The Work

June 17, 2011 8:11 PM

The Score: McCourt Divorce Saga Ends in Settlement

Posted by Brian Baxter

UPDATE: 6/20/11, 5:35 p.m. Major League Baseball has rejected a proposed $3 billion television deal for the Los Angeles Dodgers, leaving the fate of the team's ownership in limbo, reports.

Control of the Los Angeles Dodgers baseball team will come down to a one-day trial in August, according to the terms of a settlement announced on Friday.

The National Law Journal, a sibling publication, reports that lawyers for current owner Frank McCourt and his ex-wife Jamie hammered out the agreement shortly before a Friday morning deadline imposed by Los Angeles superior court judge Scott Gordon.

Gordon subsequently approved the deal, which states that neither Frank nor Jamie McCourt will challenge a $3 billion television contract with Fox to broadcast Dodgers games. The NLJ reports that the settlement will divide proceeds of the TV contract to provide an up-front payment of $385 million to serve as a loan and equity infusion for the team, which has been struggling to meet payroll.

From that amount, $235 million has been earmarked as a payment to the Dodgers, $80 million for debt related to the team, and $50 million set aside into a separate account, according to The NLJ. The settlement would also give Jamie and Frank McCourt $5 million each for attorneys' fees--estimated to be as much as $20 million per litigant--plus an additional $5 million in discretionary funds.

Last month Major League Baseball commissioner Bud Selig removed Frank McCourt from the day-to-day operations of the Dodgers and installed Akin Gump Strauss Hauer & Feld senior counsel J. Thomas Schieffer to oversee the team. Selig has retained Proskauer Rose to probe financial records for the Dodgers. McCourt has turned to Sullivan & Cromwell as he seeks to retain control of the franchise he bought for $430 million in 2004.

In December, Gordon tossed a 2004 marital property agreement drafted by Frank McCourt's former lawyers at Bingham McCutchen that presented conflicting versions of which spouse would own the team in the event of a separation. (Bingham sued Frank McCourt in April, likely anticipating a malpractice suit by its former client; click here for a March feature story from The American Lawyer on the firm's Dodger drama.)

The NLJ reports that a trial to determine who owns the Dodgers will take place before Gordon on August 4. If Gordon finds that the team is Frank McCourt's property, his estranged wife will receive a payment of $100 million, including all but one of the former couples' homes in well-to-do locations like Malibu and Vail. If Gordon finds that the Dodgers are community property, and thus owned by both Frank and Jamie McCourt, then the team, stadium, and other real estate holdings will have to be sold and assets split between the litigants.

The settlement agreed to on Friday also explicitly states that both Frank and Jamie McCourt are responsible for their own claims against Bingham, according to The NLJ.

Susman Godfrey and L.A. divorce firm Trope and Trope are representing Frank McCourt in the case. Jamie McCourt has turned to a legal team led by Boies, Schiller & Flexner, local divorce firm Wasser, Cooperman & Carter, and Santa Monica's Kinsella Weitzman Iser Kump & Aldisert.

Around the Horn

-- The ongoing lockout, union decertification, and antitrust litigation complicating collective bargaining negotiations in the National Football League could finally be drawing to a close. Multiple news agencies reported this week that a deal between players and league management was close, although some owners were resisting a deal, according to Another sticking point is the reentry of lawyers into the talks--Proskauer, Covington & Burling, Dewey & LeBoeuf, and Weil, Gotshal & Manges are the primary firms involved in the process--which reportedly almost caused negotiations to collapse until counsel were told to "stand down."

-- ESPN reporter Chris Sheridan has sued New York Post columnist Peter Vecsey for libel over a December column he wrote excoriating Sheridan's reporting on a story about New York Knicks star Carmelo Anthony. Sheridan accuses Vecsey of "shirking any semblance of responsible journalism," according to the ten-page complaint, courtesy of Courthouse News. Sheridan is represented by Mark Moody, a New York solo practitioner known for his unusual cigarette breaks, according to this story from the Post.

-- Five firms have been selected as part of a panel that will advise on the 2014 Winter Olympics in Sochi, Russia, according to U.K. publication Legal Week. DLA Piper, Hogan Lovells, White & Case, and Magic Circle firms Allen & Overy and Freshfields Bruckhaus Deringer have signed confidentiality agreements and declined to comment on the appointments, Legal Week reports. In a related note, the general counsel for the 2010 Winter Olympics in Vancouver, Kenneth Bagshaw, has been named Canadian GC of the Year, according to sibling publication Corporate Counsel.

-- A federal tax case involving South African golfer Retief Goosen could have implications for how professional athletes license their images, Bloomberg reports. Goosen is challenging the IRS's analysis of endorsement income he earned from companies like Electronics Arts, Adidas, and Rolex Group.

-- And with the 2010-11 season in the National Basketball Association coming to an end this week, it was only fitting that two longtime league personalities achieved notable litigation victories. Former Philadelphia 76ers president Pat Croce scored a $2 million win in a securities dispute with UBS, according to The Wall Street Journal, while the Los Angeles Times reports an arbitrator has awarded ex-Los Angeles Clippers head coach and general manager Mike Dunleavy $13 million from his former employer, represented by longtime counsel Manatt, Phelps & Phillips.

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