The Dodgers situation is actually a lot like the Buffalo Sabres situation under John Rigas. Rigas and his son were using their business' finances as their own.
The McCourts are taking that and blowing it out of the water.
McCourt and his wife have pretty much sucked $150 million out of the Dodgers funding their lifestyle. Everything from giving themselves and their kids millions in salaries; to billing the Dodgers for cars, homes, hotels, personal expenses (Jamie McCourt billed the Dodgers for $100,000… for flowers).
But that's not even the REAL MESS. The real mess is they used the Dodgers as collateral for a ridiculous amount of loans; and when they couldn't borrow any more money against the Dodgers, he broke the Dodgers up into a dozen little companies.
The flow chart is ridiculous:
- There's two companies that each own half the Dodger Stadium parking lots. They generate the parking revenue.
- There's a separate company which owns Dodger Stadium, the Dodgers are now paying rent on a Stadium they used to own.
- There's a separate company which owns the rights to Dodger tickets. They sell the tickets, keep the revenue, and the Dodgers pay them for this service.
All of these companies are owned by four companies, which are owned by the McCourts. It sounds stupid but McCourt did it for TWO reasons:
#1 - Because when he could no longer borrow against the Dodgers, he simply GAVE the Dodgers assets to other companies he created, and borrowed against THEM. They basically borrowed against the Dodgers 2 or 3 times what they should be able to.
#2 - MLB has the right to seize the Dodgers, but they don't have the legal right to seize all the small companies.
The situation the Islanders are in: where they weren't getting parking, concessions and had to give up 15% of ticket revenues... that made them the lowest revenue team in hockey.... well, Frank McCourt purposely put the Dodgers in that situation (only worse, because the MLB Dodgers don't get their ticket revenue, Dodgers Tickets LLC gets the ticket revenue), AND then took out millions in loans against all those companies, after taking out millions against the Dodgers as whole first.
The ONLY revenue the Dodgers make by themselves right now is their TV contract. Which is why Selig is vetoing the new TV deal. Because it's the only leverage he's got. Seizing the team only is 2/5 of a franchise. He's going to have to pull of some insane legal maneuvers to put the Dodgers back together; and he has to wait out McCourt until those loans come due, McCourt can't pay, and they can consolidate the team back into one entity through bankruptcy.
Oh, and MLB isn't completely devoid of blame. They wanted McCourt to own the Dodgers over other potential owners because they didn't want the Dodgers to have an owner who'd make them the Yankees of the West (like Mark Cuban would have). They wanted someone who'd keep them like the Cubs or White Sox, but not the Yankees or Red Sox.
The Dodgers situation is far, far worse than virtually ANY financial situation we've seen in hockey or any other pro sport.
The joke was that McCourt bought the Dodgers with a credit card. Well, he bought the Dodgers with the DODGERS CREDIT CARD; and then he maxed out that credit card three times over.
If you thought the Coyotes were a disaster with Moyes setting up a lease between the Coyotes and Moyes' office building for a $10 million... take that, and do it 300 times, then take out loans against against each of the 300 office buildings AND the Coyotes.
