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About Jon
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1) using profanity or any euphemisms for profanity
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5) discussing politics
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McCourt Refinances, 'Strengthening the Team's Financial Base'
2005-05-12 12:55
by Jon Weisman
Note: The Dodger Thoughts blog has moved to the Los Angeles Times.

From Thomas S. Mulligan in the Times:

Dodgers owner Frank McCourt unveiled a $250-million refinancing deal today that experts said improves his financial flexibility and gives him a strong incentive to stay on as owner and keep the team at Dodger Stadium for years to come.

For Dodger fans, the deal doesn't guarantee that McCourt will spend more money on players, but by strengthening the team's financial base, it does enhance his ability to do so. ... The annual interest rate is 5.66% fixed for 25 years, which experts said was very attractive.

Update: Though there is a part of me that can't help thinking that agreements are made to be broken someday, Barry M. Bloom of MLB.com writes that "the Dodgers will remain in Chavez Ravine and stay in the hands of the McCourt family for at least the next 25 years."

Bloom adds:

McCourt said he would also review development of the land around the stadium now mostly used for parking, but that would be a long process involving environmental impact reports, plus county and city approval.

"We will be looking at the real estate and what might be done with that," McCourt said. "But fundamentally, what we're saying to folks is that we're committing to play baseball on that real estate for the long-term."

Comments
2005-05-12 13:03:53
1.   scareduck
Frank's going into more debt? And this is somehow supposed to be more reassuring to Dodger fans?
2005-05-12 13:06:34
2.   the OZ
Anyone think that Eli Broad is behind this? I'll give you the best ReFi deal ever, but you keep the Stadium?
2005-05-12 13:09:22
3.   the OZ
It's not more debt so much as it's different debt - if that makes sense. Because McCourt has an incentive to pay off part of his loans quickly, it behooves him to take more profit than he might otherwise in the coming years. This ReFi eliminates that need, I'm assuming.

A 25-year fixed 5.66% rate is great news for the financial health of the franchise.

2005-05-12 13:10:53
4.   the OZ
The above post assumes readers know about Fox's early-repayment provision in the original sale. McCourt has $millions of the debt forgiven if he repays the portion within a coulpe years. Sorry for the omission.
2005-05-12 13:13:23
5.   Jon Weisman
Does this mean Fox is now officially out of the Dodgers? Was the $71 million Fox's entire remaining stake?
2005-05-12 13:14:06
6.   FirstMohican
McCourt was up late watching ESPN classic and saw a refi commercial...

"No.. yeah I own the Dodgers... the Los Angeles Dodgers..."

I wonder if the current performance of the team has any weight on the credit rating.

2005-05-12 13:15:32
7.   JeffinTokyo
Does this guy live a charmed life or what? I can only pray that his good luck eventually rubs off on the team he owns.
2005-05-12 13:16:57
8.   bigcpa
I thought Fox still had a 20% equity stake on top of the just-retired loan.

So since Valentin's Petco Fist-pumping Triple we're 8-12 and 4-10 vs non-Rockies. Anyone besides Steve Phillips call that?

2005-05-12 13:19:12
9.   JJoeScott
"... no no no, you're thinking of Peter O'Malley -- I own Los Angeles Dodgers of Los Angeles ... right, the ones without the names on the uniform ... yes, yes, 'can't tell the players without a scorecard' -- I've heard that one before ..."
2005-05-12 13:22:07
10.   FirstMohican
"The terms of the placement include provisions specifying that there will be no change in control of the Dodgers or where they play for 25 years."

http://tinyurl.com/bhgry

2005-05-12 13:32:58
11.   JeffinTokyo
I'm all for financial flexibility, but I will ever warm up to an owner who has, among other things, invested more personal money in his house than he has in the Dodgers, fills key positions nepotistically (if that's a word), tossed Ross Porter like last week's trash, and, most painfully, let his "top priority" go to Seattle without a fight.

