McCourt Bid Raises Questions

Boston real estate developer Frank McCourt’s complex $430-million bid to purchase the Dodgers is so highly leveraged that it could jeopardize the approval process, multiple baseball sources told The Times on Sunday.

McCourt is funding almost all of the package with loans from News Corp. -- the current Dodger owner -- two to four lending institutions and Aramark, one of Dodger Stadium’s two concessionaires, the sources said, adding that McCourt has little or none of his own money invested.

A person close to McCourt and his wife, Jamie, said that they are precluded by baseball rules from commenting on specifics of the financial structure but that “he does have his own money in the deal and every confidence it will go through.”

The person added that the McCourts “would only point to what the president of baseball told the Los Angeles Times, that the deal satisfies baseball’s debt and equity rules.”

He referred to an article in Saturday’s editions of The Times stating that an initial review of the recently submitted paperwork showed that McCourt had satisfied baseball’s debt equity rule, along with other requirements, according to two officials who had seen the documentation. Neither of the officials was identified as Bob DuPuy, president of Major League Baseball.

Commissioner Bud Selig refused to comment Sunday, but a high-ranking baseball official said that an ongoing review of the paperwork that McCourt was required to submit outlining the financial details of the proposed purchase raised “significant questions” and that Selig was expected to review the documentation this week.

“There are some red flags,” the official said. “I think the owners would be reluctant to approve a situation in which the prospective owner isn’t putting up a significant financial stake of his own, but there are issues in this that are open to interpretation as to who is technically putting up what.”

The official referred to the part of the funding package in which News Corp., according to the sources, is lending McCourt more than half of the purchase price, taking it out of one pocket and putting it in the other.

“The commissioner simply wants to take a harder look,” the official said.

Although McCourt has valuable waterfront property in Boston that he is believed to be using as collateral for the funding, he was not included on Forbes magazine’s most recent list of the 400 richest Americans, which required a net worth of $600 million. He finished far back in bidding for his hometown Boston Red Sox, and his attempt to attract partners in the purchase of the Dodgers has been unsuccessful, forcing him to do it on his own, which has prompted concern among baseball officials about his operating resources if he is approved as owner of a club claiming annual losses of $50 million in recent years.

The sources said that because of baseball’s financial relationship with News Corp.’s subsidiary, Fox Sports, which holds national TV rights and the regional rights of many clubs, it has been tolerant in regard to McCourt’s financing and less inclined to challenge the possible deal. Moreover, the sources pointed out, News Corp. already has had one prospective deal collapse because of Tampa Bay Buccaneer owner Malcolm Glazer’s inability to satisfy complex cross-ownership regulations in the NFL and baseball.

Having used the Dodgers to help establish two regional sports networks (which it has refused to include in the sale, limiting its field of potential buyers), News Corp.’s desire to get out from under the club’s alleged losses is underscored by its willingness to help finance McCourt’s proposed purchase, the sources said.

McCourt and News Corp. reached an agreement in principle Oct. 10. He was required to file documentation by Dec. 31, and the deal must be completed by Jan. 31.

Baseball owners are scheduled to meet in mid-January, but the proposed deal must be reviewed and approved by the ownership committee before being submitted to the full ownership for three-fourths approval of the 30 clubs.

DuPuy said Friday he hoped McCourt and his wife could “get together with a couple members” of the ownership committee this week before the industry shuts down for the holidays. It was not known Sunday if that meeting had been scheduled.