Jamie and Frank McCourt, right, watch the LA Dodgers with actors James Brolin and Barbra Streisand.
Jamie and Frank McCourt, right, watch the LA Dodgers with actors James Brolin and Barbra Streisand.

The artful dodgers of LA



Two years ago, Frank and Jamie McCourt were the golden couple of American sports entrepreneurs. Their Los Angeles Dodgers, a storied baseball franchise, were heading for the National League play-offs for the fourth time in six years, the club would sell more than 3.5 million tickets, as usual, and as operators of a civic treasure they circulated easily among the city's rich and powerful.

Frank was the chairman and his wife was chief executive of one of the elite sports clubs in the US, if not the world, an organisation valued by Forbes magazine at US$800 million (Dh2.9 billion).

Last week, however, Major League Baseball (MLB) stepped in to take financial control of the franchise, a stunning and humiliating repudiation of McCourt stewardship.

It is expected that Bud Selig, the baseball commissioner, will force a sale of the club, and the McCourts will take their places among the most notorious spendthrifts in the history of sports operators, while fans will have been exposed to a cautionary tale of greed and bad management.

The downfall of Frank and Jamie McCourt may have come about in time, given how little cash existed behind their purchases. But the plunge was precipitated by a marital split that gave new meaning to the expression "ugly divorce". At issue: Jamie McCourt's claim that she owned 50 per cent of the Dodgers under California's "community property" laws.

Among the facts divulged during questioning by the legal teams representing the former spouses:

• The McCourts took as much as $145m out of the club for their personal use without paying taxes on it. The federal tax service is investigating.

• Frank's annual salary from the club was $5m, Jamie's was $2m.

After arriving in Los Angeles in 2004, Frank and his (now) ex-wife, had purchased four homes in the LA area, including a $20m mansion in the posh Holmby Hills area with 10 bathrooms and an Olympic-size swimming pool, and a $6.5m home next door they intended to convert into a guesthouse, as well as adjoining homes in the beach city of Malibu. The larger of the two cost $27m.

• Jamie McCourt asked for more than $480,000 per month from her husband to pay for her personal expenses, including $248,000 per month to fly on private planes.

• Two of the four McCourt children had been receiving $600,000 in combined annual salary from the club despite not doing any work for it.

It became clear the McCourts had been using the Dodgers franchise as an ATM, taking monies spent by some of the best fans in baseball ($15 to park, $5 for a hot dog) to fund lifestyles lavish even by Hollywood standards.

More attention was paid, too, to how the McCourts managed to get their hands on the Dodgers, in 2004, and it was found they were astonishingly cash-poor. They met the $430m purchase price from Fox Corporation only with a $145m loan from the sellers, using a Boston car park as collateral.

The club is now more than $400m in debt, and much of it is because of reckless personal spending by the McCourts.

The final stages of the McCourt debacle came as the season began. On March 31, a fan of the rival San Francisco Giants was beaten nearly to death by two Dodgers fans in the car park of Dodger Stadium, bringing into focus rising levels of violence and thuggery in and around the stadium the McCourts would not pay to make safe.

Frank McCourt at first callously rued how that one near-fatal beating incident had ruined an otherwise wonderful day at the ballpark.

But as the Giants fan lingered in a coma and LA took a public relations hit, the city's mayor and police chief moved to the forefront of guaranteeing security inside the stadium, billing the Dodgers for the expense of hundreds more police at games and distancing the city from a former VIP. Soon after, Frank McCourt took a $30m personal loan from Fox so he could meet club payroll this month.

That demonstration of the fragility of Dodgers finances apparently prompted Selig and MLB to move, taking over control of the club - to the nearly unanimous applause of Dodgers fans and LA civic leaders.

Sports fans the world over must have been left queasy by the Dodgers story. No doubt they would like to think that the plutocrats who own their favourite sides are not as extravagant as the McCourts and not as relentless in the exploitation of their supporters.

If nothing else, it would be nice to think that big sports leagues will vet the finances of potential owners before approving the sales of franchises as important as the Los Angeles Dodgers. Prospective owners really ought to have more collateral than a Boston car park.

Company name: Farmin

Date started: March 2019

Founder: Dr Ali Al Hammadi 

Based: Abu Dhabi

Sector: AgriTech

Initial investment: None to date

Partners/Incubators: UAE Space Agency/Krypto Labs 

How much of your income do you need to save?

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Obviously, this is only a rough guide. How much you save will depend on variables, not least your salary and how much you already have in your pension pot. But it shows what you need to do to achieve financial independence.

 

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