like a hot potato that he couldn't bear to bite" (L.A. TIMES, 9/2). Also in L.A., T.J. Simers writes, "The media, who haven't spent a lot of time being put off by McCourt, think he appears nervous. But I'm not sure McCourt has ever appeared comfortable, his blinking eyes, stiff demeanor and jaw flexing exercises appearing when all he has to say is 'hi'" (L.A. TIMES, 9/2).
COURT OF PUBLIC OPINION: L.A. Times columnist Bill Plaschke said "fans are starting to stay away from the stadium in droves," and they are "absolutely upset and sick of the McCourts." Plaschke: "People, frankly, wouldn't even give a darn except because of all the money the McCourts are spending on their lavish lifestyle, which in turn leads to these lavish lawyers and all this divorce stuff, they haven't been able to buy a relief (or starting) pitcher. … The fans are really down on the McCourts." ESPN's Buster Olney added, "Baseball wants the McCourts to sell this team. I had one high-ranking executive say to me the Dodgers right now are our biggest embarrassment and we're hoping this changes very quickly." Fox Sports' Ken Rosenthal: "This whole situation is extremely embarrassing to the sport" ("Outside The Lines," ESPN, 9/1).
Investment Banker Hulsizer
Identified As Coyotes Bidder
PEAK6 Investments CEO Matthew Hulsizer is “in the final stages of negotiating a new arena lease agreement with the City of Glendale after which Hulsizer is expected to make an offer to purchase the Coyotes from the NHL,” according to sources cited by Scott Burnside of ESPN.com. The “emergence of the Chicago-based financier and former collegiate hockey player comes at a time when negotiations between” Ice Edge Holdings and Glendale city officials “have stalled.” Sources contend that Hulsizer may represent the "last, best chance to keep” the Coyotes in Arizona. It is “unknown what role the Ice Edge Group will play as negotiations between Hulsizer and the City of Glendale proceed." But there is a “likelihood some members of the Ice Edge group will stay on as minority investors and/or in some sort of operations role if Hulsizer is successful in purchasing the team.” Ice Edge also could “move on to invest in another NHL franchise.” Ice Edge CEO Keith McCullough in a statement earlier this week said, “An announcement could happen soon (in Arizona). If this occurs, we expect to continue to be involved with the Coyotes as an adviser for the foreseeable future” (ESPN.com, 9/1). In Winnipeg, Gary Lawless writes Hulsizer is "reported to have deep pockets and the ability to purchase the Coyotes for the expected $170-million the NHL will demand.” Glendale officials “would not confirm Hulsizer’s interest” (WINNIPEG FREE PRESS, 9/2).
Jamison Will Remain Head
Of Sharks Foundation
Sharks President & CEO Greg Jamison yesterday announced that he is stepping down from his position and the day-to-day operations of the team on Oct. 1. The process of finding a replacement will begin shortly. Jamison will remain a member of the ownership group and will stay active in his position as Sharks Foundation President. Jamison was named President in '96 and has overseen day-to-day business operations for the team and Silicon Valley Sports & Entertainment (Sharks). Jamison yesterday "ruled out health issues or the need to spend more time with his family ... as the reasons behind the move," instead stressing that the "timing of his decision has more to do with the fact he turned 60 on June 15." In San Jose, David Pollak notes the search for Jamison's successor will "include in-house candidates as well as outsiders." The Sharks are "considered one of the NHL's model franchises in a nontraditional market, reaching the playoffs 11 of the past 13 years while playing before capacity crowds." In addition, HP Pavilion "consistently has ranked among the top five North American venues based on ticket sales for non sporting-related events." Despite that, Jamison each season has said that the "team has not turned a profit," and yesterday noted that "also was the case" in '09-10. He added, "I think everybody's comfortable with it. ... But I do think as we move forward, there's going to be great hope and belief in a new collective bargaining agreement that might have a more positive impact" (SAN JOSE MERCURY NEWS, 9/2). COMCAST SPORTSNET's Ray Ratto wrote Jamison's "legacy is mixed, more to the good than the bad." Most of the "on-ice performance is not really his doing, except insofar that he didn’t meddle unduly in the day-to-day operation of the hockey department, and in any event, he was the arena guy" (CSNBAYAREA.com, 9/1).
WHAT'S NEXT? Jamison said of stepping down, "It's one of those decisions that I've been thinking about for a while. I had a conversation with a couple of the other owners about it and just felt like it really was the time for me to step back." He added, “I'm not retiring. I'm kind of taking a break and trying to decide what's next and where do I go from here. ... I don’t know what the future holds. I love professional sports. That could be part of the future down the road. There could be something that comes along at a collegiate level -- teaching or what have you." Jamison added, “I think the league is headed in the right direction. I think for all the individual teams there will probably be some improvements in the CBA, but I also think that its something that I would enjoy working on. If that can stay in the cards I would continue to pursue that" ("Chronicle Live," Comcast SportsNet Bay Area, 9/1).
The Grizzlies yesterday launched a “full-court billboard campaign” as the team “attempts to generate more enthusiasm for the upcoming season,” according to Ronald Tillery of the Memphis COMMERCIAL APPEAL. The team unveiled "more than 80 billboards" in several states, including Tennessee, Mississippi and Arkansas, featuring "action shots of players instead of the customary stoic poses." More than 40 of the billboards will carry “We believe …” mottos, including “We believe in the name on the front of the jersey” and “We believe underdogs bite harder.” Grizzlies Senior Dir of Marketing Communications John Pugliese said, “We started out with an aggressive television campaign that is fun. ... Our ad campaign will start to shift to a focus on our players and coaches. We know we’ll have something special on the court this season.” The campaign was created by Red Deluxe, Memphis. Meanwhile, Grizzlies officials also reported that “season ticket renewals and new sales are on pace for a” 20-25% increase from last year’s totals. Pugliese declined to discuss specific numbers but said that “group sales are exceeding last year’s numbers as well” (Memphis COMMERCIAL APPEAL, 9/2).