SBD/December 8, 2010/Franchises

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  • Court Ruling Proclaims Jamie McCourt Co-Owner Of Dodgers

    Jamie McCourt Has Been Working To Line Up Potential Investors For More Than A Year

    Dodgers Owner Frank McCourt "lost a critical round in his effort to maintain control of the Dodgers on Tuesday, when a judge invalidated an agreement that would have provided him with sole control" of the team, according to Shaikin & Hall of the L.A. TIMES. L.A. Superior Court Judge Scott Gordon yesterday "threw out the marital property agreement" at the center of Frank's divorce from his estranged wife, Jamie, "because it did not conform to California law." Jamie's attorneys "proclaimed her a co-owner of the team and hinted that she might soon challenge her ex-husband to sell the Dodgers to her and other investors," though Frank's attorneys "pledged to fight another round in court." Frank's attorneys said that yesterday's ruling "conferred no ownership rights upon Jamie and would simply force Frank to use another legal means to establish the team as his sole property." The ruling is "not expected to have an immediate impact on the day-to-day operations of the team," though the Dodgers "could be in legal limbo for several more years." Sorrell Trope, an attorney for Frank, said that his client "has not decided whether to appeal Tuesday's ruling." Trope added that Frank "would move for a second trial in which he would claim the Dodgers are his sole property because he bought them using a company formed before marriage." David Boies, one of Jamie's attorneys, said that she "has no plans to involve herself in the daily operation of the club." She has worked with former Goldman Sachs Managing Dir Joe Ravitch "for more than a year to line up potential investors" (L.A. TIMES, 12/8).

    UNCERTAIN FUTURE: USA TODAY's David Leon Moore writes Jamie was the "clear legal winner" in yesterday's ruling, but "what that means about the future of the club is anything but clear, and it could be unclear for years." Marc Seltzer, one of Frank's lawyers, said that he "would not sell." Seltzer: "Frank is certainly open to settlement talks, as he has been all along, but he has no interest in selling the team. The Dodgers are not for sale" (USA TODAY, 12/8). FANHOUSE.com's Jon Weinbach noted one "possible settlement option would be for Frank to pay Jamie off with an infusion of cash from Fox Sports Networks, which owns the Dodgers' TV rights and whose contract with the club expires after the 2013 season." An "extension from Fox -- with a large upfront payment -- would scuttle the McCourts' plans to create a Dodgers-centered regional sports network, but it would also help defray the McCourts' massive debts on the club and pave the way to a settlement" (FANHOUSE.com, 12/7). In L.A., Bill Plaschke writes, "Pending the remote chance of a successful appeal, or even more distant chance that somebody will pony up the money to allow one party to buy out the other one, the Dodgers are expected to go on sale. ... It might not happen until after the appeal process is completed, but within the next couple of years, it's going to happen" (L.A. TIMES, 12/8). SportsCorp President Marc Ganis: "This is a mess. You don't know who's going to run and own the team, how long it will take, and how much the Dodgers will be devalued" (N.Y. TIMES, 12/8). YAHOO SPORTS' Tim Brown wrote, "The city, its ballclub and its fans sit in limbo. Like yesterday. Like tomorrow" (SPORTS.YAHOO.com, 12/7).

    BUSINESS AS USUAL: Dodgers GM Ned Colletti yesterday at MLB's Winter Meetings "acted as if nothing was wrong." He "has said at every turn that the latest development in the legal case wouldn't impede his ability to assemble a contender and he repeated it" yesterday. Colletti: "I think it's business as usual." In L.A., Dylan Hernandez cites sources as saying that the Dodgers "reached agreements on one-year deals" with free agent P Vicente Padilla and CF Tony Gwynn Jr. Sources added that the team also "inquired" about Royals P Zack Greinke (L.A. TIMES, 12/8). ESPN's Tim Kurkjian said, "They already have their payroll and budget in place, so no matter how complicated this gets, the Dodgers can still compete in the free agent market and try to put their best team on the field" ("Baseball Tonight," ESPN2, 12/7). The L.A. TIMES' Bill Shaikin notes the Dodgers this offseason have invested $77M in seven free agents, and the '11 payroll is "already at about $110 million -- about $15 million more than at the peak of last season" (L.A. TIMES, 12/8).

