The Texas Rangers approach the All-Star break in first place. But a lot has been brewing behind the scenes.
In 2007 Tom Hicks partnered with George Gillett, Jr., to buy the Liverpool team of the English Premier League. In 3 weeks they face a July 24th deadline to refinance the $574 million debt for their Kop Football (Holdings) Ltd. There was a time not long ago when the commissioner of baseball did not allow an owner to have an interest in other professional sports franchises.
It is fairly common for such ownership to extend beyond just a baseball team. Jerry Reinsdorf owns the Chicago Bulls and the Chicago White Sox (with Eddie Einhorn), and is trying to buy the Phoenix Coyotes in the NHL. Mark Cuban has attempted to add the Chicago Cubs to his holdings along with the Dallas Mavericks. There was quite an appetite in Texas for ownership in teams beyond just the winter sports seasons, as if these winter sports did not extend the season long enough. In this case, the leaders at the forefront of the British banking crisis, the Royal Bank of Scotland and Wachovia, had provided the financing to Hicks and Gillett for the 2007 purchase.
How does a league like the NHL allow competing owners to go into partnership to acquire an English soccer team? The conflict of interest extends beyond the financial operation but offers a lack of transparency in any potential trades between organizations. As a consequence of the partnership to buy the Liverpool team, 2 NHL teams had been on the path to financial ruin when neither owner apparently was able to secure soccer re-financing in the current environment. On June 20th, Gillett agreed to sell the Montreal Canadiens, 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.
Tom Hicks sale of his NHL hockey and MLB baseball franchises is now widely anticipated. Tom Hicks was the guy who re-invented baseball by giving Alex Rodriguez $260 million to play baseball. Tom Hicks is the guy who hired some twenty-something kid to run his major league team who in June drafted 2 pitchers whose agents’ demands far exceed the slotting system that has developed following the June free agent draft. Tom Hicks was the guy who never really paid attention to pay slots.
Earlier this year according to the Wall Street Journal, Hicks Sports Group missed a $10 million quarterly interest payment on March 31st, triggering the default notice on a $525 million loan. There were layoffs of several front office personnel 2 weeks ago with his MLB team. As the owners of the Texas Rangers and the Dallas Stars, Hicks looks as financially secure as the state of California. Hicks recently sold his rodeo. He now reportedly wants to sell a majority share in his Texas Rangers which he acquired in 1998.
Last night I attended a Northern League game in St. Paul, Minnesota. The owner of the franchise owns more than one team in the same league, making a mockery of competition, turning baseball into a version of the American Wrestling Association, a la Vern Gagne. There was a bit of a house of cards beyond the playing field with this type of ownership.
The sale of the Montreal Canadians will not be the first sports franchise to occur due to the crash of 2008. In the next 12 months, a financial storm will come faster than the last Atlantic hurricane to professional sports, causing havoc throughout the sporting globe.
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