Chuck Greenberg, by bring in Nolan Ryan,
and solid local group of investors, made
him the savviest of the three bidders for
the Texas Rangers.
If there’s one thing that Bud Selig and the 30 owners in MLB have done in near lockstep over the last decade or so, it’s been to embrace being “conservative”. Selig, and the old guard owners such as Jerry Reinsdorf can remember far too well the tail-chasing that the owners dealt with when the likes of Ted Turner or Charlie Finley were in the Lodge. Mavericks, they were. Bold, brash, and mostly brilliant, they drove a wedge between the owners, and drove the likes of Bowie Kuhn and Fay Vincent nuts.
Now, nearly every owner that has come into the ownership ranks follows Selig’s lead, and, for the most part, the 30 of them have avoided controversy.
There have been exceptions, as of late. Whether it has been divorce (Moores, and the McCourts) or the economy, few clubs have not felt a pinch over the last two years through an economic downturn the likes of which haven’t been seen since the Great Depression.
How Greenberg (& Ryan) Won the Day
Tom Hicks certainly has felt the economy give him a punch in the ribs. The owner of not only the Texas Rangers, but Dallas Stars of the NHL, and co-owner of soccer’s England’s Liverpool club of the Premier League, his Hicks Sports Group fell into massive debt after defaulting on interest payments for $525 million in syndicated bank loans in April of this year. In May, under the stress of the default, Hicks said he would consider selling the controlling interest in the Rangers, and the bidding game was on.
Profiling the final three bidders (see Sizing Up the Sale of the Texas Rangers), the fact that Chuck Greenberg’s group has been selected as the exclusive bidder in the sales process seems to have been the logical route since May.
Greenberg and current Rangers president and Hall of Fame pitcher Nolan Ryan bonded early on, a near critical move on Greenberg’s part. Ryan made it clear from the outset that he was interested in being an owner of the Rangers, but lacked the capital to be the controlling interest.
If you look at the sale of the Nationals, and Cubs, a key component to the ownership group makeup has centered around local investors. MLB loves this aspect as local owners are more likely to take an interest in the wellbeing of the franchise (how it performs, both on the field, and in the business community is reflective of the local owners that live where the club resides), and the community has a sense that the group has their best interest, at heart. Greenberg and Ryan built that aspect into the group (reports are that up to 80 percent of the group is local).
As for the other two finalists, Gilbert, the former player agent that made his fortunes in the insurance industry, more or less, shot himself in the foot by wanting to be in charge of baseball operations, if he landed the club. That did not sit well with Ryan.
"I told Tom that I didn’t feel like I would stay with the ballclub if Dennis came in under that scenario — Dennis overseeing the day-to-day operations,” said Ryan earlier this month.
As mentioned at the outset, overly ambitious owners are not the current mold for MLB. Given the high standing Ryan has, both as an executive and as a former player, every effort would need to be made to keep him as part of any group that eventually was selected by Hicks. Even with Gilbert having White Sox owner Jerry Reinsdorf in his corner, having a former agent running the baseball operations after Ryan left the organization would certainly have raised eyebrows within the ownership ranks, and for a large majority of Rangers fans.
Concerning Houston businessman, Jim Crane, you either paint him as a “never say die” bidder, or a pawn in the process. Reports late yesterday were describing Crane’s bid as the most likely winner, based upon his increased offer, but it also brought up the memory of Marc Utay’s group with the sale of the Cubs. In that instance, the Ricketts family were well past their 30 day exclusive negotiating window when the group lowered their offer after seeing how sweet the Cubs had made rights fees to the Tribune owned WGN was. The Ricketts group understood that without WGN in the sale, the rights fee would go up, so they brought down their offer. Tribune then opened up the bidding process again, which brought in Utay, a rival bidder, back into the process. That ginned up the Ricketts bid, and helped push the deal to conclusion.
With the Rangers, Crane likely played the part of Utay. A looming problem for Crane was the fact that no matter how high the bid offer, memories of him backing out of the purchase of the Houston Astros at the 11th hour still does not sit well with many of the owners. If approved by Hicks, there was a very real possibility that the needed 75 percent approval vote by the 30 owners would not be there.
When Crane reconfigured his bid to the highest offer, it worked to gin up the Greenberg/Ryan offer, which like clockwork, happened early Tuesday. That was all Hicks needed to announce that the Greenberg/Ryan group would enter into exclusive rights to negotiate the sale of the Rangers.
While the title for this article is “How Chuck Greenberg Won The Texas Rangers”, Greenberg and Ryan haven’t “won” the Rangers, yet. In sports parlance, the Rangers are Greenberg’s and Ryan’s to lose as they now have 30 days to complete the sales agreement.
The Greenberg/Ryan group must now take what has been submitted as an offer figure, and turn it into reality. Based on how much debt the group needs to carry, getting credit through the banks – a once far easier venture – has become exceptionally difficult due to the tightened credit markets. This became the major hurdle for the Ricketts group in getting the deal finalized with Tribune for the Cubs, and why the exclusive negotiating window got extended well past 30 days. The Greenberg/Ryan group will most likely not come under the heavy weight of considerable debt, as the Cubs deal was, due to the design of the transaction; the Cubs deal was a leveraged partnership with the Tribune Co. that required a heavy amount of debt to be carried. Still, the group will have actually get the money headed in Hicks’ direction, rather than showing plans for the final bid on paper. It will be a case of no more talk, and all action.
What will be interesting is to see what the final figure winds up being. Greenberg gave Hicks an out by offering him a minority ownership position within the club. Given that Hicks had desired to retain a controlling interest, the fact that Greenberg and Ryan reached out to him to keep him in the fold had to have extra merit.
However, economics is the primary driver in the sales process, given the fact that Hicks is looking to pay down his considerable debt that is mounting daily, due to interest. If the sale price comes in-between $510-$550 million, as we projected in September, Hicks will reach most amount needed to address the debt, regardless of whether Crane’s bid was higher, or not.
A great deal of ink was spilled on who the final bidder would be. Jon Heyman of SI.com wrote two weeks ago that “Gilbert's group appears to have the clear lead now.” As early as this morning, T.R. Sullivan of MLB.com, and Daniel Kaplan for the SportsBusiness Daily reported that Crane was the frontrunner, due to the increased offer. Both were plausible, and very likely possible as Hicks needed to make his decision on Tuesday. But, in many ways, the other bidders may have simply nudged the group that had the best ownership dynamic into place. It seemed that only a case of the Greenberg/Ryan group not making an offer tweak early Tuesday would have put them in real jeopardy. Now, the rubber will have to hit the road. Unless there is a collapse, the group will wind up at the helm of the Rangers most likely sometime just after the first of the year. MLB's owners hold its quarterly owners meetings in Phoenix, AZ just after the first of the year, and will most assuredly approve the deal, if sales agreement has been reached, or is near being fully finalized.
From the chatter on blogs and in forums, the fans are happy with the Greenberg/Ryan ownership profile. If Hicks gets the money he is seeking, then the deal appears to be a win-win for the Rangers, and importantly, their fans.
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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