On April 1st, the initial closing date for the sale of the Texas Rangers was to take place. When that date passed, prospective owner Chuck Greenberg said that based on how negotiations were progressing between the 40 creditors that Hicks Sports Group is over a half-a-billion dollars in debt to, mid-April was a possible closing date.
“The date is not a deadline or guarantee.” Greenberg said at the time. “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.
Since then, mostly through predatory hedge fund, Monarch Alternative Capital, the sides have been approx. $30 million apart on what it will take to get the deal done. The Greenberg group is offering approx. $575 million for the Rangers and 154 acres of land surrounding Rangers Ballpark in Arlington. With no lien on the land component of the deal, Hicks Sports Group is offering $270 million in post-sale funds to the creditors, while the creditors have stuck to a $300 million figure in order to get the deal done.
Commissioner Selig has said that Major League Baseball could seize control of the Texas Rangers based on his “best interest of baseball” powers in order to sell the club without creditor approval, satisfy the $70 million lien on the Rangers, and let the creditors fight amongst themselves over what other money MLB would offer up (presumably at or near HSG’s $270 million figure).
At that point, the creditors have threatened to push the deal into involuntary bankruptcy in order to bring in other bidders that, they believe, would offer up more money in the sale.
But, what is unknown is whether the Texas Rangers or Hicks Sports Group would be the ones that the creditors would push into bankruptcy court. Indeed, nearly every media outlet (including this one) has reported that the Rangers would be pushed into bankruptcy, but that is not fully known.
In some senses, having Hicks Sports Group in bankruptcy makes the most sense, and the point where analysts are now turning their focus to, should Selig evoke his “best interests” powers. Hicks Sports Group, the holding company owned by Tom Hicks is the one that is overleveraged, and now sits $525 million in debt. Having HSG in bankruptcy would allow the creditors to have the courts decide the sale price for all of HSG’s assets up for grabs, with the presumption that a bankruptcy judge’s first best interest is in satisfying outstanding debt—a ruling in favor of the highest bidder for the HSG assets which includes not only the Rangers, but the NHL Dallas Stars, as well (Liverpool FC, which Hicks is selling his share of is not listed as an asset of HSG).
Selig has said the sell needs to occur, and soon.
"That needs to be completed as expeditiously as possible -- underscoring, underlining ‘expeditiously’," said Selig, at the conclusion of MLB’s owners' meetings in New York this past Thursday. "I'm concerned about the length of time it's taken. I'm concerned for the franchise, for their fans."
The questions looming over the situation is, why hasn’t Selig or the creditors pulled the trigger on their threats? It has been reported that the creditors have the involuntary bankruptcy paperwork drawn up. If Selig pushes the sale through, it allows the league to get an owner in place, and add a layer of difficulty for the courts to extract an owner that the league wants over all others. On MLB’s side, the longer they wait, the higher the odds are that the creditors pull the trigger on the involuntary bankruptcy threat, and in doing so, would place the Rangers as “wards of the state” with the league running the club for however long the matter was wrapped up in the courts, presumably months; perhaps over a year.
Selig has said he wants to see the deal completed “expeditiously” which means it could be today or it could be weeks. This is, after all, Bud Selig we’re talking about; a man that has been known to move at a glacial pace on occasion. At some point, this high-stakes game of poker has to come to a conclusion. Whether it will be Selig, or the creditors making the first move, is the question.
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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