Los Angeles Dodgers Saga Offers Cautionary Tale For Business Owners Seeking Divorce in Alabama

Posted by Steven D. Eversole | Jun 30, 2011 | 0 Comments

The storied Los Angeles Dodgers baseball club is in turmoil after owner Frank McCourt ran out of cash to make payroll, Major League Baseball rejected a $3 billion television deal with Fox to help stabilize the franchise that ruined a divorce settlement between he and his ex-wife Jamie and caused the team to file for bankruptcy protection.

The series of missteps and the potential ruin of one of baseball's most historic franchises is sad indeed, but it points out some tips for business owners who may be filing for divorce in Alabama

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In recent weeks, news media outlets have reported that the Dodgers were unable to make payroll payments to the team's players, coaches and staff. The team was recently liable for an $8.33 million deferred compensation payment due to outfielder Manny Ramirez, who no longer plays on the team, NBC Sports reported.

But some temporary good news came recently when it was reported that Frank and Jamie McCourt, who have been battling a very public divorce, had come to a divorce settlement after 20 months of negotiations. The settlement was contingent on MLB signing off on a $3 million TV deal with Fox, most of which was cash, in order to settle the divorce.

But the settlement was stifled by Major League Baseball Commissioner Bud Selig, who nixed the deal with Fox and had the league take over the team and make day-to-day decisions. McCourt, in turn, put the team into bankruptcy court.

The issue in the divorce is whether the Los Angeles Dodgers, purchased in 2004 by McCourt for $430 million from NewsCorp, is considered community property under California Law and therefore can be split between the divorced couple.

ESPN reports that Dallas Mavericks owner Mark Cuban may be interested in purchasing the troubled franchise. It's possible that a California court rules the team is community property and must be sold.

In Alabama, however, property in a divorce is generally split based on what a person brought into a marriage. In cases where a business is purchased or started in the middle of a marriage, it may make things a little trickier to navigate. While uncomfortable, it may be prudent to write a contract to decide what happens during a split to ensure the stability of the business in the future. A prenuptial agreement or putting the business in trust are just two options. The truth of the matter is that divorce is one of the leading causes of business failure.

And while many couples think about how to split the assets, the debts don't just disappear. Spouses filing for divorce must take other things into consideration, such as who pays last year's taxes and what about the balances on our five department store credit cards?

These issues and others must be handled by an experienced Alabama Divorce Lawyer in order to ensure each side equitably is responsible for debts, as well as gets the assets. It's also important to note how taxes in an Alabama divorce can affect each spouse. Splitting investments, avoiding capital gains tax hits and other issues must be taken into consideration and protected in order to ensure a person leaves a marriage able to afford life.

Additional Resources:

Dodgers divorce: McCourts reach settlement after 20 months, by Aaron Gleeman, NBC Sports

Dodgers' bankruptcy lawyers to put Bud Selig under oath, by Bill Shaikin, The Los Angeles Times

About the Author

Steven D. Eversole

J.D., Samford University's Cumberland School of Law, Birmingham, Alabama B.A., University of Alabama, Tuscaloosa, Alabama

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