    Print | Tags: Los Angeles Dodgers, Baseball, MLB, Franchises
  • Hornets Audit Shows Shinn Was Heavily In Debt, Borrowing To Pay

    Documents Show Shinn Faced Heavy Debt During Last Years Of Hornets Ownership

    An audit of the Hornets' finances published yesterday by Deadspin.com indicated that prior to selling the team to the NBA, Owner George Shinn was "heavily in debt and borrowing to pay the team's on-going operations," according to Jimmy Smith of the New Orleans TIMES-PICAYUNE. The Hornets "actually made an operating profit in 2009," but the problem for Shinn was the team's "long-term debt." At the end of '09, the Hornets' long-term debt was $111M, and they had to pay $8.9M in interest on it, which "wiped out an operating profit" of $5.8M. Contributing to the "small positive net income was that the NBA forgave a $3.9 million payment on the $30 million relocation fee that Shinn owed to move the team" from Charlotte in '02. Broadcasting and cable rights revenue from the team's TV and radio rights brought in $38.4M in '08 and $41.2M in '09; of that total, the Cox Sports Television agreement brought the Hornets $8.3M in '08 and $9M in '09. The documents also show that in January '05, Shinn borrowed $30M from the team through a separate company, GIS of Nevada. That note was "unsecured, meaning it was a promissory note from Shinn," but it was "listed as an asset on the Hornets' balance sheet." Shinn on Jan. 21, 2005 "bought out then partner Ray Wooldridge for a reported" $70M. Wooldridge had bought 35% of the team in '99. Smith notes a "bright spot for the next owner is that the audit revealed that the team's bottom line was hugely affected by its performance, as the club was enriched one year following the 2007-08 division championship season." But the audit "did raise questions about the ability of the partnership, including at least three separate entities owned by Shinn, totaling 65 percent, and one by Gary Chouest (Slam Dunk LLC) totaling 35 percent, to continue operating because of continued financial losses" (New Orleans TIMES-PICAYUNE, 12/8).

    HOMETOWN HERO: The AP's Brett Martel noted that newly appointed Hornets Chair & Governor Jac Sperling yesterday said his "assignment is to make the club more attractive to a buyer who would keep the team in New Orleans." Sperling, who also serves as Vice Chair of the Wild, was born and raised in New Orleans. Sperling said NBA Commissioner David Stern has been "very positive" about the city, "going back to when the team was awarded in 2002." Sperling: "We're in a difficult spot, yes, but I think his selection of me is a further indication of what is in his mind. He wants to try to make this asset more attractive so perhaps a local buyer will step up." Sperling said that there is "no rush to sell the club and one of his first orders of business will be to see whether revenue streams from ticket sales, sponsorships and the government inducements can be enhanced." He added it would not be wise "to go try to find a buyer now when the asset is not performing at it's best." Sperling also said that he "wants to meet soon with state and city officials to talk about whether the arena lease and other government incentives can be modified to provide a better baseline level of financial security for a future local owner of the club" (AP, 12/7).

    HEALTH CARE COMES BEFORE HORNETS: Louisiana Gov. Bobby Jindal yesterday said that he "will not sacrifice funding for state services to keep the Hornets" in New Orleans. Jindal: "We want the Hornets to stay here. We aren't going to do anything that jeopardizes health care or higher education." Jindal "declined to directly answer a question about whether he would assemble some type of incentive package to retain the team." He said that the "best way to ensure the Hornets stay in Louisiana is to buy tickets to the team's games as stocking stuffers for Christmas" (Baton Rouge ADVOCATE, 12/8).

    ON THE MOVE? Boston Globe columnist Bob Ryan said, "The Hornets, unfortunately, are doomed. … If you couldn't support pro basketball in the 1970's, when there was oil and gas money, you surely can't do it now. We can see that. There's no corporate support." ESPN.com's J.A. Adande said, "I don't really see any reason for optimism that the Hornets will stay in New Orleans" ("Around The Horn," ESPN, 12/7). ESPN's Michael Wilbon: "I fear that New Orleans ... cannot support two professional franchises with the current population." ESPN's Tony Kornheiser: "The corporations left after Katrina, and there's not enough people with enough money or enough corporations with enough money to support a 41-game season." Meanwhile, Wilbon said of the NBA buying the team, "I would like for it to mean that some team ... returns to Seattle, where they can support basketball" ("PTI," ESPN, 12/7).

