SBD/Issue 176/Franchises

Rangers Creditors Plan A Reply To Monday's Bankruptcy Filing

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 CREDITORS
CREDITOR
AMOUNT OF CLAIM
Yankees 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).

Return to top

Related Topics:

Franchises

Video Powered By - Castfire CMS Powered By - Sitecore

Report a Bug