Sunday, April 24, 2011

WTF is happening in Dodger land?

This is copied from Yes, I am too lazy to write anything original, but I certainly wanted to get everyone's reaction. Is it possible that Frank McCourt is more of a disaster than Manny?!

Official Press Release
This is all Frank could come up with:

"Major League Baseball sets strict financial guidelines which all 30 teams must follow. The Dodgers are in compliance with these guidelines. On this basis, it is hard to understand the Commissioner's action today."
MLB To Oversee the Dodgers
It's the beginning of the end for Frank McCourt. Bud Selig, per the LA Times, has decided that enough is enough:

"Pursuant to my authority as Commissioner, I informed Los Angeles Dodgers owner Frank McCourt today that I will appoint a representative to oversee all aspects of the business and the day-to-day operations of the Club. I have taken this action because of my deep concerns regarding the finances and operations of the Dodgers and to protect the best interests of the Club, its great fans and all of Major League Baseball. My office will continue its thorough investigation into the operations and finances of the Dodgers and related entities during the period of Mr. McCourt's ownership. I will announce the name of my representative in the next several days. The Dodgers have been one of the most prestigious franchises in all of sports, and we owe it to their legion of loyal fans to ensure that this club is being operated properly now and will be guided appropriately in the future."

The NY Times adds:

But two people with knowledge of the situation said that he was also strongly considering forcing the sale of the team by invoking his “bests interests of baseball” powers to wrest the team from Frank McCourt, the owner since 2004, who he believes has mismanaged the franchise while enriching himself.

And TMZ chips in with this:

IRS agents are interested in the fact that the McCourts took $145 million from the team and paid no taxes (certain court documents place the figure at around $105 million, but we’re told it’s actually $145 mil).

The IRS is also interested in the fact that the McCourt children have drawn a salary from the team but performed no apparent services to justify the payout.


  1. Train wreck. But I haven't really paid much attention to most of that stuff the past year. Divorce and now this. If its not happening on the field, I usually don't bother.

    The last part I find interesting (the taxes). While I do not every detail of the tax code (who does), I would be interested to know how either the loans or the kids salaries run afoul of the tax code.

    Warning - geek speak tax code coming. I'm relatively certain the team would be owned by either a general partnership or an S corporation, so a loan would generally be considered to have recourse back to McCourt and, as such, income has not been permanently and effectively accrued to McCourt. In fact if it were, it would create an inequitable discrepancy in the rate as that transfer of $105MM would be taxable at 35% but would only be deductible when the club is sold which would be effectively at 20%. I think the IRS has no case there.

    As far as the kids salaries. As long as they are not minors, I don't thin there is an issue there even if no services are performed. As long as income tax is paid, it should be fine. The only issue I can think of is that it is an inheritance tax/GST issue, but that really shouldn't matter - the "kids" will be paying substantial tax on this income.


    Okay, if you want to research more, go to

  2. Always love Tax-Geek, but let's consider the source: TMZ.

    Regardless, it sounds like a real shit-show. I am wondering if this will help the team focus more or implode.