Monday, May 24, 2010
Rangers have plan to complete sale
By Richard Durrett
ARLINGTON, Texas -- The Texas Rangers are attempting to complete the sale of the club through a voluntary bankruptcy plan that would fully pay the club's debt to the creditors.
The club filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Fort Worth on Monday, a process they hope will transfer ownership from Hicks Sports Group to Rangers Baseball Express, headed by Pittsburgh attorney Chuck Greenberg and club president Nolan Ryan. The new owners want to be in place by the trade deadline on July 31, so that if the club wants to try to acquire reinforcements, they'd have more money in place to do so.
"We reached a total impasse," said owner Tom Hicks, referencing the negotiations between creditors, HSG and the Greenberg-Ryan group. "We approached Chuck and MLB and we all agreed this was the plan that would work to end the impasse and allow the Rangers to be sold to this investment group."
The plan would guarantee the lenders all of the $75 million owed by the club itself. The intention is to remove the club from the dispute and pave the way for the sale to be completed through the courts. Any additional proceeds, which should total a little more than $280 million, would go to HSG to pay the lenders. That's still well short of the entire $525 million amount that was defaulted on last March. It's likely that won't satisfy the creditors, who would then be dealing with HSG to recoup more money. Some of that could be accomplished through the sale of the Stars and any other HSG assets.
"I'm not expecting an overnight personality transplant," Greenberg said of the creditors. "Odds are they won't take this well. But the Rangers are going to be satisfying 100 percent of the franchise's obligations."
The list of creditors filed with the court includes Yankees third baseman Alex Rodriguez, who was traded six years ago and is still owed $24.9 million in deferred compensation. Kevin Millwood ($12.9 million), Michael Young ($3.9 million), Vicente Padilla ($1.695 million) and retired players Mickey Tettleton ($1.4 million) and Mark McLemore ($970,000) are also on the list. So are a gaggle of vendors.
Rodriguez played for Texas from 2001-03 after signing what was then a record $252 million, 10-year contract. He was traded to the New York Yankees before 2004 season, and that contract has since been replaced by a $275 million, 10-year deal with the Yankees.
Young, the longest-tenured Ranger in his 10th season, is the only current player among creditors listed in the filing. Neither Tettleton and McLemore have played for the club since the 1990s. Others among the top 30 listed in the filing are Tickets.com, Rawlings Sporting Goods Co., Clear Channel Outdoor and Stats Inc.
The sale is still dependent on approval by 75 percent of MLB's owners, but that's not expected to be an issue.
"This plan to complete the sale of the Texas Rangers serves the best interests of the team, its fans, MLB and all other parties involved," MLB commissioner Bud Selig said in a news release. "This agreement assures an orderly process to expeditiously transfer Rangers ownership to the Greenberg-Ryan group, and it protects the franchise's baseball operations. Rangers fans can have confidence that their team has the resources it needs to compete."
The club has been operating under a budget approved by MLB in October. And MLB has agreed to loan the club $11.5 million so that it can operate during the transition. That money will be repaid from the proceeds of the sale. Greenberg acknowledged that he as "a larger budget," but that can't be put in place until the agreement is finalized.
The Rangers aren't the first MLB team to file for bankruptcy. The Chicago Cubs filed for Chapter 11 protection in 2009, allowing the new owners to avoid claims from creditors from the former owner, Tribune Co. The Baltimore Orioles were auctioned off in 1993 after filing for bankruptcy.
"Hopefully today will signal the beginning of the final stage of getting this resolved," said Greenberg, who reached a purchase agreement with HSG on Jan. 23, but the creditors haven't approved the deal. "It's our desire for this to be concluded as quickly as possible."
Greenberg said the business operations have been "paralyzed" by the delay. That includes the ability to market the team and expand the advertising base. Greenberg said he has a group of folks that he wants to bring in to help with that side of the operation, but can't hire them until the sale is complete.
The Greenberg-Ryan group includes about a dozen mostly local investors. An agreement in principle to buy the team from Hicks was announced Jan. 23, more than a month after the two sides entered into exclusive negotiations.
This is the 50th season of the franchise that began as the Washington Senators in 1961, and moved to Texas in 1972. The Rangers have never won a playoff series, going 1-9 in the postseason -- all against the Yankees -- after winning their only three AL West titles in a four-year span at the end of the 1990s.
Cash flow problems for the Rangers began in 2005, according to court records. Hicks had provided more than $100 million to the Rangers since purchasing the team, but problems have mounted over the years.
"Due to the unprecedented downturn in the U.S. economic and housing industry and global economic recession, other commitments and contractual restraints, Mr. Hicks was no longer willing to provide the same material financial support he had in the past," Kellie Fischer, the Rangers's chief financial officer, wrote in a separate filing Monday
The sale hasn't impacted the players, who have repeatedly said they are only worried about what's going on between the lines. The Rangers lead the AL West and are embarking on an 8-game, three-city road trip this week. Hicks, Greenberg and Ryan met with the team before they left for Kansas City later Monday.
"After a huge sigh of relief, the meeting went on," Young said. "Once we knew [bankruptcy] was a way to expedite the sale, we knew it wasn't that big of a deal."
New baseball players' union head Michael Weiner said he has "been assured that all contractual commitments to players will be honored in full."
The Associated Press contributed to this report. Richard Durrett covers the Rangers for ESPNDallas.com. You can follow him on Twitter or leave a question for his weekly mailbag.