More news of the recent and rather bizarre operation of the Dodgers continues to bleed out of a Los Angeles courtroom this week as Frank and Jamie McCourt wrangle over a divorce settlement.
(A World Series ring will do that)
Bill Shaikin and E. Scott Reckard of the LOS ANGELES TIMES report today that in a deposition for the couple’s legal divorce proceeding, Frank McCourt revealed that last year he solicited $25 million in cash from the founder of a company “best known for marketing the Proactiv acne treatment.”
McCourt said that in exchange for the money from Guthy-Renker founder Bill Guthy, McCourt offered the acne treatment marketing titan “a Championship Ring (when we win World Series).”
As part of the deal, if McCourt was unable to pay Guthy back the $25 million in five years, the loan would convert into a small ownership stake in the team (2.77%). The ownership stake would be based on a $900 million valuation of the team at the time of conversion - which McCourt admitted was a “very high” estimate.
McCourt said that Guthy turned down the offer, saying that Guthy said he preferred “less risky investments.”
When he bought the team with no money down in 2004, McCourt did a similar deal with three other investors. One has since been repaid and the other two loans have not yet matured.
The Times reports Jason Moskowitz, a Palos Verdes entrepreneur and chief executive of SkyBridge Private Air, was one of those three investors.
On May 18, Jon Weinbach of AOL FANHOUSE revealed another of the three investors:
FanHouse has also learned that the Dodgers’ ownership includes two limited partners who provided loans to help the McCourts finalize their purchase of the club in 2004, according to people familiar with the matter. One of the limited partners is Franklin Weigold, a long-time executive with Analog Devices, Inc., a Norwood, Mass.-based maker of electronic equipment. Weigold lives part of the year in Los Angeles and was also part of the McCourts’ failed bid to purchase the Boston Red Sox in 2001.
So why did McCourt go to Guthy to obtain $25 million in cash in 2009 in the first place?
The Times reports the move was in response to the shaky financial state of the Dodgers:
By the time McCourt approached Guthy, five years after Moskowitz made his investment, the Dodgers’ finances had become strained. Corrie Murphy, a spokeswoman for Guthy, told The Times that Guthy had considered McCourt’s proposal a “standard debt investment” and said the prospect of owning a share in the Dodgers had no appeal for him.
“Mr. Guthy’s intention was to provide capital for future McCourt Group initiatives, not to assume an ownership position in the team,” Murphy said in a statement.
Those initiatives reportedly included real estate development, a $500 renovation of Dodger Stadium and the pursuit of an NFL franchise for Los Angeles, none of which got off the ground.
What’s most amazing about McCourt seeking the additional $25 million in cash from Guthy in 2009 is that he had previously obtained a $120 million tax-free loan collateralized against future Dodger ticket sales.
But thanks to the subsequent purchase of eight homes, McCourt was soon again in a cash-poor position when he solicited Guthy for the $25 million.
It’d be one thing if this financial mismanagement didn’t affect the team’s product on the field, but it clearly does. The Dodgers have a lower payroll than small-market Minnesota and spent less on draft picks in 2008 and 2009 than any other MLB club.
That from a team in the country’s number-two media market.
Despite that galling reality, there’s been nary a peep from MLB about the financial oversight of the club to this point. Perhaps that will change if the McCourts somehow emerge with their ownership of the Dodgers intact.