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While Creditors Unhappy with Arrangement, Expect Sale of Texas Rangers to Greenberg to Proceed PDF Print E-mail
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MLB Club Sales
Written by Maury Brown   
Tuesday, 02 February 2010 12:05

Texas RangersA meeting this afternoon between members of the prospective group purchasing the Texas Rangers and creditors of Hicks Sports Group will take place at MLB headquarters in New York, with talk that the creditors are not pleased with the arrangement of the sales agreement between HSG and a group headed by Pittsburgh attorney Chuck Greenberg and current Rangers president and hall of fame pitcher, Nolan Ryan. According to the SportsBusiness Daily, the specific issues revolve around “$390M of cash changing hands, with the difference assumed liabilities. And of that the banks would only get $250M, sources said. Before they get paid, according to the deal, [Tom] Hicks would be paid for the real estate around the ballpark, MLB must be paid for loans it forwarded the team, and Rangers investment bankers, Merrill Lynch and Raine get paid too.”

One source, presumably on the creditors side of the table, describe the situation as a “train wreck” adding, “We will be better off in bankruptcy court.”

It’s the latter that should be the focus. The meeting – not in a courtroom, but rather 245 Park where MLB headquarters are located – gives you an indication as to how much leverage the creditors have at the moment. The meeting is clearly designed to obtain more money for the creditors, and possibly restructure the deal so that the banks receive payment before other parties.

Beyond that, expect the transfer of ownership to move forward. Here’s why.

The issues at hand with the creditors deal with Hicks Sports Group. Unless HSG is pushed into bankruptcy court, or the creditors sue HSG, the issues around the structure of the deal should not impede it from moving forward. To lend credence to that position, according to the Dallas Morning News, neither Chuck Greenberg nor Nolan Ryan will be in attendance for today’s meeting. Greenberg has been the lead in negotiations to this point. If the meeting were of critical importance, he would be seated at the table.

The Dallas Morning News mentions the attempted purchase of the NHL’s Phoenix Coyotes to RIM co-CEO Jim Balsillie as a precedent for creditors not receiving full payment in a sales transaction when a better offer has been on the table. While there is some level of truth to that situation, the Coyotes deal also dealt, in large part, with Balsillie looking to relocate the club to Canada outside of the NHL’s approval process. The Rangers sale does not have this component in the mix.

Both the sale price of $570 million and the figure cited as $390 million in cash changing by the SBD, is being dismissed by sources to the Dallas Morning News. More news as it becomes available.

Maury BrownMaury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He is available for hire or freelance. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.

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