The new owners of the Los Angeles Dodgers must make public a single document that reveals their financial arrangement with previous owner Frank McCourt, under a ruling made on Wednesday by a judge in Los Angeles.
The judge rejected Guggenheim Baseball Management’s motion to seal the document, part of a divorce proceeding between McCourt and his ex-wife Jamie McCourt. In 2011, Jamie McCourt agreed to give up claims that she owned half of the baseball team in exchange for $131 million. During a Chapter 11 reorganization, Frank McCourt later sold the Dodgers for $2.15 billion to a consortium led by Chicago’s Guggenheim Partners and former Los Angeles Lakers star Magic Johnson.
The sale prompted Jamie McCourt to move to set aside the settlement, claiming fraud.
She sought a document summarizing Guggenheim Partners’ financial arrangement with her ex-husband. Guggenheim, which had agreed to turn over the document, filed a motion to seal on May 13, claiming "confidential business information."
In his ruling from the bench, Los Angeles County, Calif., Superior Court Judge Scott Gordon ordered that the document be made public.
Kelli Sager, a partner at Davis Wright Tremaine in Los Angeles, had opposed the motion to seal on behalf of the Los Angeles Times. In an emailed statement to The National Law Journal, she wrote: "We are pleased with the court’s ruling; it’s unfortunate that GBM [Guggenheim Baseball Management] sought to keep this document secret, but we are gratified that the judge recognized the important public interests involved."
Gordon gave Guggenheim 10 days to seek a stay of his order. James Bates, a spokesman at Sitrick & Co., in an emailed statement on Guggenheim’s behalf, wrote: "We respect the court’s opinion, are not going to seek to appeal and will be cooperating accordingly."
In April, Gordon held evidentiary hearings in the divorce case. In preparation for those hearings, Jamie McCourt had sought depositions of her ex-husband’s financial advisers, including Peter Cohen, senior managing director of Blackstone Advisory Partners. In an interview with Forbes, Cohen acknowledged that the $2.15 billion price "was not more than [he] anticipated on day one when [he] started on this." On March 27, New York Supreme Court Judge Jeffrey Oing ordered Cohen to answer questions by Jamie McCourt’s lawyers.
On April 15, U.S. Bankruptcy Judge Kevin Gross, who oversaw the Dodgers’ bankruptcy, ruled that Jamie McCourt could not obtain documents that were part of confidential negotiations between Major League Baseball and Frank McCourt.
In its sealing motion, Guggenheim attorney David Enzminger, a partner at Winston & Strawn in Los Angeles, wrote that the firm had agreed to provide a summary of Frank McCourt’s financial benefits to Jamie McCourt if she would drop subpoenas of the team’s new owners and her request to depose Stan Kasten, the president of the Dodgers. Under that arrangement, however, the financial summary, which includes the Dodger sale price and a joint venture between Guggenheim and Frank McCourt to develop land, including the parking lot around Dodger Stadium, would be provided only under seal.
"The financial summary contains highly sensitive information related to ongoing business ventures between Guggenheim and Mr. McCourt," Enzminger wrote. "This information is private and Guggenheim has an interest in maintaining it as such."
In her filing for the Los Angeles Times, Sager wrote that the terms of the purchase are of "substantial public interest because they concern a major real estate transaction involving the ownership and control of Dodger Stadium, an iconic Southern California landmark with rich public involvement and a lurid history of real estate development."
In response, Enzminger said in court papers that the confidentiality of Guggenheim’s business dealings overrode the public’s interest in "a popular American sport."
Jamie McCourt’s attorney, Bertram Fields, a partner at Los Angeles-based Greenberg Glusker Fields Claman & Machtinger, said the agreement extended to Frank McCourt’s attorneys at Sullivan & Cromwell. One of those attorneys, Robert Sacks, a partner in the Los Angeles office, did not return a call for comment.
Fields said the document was important to Jamie McCourt’s argument that her ex-husband undervalued his team assets when negotiating the divorce settlement. "In other words, it showed that it was much more than the $2.15 billion that was announced in the papers because the papers hadn’t seen the whole deal," Fields said.
It was unclear when the document would be made public. Just before Gordon’s ruling, Guggenheim filed a redacted version as a proposed alternative to unsealing the entire document. The redacted version states that Guggenheim agreed to purchase the land surrounding Dodger Stadium for $150 million as part of the joint venture with McCourt. The joint venture receives $14 million per year for use of that land, most of which is a parking lot.
Frank McCourt also received a free suite at Dodger Stadium that seats at least 20 people.
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