Jamie McCourt's Beverly Hills offices—also known as Jamie Enterprises—are as tastefully understated as the yellow sundress she was wearing on a recent August afternoon. The wall behind her desk is filled with baseball caps, arranged neatly in rows, and photos of her at the Obama inauguration are prominently placed. She pulls out a tribute video from happier days, before her husband of 30 years, Frank McCourt, fired her as chief executive officer of the Los Angeles Dodgers baseball team: Vin Scully, the team's legendary announcer, praises her "brains and energy"; Tommy Lasorda says "she does a wonderful job"; and the dean of UCLA's business school gushes that she is a role model for women who is a "gorgeous, energetic, smart, brilliant person." Jamie is shown hugging players and her sons, and swimming her morning laps at the McCourts' Beverly Hills mansion. At the end, the petite, now 56-year-old blonde says to the camera: "There's that myth about having it all at one time. I don't think that's true, but you can have a lot."
It's from this office, for the better part of a year, that McCourt has been plotting her quixotic return to the Dodgers front office. Last October, Frank McCourt alleged, among other things, that she'd had an affair with the ballclub's "director of protocol," before casting her out of a job she says she loved. Since then, Jamie has been painted by her husband as professionally inept, consumed by publicity, and living a lifestyle that is "out of control." She disputes it and believes she will win a court case that begins on Aug. 30, in which the fate of the Dodgers is set to be determined. Her plan is to buy her estranged husband out of his share of the team and return triumphantly to the owner's box.
In a town where celebrity scandals are as common as wildfires and taco trucks, the McCourts have transfixed the city with tales of marital discord and conspicuous consumption—which was fueled by more than $100 million they have taken out of the ballclub since buying it in 2004, according to depositions. Theirs could be the most expensive divorce in California history, with the total bill estimated by both parties to be approaching $20 million and rising. It's also a cautionary tale about what happens when marriage and business fuse into a toxic partnership.
Their story has social and moral components, too: Frank and Jamie McCourt are embodiments of the boom-and-bust ethos of the past decade, a miraculous period when a pair of relative unknowns could borrow and bluster their way into a lifestyle that includes mansions, private planes, and one of the premier trophy properties in the history of sports. Now, as it all threatens to unravel along with their 40-year relationship, the McCourts have embarked on one last luxury binge, hiring some of the priciest lawyers in the business, including, on Jamie's team, David Boies, who just successfully fought to have California's same-sex marriage ban overturned, and Bert Fields, who has represented the Beatles and Tom Cruise, among others. In Frank's corner is Stephen Susman, a Houston-based litigator described by the American Bar Association Journal as "a voracious animal" who "scares people on his own side."
As allegations have flown back and forth like spitballs, efforts to settle the case have been unsuccessful, and Los Angeles County Superior Court Judge Scott Gordon has raised the possibility that if the couple can't reach an agreement, the Dodgers might have to be sold for no other reason than to pay their legal bills. A growing chorus of fans and columnists would like to see that happen. The team—which the McCourts have revitalized, leading the club to the playoffs three of the past four seasons—is now seen as adrift: Its general manager says he's tired of being asked whether woes on the field are related to ownership turmoil.
Jamie claims to be as shocked as anyone by what's happened. "I thought we were best friends," she says of her husband. Frank, who declined to be interviewed for this story, has mostly stayed quiet about the collapse of his marriage. A few weeks ago he did tell a group of local business leaders: "I have marital agreements with Jamie that make it crystal clear I own the Dodgers, that the Dodgers are not for sale." He is referring to a seven-page document he and Jamie signed a month after they bought the team in February, 2004, which, on first reading, does seem to say quite plainly that Frank owns the team and she does not. But Jamie and Boies, her lead attorney, argue that the story is more nuanced. "To contend that this is simply about a contract that you or I might enter into," Boies says, "totally ignores the nature of a marriage."
Jamie and Frank met at Georgetown University when she was 17 and Frank was 18. As Irish and Bostonian as they come, Frank was the fourth generation of McCourts to work in construction and grew up in a middle-class home with six siblings. Jamie was raised in Baltimore, where her father, Jack Luskin, owned a successful chain of discount TV and appliance shops. Jamie and Frank were married in 1979—her Jewish parents disapproved of the interfaith marriage and didn't attend. The couple lived in Boston, where Frank pursued ambitions of being a real estate developer. Jamie says she lent him the first $1,000 to start his company—one of many details from a life together that might be germane at trial and which Frank's side denies.
