The on-field performance of our local teams being what it is, we Southern California sports fans get our drama where we can find it. The current cliffhanger: Will Frank McCourt make the Dodgers’ payroll due Wednesday?
Here’s betting that somehow the players will get paid. But the looming deadline provides a chance to muster some perspective on the McCourt situation and how it’s been handled by Major League Baseball Commissioner Bud Selig.
Selig has effectively seized control of the Dodgers, placing his handpicked executive, former Texas Rangers President J. Thomas Schieffer, in the front office and giving him the authority to veto all but the most trivial financial decisions. The league aims to conclude an investigation of the team’s finances by June 22, the date of a divorce hearing on whether McCourt can pursue a television contract with Fox over the objections of his ex-wife, Jamie.
McCourt, who acquired the Dodgers from Fox in 2004, maintains that Selig is scheming to drive him from the league. He notes that although the Dodgers are not the only team experiencing financial difficulties, it’s the only team Selig has placed in effective receivership. As my colleague Bill Shaikin reported recently, nine of the 30 teams are in violation of the league’s debt limits.
No one has more contempt than I do for the high-living, tax-avoiding McCourts, though I may be tied for first place with about 10 million Dodgers fans. Nevertheless, McCourt has a point.
Selig says he acted in the “best interests of baseball,” but that’s the sort of slippery concept that always benefits those with the power to define it — in this case, Bud Selig. Canceling the World Series during the 1994 labor dispute? Ending the 2002 All-Star Game with a 7-7 tie? Selling advertising space on the actual bases to the marketers of the movie “Spider-Man 2?” Selig didn’t declare any of those decisions counter to the best interests of baseball, because he was involved in each one. He canceled the ad deal in the face of a major furor, but the others will forever stain the stat books.
Notwithstanding the melodrama of the McCourts’ divorce and the extent to which the couple has mortgaged the Dodgers’ future revenue and lived off the advances, it’s a stretch to say they’re the most financially troubled owners. That distinction surely belongs to Fred Wilpon, owner of the New York Mets.
Wilpon was one of the biggest investors in Bernie Madoff’s Ponzi scheme. Through his real estate firm and other entities, Wilpon and his partner, Saul Katz, invested an “astounding amount of money” with Madoff, according to a lawsuit filed against them by Irving Picard, the bankruptcy trustee overseeing the recovery of money for Madoff’s victims. They maintained 483 separate accounts for themselves, their families, friends, employees and others, the lawsuit says.
Picard is seeking close to $1 billion from the Wilpon interests — not only imaginary profits that Wilpon withdrew from his Madoff accounts, but money that he had invested and that was recorded as lost in the fraud. Picard’s position is that Wilpon was so deeply involved with Madoff, a personal friend, that he was more than an investor — he and Katz were all but participants in the scheme.
Picard doesn’t say that Wilpon knew Madoff was a fraud, but that he was willfully ignorant — so hooked on the consistent investment returns Madoff produced that he spurned warnings from investment experts, even one of his own partners, that the results were too good to be true.
What’s worse, Wilpon weaved the Mets — and by extension Major League Baseball — into his Madoff relationship. Over the years, Picard says, he withdrew $94 million from Mets-related Madoff accounts to cover payroll, stadium expenses and other cash needs, money that effectively came from the investments of more innocent victims and that exposes the Mets to Picard’s claims.
Wilpon’s defense, like so many other investors who should have known better, is that he didn’t know. Isn’t it amazing to see proud investors line up to eagerly proclaim their stupidity in situations like this?
Selig appears to accept Wilpon’s story. The commissioner maintains that the Wilpon and McCourt cases are “far from the same.” That may be true; the question is whether the differences include Selig’s personal opinions of the two owners.
He acknowledged in an interview last month with ESPN radio, “Fred Wilpon and I have been friends for a long time and I have enormous respect and affection” for him. Ask yourself: If it were McCourt rather than Wilpon who had been ensnared in Madoff’s net, would Selig be inclined to brush it off?
Beyond that, Selig’s distinction seems to be that Wilpon is infusing capital into the Mets by selling an equity stake (to the hedge fund manager David Einhorn), and McCourt wants to take on more debt, including money loaned from Fox. McCourt says much of the Fox money will be solid capital. But the billion-dollar claim facing Wilpon surely doesn’t guarantee that his ownership will be stable.
On the principle that what happens between the lines is what counts in baseball, McCourt has it all over Wilpon. Since the 2004 season, the Dodgers have won 593 games for a winning percentage of .523 and led their division four times. The Mets have won 577 games (.509) and led their division once. So far this year the teams are about neck and neck in the race to sub-.500 futility.
But Frank and Jamie McCourt are newcomers to baseball ownership and have always been treated by the league, the local community and the press as parvenus. Selig and the other owners seem to consider Wilpon “one of us,” and Frank McCourt “one of them.” If that’s the real difference between the Mets and Dodgers cases, that doesn’t sound as if it’s in the best interests of baseball.
Selig’s evident contempt for the McCourts drips from his public utterances. He suggests that baseball would never have accepted them into its inner circle if there were any alternative — any — when Fox decided to sell the Dodgers. You’d almost think the league would have preferred Saddam Hussein, if only his fortune were intact.
“Fox sold the club to the McCourts and presented them to us,” Selig explained to ESPN. “There were no other bidders.” Of course, he could have insisted that Fox hang on to the team until it found someone else. But “Fox was anxious to get rid of the team,” Selig said. “We have a long relationship with Fox, obviously.”
In other words, Fox, a major broadcaster, was calling the shots. That doesn’t sound like it’s in the best interests of baseball. Anyway, Selig signed off on the sale.
The history of baseball ownership is a brimming cauldron of con men, hacks, racists, cheapskates and bankrupts, from Charlie Comiskey, whose cheating of his own White Sox players led them to throw the World Series in 1919, to upstanding moderns like Marge Schott of the Cincinnati Reds, who carpet-bombed the airwaves with racial and ethnic slurs and drove talent away by the carload by penny pinching.
Just because Frank McCourt isn’t unique as an owner with flaws of character and judgment doesn’t mean the Dodgers and their fans don’t deserve better. But Selig’s evident inconsistency muddies the principle he’s applying. If it’s that you shouldn’t use your own ballclub as a personal piggy bank, that will be news to other owners who integrate their baseball business with their other enterprises, including Wilpon. Maybe he’s trying to teach McCourt that when your enemies are already taking aim at you, don’t give them ammunition.
Michael Hiltzik’s column appears Sundays and Wednesdays. Reach him at firstname.lastname@example.org, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.