By the way, I acknowledge (and feel despair over) the fact that I sound like Plaschke.

2005-05-12 13:41:56
12.   Rich Lederer
McCourt is simply "refinancing" existing debt. Of the $250M, he is paying off B of A and Fox to the tune of $221M. The 25-yr term gives him breathing room.

One way to look at it is that the interest on the debt will cost the team one very good ballplayer per year. On the other hand, McCourt will have more flexibility to make such deals for many years into the future.

As far as letting his "top priority" go to Seattle without a fight (#11), the Dodgers made the second-best offer out of 30 teams. So far, Dodger fans should be happy it wasn't the highest.

2005-05-12 13:43:44
13.   Wayne Wei-siang Hsieh
Rob seems to have never refinanced his house. I still remember your predictions from the old Dodger board of (paraphrasing) "don't be surprised if Dodger payroll collapses to 60 million." Oh well.... Geez, what does the guy have to do to earn at least a benefit of the doubt from you with regards to his solvency?

Sure, it'd be nice if McCourt was a billionaire and bought the team with straight cash, but geez, of course this is good news, assuming the news reports have the facts right. Interest rates will probably rise for the foreseeable future, and McCourt converting his debt in this way is of course a good thing for the franchise as a whole.

WWSH

2005-05-12 13:50:25
14.   Wayne Wei-siang Hsieh
BTW, Re: nepotism, are you in principle opposed to all family businesses, Jeff? Which means you would have not been a great fan of the O'Malley regime.

And it's not as if Jamie McCourt has no real credentials beyond her marriage to McCourt. An MBA with a thesis on sports management is actually a decent enough fit, and it's my impression that she had a fairly large role in running his construction business. And DePo is just fine as a GM. The other pieces of the organization need to be run better, but we should give the new regime at least some time with regards to finding better front-office management.

WWSH

2005-05-12 13:58:54
15.   Bob Timmermann
25 more years of Dodger Stadium?

I hope they put in new seats before that time is up.

2005-05-12 14:09:33
16.   dzzrtRatt
So this is the new political deal, apparently. If you don't raze Dodger Stadium, we'll let you develop the other land. The downtown dreamers, i.e. Anschutz, will be disappointed that Qwest Jackie Robinson Memorial Stadium won't be built in the shadow of Staples Center, for now, but McCourt is getting what he wants, the right to develop some of the land he owns. ("Fundamentally" is such a nice weasel word.)
2005-05-12 14:12:53
17.   Marty
Ditech lost another loan...
2005-05-12 14:17:49
18.   Im So Blue
#16:
So where does it say he gets to develop some of the land he owns?
2005-05-12 14:40:16
19.   Dodgerkid
Actually Jon, I seriously doubt McCourt would ever tear down Dodger stadium. It's just so much of a cash cow. He doesn't have to make many repairs to it, and it will sell out. Also take into account that his history as being a rent collector for property is one of not really developing new buildings, but sitting on the land and collecting checks. When Simers calls him the parking lot attendant, in some ways it's true. I know I'm in the minority, but I would be happy if Dodger stadium were torn down, or at least renovated thoroughly.
2005-05-12 14:45:17
20.   Bob Timmermann
Developing the property around the stadium will be interesting.

You know what that area needs? A good public housing project. Maybe something that a disciple of Richard Neutra can design.

2005-05-12 15:00:13
21.   Cubdom Byron
The calculator says that the new debt service will be about $4.92 million per quarter or $19.68 million per year.
2005-05-12 15:45:33
22.   Howard Fox
WWSH....it's nice to see someone else here who thinks like I do with respect to the McCourts and the Dodgers.
2005-05-12 15:47:52
23.   FirstMohican
If I were McCourt I'd develop half the parking and lobby for the Metro Rail "Dodger Blue Line."
2005-05-12 15:48:15
24.   Howard Fox
hey JeffinTokyo...I believe they are still in first place???
2005-05-12 15:49:37
25.   Howard Fox
If it were me, I'd build up the area around the stadium similar to the area around Petco Park...extending the Metro Rail would be a great idea....
2005-05-12 16:21:52
26.   Robert Fiore
"If it were me, I'd build up the area around the stadium similar to the area around Petco Park"

Jeez, Howard, where are you going to put the ocean? Don't we already have a convention center that nobody's using? If you're going to have a charmingly restored historic neighborhood, don't you have to have a run-down historic neighborhood there in the first place?