In 1987, Frank bought a 24-acre parcel of land on Boston's waterfront that had been the rail yard for the bankrupt Penn Central Transportation for around $8 million, and then spent the next quarter century making plans for the plot, known as the Seaport property, and operating it as a lucrative parking lot. He fought bitter lawsuits and also took on debt to fund new projects and to buy bigger homes, eventually moving into an 18,000-square-foot estate in Brookline, Mass., where the McCourts raised four boys. Unlike her husband, Jamie is a self-described "big worrier" when it comes to money. She was horrified, she says, when, early in the marriage, a sheriff appeared at their door to collect a debt related to her husband's business and when a lien was later taken out against their house. Because of this, the McCourts decided that their residences would be put solely in Jamie's name.
Jamie earned a law degree from the University of Maryland and an MBA from Massachusetts Institute of Technology and practiced family and real estate law in Boston before joining McCourt Co. in 1994, to work alongside her husband as general counsel and later vice-president. It was her lifelong dream to own a big-league baseball club, and over time it became a shared dream. In 2001 they lost out on a bid to buy the Boston Red Sox but continued to look elsewhere. They were also dogged by money woes. A May 2003 internal memo to Frank and Jamie from a senior McCourt lieutenant entitled "here we go again" warned of a looming business and personal liquidity crisis if they didn't watch their spending.
Still, they pursued the Dodgers, which Rupert Murdoch's Fox Entertainment (NWS) decided to sell in 2003 after seven years of lackluster ownership under the management of Robert Daly, former co-CEO of Warner Bros. The team was losing an average of $75 million a year, and Murdoch showed no affection for the game—what he wanted was the team's broadcast rights for Fox's regional sports cable network. Having just signed a 10-year contract on extremely good terms (with itself), Fox put the team up for sale. It attracted few serious bidders, among them the McCourts. The stated purchase price was $421 million, much of it borrowed. Fox was so eager to get the team off its books that it provided McCourt entities with two loans totaling $71 million, plus a separate two-year, $125 million loan with the Seaport property pledged as collateral. It even agreed to give McCourt a $50 million rebate to reimburse his companies "for certain preexisting commitments." In sum, Fox lent the money for nearly half the purchase price, though McCourt still had to come up with $225 million in cash, $125 million of which was also borrowed, a person close to him says.
According to someone who was involved in the sale for Fox, Jamie came to all the key meetings and seemed the smarter of the pair when it came to hammering out the finer points, though she possessed a more volatile personality. It was a huge financial stretch, but it also had the potential to be one of the greatest trades in history: With some creative financing, the McCourts essentially swapped a 24-acre parking lot in Boston for the 400 acres that hold Dodgers Stadium and the surrounding Chavez Ravine area near downtown Los Angeles, in addition to the team itself. They could eventually develop the land around the stadium, set up their own regional sports network, and sell the naming rights to the ballpark if they wanted to. Although press releases at the time said the team had been bought by Frank and Jamie McCourt, only Frank's signature was on Major League Baseball documents and papers guaranteeing the debts.
Unlike Massachusetts, California is a community property state, meaning any property acquired by a couple during marriage is owned equally, unless they agree otherwise. The McCourts enlisted their longtime Boston attorney, Lawrence Silverstein, to ensure that their homes would remain protected from creditors once they moved West. Silverstein drew up the now-contentious marital property agreement, which states that even in the event of a divorce or death, Jamie alone owns the residences, which at the time included the Brookline house as well as a $19.5 million, 100-acre estate on Cape Cod, a smaller house on a golf course nearby, and a ski place in Vail, Colo.
From the moment they stepped off a plane into the California sunshine, the McCourts were viewed warily by the locals—Los Angeles Times baseball columnist T. J. Simers routinely described Frank as "The Boston Parking Lot Attendant." But after a flurry of personnel changes, the Dodgers made the post-season in four of the next six years. Frank and Jamie ruled the club, with her as a hands-on president and later CEO and him as the big-picture owner. At many home games the pair would sit in the first row to the left of home plate, next to the Dodgers' dugout, his silver mane and her blonde bob visible from the cheap seats. Once, the TV cameras caught them in a kiss. Jamie became the Dodger's public face and a fixture in the city, joining the board of the Los Angeles Museum of Contemporary Art as well as the board of trustees at the University of Southern California.
In 2005, a year after buying the Dodgers, the McCourts refinanced their loans with a $250 million placement of notes that was used to pay back the $71 million in Fox loans, and presumably left over ample money to fund their ambitions. Despite Frank's perennial claims that he still intended to develop the Boston Seaport, rather than pay down the note in 2006 he defaulted on it, allowing Fox to take possession of the parking lot. The media giant quickly flipped it to another developer for a small profit.
