4 - FIFA/CIES International University Network

INSIGHT
MATT CUTLER
Deputy Editor
SportBusiness International
COURT-SIDE ACTION
TEAM OWNERS in the United
States and beyond were due to
discover in late August whether
the competitiveness of their teams
could be determined in a new arena
- the divorce court.
The prospect was raised by a bitter
split between the owner of Major
League Baseball’s LA Dodgers, Frank
McCourt, and his ex-wife, Jamie,
which prompted her to seek half the
club as part of her settlement.
Jamie McCourt married Frank in
1979 and the couple has four grown
sons. But she filed for divorce in
2009 when acting as CEO of the
team and drawing an annual salary
of $2 million. The terms of an award
were due to be thrashed out in a Los
Angeles courtroom as SportBusiness
International went to print.
The acrimonious divorce has
already been blamed for wrecking
this season for the Dodgers, MLB’s
fourth biggest franchise. McCourt
installed his ex-wife as Dodgers CEO
after buying the team from Rupert
Murdoch’s News Corporation in
2004. Their marriage imploded
and she was sacked as the Dodgers
exited the end-of-season play-offs in
October 2009.
The impact of the courtroom on
the ballpark parallels two previous
cases - the LA Lakers and San
Diego Padres, both of which were
ultimately sold to help settle divorce
pay-offs - by paralysing team
operations and limiting the amount
of cash available to strengthen the
playing roster. The $19 million
spent by the McCourts on legal fees
during their divorce are equal to
the 2010 salary of the Dodgers’ star
player, Manny Ramirez. Instead of
high-profile young recruits, general
manager Ned Colletti has been
forced to recall a clutch of older
players who had been sent out on
loan to other teams.
Lawyers claim circumstances
in the case are not necessarily
unique to the US but represent
the latest example of a developing
trend that could endanger sports
teams worldwide.
James Brown, associate with
Manchester-based law firm
Pannone, says one consequence
of sports organisations being run
along business lines is that stakes
in sports clubs are no longer treated
differently to any other asset to be
divided on divorce. Pannone has
handled many big-money divorces
in the world of sport, including
backers, boardroom members, star
players and athletes.
Judges have the power to divide
a sports club as they would any
other asset and, if a husband doesn’t
have sufficient ready cash to settle
a pay-out, can potentially order the
sale of a club to raise the money.
The implications for many clubs are
acute, Brown argues, particularly
for those reliant on support from
banks: “No-one should be under
any illusions that a football team is
a ‘safe’ asset, immune to the reach
The McCourts during the the 2009 Playoffs - Getty Images Sport
English Premier League club owners will be among those reflecting on
the outcome of a US divorce case with potentially significant ramifications.
of a divorce court. It is very possible
that the situation being played
out in Los Angeles could be
repeated elsewhere.
“Many Premiership teams
are heavily leveraged and the
prospect of seeing ownership
fought over can cause banks to pull
funding in the same way that they
can do with businesses in other
sectors during marital battles.
“That eventuality would, of
course, have serious repercussions
for the running of the club and
even the on-field performance
of the team by limiting the cash
for wages, new players, stadium
developments and so on.”
Only last year, Veronica Lario
was reported in the Italian media
to be seeking a stake in AC Milan
as part of her strategy in obtaining
a generous pay-off from her
ex-husband, Silvio Berlusconi.
Brown adds the UK’s reputation
for awarding settlements that are
especially favourable to wives meant
that even sport’s richest and most
powerful figures are under pressure.
In divorcing his wife, Slavica,
Bernie Ecclestone was reported to
have last year reached a generous
settlement in order to retain his
grip on world motorsport.
Much of his $2 billion wealth had
been built up during the couple’s
24-year marriage and Slavica had
been entrusted with looking after a
family trust which controlled 10 per
cent of the value of Formula One.
Ryder Cup Director for The
European Tour Richard Hills told
me in May that golf’s biennial team
event is the “transatlantic bridge
in the world of sport.” He’s right
– seldom do the sporting cultures
of the USA and Europe cross other
than at the Olympic Games.
That said, the future growth and
development of the Ryder Cup is
unquestionably being driven from
Europe. Bidding to host the event
in eight years time is becoming the
most competitive in golfing history,
with several European nations
willing to build bespoke courses
and promising spectators a Ryder
Cup that will raise their golfing
experience to the next level.
Interest in the USA has waned
over the past 20 years, partly
because of the strength of the
European team (the USA’s record is
two wins from the last seven played
and Europe are strong favourites
for Celtic Manor), but also from
a significant proportion of the
US golfing elite downplaying the
event’s importance, believing the
professional golf year is over once
the PGA Championship is over.
Add to that the Tiger Woods
factor, a major draw for US
television audiences. He didn’t play
in 2008 through injury and despite
still holding the number one
ranking (albeit precariously), there
are calls for him to not be part of
the 2010 USA team given his poor
form since his return from the
extra-marital affair scandal.
As you’ll see in our Ryder Cup
feature starting on page 34, this
year’s match is primed to have a
positive economic impact of €100m
to host country Wales, thanks in
part to an influx of high-spending
US sports fans, who at the 2006
Ryder Cup in Ireland, spent on
average €600 per day (compared
to the €350 per day average)
according to research by Deloitte.
It’s a two-way relationship and
the Ryder Cup relies on the US
public’s engagement, and their
desire to cross the Atlantic to
come and watch.