McCourt Teams Up on Land Use
In an alliance that addresses some doubts about his financial muscle, Dodger owner Frank McCourt has enlisted New York real-estate heavyweight Related Cos. as his partner in developing his harbor-side land in Boston.
The 24-acre parcel was the financing linchpin of McCourt’s highly leveraged $421-million purchase of the Dodgers a year ago from Fox Entertainment Group, a unit of media conglomerate News Corp.
McCourt used the land as collateral for a $145-million loan from Fox to help buy the team, and ever since some have questioned the value of the property. McCourt said Wednesday that the joint venture with Related plans to buy the land, which he now wholly owns, and that he will use part of the proceeds to repay Fox.
“Markets speak,” said Rodney D. Fort, a Washington State University economist who studies professional sports finance. “The market is telling us the land is worth at least $145 million.”
Related is perhaps best known for developing Time Warner Center, the landmark, 2.8-million-square-foot complex that opened last year in New York’s Columbus Circle. Related also emerged last summer as the top choice in the competition to be lead developer of the $1.2-billion Grand Avenue project in downtown Los Angeles.
McCourt and Related’s chief executive, Stephen M. Ross, and its urban development head, Kenneth A. Himmel, met Wednesday with Boston Mayor Thomas M. Menino to outline the 50-50 joint venture they formed.
“Today’s meeting was simply to introduce the mayor to our new partners,” McCourt said in a telephone interview from Boston. “Now we’re moving into the planning phase for how we’re going to develop the site.”
Menino, through a spokesman, declined to comment.
The McCourt property is in a section of South Boston that juts picturesquely into Boston Harbor and is a five-minute walk from the downtown financial district. City officials have long considered the area a promising site for development.
McCourt’s parcel, which he purchased 25 years ago from the bankrupt Penn Central Railroad, has been used mainly for surface commuter parking lots. McCourt in 2001 proposed locating a new ballpark there for the Boston Red Sox, but his bid to buy his hometown team was rejected and the plan evaporated.
In buying the Dodgers, McCourt used the land to secure a $145-million, two-year loan from Fox, part of $196 million in seller financing. Under the terms of the loan, McCourt has until February to either pay Fox back or hand over title to the land.
The rest of the purchase price was financed by bank loans and loans from Major League Baseball’s revolving fund for owners.
The low-cash nature of the deal and the unusual seller financing raised questions about whether McCourt’s pockets were deep enough to keep the Dodgers competitive in an environment where some teams spend more than $100 million a year on player salaries alone.
A person familiar with the deal -- not a McCourt admirer -- said recently that the disposition of the Boston land would be an important test for the Dodger owner, who has long insisted that his property is potentially worth $300 million or more. McCourt’s ability to line up a well-regarded development partner would burnish his credibility, said the person, who spoke on condition of anonymity.
Before the development can begin, the partners must submit plans to the city and obtain permits. Previous development plans in the South Boston waterfront have fallen through in recent years.
McCourt said the project would be a mixture of office, retail and residential uses.
“One reason we chose Related is because of their extensive experience with mixed-use projects,” he said