According to depositions, Frank and Jamie also began taking money out of the company in the form of salary and "distributions"—a total of $108 million during their first six years of ownership. This is a striking figure, because it nearly equals the amount of cash Frank put into the ball club at purchase. Today, according to McCourt insiders, the Dodgers' debt load stands at around $525 million, the majority of it borrowed against future ticket sales. It appears that much of the money that flowed out went toward financing a real estate shopping spree: Soon after arriving in L.A., the couple (technically, Jamie) bought a $20 million, 15,000-square-foot home across from the Playboy Mansion in Beverly Hills; a $6.5 million "guest house" next door; a $27 million Malibu beach house; and the $19 million house beside that.
According to court documents, renovations at the first Beverly Hills home included building a natatorium to house the Olympic-size indoor pool where Jamie would swim laps, as well as steam, sauna, and massage rooms, the construction of a guardhouse, and having the entire kitchen of the McCourts' old home in Brookline carted up, shipped to L.A., and reconstructed at a cost of $180,000. They upgraded their NetJets account so they could fly in Gulfstreams rather than Citations and bought land in Cabo San Lucas, Mexico, for $4.6 million. They did sell their Brookline home in 2007, but in a March 2008 e-mail, Frank still told his wife that he was "thinking of ways" to reduce the debt carried on the houses: "These are all big commitments that are challenging right now financially but I am willing to figure out how to do it because I want to make you happy," he wrote. When asked why they had so many houses, Jamie says that they were simply trying to recreate the life they enjoyed on the East Coast, where they had their city home and a getaway on the Cape. She added that Frank had been reluctant to sell any of the properties. In depositions, Frank described the couple's lifestyle starting in 2008 as becoming "out of control and unsustainable," but Jamie says he was the driving force behind many of the purchases and projects. (Her office is down the block from a hotel where Frank has been living in a $30,000-a-month suite and has an option to buy a $9 million condo.) "Let me tell you," she says, "I couldn't take a leaf from a tree without his approval."
Around the same time, during estate planning meetings with a lawyer in Los Angeles, Jamie says she was informed that the marital property agreement she and Frank had signed three years earlier gave her sole ownership of the houses and gave Frank sole ownership of the Dodgers in the event of divorce or death. By this time the value of the Dodgers had increased, while the real estate market was suffering. The lawyer, Leah Bishop, claims that Frank admitted in a meeting that this was a mistake and that everything should be shared. (Frank's lawyer says he was referring to something else.) Nonetheless, Frank appeared willing to revise the document and officially make the Dodgers community property, and Bishop set about drafting it. In one e-mail exchange between Bishop and Silverstein, the Boston lawyer who wrote the original MPA, Silverstein told Bishop that there hadn't been a mistake in the original MPA, writing, "I recall [Jamie] saying in those days she didn't care about the business assets so long as she had her separate pool." In response to Silverstein's e-mail, Jamie angrily wrote that this was "preposterous....Don't forget, I was a divorce lawyer there and I am really clear on what the intended distributions were to be...my fault, I guess, for not having read the post marital document and believing that you were preserving the status quo."
Jamie's e-mail address was email@example.com. Frank's was firstname.lastname@example.org. Swimmer copied Malibu on her angry e-mail, and Frank then wrote back: "Jamie—I don't have the energy to deal [with] this right now but on this point, and the history behind it, Larry is correct. That said, we have been talking about doing things differently moving forward—but the history is what it is and all our legal documents reflect this and have always reflected this." Swimmer then forwarded Malibu's response to estate lawyer Bishop, who wrote to Jamie: "He's right, but it needs to be changed before you guys kill each other."
Less than two weeks later, Jamie, in an affectionate e-mail to Frank, wondered why he still hadn't agreed to meet with the estate lawyer. "We should both remember that we've been life partners for nearly 40 years," wrote Jamie. "We have been enormously fortunate with our love, our health, our children, and our success together. I would really like to get this annoying estate work behind us for a variety of reasons....What about this am I missing, because it really makes me feel that you don't care about me? If we come through this troubling time in our lives we should think about renewing our vows...I love you." What she didn't know until later that day is that Frank had changed his mind and written to Bishop: "We're not moving forward [with] any change of asset ownership at this time." This, Frank's lawyer Susman contends, underscores how valid the agreement is. "Pigs get fat and hogs get slaughtered," he says. "If she had not pushed him so hard, he might have changed it."
According to both sides, the McCourts' marital strain had roots that went deeper than the MPA issue. Jamie's role and profile at the Dodgers increasingly troubled Frank. A December 2008 memo written by a top Dodgers lieutenant that seems to lay out a blueprint for Jamie to run for U.S. President is seen as evidence of Jamie's wayward personal agendas, but she says it was a lark. Frank didn't see it that way. According to notes jotted down by lawyer Bishop during a conversation with him last summer: "He just realized she thinks she can run the team. Total disconnect with reality." As things were disintegrating, the Los Angeles Business Journal named the McCourts 2008's "power couple of the year."