    WAITING IN THE WINGS: In Seattle, Steve Kelley writes the "inevitable collapse of the Hornets raises all kinds of questions about the future of the NBA in Seattle." Kelley: "Can the Hornets become the new Sonics? ... Does Seattle even care about the NBA anymore?" New Orleans "doesn't care about the NBA," as it "never has supported the Hornets." New Orleans is an "NFL town," and "losing an NBA franchise wouldn't feel catastrophic to those fans the way it felt for many Seattle sports fans" (SEATTLE TIMES, 12/8). Meanwhile, in K.C., Sam Mellinger writes the city's chances of "landing a major pro sports team for the Sprint Center remain very, very low." That "holds true even today, with the NBA's Hornets being taken over by the league," as there is "no apparent potential owner to make it work." Sources in or close to "four of the wealthiest families" in K.C. said that they "have no interest." Mellinger, on the apparent lack of local ownership interest coupled with the NBA having to approve any franchise relocation: "Neither fact eliminates us. But it does mean we're a long way from season-ticket deposits" (K.C. STAR, 12/8).

    Print | Tags: New Orleans Pelicans, NBA, Basketball, Franchises
  • Thrashers Become Focus Of Relocation Talks At NHL BOG Meetings

    Thrashers Only Averaging 11,789 Fans Per Game At Philips Arena This Season

    The NHL BOG meetings concluded yesterday, and by the end of the meetings the "focus of relocation chatter had shifted" to the Thrashers from the Coyotes, according to David Shoalts of the GLOBE & MAIL. When reporters "raised the struggles of the Thrashers, who are once again near the bottom of the NHL in attendance (an average announced crowd of 11,789) and whose owners are looking for new investors," NHL Commissioner Gary Bettman "grew dismissive." Bettman: "Too much is made about franchise issues at a particular point in time. Our goal is to keep all our franchises where they are. That's always been our goal and that's what we try to do." But Shoalts notes "even those at the top of the NHL recognize the problems" with the Thrashers. The team has "endured a long and bitter feud among its ownership group -- which is still not settled -- and it has never been a consistent draw in Atlanta." With groups in Winnipeg and Quebec "stalking the Thrashers, talk of relocation is growing." NHL Deputy Commissioner Bill Daly in a recent interview with Winnipeg's Sports Radio 1290 indicated that relocation is a "possibility if things cannot be turned around," though he "clarified his remarks at the Florida meetings, saying he did not mean a move 'is imminent.'" Thrashers President Don Waddell "insists the league will not allow a move." Waddell: "We deal with it as it comes up and it's been coming up for three years now. It won't be the last time for sure" (GLOBE & MAIL, 12/8). Waddell yesterday also "spoke of the Thrashers' efforts, unsuccessful so far, to draw new investors, and its continuing struggles at the gate in what he called 'a difficult market.'" Waddell said, "If we get through the holidays and it doesn't pick up, you can call me again" (N.Y. TIMES, 12/8).

    INVESTOR HUNT: In N.Y., Jeff Klein notes some "financially challenged" NHL clubs "continue to seek investors with mixed success, reinforcing the impression of a two-tiered league." Blues Owner Dave Checketts said that partners "would be brought in to offset the reduced involvement" of private equity firm Towerbrook Capital Partners, which has a 75% stake in the club. Checketts added the new partners would add their stakes "early in the new year." Meanwhile, Sabres Owner Tom Golisano "would not say whether he has entertained a bid for the club" from East Resources President & CEO Terry Pegula, who did not attend the BOG meetings (N.Y. TIMES, 12/8).

    WARNING SIGNS? THE HOCKEY NEWS' Ken Campbell wrote "two red flags came up big-time in this corner, as we learned more about" prospective Coyotes Owner Matthew Hulsizer at the BOG meetings. The first was that Hulsizer "has a net worth somewhere in the neighborhood" of $300M, which "might sound like a lot of money to you and me, but it's a pittance by NHL standards." Campbell: "The last thing the NHL needs in Phoenix is an owner and a bunch of fellow investors who could develop a case of the shorts." The "second red flag came when Hulsizer talked about the prospect of being an NHL owner by saying, 'I'd love to join the club.'" Campbell wrote, "A quote like that tells me this transaction has 'vanity purchase' written all over it" (THEHOCKEYNEWS.com, 12/7). Meanwhile, ESPN.com's Scott Burnside wrote the "answer is an emphatic 'no'" to the question of whether anyone thinks "there is a snowball's chance in, well, Phoenix in mid-July that an NHL team is going to up and move anytime soon." Burnside: "It is not going to happen. NHL commissioner Gary Bettman tells us it's not going to happen, and history tells us he is right." No NHL team "has relocated in more than 14 years" (ESPN.com, 12/7).

