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Hicks Sports Group Creditors Threatening bankruptcy for the Rangers

Apr 14, 2010, 8:48 PM EDT

It’s hard to tell if this afternoon’s BusinessWeek report represents something truly new or if it’s more of a rehash of what we already know, but for the record:

The Texas Rangers, the Major League Baseball team
controlled by billionaire Thomas Hicks, may be forced into bankruptcy
unless terms of a planned sale of the team are improved or another buyer
is found, according to two people familiar with the matter.

Creditors led by Monarch Alternative Capital may
block Hicks Sports Group LLC, which defaulted on $525 million of debt
last year, from selling the Rangers and try to put the team into
bankruptcy, said the people, who declined to be identified because the
debt talks are private. The creditor group, which includes CIT Group
Inc. and Galatioto Sports Partners LLC, is seeking at least $30 million
more from the team’s sale, one of the people said.

The dynamic is the same that we’ve seen all along: Hicks’ creditors want more money, they’re threatening to force the team into bankruptcy if they don’t get it. Based on the tone of the article and based on the positions the parties have taken in the past, my guess is that the source for this specific report is one of the creditors, trying to ratchet up the pressure. The whole thing works best if you read it in a “and this time we really, really mean it” tone.

Not that it’s an empty or meaningless threat. No one ever gets rich forcing one’s opponent into bankruptcy, but this may one of those situations where it makes some amount of sense. The biggest problem of bankruptcy is the delay it causes in the asset in question getting liquidated, which often diminishes its value. The nut of this dispute, however, is Hicks’ proceeds from a land sale to Greenberg along with the Rangers. Land for mixed-use development — which is what this land, next to the Ballpark, is — is likely about as down in the dumper as it’s ever going to be right now.  Yes, bankruptcy will cause everyone to incur costs in the short term, but if the whole thing gets tied up for months or longer that same piece of land is still going to have to be disposed of in the end, and there’s every reason to believe that it will be worth more later than it is now.

But however that shakes out — and there are a million ways it could shake out — this report can be viewed as a signpost.  A week ago it was reported that Major League Baseball was stepping in to try and persuade the creditors to get the deal done. At the time Greenberg made noises that it would get done next week. The next thing we hear from the creditors is a renewed bankruptcy threat.

What to make of it? Perhaps they are not all that impressed with Mr. Selig’s efforts to play peacemaker. Perhaps they are not all that impressed with Mr. Greenberg’s public statements of inevitability.  Perhaps no one — not Hicks, not Greenberg, not baseball, not anyone — has enough money to wave at Hicks’ creditors to make them think that they’d get all that worse a deal in bankruptcy court. Hard to say.

The only thing that is certain in all of this is that Greenberg will come out with a statement in the next 48 hours in which he tells us, once again, that the deal is almost done. Because that’s what he always does.

(Thanks to Kevin T. for the heads up)

  1. TRex - Apr 14, 2010 at 10:02 PM

    Wow, that’s news to me. I thought all of these tight wad greedy owners had their bank accounts bulging with money from profit sharing, sweetheart deals with state and local governments, luxury suites, cable deals, TV sponsorship, etc. What happened. The Texas Rangers were rated #15 in value among all MLB teams at 405 million dollars by Forbes Magazine in 2009. The teams owner, Thomas Hicks, bought the team in 1998 for 250 million dollars and is reported to have a net worth of 1.4 billion dollars. Is someone trying to pull a fast one here, or is it possible that not every MLB team makes a profit, not even with profit sharing, no matter what Forbes, sportwriters, or divorce lawyers say.

  2. willmose - Apr 14, 2010 at 10:29 PM

    Generally, I like when the rich bankers get stiffed, but this time I have come on thier side. This deal with Greenberg smells like a week old fish that has been sitting in the sun. I’m going to cry myself to sleep tonight for everyone involved.

  3. Ranger - Apr 15, 2010 at 12:16 AM

    Hicks bought the team in 1998 for 250 million dollars but now Hicks Sports Group LLC has defaulted to creditors for 525 million dollars in loans. How do you lose 275 million dollars in 12 years. Another MLB success story.

  4. Fuzzball the Magnificent - Apr 15, 2010 at 1:04 AM

    Somewhere, Gerry Nugent is laughing…

  5. George Bowser Jr - Apr 15, 2010 at 6:54 AM

    I am with the creditors on this one. They should get more money. Hicks is trying to profit by bankruptcy (and for his ill-advised A-Rod signing). Hicks is also attempting to sell his Premier League Team as well.
    Good thing he got out of private equity.

  6. Charles Gates - Apr 15, 2010 at 8:24 AM

    Chan Ho Park and ARod may be able to help answer that.
    Just because you’re rich doesn’t mean you’re smart. Trust me, I’m a poor genious.

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