Baseball Commissioner Bud Selig has rejected a proposal under which Fox would have lent about $200 million to Dodgers owner Frank McCourt, three people familiar with the discussions told The Times.
McCourt would have used the Dodgers’ cable television rights as collateral, extending the team’s current contract with Fox by as many as four years if he did not repay the loan, according to the individuals, who were briefed on the proposal but who are not authorized to discuss it.
Major League Baseball spokesman Pat Courtney and Fox spokesman Chris Bellitti each declined to comment. Steve Sugerman, the spokesman for McCourt, said he would not discuss the proposal.
Selig made his decision several weeks ago. Since then, McCourt has continued to explore financing options that would enable him to satisfy the commissioner and manage a debt that, according to court records, exceeded $430 million as of November 2009.
McCourt said last week he was “very, very confident” that he would remain the owner of the team, however and whenever his divorce proceedings end.
The Times reported last month that Fox had advanced McCourt money from the team’s current television contract to help cover operating expenses. Sugerman declined to discuss how Selig’s decision might affect McCourt’s ability to manage the Dodgers’ finances.
Selig has indicated he might withhold approval of any minority investor or broadcast contract proposed by McCourt. The commissioner last year rejected a proposed TV deal between Fox and the Texas Rangers, one that would have eased the severe financial burdens on Tom Hicks, then the Rangers’ owner.
The team ended up in Bankruptcy Court. Fox considered bidding for the Rangers so as to secure the team’s television rights, then negotiated a contract with the team’s new owners, worth a reported $1.6 billion over 20 years.
That deal averages $80 million per year. The Fox loan to McCourt could have enabled the company to secure an extension to the Dodgers’ rights at about $50 million per year had McCourt not repaid the proposed loan.
David Boies, an attorney for Jamie McCourt, said any such deal should trigger “court supervision” of the Dodgers’ finances, so as to ensure the value of the team is not harmed until the court determines ownership.
Jamie McCourt maintains that she owns half of the Dodgers. Frank McCourt says the Dodgers are his sole property. The couple divorced in October but has not reached a financial settlement.
“The most important thing is that he not be allowed to abuse his position of control to dissipate a marital asset,” Boies said. “He has to manage the asset in a way that not only protects his asset but his wife’s interest.”
Sugerman, Frank McCourt’s spokesman, said Jamie McCourt’s advisors have pursued a “campaign to create confusion and disruption.” Sugerman said Frank McCourt has acted in the best interest of the Dodgers, noting the franchise value has roughly doubled in the seven years since he bought the team.
“He is well aware of his responsibilities to the team, to the city and to his former wife,” Sugerman said. “He takes these responsibilities seriously and is living up to them.”
Neal Pilson, former president of CBS Sports, said Fox was smart to try to help Frank McCourt at a time when Time Warner, Comcast and ESPN all are competing to secure broadcast rights to teams currently aired on Fox channels across the country. Time Warner’s new Lakers channel, for instance, could bid against Fox for the rights to carry Dodgers games.
The proposed loan could have effectively added years to the Dodgers’ contract with Fox, which expires in 2013.
“I don’t see any downside for Fox,” Pilson said. “But Fox isn’t going to secure a loan with six months of broadcast rights. They’re going to want to have a term that more than adequately covers them in case of default.
“This way, at worst, you get back your loan with, I’m sure, a fair rate of interest. At best, you get broadcast rights for a term of years that might be worth more than the loan.”
Fox lent $145 million to McCourt in 2004, as part of its agreement to sell the Dodgers to him. McCourt put up his Boston parking lots as collateral. Fox essentially foreclosed on the property two years later, then sold it.
Times columnist T.J. Simers contributed to this report.