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Tuesday, February 28, 2012

Parking Lot Viewed as McCourt Bargaining Chip




     By Ross Newhan

     Frank McCourt has the right to retain the Dodger Stadium parking lot as part of his agreement to sell the team---but he won't.

    That, at least, is the thinking of several people involved in the bankruptcy bidding but unable to speak publicly because of their confidentiality agreement with Blackstone Advisory Partners.

    There are seven groups left in the bidding process but "it is my guess that not one (of those groups) will agree to submit a final bid if McCourt is adamant about retaining the parking lot," said one of the people with whom I talked.

    "No one wants McCourt to remain involved," this person continued, "and  there is too much money and there are too many options involved in ownership of the lot to give that up as a McCourt tenant.

    "Right now I see him using it as a bargaining chip, but he's not going to get the sales price that he wants--if he gets any at all--if he is serious about keeping the lot."

    One group thought to be among the potential favorites--Joe Torre and Rick Caruso--have already dropped out because they have been led to believe that McCourt intends to keep the lot. In a letter to Major League Baseball they have said that they will immediately jump in again if that changes. However, the process is moving on and it may be too late for anyone to jump back in once McCourt's final intent is clear.

   The principal financial backers in each group are currently in the process of meeting with baseball's ownership committee and executive council.

   As previously reported here and elsewhere, McCourt divided the Dodgers and the parking lot into separate entities in 2005, with the approval of MLB. The entity that controls the parking lot is not in bankruptcy, even though the Dodgers are. The sale agreement between McCourt and MLB specifically permits him to retain the lot--and construct parking structures if he chooses.

  The new owners of the Dodgers would inherit a lease for the parking lots at $14 million per year--with increases starting in 2015--and a separate loan that McCourt has said requires the team to play at Dodger Stadium until at least 2030.

  The sale agreement with MLB calls for McCourt to select a winner from five groups that pass MLB's scrutiny by April 1 and complete the transaction by April 30, when he owes Jamie McCourt a divorce settlement of $131 million.

   "There are a lot of factors involved with the lots, including potential development and the future possibility of a stadium in the new downtown area," said another person associated with one of the bidding groups, most of the seven believed to have submitted conditional bids in the second round of bidding--one bid based on McCourt retaining the lots and one not.

    "I think there will be political pressure on McCourt to include the lots, and I think there could be legal pressure from his creditors if he doesn't get top dollar for the team," the person continued..

    "We will learn a lot more over the next few weeks."

Thursday, February 23, 2012

Erosion of Dodger Sale Is Fault of McCourt and Selig




       By Ross Newhan

       The deadline for second bids in the bankruptcy sale of the Dodgers was Thursday, and an already convoluted process has now collapsed into a total mess.

       It is easy to blame Frank McCourt, and there is no questioning his destructive ownership, but Commissioner Bud Selig and advisors also share responsibility for a situation that is now almost beyond repair.

       Selig's desire to rid the Dodgers of McCourt's ownership--and who doesn't applaud him for that-- has virtually (or is it literally) allowed McCourt to dictate the final terms of the sale.

       In addition, it was Major League Baseball that allowed McCourt to divide the Dodgers and the Dodger Stadium parking lots into separate entities in 2005, and the sale agreement between McCourt and MLB permits him to retain the lots--and build parking structures on them if he desires.

      The Dodgers are in bankruptcy as everyone knows, but the entity controlling the lots is not, and the new owner of the Dodgers would be forced to inherit a lease of the lots at $14 million per year.

      The lease calls for increases starting in 2015, an a new owner would also be responsible for a loan that requires the team to play at Dodger Stadium until 2030, according to McCourt's previous remarks.

      This situation, calling for a division of the team and the stadium from the parking lots, prompted most of the groups submitting a second bid to make it conditional depending if the lot was included or if it was not, according to multiple sources who refused to speak on the record because they do not have the authority or are restricted by the confidentiality agreement with Blackstone Advisory Partners (surpervising the sale for McCourt).

