SBD/Issue 211/Franchises

Mark Cuban Expresses Interest In Making Bid For MLB Rangers

Cuban Previously Bid 
For Cubs During Team's Sale

Mavericks Owner Mark Cuban Friday confirmed that he is thinking about buying the MLB Rangers by either joining Chuck Greenberg  and Nolan Ryan's group or "another as a major investor," according to Barry Shlachter of the FT. WORTH STAR-TELEGRAM. Cuban: "The economics have changed, which has gotten me interested. My lawyers are still going through everything, but the bigger point is that I now have an interest. As I learn more I will have a better understanding about how aggressively I will pursue the interest and whether or not I will actually make a bid come the first week of August or whenever the court sets the date for bids." Cuban added he thinks there is an "opportunity to organize a bid for the team." Cuban: "Or if it's feasible or possible -- and I don't know for sure if it is or isn't -- to work with Chuck and Nolan and their group. I'm not trying to push anyone off or out. I'm exploring." Cuban added that he would ask Greenberg and Ryan "to join the group he ends up in ... should the Greenberg-Ryan group fail to buy the team." Shlachter notes Cuban "declined to say if he would insist on becoming the lead owner." Cuban's "possible entry comes at a crucial time when major lenders are trying to block the scheduled" Aug. 4 bankruptcy court auction of the team "to make it easier to get bids higher than what Greenberg-Ryan are offering." A Friday filing indicated that U.S. Bankruptcy Court Judge Michael Lynn "will hold an emergency hearing Tuesday morning to hear complaints that new auction rules would skew bidding in favor of the Greenberg-Ryan group" (FT. WORTH STAR-TELEGRAM, 7/17). In Dallas, Eddie Sefko notes Cuban "went hard after the Chicago Cubs when they were for sale three years ago, but his bid, which was considered very competitive, was turned down." Cuban at the time said that he "could not envision owning any other baseball team" (DALLAS MORNING NEWS, 7/17).

CHASE FILES SUIT: JPMorgan Chase sued the Rangers Friday for transferring their ballpark lease on the eve of their May 24 bankruptcy filing. Judge Michael Lynn is set to hear arguments tomorrow on a motion by the aggrieved lenders to the team to cast aside the auction bidding procedures set by the court last week. How JPMorgan’s lawsuit will affect that debate is uncertain, though having an auction for the team when the fate of the ballpark  lease is in question could prove tricky. The lenders have complained about what they called the “midnight transfers,” since the Rangers first filed for Chapter 11 bankruptcy in an effort to skirt creditors' objections to the sale to Greenberg and Ryan. What JPMorgan argues in the lawsuit filed in the same court is that the team transferred the lease from its ballpark subsidiary directly into the club. The lenders had an uncapped lien against the ballpark unit, but only a $75M one against the club. And according to the bank, the lenders would have had to consent to any change to the ballpark lease. At a June 1 hearing in the bankruptcy court, Rangers attorney Martin Sosland said the transfer had no economic affect. The lawsuit was filed in the U.S. Bankruptcy Court for the Northern District of Texas, the same venue of the bankruptcy. The Rangers' parent defaulted on its debt on March 31, 2009, and soon after put the club up for sale. Over lender objections, the club, with MLB, chose Greenberg and Ryan. JPMorgan’s suit is notable in that in the months after the January agreement with Greenberg, JPMorgan Chase had been the one lender seeking to push the deal through. The bank is a traditional lender to sports leagues, while many of the creditors are funds with few ties to sports. The split between JPMorgan Chase and the lenders was so pronounced that each hired separate counsel. JPMorgan tapped Latham & Watkins, the attorneys in this case, and what became known as the ad hoc group of first lien lenders hired Milbank Tweed (Daniel Kaplan, SportsBusiness Journal).

GETTING OFF TOO EASY: In Ft. Worth, Mitchell Schnurman wrote under the header, "Texas Rangers' Bankruptcy Needs To Be Done Right, Without Hicks' Side Deals." Rangers Owner Tom Hicks "tarnished the Rangers, embarrassed Major League Baseball and stiffed lenders" in his attempted sale of the team. But the Rangers' bankruptcy plan "would allow him to walk into the sunset with a coronation and golden parachute," which is "reason enough for Judge Lynn to order a do-over." In bankruptcy, it is a "travesty to see a rich guy cut side deals at the expense of creditors and then make a bunch of midnight maneuvers to protect himself." Schnurman: "Haven't we seen enough executives gamble with other people's money, bring down their companies ... and somehow maintain their status on Forbes' richest list?" (FT. WORTH STAR-TELEGRAM, 7/17).

FOCUS ON THE FIELD: In N.Y., Sandomir & Belson note few team sales have been "mired in as much financial turmoil as the Rangers." Rangers 1B Chris Davis said of the sale, "Whenever you sit down and really start thinking about it, you kind of lose sight of what you're supposed to be doing on the field." Rangers 2B Ian Kinsler added, "There's nothing I can do about it. We're just basically waiting for new ownership to take over so we know what our future holds" (N.Y. TIMES, 7/19).

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