Baseball91's Weblog

April 21, 2010

The Sportsmen of the Year

There was a time not long ago when the commissioner of baseball did not allow a baseball owner to have an interest in other professional sports franchises.

Hicks Sports Group, which owns the Dallas Stars of the National Hockey League as well as the Texas Rangers, missed a $10 million quarterly interest payment on March 31, 2009, triggering the default notice on a $525 million loan, according to the Wall Street Journal. The default on the $525 million debt at the time was deliberate, Hicks said, in order to help get better terms from its banks.

In 2007, Hicks Sports Group had partnered with George Gillett, Jr., to buy the Liverpool team of the English Premier League. The Royal Bank of Scotland and Wachovia, leaders at the forefront of the British banking crisis, had reportedly provided the financing to Hicks and Gillett for the 2007 purchase. Mr. Gillett was at the time the owner of the Montreal Canadians. In July 2009, they had faced a deadline to refinance the $574 million debt for their Kop Football (Holdings) Ltd.

On June 20, 2009, Gillett agreed to sell the Montreal Canadians of the National Hockey League, the Gillett Entertainment Centre, and the Bell Centre back to Molson Brewery, the entity which he had staked his majority purchase. Gillett made his fortune through sports franchises, developing Colorado real estate for ski resorts, and in meat packing companies.

In January 2010, Hicks Sports Group reached an agreement to sell his majority share in his Texas Rangers which he acquired in 1998 to Chuck Greenberg. Sources told Jeff Wilson of the Star Telegraph on April 6, 2010 that Major League Baseball sent a request to lenders led by Monarch Alternative Capital, who hold $525 million in Hicks Sports Group debt to reach settlement with Hicks Sports Group, to allow an agreement in place with Chuck Greenberg and Nolan Ryan to move forward toward final approval from baseball’s club owners.

In England this month, Tom Hicks refused an offer from the Rhone Group of New York of £100-million for his 40percent to satisfy the Royal Bank of Scotland’s demand for a pay-down on his huge debt. In an interview with the Wall Street Journal over the weekend, Hicks reportedly said that he anticipated the Liverpool soccer team to bring £600 million to £800 million ($1.24 billion), with his 50% stake in the sale, four times his original investment.

In delivering a damning indictment on his relationship with Tom Hicks, George Gillett, Jr., said in a March 28, 2008 interview with Prime Time Sports Radio in Canada,: “This partnership [with Hicks] has been unworkable for some time. We gave our partner a long period of time to try to make arrangements to buy us out. We didn’t put pressure on him but he ultimately did not get to the finishing line. Because of the things he said, the fans’ reaction has been so negative to him that if we sold to him it has been made untenable for us. He threatened to block me selling to Dubai – that was certainly one of the things that made the fans upset.”

On April 15, 2010, Bloomberg News was reporting that the team’s creditors might force the Texas Rangers into bankruptcy unless the deal with Pittsburgh attorney Chuck Greenberg and Nolan Ryan Ryan is improved, or another buyer is found. Creditors balked at the terms of the deal, where Hicks keeps $30 million of the negotiated $300 million sale, in ongoing negotiations between the lenders and HSG. The media in Dallas is having a hard time following all of this high finance. Whether the offer for the baseball team was $300 million or the amount of debt financed, the debt which had been defaulted upon. Creditors who simply wanted the most money possible out of the deal. According to Bloomberg, Hicks spokeswoman Lisa LeMaster said the situation is between Major League Baseball, Hicks’ lenders, and the Greenberg-Ryan group. But the story also credits a Greenberg spokesman as saying the talks are between Hicks Sports Group and its creditors.

With total debt between $520 million and $570 million, an agreed-upon price has not been confirmed for the baseball club. In 2009, Tom Hicks had sold the rodeo he owned. At one point, Hicks was reportedly trying to work out a sale where he would retain some percent of ownership of the Rangers.

The Liverpool football team has three months to find the requisite investment for the refinancing of the club’s £237 million debts with the Royal Bank of Scotland. Liverpool co-owners Tom Hicks and George Gillett refused to cede overall control of the club to Rhone, preferring to sell a 40 per cent stake in the club, but to combine each of their own respective 30 per cent shares to maintain overall control. Yet unable to find financing for construction of a £375 million proposed stadium.

In a counterclaim to recover damages in a lawsuit filed by his former Glorypark development partner, Steiner & Associates of Columbus, Ohio filed in January, Rangers owner Tom Hicks alleges fraud and breach of fiduciary duty by Steiner & Associates, stemming from “misrepresentations and omissions” about the financing involving a failed 1.3 million-square-foot shopping, hotel, entertainment, office and residential development near the Ballpark in Arlington.

Those bubbles. Where the value of one franchise can affect the sale of the next one. The partners in Major League Baseball who compete with each other on the field but now allegedly have had presented by Mr. Greenberg what was not the top dollar offer. The creditors however “are not happy with the proceeds from the deal,” one source, who asked not to be identified, told Reuters, in discussing the ongoing talks. In the Bud Selig age, it was who you knew that counted. So you could collaborate together. To increase revenue. With your business partners that had not really competed to acquire their franchises at the best possible price.

Reportedly, Hicks has retained Weil, Gotshal & Manges to lead deals for the Dallas Stars, the Texas Rangers, and the Liverpool team. Reportedly, lenders claim that they have already lost $100 million in the deal with Hicks Sports Group.

In Bud Selig baseball, too much had become an illusion. Doing the math, Hicks who in his own words, deliberately defaulted on the $525 million debt at the time. Hicks who is to make $450 million from the Liverpool team had. I have wonder if Hicks ever had given consideration to where money came from. If it all seemed too much like a game. And he wanted to keep $30 million as a form of memorabilia from the days when he was owner of the Texas Rangers?

There was a time not long ago when the commissioner of baseball did not allow a baseball owner to have an interest in other professional sports franchises. Fans who remembered when George Bush was just a baseball owner. While people who once bought the tickets now watched with their mouths opened. About the new world order. From not just hunger. Maybe over the price of tickets. People who bought cars and trucks and knew that the bank held title. People who understood that if a vehicle was repossessed, they would have to hand over the keys, ceding overall control of the transportation. To bankers who knew from where the money came.

And now Bud would be working to convince the others owners to finance the purchase of the Rangers. Bud with his leverage. Like MLB had taken over the Expos, and moved the Montreal franchise to Washington. Maybe to keep the bubble inflated. On the value of all the franchises. And move the team, the former Washington Senators but the new Washington Senators, to Dubai. If the bubble there could ever be re-inflated. Maybe the Senate would approve the financing. Through TARP, since it never rained much in Dubai.

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1 Comment »

  1. Comment by baseball91 — June 16, 2015 @ 9:37 PM | Reply

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