      However, learning that McCourt plans to retain the lot, the partnership of Rick Caruso and Joe Torre withdrew from the process in a letter to Rob Manfred, baseball's Executive Vice President. A copy of the letter was e-mailed to this writer and reads in part:

     "Since the outset we felt that operationally it would be impossible to effectively manage baseball operations having the parking lots...under separate ownership. We believed that during the bid process that we would have the opportunity to buy the lots. It has now been made clear to us by Mr. McCourt that the lots are not and will not be for sale."

    Caruso and Torre, probably one of the top five groups bidding for the Dodgers, wrote that if the circumstances change "we are prepared to re-engage in the process immediately."

    The withdrawal of Caruso/Torre, following the week's earlier withdrawal of former Dodger owner Peter O'Malley, leaves the number of groups still in the bidding unclear, although a group that includes Magic Johnson and former baseball executive Stan Kasten, and another headed by hedge fund billionaire Steve Cohen (and including former deputy commissioner Steve Greenberg and agent Arn Tellem) are still viable, having placed conditional bids, according to the sources.

    "Given the renovations that are necessary on the stadium and the $14 million off the top for the lease on the parking lot, McCourt is looking at a sale price that is likely to be a lot less that he may have originally envisioned," a source close to the process said.

    The source added that while the lots are not part of the bankruptcy, the federal judge overseeing the bankruptcy and the creditors that are involved could force McCourt to change his plan and sell the lots by charging that he "did not sell for top dollar" or as much as he would have if the lots had been included.

    "However," the source said, "we know that McCourt is a stubborn guy and plans to stay in Los Angeles rather than return to Boston, so unless he is legally forced to sell the lot, it appears at this point that he plans to keep it, which certainly changes the whole process."

    As it is, the remaining groups will now by investigated by major league baseball--a process that had begun already--and the principal financial figure in each group will be meeting with baseball's ownership and executive committees. The bidding groups will be narrowed to five--there may not be that many left if McCourt insists on retaining the lot--and then turned over to McCourt to select the winner by April 1.

   Nice of the commissioner to have given a despicable owner all of this control.

                                        X

  An Angel Error

   It was the responsibility of Angel management to check with Albert Pujols regarding his feelings about having his image and "El Hombre" plastered on billboards throughout the megalopolis.

   First of all, Pujols may not have wanted to be isolated from his new teammates by being known as "the man."

   Secondly, Pujols always maintained that in St. Louis there was only one man, and that was Stan Musial. Now that he is with another team in another city it does not change his feelings, he has said, nor the responsibility of the Angels to discuss it with him.

   In addition, Angel owner Arte Moreno has always played down the Mexican aspect of his heritage to say he is a fourth generation American, period.

  The Angels should have kept that in mind when they billed Pujols as "El Hombre."

                                            

                         
                         

Deadline Passes for Second Bids in Dodger Sweepstakes




      By Ross Newhan

      The deadline for second bids in the convuluted bankruptcy auction of the Dodgers was Thursday.

      Of course, if somebody wants to come in at $2 billion dollars today they will be welcomed.

      According to multiple sources, some of them part of the respective investment groups and not authorized to speak on the subject because of the confidentiality agreement with Blackstone Advisory Partners or other factors, all of those remaining in the process planned to submit second bids that covered the entire Dodger package--team, stadium and parking lot.

     Because most, if not all, of those remaining groups believe considerable and costly renovations are necessary to bring Dodger Stadium up to reasonably modern standards, the overall bid prices may be lower than originally anticipated and may even fall short of the $1.5 billion plateau, once thought certain to be surpassed in a lively battle for a flagship franchise with attractive television potential.

     In this process, one day you are in and one day you are out.

     Groups led by Dennis Gilbert, Fred Claire and Steve Garvey/Orel Hershiser did not survive the first round, and former owner Peter O'Malley reportedly withdrew this week, although he was still adhering to the confidentiality agreement when I talked with him Wednesday.