    ISLAND RESCUE: In N.Y., Larry Brooks wrote it is time for Bettman to "declare the Islanders are in a State of Emergency and the NHL will simply not allow the current ownership to maintain the franchise as currently neglected." Owner Charles Wang "is not getting his Lighthouse" development, but that "does not give him the right to act as the equivalent of a slumlord for the remaining four years of his team's lease at Nassau Coliseum." The product on the ice is "shockingly inferior," and Wang, "once perceived as a savior, has all but disappeared from public view." Brooks wrote Bettman "always talks about the league's commitment to its current markets except when he talks about the Islanders, and then he talks about the commitment to Wang." Brooks: "The league seems to stand behind Wang and not the Islanders. Memo to Bettman: One should not be confused with the other" (N.Y. POST, 12/5).

    Print | Tags: Hockey, Atlanta Thrashers, Franchises
  • NFL Panthers Owner Reaffirms Commitment In Letter To Fans

    Richardson Promises To Invest Necessary Resources For Panthers To Rebound In '11

    NFL Panthers Owner Jerry Richardson “elected to bypass the media to directly address those who support his stadium and his team” by sending a letter to every PSL owner “apologizing for the way things have turned out this season,” according to Steve Reed of the GASTON GAZETTE. The Panthers currently have the worst record in the NFL at 1-11, and Richardson in the letter wrote, “Going forward, our plan of attack is to build through the draft while retaining our core players. We have one of the youngest teams in the League, and a number of those younger players have shown genuine promise in this otherwise disappointing season. We won’t give up on them. We also have a solid nucleus of veterans that we will seek to keep intact. I want all of you to know that we plan to look at every aspect of our organization. What we do in the future will entirely be geared toward putting the best possible team on the field. I am committed to fielding a winning team, and I’m willing to invest the resources necessary to make it happen” (GASTON GAZETTE, 12/8). Richardson in the letter also “explains his reluctance to give interviews through the media, saying he didn’t want to be a distraction to the team during the season.” In Charlotte, Darin Gantt notes Richardson “hasn’t taken questions from reporters since January 2009.” Since then, he has “fired his sons and let coach John Fox walk into a lame duck season without an offer of a contract extension.” The letter is “similar in tone to the conversations he’s been having with individual customers who sent letters of complaint” (CHARLOTTE OBSERVER, 12/8). 

    GOOD FIRST STEP: In Charlotte, Scott Fowler wrote, “Although this certainly isn’t a substitute for actually answering questions about the team, it’s a good first step for Richardson. I thought the letter was too vague in parts but quite well done in others” (CHARLOTTEOBSERVER.com, 12/7).

    Print | Tags: Franchises, Carolina Panthers
  • Trustee In Madoff Case Sues Wilpon Family For Profiting On Scam

    Wilpon's Sterling Equities Promises Madoff Lawsuit Will Not Impact Mets' Payroll

    Irving Picard, the trustee seeking assets for victims of Bernie Madoff, yesterday sued Mets Owner the Wilpon family, which "had invested hundreds of millions of dollars in the global Ponzi scheme," according to Lattman & Schmidt of the N.Y. TIMES. Sterling Equities, the Wilpon-controlled company that owns the Mets, was "named as a defendant in the case along with its partners, family members, and certain related trusts and entities." Sterling Equities said in a statement, "Regardless of the outcome of these discussions, we want to emphasize that the New York Mets will have all the necessary financial and operational resources to fully compete and win. That is our commitment to our fans and to New York." When Madoff was arrested in '08, there was "widespread speculation that the Wilpons lost hundreds of millions of dollars in the fraud." But in October '09, Picard "revealed in a court filing that an account called Mets Limited Partnership put a total of $522.7 million into Madoff accounts and withdrew $570.5 million, a profit of $47.8 million." Lattman & Schmidt note the lawsuit "comes as the Mets are sending out repeated signals that they intend to spend little money this winter on free agents despite their disappointing performance on the field in recent seasons." It is unclear "whether the Mets' current reluctance to spend money is also being influenced by the Madoff lawsuit, and the financial burden it could pose" (N.Y. TIMES, 12/8). The WALL STREET JOURNAL's Chad Bray noted under federal bankruptcy law, Picard "must bring such lawsuits by Dec. 11, the two-year anniversary of Madoff's arrest and his firm's demise" (WSJ.com, 12/7).

