Why did Selig reject the Dodgers-Fox deal? Because it was more looting of the team by Frank McCourt

37 Comments

The primary reason the Dodgers are in the boat they’re in right now is because Frank and Jamie McCourt took some $100 million out of the organization for personal use, carved up the team into individual components and leveraged it all to the hilt.

Bud Selig has just released his official statement regarding why Major League Baseball has rejected the Fox deal that Frank McCourt claims is critical for the Dodgers.  He is a bit more polite about it all, but his reasons are basically the same: the Fox deal would have put money in Frank and Jamie McCourt’s pockets, and would not have benefited the team.  In saying so, he cites “the best interests” power that Commissioners have always had, but which is so very rarely cited so explicitly:

Pursuant to my authority as Commissioner, I have informed Los Angeles Dodgers owner Frank McCourt today in a detailed letter that I cannot approve the club’s proposed transaction with FOX. This decision was reached after a full and careful consideration of the terms of the proposed transaction and the club’s current circumstances. It is my conclusion that this proposed transaction with FOX would not be in the best interests of the Los Angeles Dodgers franchise, the game of Baseball and the millions of loyal fans of this historic club.

Mr. McCourt has 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 Dodgers assets for the personal needs of Mr. McCourt. Given the magnitude of the transaction, such a diversion of assets would have the effect of mortgaging the future of the franchise to the long-term detriment of the club and its fans.

As I have said before, we owe it to the legion of loyal Dodger fans to ensure that this club is being operated properly now and will be guided appropriately in the future. This transaction would not accomplish these goals.

What has gone on with the Dodgers under McCourt’s watch is an atrocity.  What’s worse, it’s now being reported that even if Major League Baseball seized the Dodgers, McCourt would still own the parking lots and all manner of ancillary income.  McCourt is clearly using this as a buffer against MLB action, saying in effect,”if you take my team, I’ll be your new owner’s landlord.”  Which could certainly serve to depress buyer interest in the club.

Of course, the fact that that business arrangement is even allowed (i.e. an owner parsing out what should be team assets away from potential MLB control) is Major League Baseball’s fault.  As was letting McCourt into the club in the first place, so let us not weep too much for Major League Baseball here. Letting in clearly unqualified owners with questionable motives is something that never should have occurred, but which in any event needs to end now.  You can’t claim the best interests of baseball now when, a few years before, you weren’t all that damn diligent about it.

So where does it go from here? It would almost have to be litigation, one would assume, with Frank McCourt suing baseball for not approving the Fox deal or demanding that it be ratified immediately via some sort of injunction.  Baseball’s best bet is probably to simply take over when McCourt fails to make payroll at the end of the month and hope that they can swing it to a posture where the team and the ancillary assets could both be wrenched from McCourt’s control so as to make the Dodgers a more attractive asset for some billionaire.

But it’s going to get darker, it seems, before it gets light again.

Meanwhile, on the cold, cold Hot Stove . . .

Getty Images
10 Comments

It’s Hot Stove Season baby! You know what that means! Yep: time to watch some teams sign a few relievers to minor league deals and then wait everyone out until February while talking about the need to maintain financial flexibility! FEEL THE BURN.

In more specific news:

We’ve talked a lot about Betts this winter already, and that seems like madness. Bryant’s career with the Cubs began with business-side acrimony, it’s still simmering, and there is no sense that either side is amenable to a long-term deal before he hits free agency. The Indians have been signaling for some time that they have no interest in keeping Lindor long term.

It’s quite the thing when three teams who are supposed to be contending are, instead, looking to deal recent MVP award winners and candidates who are 27 and 26 years old, but these are the times in which we are living.

  • Joe Sheehan wrote an excellent column for Baseball America last week analyzing the attendance drop MLB experienced in 2019. Which is just the latest in a series of attendance drops. As Joe notes there is a very, very strong connection between teams (a) signaling to fans during the offseason that they are not interested in signing or retaining players or otherwise being competitive; and (b) teams suffering attendance losses.

As I wrote last offseason, there is an increasing disconnect between attendance and other proxies of broad fan interest and revenue. Which is to say that, as long as teams continue to get fat on long-term TV deals, side businesses like real estate development, and soaking a smaller and wealthier segment of the fan base with higher and higher prices, they really have no reason to care if several thousand common or casual fans become alienated by their teams’ lack of desire to compete.

Sullivan doesn’t offer ideas about how that can happen, but over the past couple of seasons we’ve seen a number of proposals, some broad, some specific, about how MLB can turn its free agency/trading period into frantic, 1-3 day scrambles-to-sign like we see in both the NBA and NFL. I’m sympathetic to that desire — it’s exciting! — but any attempt to do that in Major League Baseball, at least as things are currently set up, would be a disaster for the players.

In the NBA and NFL you have salary caps and floors and, in the NBA, you have max contracts. As a result, teams both have a set amount of money to spend and an incentive to spend that money. We can quibble with whether those incentives are the best ones or if they benefit the players as much as other systems might, but there’s at least something inherent in their systems which inspires teams to sign free agents.

In Major League Baseball, there is no such incentive. May teams want to keep payrolls as low as possible under the guise of rebuilding or tanking and there is no effective mechanism to keep them from doing so. Even nominal contenders — see the Cubs, Indians and Red sox in item 1 above — spend more time thinking about how to cut payroll rather than add talent. This is bolstered by the stuff in item 2 above in which attendance and even winning has less of an impact on the bottom line than it ever has.

So, why scramble to sign players by a set deadline? Under most of the scenarios I see floated — like the laughably horrible one MLB reportedly suggested to the MLBPA — teams would just wait out free agents until deadline day, give them crappy take-it-or-leave-it offers and then leave them all scrambling to sign one-year deals or to sit the season out.

For such a thing to happen — or for teams to want to keep their bright young stars or for the league to want to maintain fan interest and keep attendance from continuing to slide — there must be incentives put in place to make them want to sign and retain players. To make them want to win. To make them want to excite the fan base.

At present, such incentives are not there. And, as such, we are faced with yet another winter with a cold, cold stove.