MLB accuses Frank McCourt of ‘looting’ $189 million from Dodgers
For the first time, Major League Baseball put a specific number on the amount it alleges Dodgers owner Frank McCourt took out of the team -- $189.16 million -- and described the distributions as “looting.”
However, amid the legal and financial fine points of the Dodgers’ bankruptcy, Bryan Stow could emerge as a pivotal face in the case at a critical hearing next week.
Stow won’t be there, of course. But, with his representatives sitting on the official committee of creditors, attorneys for the Dodgers and the league are expected to cite Stow in their arguments in a Delaware courtroom.
Both sides cited Stow on Monday, a day that featured a flurry of court filings from several parties in the case.
The United States trustee agreed to appoint two fans to the creditors’ committee, so that the interests of season-ticket holders could be represented through that committee rather than through the formation of another.
The creditors’ committee and Fox Sports each asked U.S. Bankruptcy Judge Kevin Gross to deny the Dodgers’ bid to auction their television rights, the key to McCourt’s strategy to emerge from bankruptcy as the team’s owner. The Dodgers asked Gross to extend their exclusive window to propose a restructuring plan until April 25, citing the refusal of MLB and Fox to work cooperatively with McCourt.
Commissioner Bud Selig has alleged mismanagement in wanting to oust McCourt. The Dodgers’ owner has charged Selig with acting in bad faith, in part by choking off his money supply and precipitating the bankruptcy filing.
Gross has ruled that Dodger Stadium security is a valid issue in the bankruptcy proceedings, as he determines the condition of the Dodgers. Stow’s attorney, Thomas Girardi, has said his client’s medical bills could exceed $50 million.
On Monday, the adversaries each used Stow to make their case. The league claimed the aftermath of the Stow incident revealed how inadequate stadium security was on McCourt’s watch; the team claimed that aftermath revealed how low Selig would stoop to drive its owner out of the league.
“He set about fabricating the public misimpression that security at Dodger Stadium was somehow inadequate,” the Dodgers’ filing read. “This is, by far, the most unforgivable action taken by the commissioner during this entire saga, and has caused enormous and irreparable harm to the Dodgers, Mr. McCourt and the game of baseball.”
The Dodgers argued that Selig did not announce a six-man task force to review Dodger Stadium security until after the team had agreed to add Los Angeles Police Dept. reinforcements on stadium property and to retain former LAPD Chief William Bratton to develop a long-term security plan.
“In short, the Dodgers were clearly on top of the situation,” the team filing read.
In a previous filing, the Dodgers said 197 sworn police officers were on duty the day Stow was attacked -- “the highest number ever at a Dodger game” -- and noted McCourt was the first Dodgers owner to hire uniformed LAPD officers.
“McCourt, however, omits the fact that he removed uniformed officers before the 2011 season, including the opening game when Stow was so seriously injured,” MLB responded in its filing on Monday.
The filing cited other alleged deficiencies in stadium security, including inadequate lighting in the stadium parking lots, a front office lacking in experienced executives in ballpark operations and security as well as “the ease of unauthorized access to the stadium.”
Two days after Stow was beaten, and two weeks before Selig appointed the task force, the Dodgers drew their smallest crowd in eight years for a weekend Giants home game. The crowds remained small -- the Dodgers’ attendance dropped 18% this season -- and the team blamed Selig for trumpeting his dispatch of a security task force and a trustee to Dodger Stadium within six days in April.
“Not surprisingly, the commissioner’s one-two punch ... was followed by a dramatic reduction in attendance at Dodger games,” the Dodgers’ filing read. “That drop in attendance reduced revenues and, of course, worsened [the Dodgers’] already difficult liquidity situation.”
The league argued that McCourt’s problems are of his own making, claiming he “fabricates an absurd story about a ‘furious’ commissioner out to harm him.”
The league alleged McCourt had broken 10 MLB rules -- any of them grounds for termination of his franchise -- including what MLB termed the “siphoning” of team revenue for non-baseball use.
“The Dodgers are in bankruptcy because McCourt has taken almost $190 million out of the club and has completely alienated the Dodgers’ fan base,” the MLB filing read.
In the filing, the league claimed McCourt funneled $73 million in parking revenue through Blue Land Co., a non-team related entity; used $61.16 million in team revenue to pay off personal debts; and took $55 million from team revenue for personal distributions.
The Dodgers claim Selig approved the business structures about which he now complains, including the Blue Land mechanism by which the Dodgers pay $14 million in annual rent to play in their own stadium. The league claims McCourt misled Selig about some of those structures and concealed others.
The Dodgers also charge Selig with bad faith in declaring he would reject any television contract proposed by McCourt. The league claims any deal would necessarily require McCourt to divert some team revenue for personal use, including a $130-million divorce settlement.
That claim, the Dodgers said, is “simply make believe.”
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