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SBJ/July 17 - 23, 2006/This Weeks News
Texas still owes long-gone A-Rod $22.5M
Published July 17, 2006
Nearly 2 1/2 years after trading Alex Rodriguez to the New York Yankees, the Texas Rangers still owe him $22.5 million over the next three years.
|Sources differed on if part of
a recent loan would be
used to pay Rodriguez.
The $32 million the Rangers owe Rodriguez and the two unidentified players emerged as part of a recent loan the company that owns the team borrowed on June 30. That $75 million transaction was not explicitly to pay off Rodriguez, though one financial source said there was a good chance some of the money would be used for this purpose.
“They need to get through their deferred compensation issues,” the source said.
Another financial source said the team had prepared for the amount of money still owed Rodriguez when he was shipped to the Yankees, and the new borrowing of parent company Southwest Sports Group was not needed to pay him.
As part of the trade, Texas agreed to pay $67 million of the $179 million in salary that Rodriguez is owed over the final seven years of his contract. He signed with the Rangers in 2000 in a still-record $252 million, 10-year deal.
Southwest Sports Group, which also owns the NHL’s Dallas Stars, half of the American Airlines Center and other sports assets, now has $468 million of debt, a sign that bankers are sold on the financial story in Texas. Southwest declined to comment.
“Southwest Sports Group is a fantastic group of assets and I have a huge amount of confidence in Tom Hicks,” said Sal Galatioto, founder of GSP Capital, which is one of the banks lending the firm money. Hicks owns Southwest.
Southwest borrowed $325 million from a syndicate of banks led by JPMorgan Chase in December, and added the $75 million last month because, one financial source said, of favorable financial conditions. JPMorgan also led that deal. The Rangers also have a $68 million loan from MLB’s credit facility. JPMorgan declined to comment.
Southwest owes on average about $18 million in annual interest payments, a financial source said.