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Dodger Dog 

Frank McCourt's Wife Is Only the Latest to Get the Raw End of a Deal

Thursday, Aug 5 2010
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Page 4 of 6

By 2006, Mayor Thomas Menino got so fed up with the lack of progress toward developing the land that his administration threatened not to renew the parking permits.

Shortly thereafter, McCourt transferred the property to Rupert Murdoch's News Corp. to pay off a loan that helped him buy the Dodgers. Murdoch sold the land in turn to a developer, who is still trying to build something there. For now, it's still a parking lot.

To date, probably the biggest project McCourt has built is Camelback Ranch — the new Dodgers spring-training facility in Arizona. But he didn't actually build it. The taxpayers of Glendale, Arizona, did, for $150 million.

click to flip through (5) ILLUSTRATION BY CHRIS RAHN
  • ILLUSTRATION BY CHRIS RAHN
 

Lately there are troubling signs that it was a very bad investment — though not for Frank McCourt.

A few months before they separated in July 2009, the McCourts were named "Power Couple of the Year" by the Los Angeles Business Journal. The accompanying profile was fairly glowing. They were hailed for their business acumen and their civic leadership.

But there were also hints of trouble.

"Within their marriage, the McCourts have a simple method for resolving conflicts," wrote Business Journal reporter Joel Russell. "They keep arguing until one side gives up."

This was perhaps the first public indication that the implacable McCourt business style also applied to the McCourt marriage.

But behind the scenes, Dodger executives had already been playing marriage counselor for years.

From e-mails and documents made public in the divorce proceedings, the central disagreement in the marriage apparently was between Jamie's desire for security and McCourt's appetite for risk. In that respect, it was not so different from McCourt's dispute with Craig and Heath.

Without leverage, the McCourts never would have owned the Dodgers. With it, they used a 3,000-space parking lot to buy a team, a stadium, a spring-training facility, a Dominican baseball academy and, don't forget, a 16,000-space parking lot surrounding the stadium.

Flying in the face of an MLB rule that limits owner debt to 40 percent, almost the entire purchase was financed with loans from News Corp. and Bank of America.

It was a big gamble, and it carried risks.

At this point in her life, Jamie was becoming risk-averse.

In April 2008, Jeff Ingram, a Boston real estate banker who had worked for the McCourts since 1999, wrote an e-mail to both McCourts titled "Getting on the Same Page."

"The most important thing that has to be accomplished is for the two of you to get on the same page on both the family finances and aspirations and the strategic direction of the companies," Ingram wrote, sounding more like a therapist than a banker. "If there are common goals, I believe the journey will be more fulfilling and enjoyable for you and for everybody else."

For her own sense of comfort, Jamie wanted to have $250 million in the bank. Given that the McCourts owned mostly large, illiquid and leveraged assets, the only way to achieve Jamie's goal, Ingram wrote, would be to sell a minority stake in the Dodgers.

That was directly counter to McCourt's ambitions, which involved not only holding on to full ownership of the team but also building a football stadium and ultimately turning his company into a global sports enterprise.

"If you aren't on the same page," Ingram wrote, "I sincerely hope you can have the conversation in the spirit of 'Look what we accomplished' and 'How do we want to spend our time going forward.' Please appreciate the moment and work together to determine what is best for you and your family. ... From a personal perspective, I really hope you can find a common ground."

It didn't happen. In November 2008, McCourt sent an e-mail to Ingram in which he contemplated raising an astounding $600 million in fresh equity to expand the business into a global sports enterprise. He seemed particularly excited because his two oldest sons, Drew and Travis, were onboard and eager to be seriously involved in the family business. This would prepare them for someday taking ownership of the team.

Of the $600 million, $47 million would go to the family, which McCourt thought would give Jamie more "peace of mind."

In reality, McCourt's ambitions could not have been in greater conflict with Jamie's desire for security. Ingram understood this better than anybody. In a one-line e-mail to McCourt, he wrote, "I assume you realize all eyes will be on Mama Bear to see how she embraces new direction."

In the midst of this conflict, the McCourts sat down for an estate-planning session. Jamie says it was then that she first learned what would happen to their assets in the event of a divorce.

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