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Sources: MLB to Seize Control of the Texas Rangers This Week PDF Print E-mail
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MLB Club Sales
Written by Maury Brown   
Monday, 10 May 2010 06:13

Texas Rangers

According to multiple sources, if the stalemate between Major League Baseball and a group of 40 creditors of Hicks Sports Group isn’t resolved this week, Bud Selig will use powers given the commissioner to seize control of the Texas Rangers and sell them to a group led by Pittsburgh sports attorney Chuck Greenberg and Hall of Fame pitcher Nolan Ryan without creditor approval. Currently, Monarch Alternative Capital, a “predatory” hedge fund is reportedly holding out for $300 million in post-sale dollars while Hicks Sports Group is offering $270 million. The Greenberg/Ryan group has reportedly offered $570 million for the Rangers and 154 acres of land surrounding Rangers Ballpark in Arlington. Creditors hold a $70 million lien on the Rangers, but there is no lien on the land, something that has angered creditors as they have no access to monies involved in that part of the deal. Major League Baseball has been acting as an intermediary between HSG and the creditors to finalize the sale.

If the action is taken, it is believed that the creditors would look to force the Rangers into involuntary bankruptcy with the hope of having prior bidders Jim Crane or Dennis Gilbert offer up more money to satisfy more of HSG’s $525 million in debt, while MLB would argue that historically professional sports leagues have been able to select who owns clubs within a league format, regardless of whether the selected owner is offering less than other bidders. Baseball wishes to see Nolan Ryan involved, given his strong standing in baseball.

Selig would use the “best interest of baseball” clause from the league constitution, which reads under Article II, Section 3 of “The Commissioner”:

In the case of conduct by Major League Clubs, owners, offices, employees or players that is deemed by the Commissioner not to be in the best interest of Baseball, punitive action by the Commissioner for each offense may include any one or more of the following:

(a) reprimand; (b) deprivation of a Major League Club of representation in Major League Meetings; (c) suspension or removal of any owner, officer, or employee of a Major League Club...

The SportsBusiness Journal confirms The Biz of Baseball's sources by reporting that "Selig has warned the creditors of the Texas Rangers owner that he could revoke their liens on the franchise if they do not approve the long-pending and controversial sale of the club, sources said last week."  According to the report:

While the creditors would still be paid back something from the proceeds of a subsequent franchise sale, the commissioner by taking this route would be blocking the lenders’ right to stop the sale and have a say in their payments. The creditors would surely sue in response, and one source said many of the roughly 40 lending institutions, which are owed $525 million, are already clamoring to file an involuntary bankruptcy petition on behalf of the Rangers. That document is ready to be filed, sources said.

Selig's warning has sent "shock waves through the sports finance world." As further reported by the SBJ, outside sources see financing issues for future club sales at stake.

“Bud can forget any lender, which includes any hedge fund or anyone, [lending] a single nickel or dime into baseball again,” said Joe Kosich, who owns advisory firm Dornoch Capital Advisors and formerly ran sports lending at Wachovia. “In my opinion, it’s cutting off his nose to spite his face. … It is completely wrong.”

The last time an MLB club was under league control was 2001 when owners voted 30-0 to form a Delaware partnership, Expos Baseball, LP, to purchase the Montreal Expos from Jeffery Loria with the intent to relocate and sell the club. That action occurred when MLB conditionally awarded the club to Washington, DC and Ted Lerner purchased them, rechristening them the Washington Nationals.

MORE ON MLB POSSIBLY SEIZING CONTROL OF THE RANGERS:

The Good, the Bad, and the Ugly of MLB Seizing the Rangers


Maury BrownMaury 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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