Frank McCourt and How Not To Run a Baseball Team

Recently Frank McCourt has been in the news. I usually don’t read Vanity Fair but this month there was a good article about Frank McCourt and his wife Jamie McCourt. Frank McCourt is the owner of the Los Angeles Dodgers. In essence, right now the Los Angeles Dodgers are broke. McCourt can’t pay its bills and owes millions of dollars to various parties. The Dodgers owe slugger Manny Ramirez $20.9 million, Andruw Jones $11 million, and Hiroki Kuroda $4.4 million. Not only do the Dodgers owe players but are around $400 million in debt. Apparently, Frank McCourt has had a divorce which has caused some financial hardship however his spending is out of control for even a billionaire. The McCourt’s net worth in 2009 was $1.2 billion. In 2010, the couple started to go through a divorce. To start off McCourt was had many different homes. Here is a list of their estates

-$27.3 million beach home in Malibu

-$21.3 million Homby Hills, California (near Playboy mansion)

-$19.5 million home Cap Cod

-$16 million Massachusetts home (main home

-$6.5 home Homby Hills

-$6 million ski condo in Vail, Colorado

-$4.7 million land in Cabo San Lucas

-$7.7 million lot in Yellowstone

-$360,000 per year for a suite in the Montage hotel
Don’t the McCourt’s realize people can only live in one place at a time? What is very interesting is that Frank McCourt has an economics degree from Georgetown. The McCourts were also paying a hair dresser $10,000 a month to cut their hair five days a week. Reportedly the couple also paid $100,000 per year for “positive energy”. The recent divorce is now causing even more financial issues as Frank McCourt has to pay his wife $225,000 per month plus over $400,000 per month to pay the mortgages. No this is not a mistake his wife is getting $625,000 per month or $7.5 million per year.

One problem the McCourt’s got into is they were using the Los Angeles Dodgers as an ATM. The McCourts bought the Los Angeles Dodgers for $421 million in 2004. By 2009, the Dodgers had taken on $459 million in debt. What is really confusing is how Forbes can claim the value for the Dodgers is hundreds of millions when the team is consistently losing money. Apparently, the McCourt’s took out $108 million for personal distributions. One deal that could have saved the McCourt’s was a possible deal with Fox. The deal would have been worth anywhere from $1.5 billion to $3 billion. McCourt would have given Fox the rights to broadcast Dodger games for the next 20 years. One problem was Major League Baseball (MLB) has to approve any deal like this. Budd Selig the commissioner of the MLB didn’t allow the deal to go through. Then Budd Selig goes in and has MLB take over the day to day operations of the Dodgers. Is Budd Selig aware of private property and the rights associated with it? McCourt was trying to get a hedge fund to lend him $150 million in order to manage the day to day operations and pay off debts. What is interesting however is everyone seems to think Selig did the right thing by stepping in. However, looking at the McCourt’s finances what genius was in charge of allowing them to purchase the team? MLB has financial rules and guidelines and most likely looks at an individual’s liquidity in order to see if they can afford the team.