     O'Malley, highly critical of Dodger owner Frank McCourt in the past, came to the conclusion that he was not going to be selected by McCourt even if he had the highest bid, which was probably unlikely. His financial underwriters, South Korean conglomerate, E-Land, was also drawing criticism in South Korea for not putting its money into homeland baseball. The withdrawal of O'Malley was reported first by my former L.A. Times colleague Bill Shaikin.

    Why did O'Malley get involved if he knew from the start his approval by McCourt was a longshot? According to several people familiar with the situation but unwilling to talk on the record because of their friendship with O'Malley, he did it in the hope that community pressure might influence McCourt and he did it for his sons and nephews in the large O'Malley/Seidler family. Several other Los Angeles based groups, including Magic Johnson in one and Joe Torre in another, tended to divide the community aspect, and the name of the game simply became too expensive for O'Malley to justify family hopes.

   However, whoever emerges as the next owner would be smart to hire O'Malley to help accelerate the transition and organization of a new front office.

   The next step, and one that has already going on behind the scenes, is for major league baseball to begin a background investigation of the remaining groups. In addition the principal financial partners in each group will be asked to meet with baseball's ownership and executive committees during March. Some of those meetings will take place in Arizona during spring training and some in New York. Baseball hopes to narrow the list to five groups for McCourt's selection by April 1, a rapid turnover by baseball's normal standards.

    Selecting a winner remains virtually impossible, but two groups seem to stand out.

    One is the Magic group that includes former baseball executive Stan Kasten and primary financial backer Mark Walter, CEO of Guggenheim Partners, a private global financial service.

    The other is a group headed by Steve Cohen of SAC Capital, a hedge fund conglomerate based in New York and Stamford, Conn., and which includes former deputy commisssioner Steve Greenberg and attorney/player agent Arn Tellem. Cohen, whose wealth has been estimated at $8.3 billion by Forbes,  has been assisting with a federal investigation of his company. Two employees have been charged with insider trading, but no charges have been brought against Cohen, although he has received a federal "target letter."

   How those factors may impact baseball's considerations is uncertain.

                                                                X

    An Angel Error    

    It was the responsibility of Angel management to check with Albert Pujols regarding his feelings about having his image and "El Hombre" plastered on billboards throughout the megalopolis.

    First of all, Pujols may not have wanted to be isolated from his new teammates by being known as "the man."

   The other factor is that Pujols has always maintained that in St. Louis there was only one man, and that was Stan Musial. Now that he is with another team in another city does not alter his feelings, nor the responsibility of the Angels to discuss it with him.

   In addition, Angel owner Arte Moreno has always played down the Mexican aspect of his heritage to say he is a fourth generation American, period.

   The Angels should have kept that in mind when they billed Pujols as "El Hombre".
     

      

          

Friday, February 17, 2012

Remembering Gary Carter





         By Ross Newhan

         My last, lengthy conversation with Gary Carter took place about a month before his 2003 induction into the Hall of Fame.

         We sat in the Palm Beach office of his Gary Carter Foundation, which he founded and helped fund, providing books, computers and hope to schools in underprivileged areas of South Florida.

         He was, as always, The Kid--laughing in the retelling of baseball stories, tearing in remembering his parents, excited in regard to his imminent induction even though it came in his sixth year on the  Hall ballot, as if his statistics had changed in retirement. It is true that some of his career was played amid the long shadows of Johnny Bench and Carlton Fisk, but he would find his own spotlight in a 19 year span of catching endurance and craftsmanship that ended as a backup to Mike Scioscia with the Dodgers, the team that he hoped would draft him as a football and baseball star from Sunny Hills High in Fullerton.

      Carter, on that day in Florida, smiled broadly as he recalled being a high school classmate of Laura Lasorda, whose father, Tom, was then managing the Dodgers triple-A farm club and clearly too busy to pick up on his daughter's recommendation that he scout the hot young athlete at Sunny Hills, a development, Carter said with a wink, that he didn't let his manager forget when he finally joined the Dodgers under Lasorda.

