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SBD/Issue 176/FranchisesPrint All
MLB, HSG Have Thrown Rangers Into
Bankruptcy In Hope Of Facilitating Sale
The creditors to Hicks Sports Group plan to file a reply today to the surprise bankruptcy filing of the MLB Rangers. HSG, which owns the Rangers, has been battling with its creditors over the sale of the team. A 1:30pm CT hearing is scheduled in U.S. Bankruptcy Court for the Northern District of Texas in Ft. Worth. Nolan Ryan, who is part of the group seeking to buy the team, is expected to attend. MLB and HSG chose to throw the team into bankruptcy in Texas yesterday morning as a way to facilitate the sale to Ryan and Chuck Greenberg. However, creditor sources promise a major response, with one source saying “this is now war." The creditors’ lawyers are in Texas to contest the filing, which would give the creditors around $230M, one source said. They had been seeking about $300M and had bargained up to around $280M. But the bankruptcy filing takes away the gains made at the negotiating table over the last few months. The creditors were able to block the deal after HSG defaulted last year. But by throwing the team into bankruptcy, the idea is that the old contracts are invalidated. On the other hand, it is always possible the judge could agree with the creditors that a fair auction was not held and re-open the sale (Daniel Kaplan, SportsBusiness Journal).
MEANS TO AN END: ESPN DALLAS' Richard Durrett noted the intention of yesterday's bankruptcy filing is to "remove the club from the dispute and pave the way for the sale to be completed through the courts." Rangers Owner Tom Hicks yesterday said, "We reached a total impasse. We approached Chuck and MLB and we all agreed this was the plan that would work to end the impasse and allow the Rangers to be sold to this investment group." Durrett noted the plan would "guarantee the lenders all of the $75 million owed by the club itself." However, it is "likely that won't satisfy the creditors, who would then be dealing with HSG to recoup more money," some of which "could be accomplished through the sale of the Stars and any other HSG assets." Greenberg said of the creditors, "I'm not expecting an overnight personality transplant. Odds are they won't take this well. But the Rangers are going to be satisfying 100 percent of the franchise's obligations" (ESPNDALLAS.com, 5/24). Greenberg contends that the "bankruptcy process was the best way to expedite the sale." He said yesterday, "We're looking forward to a great future. This wasn't exactly how we designed it a while ago. I'm confident the action taken this morning will break the stalemate" (FT. WORTH STAR-TELEGRAM, 5/25). In Dallas, Tim Cowlishaw writes the "good thing about Monday is that maybe this really is the beginning of the end of the Hicks era, and the transition to Greenberg and Ryan" (DALLAS MORNING NEWS, 5/25). ESPN DALLAS' Jim Reeves wrote, "The important thing for the fans is that this gets done sooner and not later, that it doesn't get tied up in legal maneuverings, that some other bidder, willing to up the ante a little more, doesn't pop out of the woodwork and muck up the situation, delaying this even further" (ESPNDALLAS.com, 5/24).
OPENING DAY? In Dallas, Evan Grant notes this bankruptcy filing, "hatched by Hicks' attorneys about a month ago, is all about timing." The Rangers, currently in first place in the AL West, own four of the first 50 picks in next month's MLB draft and "would like to add a veteran player or two before the July 31 trade deadline." Greenberg and Ryan yesterday acknowledged that their "planned budget for the operation of the team is larger than Hicks' MLB-approved budget." The petition filed yesterday asked Judge Michael Lynn to "rule within the next 45 days, which could give the team almost a month before the August 16 draftee signing deadline and two weeks before the trade deadline" (DALLAS MORNING NEWS, 5/25). The MORNING NEWS' Grant notes while the filing "doesn't assure the Rangers will have additional funds in time to sign" their draft picks, it does "offer some direction." If GM Jon Daniels and his staff are "wavering between 'signability' and 'ability,' the intent is to once again be aggressive" (DALLAS MORNING NEWS, 5/25). Ryan said, "We have budgeting for where we think we're comfortable for where we're drafting. It doesn't matter if we have the money; if we don't feel like it's prudent to spend the money that way, we won't" (FT. WORTH STAR-TELEGRAM, 5/25).
