Fan and fortune
The $30-million personal loan that Fox gave Dodgers owner Frank McCourt last week was not only to help him meet payroll and pay for increased security after the shocking beating of a San Francisco Giants fan, but also to stay in McCourt’s favor after learning he had approached rival Time Warner Cable for a similar loan.
McCourt told Fox representatives that Time Warner was ready and willing to assist him with his financial problems, according to two people with knowledge of the situation but not authorized to speak publicly. Time Warner also was ready to offer a full sponsorship package that included naming rights for Dodger Stadium.
Weeks before making that loan, Fox had reached a tentative agreement with McCourt for a new Dodgers television contract worth $3 billion over 20 years that would include a $375-million upfront payment, according to individuals familiar with the negotiations. Fox’s current contract expires after the 2013 season, but baseball Commissioner Bud Selig has not yet ruled on the proposed deal.
The Dodgers grew in importance for Fox after Time Warner in February surprised everyone by striking its own 20-year deal with the Lakers, grabbing the premier NBA franchise away from Fox and KCAL-TV beginning in the 2012-13 season. In addition, the cable provider said it would create two regional sports channels -- one in English and one in Spanish -- beginning with that NBA season.
Chris Bellitti, director of corporate communications for Fox, acknowledged the personal loan to McCourt but said, “We want to be a part of the solution. A financially stable Dodgers team is good for fans, good for Major League Baseball and good for Fox.”
Asked whether McCourt approached Time Warner Cable for a loan, spokesman Darryl Ryan said the company would have no comment on the Dodgers situation.
“I can’t think of another situation in baseball where this has happened,” Andrew Zimbalist, an economics professor at Smith College and an expert in sports contracts, said Thursday. “Fox has been doing unprecedented things in baseball all along, but it seems pretty apparent what this is about. Fox sees an opportunity to forestall the Dodgers’ one day creating their own sports channel and locking Fox out of the telecasting market.
“Fox sees an owner in distress, under duress to raise capital that allows McCourt to keep his head above water. That was their ploy.”
According to a third individual with knowledge of the situation, Selig was upset with Fox because he had asked it to “stand down” and not get involved with McCourt’s finances. Moreover, Selig did not want to immediately act on Fox’s proposed deal because he feared McCourt would use some of that money to cover personal debts, this person said.
McCourt, already facing intense backlash over the beating in the stadium parking lot, grew worried when Selig did not immediately act on the proposed Fox deal and reached out to Fox and Time Warner about needing a cash infusion.
Marc Ganis, president of Chicago-based SportsCorp, a sports business consulting firm, said Fox Sports -- with its FS West and Prime Ticket channels -- isn’t in the business of being charitable.
“We should all recognize that News Corp. [Fox’s parent company] is very smart and is not used to giving money away,” Ganis said. “It appears to me Fox saw a problem in Los Angeles, especially with the arrival of Time Warner: It has a franchise to protect, a person in distress who needed cash, provided that cash with the expectation it will lock in a long-term deal for broadcast rights.
“From Fox’s perspective, this is a smart move.”
In 2004, Frank and Jamie McCourt bought the Dodgers from Fox, which loaned them $145 million to help close that sale. Fox had bought the Dodgers from Peter O’Malley and his family partly because the network feared that the then-owner of the Angels, the Walt Disney Co., which owns ABC and ESPN, was going to try to start a West Coast-based regional sports network. Disney backed away from the idea and eventually sold the Angels to current owner Arte Moreno.
When Fox sold the Dodgers to the McCourts, the deal included a clause that would allow Fox to match any competing offer for television rights.
Even with that protective clause, though, Fox does not want Time Warner to take the Dodgers as it did the Lakers. Fox Sports currently gets $2.37 per subscriber, per month from cable operators. When the network loses the Lakers in 2012, there will be pressure to lower that price.
Time Warner Cable, meanwhile, needs more than the Lakers to threaten Fox Sports, which still has the Angels, NBA’s Clippers, the NHL’s Kings and Ducks and USC and UCLA basketball and football.
Zimbalist said he is a little puzzled by Fox’s decision to make McCourt a personal loan.
“Some things about Fox’s behavior are not entirely understandable,” he said. “Maybe Fox, after Selig [didn’t immediately approve] the long-term deal, felt it still had a reason to be on McCourt’s side.
“The loan was made with flimsy collateral and maybe it was made on the assumption that after this storm passes McCourt will still be the owner.”
Times staff writers Joe Flint, Meg James and Bill Shaikin contributed to this report.