    "I told Tommy that I guess he didn't think that much of his own daughter's scouting eye," he said, laughing.

    It is sad to think that The Kid and his vibrancy is gone too soon, Carter having died of brain cancer on Thursday at 57.

    In that long career, predominantly with the Montreal Expos and New York Mets, with whom he won a World Series title, his talent and heart are measured by some of the numbers.

    Consider this: He would endure nine knee operations, average an improbable 148 games per season during an eight year span early in his career, set the National League record for catchers of 2,056 games, a figure surpassed only by Fisk's 2,226, and a plateau, he said during our Florida visit, that he doubts any catcher will "play long enough or be crazy enough" to attain, particularly "the way they're protected" now from overuse.

    He was also an 11 time All-Star, a two time Most Valuable Player, a three-time Gold Glove winner and one of only four Hall of Fame catchers (Fisk, Bench and Yogi Berra being the others) to collect 2,000 hits, drive in 1,200 runs, slug 300 homers and score 1,000 runs.

   Carter recalled on that warm afternoon in Florida how Bench "befriended" him at the 1975 All-Star game, giving him an autographed picture with the inscription, "In a few years it's all yours."

   "I think what he was saying is that he saw a little bit of him in me," Carter said, "and since he was the icon of catchers, I just wanted to follow in his footsteps. I ultimately felt that if he was the catcher of the 70s, I was the National League's catcher of the 80s."

   In the process, there were moments of clubhouse derision from teammates, similar in some ways to what Steve Garvey experienced at times in the Dodger clubhouse.

   Was he really that nice, that sincere? Might he be a little too good to be true?
  
   "It was just something I had to live with," Carter said, looking back during our two hours together. "I loved baseball and what I was doing and I felt that a large part of it was being accommodating to the fans and media. The game wouldn't be the same without them, and I always tried to be there for the media whether I had a good game or bad game.

  "I wasn't kissing up and wasn't trying to steal the headlines, as some teammates occasionally suggested. I simply thought it was part of my responsibility. The other players had the same opportunity and responsibility but didn't always act on it. I was just trying to live up to the way my father was and the way he taught me to act."

  As a journalist who had already spent 40 plus years in hundreds of clubhouse I thanked Carter for being the way he was when I left his Florida office.

  And now I'm quite sure The Kid will receive a hug from his dad and remain the way he always was when prematurely welcomed to that biggest clubhouse of all.                   

Thursday, February 16, 2012

Is $1.5 Billion The Ceiling or Merely The Floor In Dodger Sale?




      By Ross Newhan

      I have returned from a Costa Rica vacation--yes, I did the zipline through the cloud forest and even the Tarzan Swing with my eyes open--to learn from knowledgeable sources who are not authorized to speak publicly that that the auction sale of the Dodgers may be closer to $2 billion than the previously anticipated $1.5 billion, possibly doubling the record $885 million that Tom Ricketts and family paid for the Chicago Cubs.

     It is incomprehensible that Frank McCourt--given the commissioner's and the community's distaste for the man and the desire to terminate his ownership--will emerge with a check that should easily erase his $700 or so million in debt, sustain the lifestyle to which he has become accustomed and possibly still leave him as owner of the Dodger Stadium parking lot---a potential goldmine for development.

   It is true this was once a flagship franchise, but how high the flag and how promising are the riches from the inetivable TV contract, an obvious reason that both Fox and Time-Warner are willing to join forces with a prospective bidder as a minority partner, each unwilling to let the other out of sight and/or with a foot in the door.      

   In the final two-plus weeks of February, the 11 groups that made it through the first round of bidding are in the process of submitting second bids, nailing down financing and, in some cases, possibly adding investors or merging with other groups--a process that Blackstone Advisory Partners, handling the sale for McCourt, has encouraged as a means of building a solid financial foundation for each of the respective and surviving bidders.