CREDIT WHERE CREDIT IS DUE: The Rangers' bankruptcy filing listed Yankees 3B Alex Rodriguez as the team's top unsecured creditor, and MLBPA Exec Dir Michael Weiner said that he "expects Rodriguez will get" the $24,892,006.61 he is owed. Weiner: "We have been assured that all contractual commitments to the players will be fully honored" (N.Y. DAILY NEWS, 5/25).RANGERS' FIVE LARGEST UNSECURED CREDITORSCREDITORAMOUNT OF CLAIMYankees 3B Alex Rodriguez$24.9M
Orioles P Kevin Millwood$12.9M Rangers 3B Michael Young$3.9M Dodgers P Vicente Padilla$1.7M Former MLBer Mickey Tettleton$1.4M
MORE FALLOUT: SportsCorp President Marc Ganis noted that "professional sports is watching to see if the judge determines that the franchise can be separated from its parent company's financial obligation." Ganis believes that the outcome of this case "could have immense impact on future financing of major league franchises." He said, "There's an argument in sports that other teams would be better off if Hicks loses the court decision because there would be a ruling that a franchise can't be separated from its parent holding company after the fact" (FT. WORTH STAR-TELEGRAM, 5/25). Stars President Jeff Cogen yesterday asserted that HSG's bankruptcy "doesn't affect the sale" of the NHL club. Cogen said, "The Rangers' filing today was a single-team-only filing. That is separate and distinct from the Dallas Stars. As far as I know, it has no impact on the Stars' sale. They're mutually exclusive. They're being treated as two separate entities." He noted that a "timetable to complete the sale of the Stars has been set." Cogen added, "But I'm not going to have that put out there and be working against it publicly" (DALLAS MORNING NEWS, 5/25).
The consummation of Gary Chouest's agreement to buy George Shinn's 75% share of the Hornets is "now being slowed by Chouest’s desire to put together an out-of-state group of minority owners that would purchase a portion of the team," according to NBA sources cited by Jimmy Smith of the New Orleans TIMES-PICAYUNE. A league source yesterday indicated that Chouest is "seeking to have a group of minority investors purchase 'a significant chunk' of the 75 percent of the team that he’ll purchase from Shinn." While the specific percentage available to outside investors is unclear, the source noted that Chouest "would be the team’s majority owner when the deal is ultimately settled." A source said, "Gary and George have come to an agreement they feel comfortable with. The hang-up has been the lack of ability of Gary to come to an agreement with the investors he’s trying to bring on board." Another source indicated that the "ultimate number of individuals in Chouest’s minority investment group has not been established, but that they are being brought in to cover a substantial gap in the final purchase price." The NBA reportedly has "not begun to perform its due diligence on potential minority owners" because the "complete partnership group has not yet been determined." Sources stressed that the "unsettled ownership situation has not, and is not, expected to retard the process of the team’s search for a head coach" (New Orleans TIMES-PICAYUNE, 5/25).
Karmanos Is Looking To Sell 49%
Of Hurricanes To A Local Partner
Hurricanes Owner Peter Karmanos yesterday said the team is a "community asset" and it "would make sense to have a partner who lives and works in the Raleigh area," according to Chip Alexander of the Raleigh NEWS & OBSERVER. Karmanos has hired Allen & Co. to sell a "full 49 percent" of the team, but stressed that he "was not looking to sell" a majority stake in the club. Karmanos: "That's my baby." Alexander notes while a new investor "would have a hand in management decisions, Karmanos would remain majority owner and represent the Hurricanes at the league's board of governors meetings, where NHL issues are discussed." With Karmanos living in Detroit, "local representation within the ownership group would further ensure the stability of the team" in Raleigh. Local business leaders "praised the possibility of some local ownership for the Hurricanes, although no one publicly expressed interest Monday in buying a share of the team." Greater Raleigh Chamber of Commerce President & CEO Harvey Schmitt said, "It would be terrific for the Hurricanes to find someone locally to be a part of the team. I think the business community and the community in general have adopted the Hurricanes, and a local ownership in the team would only cement that relationship into the future." Former Hurricanes President Jim Cain: "It's always good to have someone with that abiding commitment to the community who understands the role the team plays in the community." Karmanos said that the "financial health of the NHL was stronger than that of other leagues." He said, "Hockey is in great shape financially" (Raleigh NEWS & OBSERVER, 5/25).
POWER PLAY: In Raleigh, Luke DeCock writes the news that Karmanos has hired Allen & Co. to "help him find an investor to buy part of the NHL team is no cause for alarm, let alone panic." If anything, it is a "long overdue move on Karmanos' part that should only accelerate the process of finding a local partner in the franchise." Karmanos has been "talking for more than six years about bringing in a local owner." His decision to "seek help finding a buyer for" former co-Owner Thomas Thewes' share in the team "isn't groundbreaking." It is an "incremental move forward in a process that has taken too long already" (Raleigh NEWS & OBSERVER, 5/25).
