MLB commissioner Bud Selig had an overflow of reasons for rejecting a proposed 17-year television rights extension between Fox and Los Angeles Dodgers owner Frank McCourt, according to the 11-page June 20 letter Selig sent to McCourt. The letter was posted by the Los Angeles Times today.
“While any one of the factors identified below would alone give me serious pause,” Selig wrote, “collectively … they demonstrate overwhelmingly that the proposed transaction is neither in the long-term interests of the franchise nor consistent with the best interests of the game of baseball.”
Selig noted that McCourt was rushing into the Fox deal because of his “desperate need for immediate cash” to address his and the Dodgers’ financial problems, without waiting for the period starting on November 30, 2012 when he could solicit other, potentially more lucrative offers through competitive bidding. Selig notes the mega-deal that the Los Angeles Lakers struck for their TV rights through such a process.
“In fact, as your chief financial offcer told representatives of my office on April 5, 2011,” Selig said, “you would not even be considering a media rights transaction at ths time were it not for the club’s ‘financial duress.’ “
Selig also stated that the $385 million up-front payment that McCourt would receive upon signing the deal “far exceeds any up-front payment previously received by any other club,” adding that “no other owner has sacrificed so much of his team’s future for an immediate payoff.”
“I am concerned that at some point,” Selig wrote, “(the Dodgers) will be unable to adapt to unexpected circumstances because you have accelerated such a substantial amount of its media revenues.”
Selig’s letter also quotes 2009 testimony from McCourt’s divorce proceeding against Jamie McCourt, when current Dodgers vice chairman Jeff Ingram said that McCourt “noted that Fox has very tough negotiators, they’re very smart and he’s not convinced we would get a very good deal from Fox at this time to do a capital raise, and that we’d hamstring the business in the future by getting them to do something now.”
Selig then delved into McCourt’s plan to put the 35% equity interest in Fox Sports Net West 2 that the Dodgers would receive into a holding company separate from the franchise, as well as his plan to take at least 45% from the $385 million up-front payment to settle personal debts.
And, Selig took pains to note that the McCourt’s proposed divorce settlement with Jamie McCourt had the potential of a court-supervised sale of the team beginning in August — yet the next owner would be stuck with the Fox deal without a dime of the $385 million.
There’s even more, but by now, you get the idea.
“Your (June 18 letter) asserts, without explanation or support, that I should not take into account the Dodgers’ current financial condition and operational state,” Selig wrote. “Apparently you believe that I should make these decisions in a vacuum, without the context of the relevant facts and circumstances related to the Dodgers. To me, that makes no sense. It is not the manner in which I have approached decisions concerning matters involving other clubs, each of which has turned on the unique circumstances of the particular club.”
McCourt took the Dodgers into bankruptcy one week later.