   McCourt will reduce the 11 to five in March and turn those groups over to baseball's ownership and executive committees for vetting, including investigations into the financial and operational structure of the five survivors--both on paper and in personal meetings--before the survivors of that process go back to McCourt, who must select a winner by April 1 and complete the sale by April 30.  

   The winner?

   It is hard to ignore the check writing ability of Steve Cohen--linked to Steve Greenberg, the former deputy commissioner, and L.A. attorney and player agent Arn Tellem--or the check writing ability of Mark Walter, who is linked to Magic Johnson and Stan Kasten.

   On the other hand, there are others with the resources of Cohen and Walter and there is said to be considerable maneuvering behind the scenes. Rick Caruso and Joe Torre, for instance, may have picked up important financial support recently via union with a member of the Thomson family, the richest in Canada, according to the sources with knowledge of the situation.

   Those sources also revealed that none of the investors are particularly happy with the Dodgers' eight year, $160 million, back loaded signing of Matt Kemp, and the two year, $19 million contract to Clayton Kershaw.

   "Who with the Dodgers is giving out those kinds of contracts at this point?" said one of the sources. "I mean, two years to Kershaw when you are not buying out free agency or arbitration? That's almost as much as (two time Cy Young Award winner) Tim Lincicum got from the Giants."        


            

Thursday, February 2, 2012

The Dodger Sale: More Shadowy Every Day




            By Ross Newhan

            It stands to reason that the shadow encompassing the sale of the Dodgers became even more convuluted on groundhog day.

            Has Punxsutawney Phil joined the potential horde of buyers?

            It's hard to tell if you are in or you are out.

           For example, former Dodger general manager Fred Claire and his group are technically out but have been told that if they improve their financing they will be back in.

           Does the same go for the groups headed by Dennis Gilbert and former Dodgers Steve Garvey and Orel Hershiser?

           Well, according to multiple sources not authorized to speak on the subject, what Claire, Gilbert and Garvey/Hershiser have been told via letter is that if they raise their bids to $1.5 billion  they will be back in it.

          Dodger owner Frank McCourt is determined to emerge from this bankruptcy auction at $1.5 billion or more--probably more it seems--and the process is beginning to take on the aspects of back room arm twisting considering the in or out corner that Gilbert, Claire and Garvey/Hershiser have been pushed into.

         None of those respected baseball people have expressed a willingness to comment, but it would not be a surprise if all joined other groups in one fashion or another.

        The aforementioned sources told me Thursday that Gilbert and Peter O'Malley, whose group is still definitely alive, had lunch Wednesday, and it is doubtful they were discussing the weather.

       Underscoring all of that suspect handling comes the sordid word that Steve Cohen, whose group includes Los Angeles based agent Arn Tellem and former deputy commissioner Steve Greenberg, may buy a $20 million minority share of the New York Mets, which he would sell if he emerges as  McCourt's choice in the Dodger sweepstakes or which he could multiply into ownership of the Mets, whose owners, Fred Wilpon and Stan Katz, are in the eye of a potential financial hurricane related to the Bernie Madoff scandal.

      According to one of the sources, Cohen, whose personal wealth is put at $8.3 billion by Forbes, will not proceed with the Mets purchase until he knows where he stands in the Dodger bidding, but the interesting--or to use the word "sordid' again--thing here is that he has already been cleared by a Major League Baseball investigation, which all potential owners undergo. His clearance by MLB comes despite the fact that his Connecticut based investment firm, SAC Capital Advisors, remains the subject of a broad federal investigation. The company's records have been subpoenaed, and one current and two former SAC employees have been charged with insider trading.

    No charges have been filed against Cohen or his company, which is reportedly cooperating with the government probe, but a source with knowledge of the investigation said Cohen has received a federal "target letter" and, "certainly the matter remains an open sore."

    How and why baseball has been so quick to clear Cohen under the circumstances is not clear, and Commissioner Bud Selig refused comment when reached at his Milwaukee office Thursday.

    "I have a legal and moral agreement with the (bankruptcy) judge that prohibits me from discussing any aspect of the situation," Selig said.