Islanders' China Trip Has Been Canceled After
Wang Objected To NHLPA's Requests
The Islanders' planned nine-day trip to China "for training camp in September is off," according to Katie Strang of NEWSDAY. The NHLPA wanted to "send representatives to China before the Islanders' trip to make sure all facilities complied with certain NHL standards." Sources indicated that Islanders Owner Charles Wang "objected to the request because he feared it might cause problems" with his native China. Because of their "reluctance to comply with the requests," the Islanders "declined to put down a deposit that was due for the trip this past Friday." Sources said that Wang also "bristled at the NHLPA's request for a donation to the NHLPA that would be given back to help fund children's hockey programs in China." NHLPA Communications Dir Jonathan Weatherdon contends the request was more a "suggestion." He added that the "suggested donation was not a make-or-break element of the terms." Strang notes the Islanders now must "focus on putting together an alternative training camp schedule." At this point the "top two options are to return to Saskatoon, Saskatchewan, where they held training camp last September, or remain on Long Island" (NEWSDAY, 5/25). Weatherdon yesterday said that the NHLPA's "planned logistics check was standard operating procedure for any event involving the union's membership and was not in any way a sign of disrespect for Wang or the Islanders" (ESPN.com, 5/24).
Team Teal Seems To Have
Boosted Jags' Ticket Sales
The Jaguars said that they have sold "more than 10,000 season tickets this year, more than any other year in Jaguars history with the exception of the team's inaugural season, and many are pointing to" civic initiative Team Teal as the "driving force behind burgeoning sales," according to Abel Harding of the FLORIDA TIMES-UNION. Former Jaguars OT Tony Boselli and former Florida Times-Union Publisher Carl Cannon, "who are spearheading Team Teal's effort, now say they believe there's a strong possibility the Jaguars will be able to avoid blackouts altogether in 2010." Jaguars Senior VP/Sales & Marketing Macky Weaver: "It's hard to determine exactly how many sales (Team Teal) is responsible for. But, their willingness to speak to large numbers has been the contributing factor." Harding noted season tickets "have been selling at an average of 150 per day, putting season ticket renewals and new sales at 34,939 as of Thursday." When 2,100 group tickets "are factored in, the Jaguars say they are now roughly 13,000 tickets away from 50,957 -- the magic number that will prevent blackouts." Team Teal "has grown to more than 527 teams that range from church groups to golf clubs, all headed by captains intent on expanding them, and 2,536 members," who have been "pushing multi-year season ticket deals that range in price" from $300-3,500. Team Teal organizers said that the group "has held more than 50 events ... and spoken to more than 9,500 people," and Jaguars Owner Wayne Weaver and other team officials "have become a fixture on the Team Teal circuit." But Harding noted "no single volunteer has been more visible than Boselli," who has made "more than 45 appearances" (FLORIDA TIMES-UNION, 5/23).
In St. Louis, Jim Thomas reports it is "looking more and more" like Stan Kroenke will be the Rams' next owner after receiving the "strongest public endorsement yet" of his efforts to buy the remaining 60% of the team. NFL owners will not vote on Kroenke's bid during their meetings this week, but Saints Owner Tom Benson yesterday said, "Everybody wants him as an owner, I can tell you." Kroenke has told the NFL that he "cannot be in compliance with the cross-ownership rules at this time, but is asking the league to approve his purchase of the Rams with his promise that he will reach compliance with those rules in time" (ST. LOUIS POST-DISPATCH, 5/25).
Writer Calls Hunsicker "Baseball Brains"
Of Rays' Front Office
GROWING INTO IT: Baseball writer Murray Chass wrote that Rays Owner Stuart Sternberg and his "neophyte staff have been able to overcome the deep, deep hole" that former Owner Vincent Naimoli put the team in is "one of the most impressive developments in modern baseball history." Rays Senior VP/Baseball Operations Gerry Hunsicker is the "baseball brains of the organization," aiding Sternberg, who was a "baseball neophyte" when he bought the club in '05, and Exec VP/Baseball Operations Andrew Friedman, a former investment banker. Now the front office operates in a "winning, intelligent way," which is "180 degrees from the way Naimoli ran" the club (MURRAYCHASS.com, 5/23).
WE HAVE A PROBLEM: In Houston, Richard Justice noted the Astros have the NL's worst record at 15-29 and attendance at Minute Maid Park is down 30% from '07, so "apathy is replacing anger" for fans and the "passion is gone." Houston fans "think the Astros are a joke," a team that is "old, bad and boring on the field, and stupid in the front office." The empty seats "are a referendum" on team Owner Drayton McLane, and if he "wants to make it only about the economy, if that's why he thinks there are acres of empty seats, that's either sad or funny." Justice: "He just seems incapable of dealing in reality. ... He talks a lot about leadership. This is a time when the Astros desperately need some" (CHRON.com, 5/24).
NIFTY FIFTY: The Cowboys yesterday unveiled the logo that the team will display prominently throughout the '10 NFL season in celebration of the franchise's 50th anniversary. The logo will be featured on the team's jerseys next season, in addition to being displayed on all printed club materials (Cowboys).