The quarterly meetings of MLB’s 30 owners has just wrapped up, and as we reported yesterday, action with the league seizing control the Rangers and selling the club without creditor approval is not taking place this week.

According to Eric Fisher of the SportsBusiness Journal (via Twitter), Selig has set “another deadline [to seize and sell the club], but he declines to say what it is.”

Asked what it would take to break the stalemate between Hicks Sports Group’s $270 million offer, and the lenders demanding $300 million, Selig said, "We'll let human events determine that."

Should the league seize the club from Hicks Sports Group, they would then quickly sell it to a group led by sports attorney Chuck Greenberg and current Rangers president and Hall of Fame pitcher, Nolan Ryan. MLB would then move to revoke the $70 million in liens on the Rangers, and let the creditors fight over the remaining $200 million, if that figure still stands.

The SportsBusiness Journal reported earlier this week that should the league sell the club without creditor approval, lenders would take an unfavorable view of lending to current or would-be owners of MLB clubs in the future. According to Fisher, Selig said that he does not expect negative effects on future deals from recent letter to Rangers creditors threatening to revoke the liens.

If the action takes place, the creditors would then move to push the Rangers into involuntary bankruptcy in an attempt to gain a higher sale price through former bidders Jim Crane or Dennis Gilbert than what the Greenberg/Ryan group is offering.

The total price of the Greenberg/Ryan offer is $570 million, but includes approx. 154 acres of land around Rangers Ballpark in Arlington, and is not covered by a lien and therefore would not be part of any bankruptcy proceeding. Since the Ballpark is not owned by HSG, it is not an asset that could sold off in the sale.

Sources close to the sale would not divulge what the total assets surrounding the Rangers sale include.

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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Comments (7)

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Chances that bankruptcy court blocks sale?
written by ab03, May 13, 2010

Any thoughts on the chances of a bankruptcy court blocking the sale. It's basically new territory as we really only have the NHL/Coyotes situation to go on and there were different circumstances there.

The problem is that if a court decides to do anything but deny the creditors' claim, the Rangers are going to be in purgatory for a while. So what are the chances that a bankruptcy judge abides?

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Rangers won't be pushed into involuntary bankruptcy, HSG will
written by Pinto, May 13, 2010

I don't understand why the lenders' threat continues to be characterized as forcing the Rangers into involuntary bankruptcy. That is simply not the case. They might force HSG, the owner of the Rangers, into bankruptcy, in which case the Rangers might be an a*set of the bankruptcy estate, but to say that the Rangers will be forced into bankruptcy is misleading.

I suppose to a large extent it doesn't matter all that much if this fact is misstated, but you'd think that with the business angle you're coming from, and with the level of detail you're presenting, and with the fact that this issue has been pointed out in the past, and with the relative lack of complication involved with this particular fact, that it would be corrected eventually.

Then again, people get more riled up when they read that their team might be declared bankrupt, than if HSG goes belly up!

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Um...
written by Maury Brown, May 13, 2010

Um... It is the Rangers that would be forced into bankruptcy, not HSG. The reasoning is the attempt to garner more from the sale of the club a*sets by bringing in other bidders (presumably, Crane and/or Gilbert).

So...

Don't get confused... It's the Rangers, not HSG that would be put into involuntary bankruptcy.

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The Rangers or Texas Rangers Baseball Partners?
written by ab03, May 14, 2010

Are they forcing the Rangers into bankruptcy or Texas Rangers Baseball Partners?

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Uh, yeah...
written by Pinto, May 14, 2010

Yeah, So, like, bankruptcy is a procedure for creditors to maximize the value of the a*sets of their debtor. Creditors = Monarch and other lenders. Debtor = HSG. a*set = Rangers organization. Do we need to keep going?

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...
written by Maury Brown, May 15, 2010

I'll put it this way...

It's unknown at this point (or, at least, through my sources close to the sale), what the creditors plan to do. It could go either way... Rangers... HSG.

Up until recently, there was a feeling that the Rangers would be the sole focus. Now, there is leaning toward HSG.

But, as I said, the matter is unknown at this point. Personally, it would be better for HSG to be pushed into bankruptcy. It places onus on Hicks, which is where this should be in the first place.

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Doubt it matters much other than procedurally
written by Pinto, May 15, 2010

If the Rangers were forced into bankruptcy, the lenders would look to liquidate the a*sets of the club, which I a*sume would include all of the club's contracts rights, including whatever rights they have as a major league affiliate, as well as the balls, helmets, bats, ballpark etc. Basically the bankruptcy trustee would take everything the club owns and sell it to the highest bidder. But given that the Rangers club is not a debtor of these lenders, I don't see how that would happen.

On the other hand, if HSG were to be forced into bankruptcy (which is the only thing that even seems feasible, since it is HSG that is a debtor to the lenders), the trustee would look to liquidate what HSG owns, which is the ownership of the club itself (the club being a corporation or other entity, not just a bunch of helmets, bats and TV rights). In that case, the same entity would continue to own the bats, ballpark, rights as a major league affiliate, etc., but someone other than HSG would own that entity.

In either case you would have a bankruptcy trustee potentially deciding who gets to run the show, either through a new club entity or as the new owner of the existing club entity, so the question of whether it's the Rangers or HSG that actually goes into bankruptcy is fairly insignificant.

However, the fact that this point hasn't been accurately portrayed by any media I've seen, despite the rather heavy coverage, tells me either that (a) the strategy has not been completely thought out by the lenders, (b) the lenders are trying to scare fans in order to apply pressure by claiming the team will be declared bankrupt (since the fans couldn't care less about HSG), or (c) the recipients of the leaks just misunderstand what they're being told. It's a subtle issue, so (c) would be completely understandable. But my guess would be (b).

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