Last summer they separated. Their growing domestic feud became fodder for the gossip site TMZ, which reported that Jamie had allegedly called 911 because she felt threatened by Frank when she was on a scheduled swim at the Beverly Hills house. Frank's lawyer said Frank knew nothing about it and told TMZ that Jamie had been at the house with the Dodgers' then "protocol" executive, Jeff Fuller, with whom she was allegedly romantically linked. Jamie declined to discuss her personal life. "I want to look back and say I took the high road," she says.
On Oct. 21, Jamie received an e-mail informing her that she was fired from the Dodgers. Frank wrote that the reasons included "insubordination" and "inappropriate behavior with regard to a direct subordinate." Jamie and Boies tried to gain access to her office—which she had been locked out of—but were turned away at the guard gate. Boies brought along a cameraman, and the footage made its way onto TMZ. Judge Gordon denied Jamie's petition to be reinstated as CEO. More than 50 employees who had worked closely with her have been pushed out.
The legal battle and appurtenant depositions and documents reveal the extent to which the McCourts used the Dodgers to fund their lavish lifestyle. Two of their four sons were paid hundreds of thousands of dollars in salary by the team even though one worked at Goldman Sachs (GS) and the other was in school at Stanford. A Beverly Hills hair stylist was given more than $150,000 a year to primp both McCourts in their home. Vladimir Shpunt, a 71-year-old psychic healer who lives outside Boston, was paid an undisclosed amount until 2008 to beam his positive thoughts at the team during games while sitting in his living room some 3,000 miles away. Additionally, when Jamie went to court to fight Frank for spousal support, she claimed she was owed $444,000 a month in Dodger "perquisites," including $248,000 for leasing a private jet and nearly $95,000 for "access to the owner's suite, dugout seats, and food and beverages."
As this was going on, the amount of money the McCourts pay their ballplayers shrank. The opening-day payroll of around $95 million is the 11th-largest in the league, down from fourth in the last year of Murdoch ownership. So far, the Dodgers' 2010 performance has been disappointing. Star outfielder Manny Ramirez has been out with an injury, and Manager Joe Torre has been cryptic about whether he plans to stay beyond the current season. "Our payroll is down a little bit, but we don't lack for resources," says Dodgers General Manager Ned Colletti Jr. "If there's a distraction, it's that people continually ask the question. This is probably the 50th time I've been asked this question this year."
David Boies believes he has at least five legal arguments why the MPA is invalid. One is that Jamie did not have independent counsel at the time she signed it; even though she herself is a lawyer and Silverstein suggested she hire someone, how many people in a seemingly happy marriage, working with their longtime lawyer, would have done so? Boies' most sensational argument is based on something he discovered reading through the files one day: that the schedule of assets that designates each spouse's separate property was actually changed right before Jamie signed it on Mar. 31, 2004. Whereas earlier drafts had said Frank's sole property was "exclusive" of the Dodgers, the schedule was amended to say "inclusive." Forensics experts hired by Jamie's side also determined that three copies of the MPA that Frank signed had the wrong schedules attached to them, which were then switched. Boies argues that by altering a signed and notarized agreement without telling the parties, the agreements are invalidated: "It's not a technical issue, it's fraud," he says. Susman argues that these were administrative errors that were corrected and says the evidence is clear that Jamie knew what she was signing. He wrote a letter on Aug. 10 to a member of Jamie's legal team: "Her credibility is shot and this is no doubt why her lawyers are now grasping at straws...."
The bigger question, though, is why the McCourts haven't been able to settle their differences. Frank recently told the court that he has borrowed money from his brother and a friend because he is out of cash and was turned down for a loan. (Jamie's side says this was a subterfuge.) Judge Gordon did approve Frank's request to sell their Cabo San Lucas property for $5 million—which Jamie had opposed—with all the money going toward her legal fees and to cover past support payments of $637,000 a month that Frank has not made.
The parties can't agree on the value of the Dodgers, and Jamie is insistent that she get a piece of the business. Boies says she is willing to accept a minority share; Frank hasn't budged. His camp says he has offered far more money to Jamie than she would get if the Dodgers were ordered sold and the proceeds were split, after paying off the $525 million in debt. But that values the Dodgers at an estimated $700 million to $900 million. Jamie's side believes the team could be worth more than $1 billion, especially once the site is developed or the team has launched its own sports network. As the trial looms, Jamie knows firsthand how intractable Frank can be. "I'm disappointed, not surprised," she says. Neither, presumably, is Frank. In better days, he once said of their four-decade partnership: "It's been one long argument, actually."