    BARGAIN SHOPPING: In N.Y., David Waldstein notes while some MLB teams "contemplate gigantic financial commitments to various stars, the Mets sift through the discount bins looking for deals." For the Mets, the MLB Winter Meetings "have so far been mostly a drab exercise in accounting," but "next year, and the years after, could be far different." With several large contracts "coming off the books after next season, the Mets could reduce their payroll by as much as" $60M, which would allow Mets GM Sandy Alderson to "reshape the team" (N.Y. TIMES, 12/8).

    Print | Tags: New York Mets, Baseball, Franchises
  • City Releases Names Of MLB Cardinals Owners Who Sold Shares

    Bill DeWitt III Among List Of Cards Owners Who Sold A Stake Last Year

    The city of St. Louis Monday released a list of members of the Cardinals' ownership group who sold shares last year after a local group "aired allegations that the Cardinals owed the city hundreds of thousands of dollars in profit-sharing," according to David Hunn of the ST. LOUIS POST-DISPATCH. The city asked for the list of Cardinals owners as "required by their contract with the city." The list included Mercer Reynolds, Reynolds Sibling Management LLC, Bill DeWitt, Jr., Bill DeWitt III, Andrew DeWitt, Katherine D. Kern and Margaret D. Good. Cardinals President Bill DeWitt III agreed to further explain the contract with the city, and the following are excerpts from that discussion.

    Q: What was the purpose of the 2002 agreement with the city?

    DeWitt III: The Cardinals were looking for relief from the 5 percent "amusement" tax on tickets -- which no other baseball team was paying -- and the city was looking for the Cardinals to commit to downtown St. Louis long term to protect and grow the existing Cardinals tax base.

    Q: So, are the Cardinals still paying taxes to the city?

    DeWitt III: Absolutely. There are 23 different types of taxes that the Cardinals and our affiliates pay. Sales tax on tickets is the biggest one. We now pay the State an average of $17.4 million a year in taxes, nearly double the average before the ballpark deal. We pay the city an average of $10.1 million per year in taxes, or about $3 million more than in the old stadium.

    Q: Why did Cardinals owners sell some shares last year?

    DeWitt III: Several owners wanted to return to their approximate original ownership percentages, so they sold some shares to a couple of new partners.

    Q: Why haven't they shared profits with the city?

    DeWitt III: The equity value of the team hasn't yet appreciated to the level that triggers that obligation (STLTODAY.com, 12/7).

    Print | Tags: Franchises
  • Franchise Notes

    Lions Selling Out Games Despite Continued On-Field Struggles

    In Detroit, Mike O'Hara noted the Lions' 2-10 record is "tied for second worst in the NFL, but their gains in ticket sales are near the top." The team is averaging 55,935 fans per game through six games at Ford Field, up 13.2% from 49,395 last year. That marks the biggest gain "in the NFC on a percentage basis." The average "is the highest since 2007, when the Lions started 6-2 and averaged 61,304 and every home game was an official sellout." Sunday's Bears-Lions game marked the "fifth official sellout" this season (DETROIT NEWS, 12/7).

    FINDING A ROLE FOR ELWAY: In Denver, Mark Kiszla writes in the wake of the firing of Broncos coach Josh McDaniels, what the team requires "first and foremost is a face to make the franchise likable again in the eyes of betrayed fans," and Pro Football HOFer and Broncos consultant John Elway "is the man, the myth and the legend for the job." Elway "long has dreamed of owning an NFL franchise," so he "would be miscast" as a GM. Elway's "strength would be as a business executive who could raise the organization's football IQ, while effectively telling the team's story to season-ticket holders, sponsors and the media" (DENVER POST, 12/8).

    NO PLACE LIKE HOME: Houston-based Greenstar Recycling CEO Matt Delnick said the company "looked at a lot of different teams" before agreeing to a jersey sponsorship with the MLS Dynamo. Delnick: "There are five or six teams out there that don't have sponsors, and for us we're proud of our headquarter city. We're proud to be in Houston. We want the recycling here to be as successful as possible. Really it's about helping to build our brand but also helping to build awareness for recycling and sustainability in Houston"  (HOUSTON CHRONICLE, 12/8).

    NEW OWNER: In DC, Steve Goff reported magicJack Founder Dan Borislow is the new owner of the WPS Washington Freedom, who "nearly folded after this second season" in the league. The Hendricks family, "which founded the club 10 years ago, will retain a minority stake" (WASHINGTONPOST.com, 12/3).

    Print | Tags: Franchises
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