Broad’s Offer Stays on Bench
The emergence of Los Angeles developer and billionaire philanthropist Eli Broad as a backup candidate to buy the Dodgers has had no impact on the process by which Frank McCourt’s highly leveraged proposal would be approved or rejected, baseball’s chief operating officer said Monday.
Bob DuPuy also said that despite issues that pertained to baseball’s complex and important debt-service rule in McCourt’s $430-million proposal, he still thought that the sale could be completed before Jan. 31, the deadline in the agreement involving McCourt, the Boston real estate developer, and News Corp., the Dodger owner.
“As to what significance the development with Eli Broad has is a question for News Corp.,” DuPuy said. “As for baseball, we have no reaction in the sense that News Corp. has asked us to process the McCourt application and that’s what we’re attempting to do. I think both the buyer and seller want it done and that’s what we’re trying to do.”
The next step will be a meeting today in New York -- logistical issues forced its relocation from Los Angeles, DuPuy said -- involving key baseball officials and lawyers and McCourt and his wife Jamie, in an attempt to resolve the ongoing debt-service problems.
McCourt has proposed financing the purchase with loans from News Corp. and Bank of America, plus an equity partnership with Aramark, one of Dodger Stadium’s two concessionaires.
A high-ranking baseball official recently put McCourt’s worth at $400 million. Most of it, however, is tied up in Boston real estate, and baseball is reluctant to force him to sell in a deadline situation that might lead to a distressed price.
Broad, whose net worth has been estimated at $3.8 billion, notified News Corp. Chairman Peter Chernin by letter last Wednesday that he was willing to offer the same $430 million if McCourt’s deal fell through.
His involvement, coming at the urging of Mayor James K. Hahn and former Dodger owner Peter O’Malley, among others, seemed to amplify concern in and out of baseball about McCourt’s ability to operate the Dodgers at an acceptable level and about the fact that he is proposing to invest little or none of his own money, with News Corp. loaning him almost half the $430 million.
“I’m not going to discuss the specifics of an ongoing application,” DuPuy said, “but the ability of an owner to operate a team is always an issue and consideration.
“We’ve often rejected proposals, including one or two [Alabama businessman Donald Watkins being one] that surfaced recently [in the sale of the Angels].”
It is not clear what today’s meeting will produce.
The problems could be resolved or they could linger, forcing another meeting.
The McCourts could be asked to expand their limited investment or the problems could be deemed too great to overcome.
McCourt needs three-fourths approval of the 30 owners, but the ownership committee has yet to recommend approval or rejection, and Commissioner Bud Selig has yet to schedule a conference call during which owners would vote on the sale.
Selig seldom puts an issue up for a vote unless he knows the outcome, which in most cases is to rubber-stamp his desires.
This case, however, is tougher to read.
Whether Selig is determined to have McCourt approved as a favor to News Corp. because of its national and regional TV contracts with baseball or whether he would let owners reject the sale, feeling that he could tell News Corp. that he had done everything he could, isn’t clear.
He has insisted that the debt-service rule must be fastidiously and aggressively applied and that the Dodger situation has to be resolved quickly to restore stability to one of baseball’s flagship franchises.
Although Broad’s emergence has provided baseball with a viable alternative -- a person who is highly respected in the community and requires no credit check -- the timing of his letter, coming late in the process, has almost seemed to increase support for McCourt.
On Monday, a high-ranking baseball official said McCourt was being “prejudged unfairly” by Los Angeles media, which has raised questions about his leveraged proposal and operating resources if approved. The official said reports that he has had his “fingerprints all over the Dodgers’ off-season operation” are not true. He added, “There are no problems with his wherewithal, especially with News Corp. remaining involved [through its sizable loan].”
In addition, although there was no consensus among almost a dozen industry and club officials contacted Monday, an owner who sits on Selig’s powerful executive council said he expects McCourt to be approved.
“My feeling is that everybody who has met him among the owners likes him and that this will get done,” the owner said. “I think Rupert Murdoch’s people [at News Corp.] want it to get done, and that’s an important consideration as well. I know the deadline is Jan. 31, but it could be Feb. 10 or March 4. If it’s a delay caused by baseball requiring certain clarifications, I can’t imagine there’d be a problem getting an extension.”
In other words, the owner was asked, he saw no problem with McCourt buying the Dodgers entirely with borrowed money.
“If he didn’t have the collateral he wouldn’t be getting the loans,” the owner said. “The fact that his assets are tied up in real estate is no different than if I was buying it with stock that I could only sell on certain dates because of corporate rules. If he’s forced to sell, the value of his property isn’t going to be what it would be if he wasn’t.”