I merely bust chops for amusement, but it's fairly clear people don't have any great desire to hang around Chavez Ravine before or after a ballgame. We're not in a hurry to get there, and we can't get out soon enough . . .

2005-05-12 16:26:15
27.   Howard Fox
I'd like to see upscale housing and shopping.
2005-05-12 16:41:54
28.   DougS
Howard, I'm sympathetic to your point, but I just don't see how you could turn Chavez Ravine into a place where people will hang before and after the game, unless you build over the entire parking lot. And even then, it would still be disconnected from Downtown/Chinatown.

The terrain is just too hilly. Even the Police Academy and Elysian Park are rather arduous walks from the stadium itself. Basic topographics dictate that you'll never be able to turn the neighborhood into something like, say, Wrigleyville.

And even then, it's not like Wrigleyville is always bliss. Just ask the residents who complained about night games because of the lights and the drunks micturating on their lawns afterward.

2005-05-12 16:48:45
29.   Howard Fox
picky, picky...
2005-05-12 16:53:50
30.   gvette
Actually, I wouldn't put it past Frank and Jaime to do what Disneyland did, and put up massive parking structures, guaranteeing possible carbon monoxide poisoning, as well as hour long waits to get to the ground floor.

Frank would then bring in LA insider Rick Caruso to build another Grove clone type project.

When you don't have an historic neighborhood to revitalize, you build a new facsimile of one.

2005-05-12 18:08:36
31.   FirstMohican
I would definitely hang out before or after a game... get off of work, walk to Chavez Ravine and grab dinner, walk to the game...

After the game come get a couple drinks, wait until traffic dies down a little bit...

It would definitely be for the younger crowd.

2005-05-12 18:18:03
32.   Dodgerkid
If they make a development, they'd better load it with cops for the psychos coming drunk after the game.
2005-05-12 18:18:48
33.   LAT
"the Dodgers will remain in Chavez Ravine and stay in the hands of the McCourt family for at least the next 25 years."

Is that a good thing?

As others have said, you will never have Wriglyville in Chavez. But if you want people to hang out you could lift the ban on tailgating. This of course would cause more problems with drunken fans but people would be there early.

As for nepotisim, I assume Jeff was refering, not to Jamie but, to giving the 23 yr old son with no experience Lon Rosen's job. Even if the kid is "entitled" to it becasue its a "family business" he is not qualified. At least Peter O'Mally had to pay some dues. Of course, maybe its a cost-saving measure and this is how the kid earns his allowence.

Finally, DougS, couldn't you have just said "pissing." I had to look up "micturating."

2005-05-12 18:33:16
34.   gvette
But if you want people to hang out, you can lift the ban on tailgating

Frank and Jaime won't make any money off of people bringing their own six pack and barbeque to the parking lot before the game.

But they'll make a killing charging $8 a beer, and $12 a burger at a Dodger themed ESPN Zone style sportsbar, as part of a parking lot Citywalk/Grove style development.

2005-05-12 18:39:39
35.   scareduck
LAT -- WRT "micturating", well, now you know.

WWSH -- do get down from that high horse. I still stand by my comments of two years past; we had no reasonable means to judge McCourt save by what appeared in the papers, and that was uniformly bad. Moreover, one winning season doesn't mean we shouldn't take McCourt ownership somewhat skeptically, at the very least.

Rob seems to have never refinanced his house.

