May 2004 Boston Baseball: Red Sox Dodged a Bullet

Red Sox Dodged a Bullet

Whenever you're frustrated about the 2004 Sox, remember that things could be a lot worse. Frank McCourt could have bought the team.

McCourt was an early bidder for the Red Sox before they were sold to the group headed by John Henry and Tom Werner in 2002. He wanted to move the Sox from Fenway to a park to be constructed on land he owned in South Boston. But McCourt dropped out of the bidding when it topped $600 million.

In January 2004, McCourt acquired another trophy franchise, the Los Angeles Dodgers. Unlike the Sox, the Dodgers don't have a cable network to generate cash for their owners -- but they do have Dodger Stadium, the Dodgertown spring training complex in Vero Beach, Florida, and a baseball academy in the Dominican Republic. The club and its properties sold for $430 million.

The sale was held up for several months while Major League Baseball's bankers and accountants examined the transaction. ultimately forcing McCourt to restructure the deal. Concerned Angelenos convinced financier Eli Broad to match McCourt's offer, under a scenario by which former owner Peter O'Malley would have returned to run the Dodgers, but MLB refused to consider the bid so long as McCourt still had a contract to buy the team. And despite considerable effort, McCourt failed to persuade local investors to join his bid.

In the end, not one dollar of the purchase price came from McCourt's pocket. He borrowed $250 million through the Bank of America. He borrowed another $145 million from Fox Entertainment Group, the entity which sold him the Dodgers, and gave Fox promissory notes for $80 million more. An anonymous baseball insider told the Los Angeles Daily News: "I'd give him three years before he has to sell the team. He will either realize he can't do it, or he just won't be able to make payroll."

Do the math: McCourt borrowed $45 million more than he needed to close the deal. The balance will be used for working capital. Because McCourt's debt to Fox is secured by his personal Boston real estate holdings rather than club assets, under MLB rules it doesn't count as club debt. That was cold comfort to Dodger fans, who saw the franchise that made multimillionaires of two generations of O'Malleys sold to an out-of-towner who started his tenure with $475 million of debt. Not since Larry Bird led the Celtics into NBA title showdowns against Magic Johnson's Lakers has Los Angeles welcomed a Bostonian with such hostility.

McCourt won few friends by appointing his wife Jamie as the club's vice chairman, then allowing the Dodgers' two top business executives to leave over "philosophical differences." Jamie McCourt didn't help matters by insisting that the Dodgers should be able to draw 4,000,000 fans every season.

Overshadowing anything the McCourts might say, though, is metropolitan Los Angeles's new-found love affair with the Anaheim Angels and their new owner, Arte Moreno. When Moreno bought the Angels from Disney last year for $183.5 million, he paid cash. His first act as owner was to lower beer prices. Moreno talked to the fans during games, instituted other customer-friendly changes, and then opened his checkbook wide during the offseason, signing Vladimir Guerrero and Bartolo Colon to long-term deals.

More ominously from the Dodgers' perspective, Moreno has taken dead aim on the Los Angeles market. This year the Angels have removed "Anaheim" from their jerseys and have promoted their Orange County-based team throughout Dodger country. For the first time in the 44-year history of the franchise, the Angels expect to outdraw the Dodgers this season.

Who's the better bet for long-term success in the Los Angeles market: a Boston Irishman who made his money from construction and parking lots, or MLB's first Hispanic owner, a gregarious self-made billionaire whose fortune comes from outdoor advertising?

McCourt has made one shrewd move so far, hiring Billy Beane protege Paul DePodesta from Oakland to become the Dodgers' general manager. Like Theo Epstein in his first year with the Red Sox, DePodesta should be able to improve his club even while reducing payroll. His ability to do so may determine whether Frank McCourt can afford to own the Dodgers through Opening Day 2007.

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