Understandably, the press release from Major League Baseball yesterday regarding the sale of the Texas Rangers has resonated across the country, especially in the Dallas/Ft. Worth market. There have been stories in print, discussions on radio, and presumably on television, about the contents of the press release. There has been some exclamation points on the subject that probably should not have them. Here’s a primer:
- MLB Controlling the Sale Process – This is from last night’s press release: “Major League Baseball is currently in control of the sale process and will use all efforts to achieve a closing with the chosen bidder…” What it means: Not much more than it has for more than a month. The truth is, MLB has been in control of the sales process since January in an effort to bring the sides together.
- Does MLB Control the Rangers? – No, but that’s certainly an option. The aforementioned control of the sale is far different than them holding on to the reins of the club (for more see Time for MLB to Play Hardball on the Texas Rangers Sale).
- Could the Rangers Wind Up in Bankruptcy Court? –This is becoming more of a possibility, although it would be a case of lenders (primarily, hedge fund Monarch Alternative Capital) seeing the $30 million they are seeking to breach the difference between the $270 million offer and the $300 million they are willing to settle for, be eaten away by legal fees.
- Is the “Week of the 19th” a Hard Date? – No. The date comes from comments made by Chuck Greenberg at the beginning of the month, in which he said, “The date is not a deadline or guarantee. As always in a deal of this complexity, nothing is concrete. But, the principles continue to work together, and the various timetables all align for the closing to be the week of the 19th.”
- Is the Deal Going to Collapse? – At some point – either sooner or later – the sale of the Rangers will get completed. Even if the deal were to move to bankruptcy court (in this author’s opinion, a long shot), eventually the dust will settle. This deal is very complex. There are more parties involved than in a straight sale, each with different interests. At the end of the day, however, all need the sale process to come to a conclusion to meet their mutual wants. As has been the case with the sale of clubs such as the Cubs and Braves, patience will need to be the order of the day in order to see it all through.
- Could MLB Consummate the Sale Without Creditor Approval? – This is a looming, and dangerous question, but… in theory MLB could – repeat COULD – consummate the sale without creditor approval. This would set off all kinds of chain reactions. Remember, the 40 creditors are not one giant like mind. There are primary and secondary lenders fighting for funds. The $270 million sale of the assets would be subject to the $70 million lien. At the point, first and secondary tier lenders could turn on each other, and certainly there would be calls for MLB’s collective head by the creditors pushing the Rangers into involuntary bankruptcy in the hopes of gaining a bigger payoff through the likes of Jim Crane. All the more reason for Tom Hicks to remain silent and stand behind Big Brother.
Maury 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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