And you seem to have avoided reading the article; the new loan is a sum greater than the funds he's retiring. Maybe the terms are better, but is he any less in violation of the Debt Service Rule?

2005-05-12 18:52:03
36.   Vishal
re: micturating - watch "the big lebowski"
2005-05-12 19:02:28
37.   Bob Timmermann
The problem of a big commercial development around the park is twofold:

1) you have the not so desirable Solano Canyon neighborhood on the east side of the park that would likely be a problem for access from that area. I doubt that McCourt could by all those people out.

2) Echo Park has become quite gentrified. And there will be a lot of people there will a fair amount of money and the ability to get City Council members and mayors to prevent more and more cars coming through their neighborhood.

2005-05-12 19:08:34
38.   LAT
Gvette, very good point. Now that they have more debt to service they need to generate more revenue. They could allow tailgating and charge a "corkage" fee. (See why didn't the 23 yr old wiz kid come up with that brilliant marketing idea.)

Some of you out there have convinced me that Choi is better than I thought. So while he stays above .275 I will gladly admit I was wrong. But it will take some real convincing for me to admit that Frank and Jamie are anything more than carpetbaggers. (Well ok, she is a MILF.) (Clerks? or Chasing Amy?)

Vishal, I have have not seen "the big lebowski" But I have been forced to watch the big Grabawski and it stinks.

2005-05-12 19:16:56
39.   Robert Fiore
Judging by McCourt's Kagemusha approach to his Boston holdings what you can expect him to do with Chavez Ravine is nothing. "Grove style project" seems most likely if he does do something; it's hard to believe "upscale" tenants are going to want to live next to 81 ballgames a year. People farther away already complain about it. The great advantage of the property is that parking is already in place.

You start believing everything you read in the paper and you end up being Charles Fort. You have to ask yourself as you read whether you're reading factual material or rumor and surmise, particularly if it's something as prejudiced as the Times sports section. It's foolish to form opinions based on rumor and surmise simply because that's all you have on hand.

2005-05-12 19:34:17
40.   LAT
Alou just used 3 relievers in one inning. I love that guy.
2005-05-12 23:26:47
41.   DougS
Re: #33
Hey, I thought this was a family blog. :-) Friend of mine learned that word during his pre-med studies and became fascinated by it. That's how I know what it means.

Robert Fiore makes a good point about how theoretical 'upscale' neighbors would feel about living next to a ballpark. Witness the problem that the Rose Bowl has in bringing in enough events to keep itself viable.

I was living in Chicago when Wrigley finally got its lights, so I remember all the uproar from the Wrigleyville neighbors. As long as the drunken fans wandered over their front lawns during the day, while they were away at work, it wasn't a big deal. But at night, when you're home and getting ready for bed, that was another thing, and understandably so.

2005-05-12 23:40:28
42.   aloofman
Developing around Dodger Stadium seems like a lost cause to me. Like others said, it's geographically isolated from the rest of the city because of the hills and only has a few roads. While it would be a better use of land to use that vast parking lot more than 60 days a year, I'm unconvinced that developing it is the answer.

For one thing, you'd have to build parking structures to replace the lost spaces, which would make getting in and out even harder than it is now. (Hard to believe!) From a tenant's point of view, the only real attraction is a nice view of downtown on clear days. Where would the customers to a hip mall come from? Would people get in the habit of going to Dodger Stadium on non-game days?

The best alternative I can think of -- if you must build something there -- is an amusement park. Most of the time there'd be plenty of parking and the traffic would be spread out over a longer period of time during the day than during a game. Maybe some water slides, a ferris wheel. There are quite a few people in the downtown area that would find the short drive attractive.

