McCourt faces long odds in regaining control of Dodgers
In Major League Baseball, the commissioner swings the big bat.
The courts have historically upheld the commissioner’s extraordinary powers to act in the “best interest of baseball.” Because of that, legal experts say Dodgers owner Frank McCourt will face long odds if he challenges the league’s move to seize control of the troubled club — a fight McCourt has already indicated that he may wage.
Dodgers Vice Chairman Steve Soboroff gave a spirited defense of McCourt’s stewardship of the team Thursday and declared the owner “financially fine,” despite what Commissioner Bud Selig called his “deep concerns” about the team’s finances and operations.
Soboroff said Selig’s decision to take over the team seemed designed to push McCourt out. “There’s a predetermined campaign to blow him out of town,” he said.
“I think it’s irresponsible and it’s hurting the city,” he said.
One option for McCourt and his attorneys would be to seek an injunction to stop the takeover, arguing that Selig’s move was arbitrary and capricious.
McCourt required a $30-million loan from Fox to meet the team’s first payroll this season, and on opening day — at a time when the Dodgers had been without a security chief for months — a San Francisco Giants fan was severely beaten.
Financial details that emerged during McCourt’s messy divorce from Jamie McCourt, who claims a 50% ownership, would probably serve as ready evidence the owners had other priorities than the team’s best interests, experts said. Among the revelations: The McCourts directed more than $100 million from team revenues toward a lavish personal lifestyle.
Fay Vincent, who was baseball commissioner from 1989 to 1992, said Thursday that the courts would probably back Selig’s takeover of the Dodgers if there is a lawsuit, but that the courts would be looking over the commissioner’s shoulder.
“If you take over a team, you are operating property owned by someone else,” Vincent said. “It’s like taking over someone’s house and making sure the roof doesn’t leak. You need to make sure the value doesn’t decline.”
Powerful as the commissioner’s job is, it requires careful political calibrations, Vincent said.
“In effect you are running a business with a board of directors, who are the team owners,” he said. “They are the people you might have to discipline and control. Bud in effect works for McCourt. If he intervenes and there is no support from the owners, it could cause political trouble. CEOs of private companies don’t discipline their board members.”
In building an argument against Selig’s takeover, the Dodgers may cite the financially strapped New York Mets and ask why the league has given that team a loan to cover its bills but has not sought control of operations. In public remarks, Selig has insisted that the two cases are different but has not elaborated.
“Anything that Selig does with the Dodgers must be consistent with other, similar situations,” Vincent said. “There is a more complicated chess game here than just the Dodgers.”
Though the New York Mets, like the Dodgers, face financial turmoil, the league may have more confidence that the Mets owners have the team’s best interests in mind, said Clark C. Griffith, a Minnesota-based sports law attorney and son of Calvin Griffith, the former Twins’ owner.
Last November, the league loaned the team $25 million to pay mounting bills. The New York franchise is about $450 million in debt, and in 2010 had an operating loss of about $6.2 million before interest, taxes, depreciation and amortization.
“To compare it to the Mets, there’s never been a question in Bud Selig’s mind that [Mets principal owner] Fred Wilpon is doing everything he possibly can to improve the Mets,” Griffith said. “If [Selig] has evidence that the owners are acting for their own personal welfare and are not dedicated to the team and MLB ... the commissioner has an obligation to step in and correct that situation.”
Under the agreement McCourt signed with Major League Baseball when he bought the team, it is unclear whether McCourt can sue the league to challenge the commissioner’s powers, Griffith said..
“McCourt has signed contracts admitting him to Major League Baseball, whereby he agrees to comply with those powers,” Griffith said.
An oft-cited case illustrating a commissioner’s powers involved Oakland Athletics owner Charles Finley’s lawsuit against Commissioner Bowie Kuhn in the late 1970s. Finley challenged Kuhn’s authority to stop his sale of three highly paid players. The U.S. 7th Circuit Court of Appeals ruled for the commissioner on the grounds that he had exercised legitimate “best interests” powers.
The baseball commissioner’s authority was “an exception, anomaly and aberration,” the judges wrote. “In no other sport or business is there quite the same system.”
In the Finley case, the court ruled that the commissioner does not have to establish a violation of the Major League Rules or moral turpitude to act as he sees fit.
The “commissioner has the authority to determine whether any act, transaction or practice is ‘not in the best interests of baseball,’ and upon such determination, to take whatever preventive or remedial action he deems appropriate,” the judges wrote in the 1978 decision.
Though Selig’s move to seize control of the Dodgers appears unprecedented, Major League Baseball has interceded in the affairs of troubled teams before. In 2009, the league loaned the Texas Rangers money to make its payroll, and in 2010, it relieved club owner Tom Hicks, who was facing serious financial trouble, of any responsibility for selling the team. The league had deemed his public comments detrimental to negotiations. The team filed for bankruptcy protection, which led to the team’s auction.
In a more amicable intervention, the league’s team owners formed a partnership in 2002 to buy the Montreal Expos. The move was designed to buy out the owner, who wanted to purchase the Florida Marlins and save the struggling club, which had been suffering from low attendance. In September 2004, the league announced that the franchise would be moved to Washington, D.C., and renamed the Nationals.
The courts have ruled that some things are outside a commissioner’s authority — but only in cases in which there is express language in the Major League Agreement that say so.
In 1992 , the Chicago Cubs successfully obtained an injunction from a federal district court against then-Commissioner Vincent that stopped him from transferring the club to the Western Division. The court noted that league rules bar divisional transfers if the affected club does not consent.
Times staff writers R. Scott Reckard, Bill Shaikin and Martha Groves contributed to this report.
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