2005-05-13 07:15:37
43.   Wayne Wei-siang Hsieh
Re:35

So, you can cite media reports from the sometimes dubious-LA Times as justification for your previous comments, but I can't do the same with regards to the debt refinancing, which pretty clearly implied that the terms were significantly better? The entire gist of all the articles on this issue have been fairly positive from the start, and considering the long repayment period--it's my impression the earlier financing was much more short term--I thought it reasonable to not say this was a bad thing, which you clearly implied in your first post. We certainly can't judge an ownership tenure with one winning season, but one actual season of ownership is a better data set than the winter of negotiations surrounding the sale itself.

Who knows if the media reports' positive glow on the refinancing are correct, but that combined with two years of strong payroll, and the reinvesting of funds in the stadium, mean in my view at least that McCourt's solvency is not an imminent crisis.

What I thought to be the main point of my original post was that this debt arrangement was at least better than the previous financing surround the sale, and that casting it in a negative light from the get-go seemed dubious. And that this negative light reflected an unwillingness to give McCourt the benefit of the doubt. I'm not saying McCourt's a perfect owner--the Vlad fiasco doesn't need to be mentioned, the new seating at the stadium seems to have been very badly planned, it took him forever to figure out that constantly talking about the BoSox was not going to reassure Dodger fans, and the front office has had far more turnover than I'd like--but I want to give him some time to iron things out. Especially IMO since he at least did well with his most important personnel decision in hiring DePodesta.

WWSH

2005-05-13 17:23:53
44.   Mr Customer
Re:20

Richard Neutra...

Re:42

Actually, I've always felt that the circulation in the parking lot is not really the traffic issue at the Stadium, its the fact that the 4 exits become bottlenecked. One could concieveably build parking 3-4 parking structures to replace land that could become pedestrian retail/mixed use and still reduce the traffic congestion.

There are at least 4 additional exits to the big lot that are not being utilized, simply because of the the need for ingress/egress control. Trust me, I'm an architecture geek, and I've counted them. Often.

If you were to open them up, putting the egress control at the individual structures rather than at the main entry, you could save everyone a ton of parking pain, and any retail would filter the time of departure a little bit.

Then again, I'm not exactly an unbiased opinion, since that's what floats my personal watercraft. I'd be willing to work nights and weekends if they'd let me design it, though. (/dreaming)

Mr. C

2005-05-14 12:05:15
45.   Jim 7
I imagine a mixed-use condo and retail development with the best views in L.A. of downtown is not such a dumb idea. Or an NFL Stadium...
2005-07-20 17:16:44
46.   BigMamou
I find it sardonically amusing that the discussion in this particular thread about the viability of development in this area is completely ignorant of the history of Chavez Ravine! Before the existence of the ballpark the Ravine was a community for almost 80 years of 3 small Mexican-American villages inhabited by several hundred people whose existence was mostly ignored by the city of Los Angeles. But came a time in the late 40's when so-called urban redevelopment turned it's avaricious eye on the community culminating in all of those people losing their homes (and more importantly - their community) through cheap, forced buyouts and confiscation through eminent domain property condemnations by the city of angels powers-that-be. A low-income public housing project was to be built on the site overseen by the LA Public Housing Authority led by the get-it-done Frank Wilkinson, a legend in mid-century LA. By the early 50's though the corrupt realty lobby in LA turned its profit seeking eye to the area to hijack it for high end homes - after all we're talking about views of the city and beyond and access to the working area of downtown for the newly emerging well-heeled gentry. The lobby dealt Mr. Wilkinson the low blow of a false rumor campaign that he was a "communist" and ultimately by his heroic refusal to testify before the California legislature UAAC the project was lost to the Housing Authority. The lobby didn't get the property though as the city fathers sold it to Walter O'Malley to lure him to LA in the late 50's. The rest as they say is history, yadda, yadda............! If there is any Karmic Justice in the midst of sordid political stories like this and the bullying of innocent average joes and janes who were made hollow promises by the politiswinos it should be that the next "big one" swallows up the baseball stadium and renders the property such that NO ONE can use it for anything let alone as the home for a perennial loser of a baseball team and its public money sucking owner!

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