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Report: MLB to seize Rangers, complete sale, get sued

May 3, 2010, 10:59 AM EST

That’s the logical conclusion if what Sports Business Journal’s Daniel Kaplan is reporting is true:

MLB as soon as this week plans to dramatically alter the
course of the standoff between creditors and the owner of the Texas
Rangers,
multiple sources said last week, a development that could include the
league
seizing the franchise.

Were the league to seize the team under its “best interests of
baseball”rule, MLB could sell the club to the group led by Chuck
Greenberg and
Nolan Ryan without, the league believes, the creditors blocking the
deal, these
sources said. But were MLB to choose that course — and late last week,
the
situation was still fluid — financial sources predicted a furious
legal
response from the creditors that could involve an involuntary
bankruptcy petition
on behalf of the baseball team.

I get the reasoning: the creditors are owed money by Hicks Sports Group, the debt is not secured with a lien on the baseball team itself (MLB does not allow this) and Major League Baseball can kick Hicks Sports Group out of the ownership club if it wants to, leaving the creditors to fight with Hicks after the sale is done.

But such a move is almost certain to throw the whole matter into court, with the creditors almost certainly filing to get an injunction stopping the sale, because without the sale of the team at issue, the creditors lose all their leverage. Maybe they don’t get an injunction — if your beef is ultimately over money, you’re not supposed to be able to enjoin a business deal; rather, you’re supposed to let it all play out and get your money later — but depending on the court and the way the complaint is written and a bunch of other factors, it could happen. If so, and the Rangers are placed in legal limbo during the pendency of the lawsuit, the nightmare scenario that was described last week — indefinite MLB stewardship, no money for the draft, etc. — comes to pass.

But even if the sale is not enjoined, Major League Baseball is still stuck in a multimillion dollar lawsuit (and even if the sale is not held up over it all, you can bet that MLB will be named a party in the suit).  The calculation, one presumes, is that baseball is better off having the Rangers in Greenberg’s hands while fighting a lawsuit than it is to remain in the current stalemate.

If so, it tells you how ugly the stalemate is, because lawsuits like this are never fun, especially if they have the potential to have outsiders probe specific-team finances, which Major League Baseball is historically loathe to allow.

Popcorn anyone?

  1. Old Gator - May 3, 2010 at 11:36 AM

    Popcorn is for the kind of people who watch reports about this mess on the Trailer Park Network. Sophisticated connoisseurs of legal pyrotechnics prefer honey roasted macadamia nuts and watch it on the CNN legal channel.
    .
    John Grisham is over the hill – hell, he’s over the top of Aconcagua at this point – and he could never write worth a damn anyway. This is your big chance, Craig, and a potential bestseller at that; it could be bigger than Sidd Finch and Merger Mania combined. You can probably manage without a ghostwriter – they spend all the time they’re supposed to be working playing Ouija Scrabble with Jon Heyman anyway (and you actually thought Boras would play his cards face up for that gormless git?) – but just give a shout when you need a good editor.
    .
    reCaptcha: and shutout
    .
    Really.
    .
    And when that one earned me a comment submission error, the new one was battlefido’s utterer. I’m sure there’s an H. P. Lovecraft short story by that name someplace….

  2. APBA Guy - May 3, 2010 at 12:55 PM

    Craig, what’s the impact of baseball’s anti-trust exemption, if any, on MLB’s ability to seize the team and withstand a suit? It’s one thing to sue, it’s another to win the suit.

  3. Scott - May 3, 2010 at 1:20 PM

    Remember when you were called “irresponsible” for reporting the problems of this sale and that it was going smoothly?

  4. Craig Calcaterra - May 3, 2010 at 1:22 PM

    Yeah, that was a hoot.

  5. ChrisKoz - May 3, 2010 at 1:38 PM

    There really are some interesting issues of bankruptcy law and civil procedure at play here.
    Is the sale of the team going to cause irreparable harm to the creditors? The argument that the creditors will make will likely be along the lines that the loss of leverage will prevent them from recouping anything close to satisfactory payment.
    Then again, isn’t that just another way of saying monetary damages? In which case injunctive relief wouldn’t be appropriate because monetary damages would suffice, thus making the harm reparable.
    It will be interesting to see if, MLB makes the move, what strategic angle the creditors try to work.
    I’d be interested in seeing the thoughts of those in related fields.

  6. Craig Calcaterra - May 3, 2010 at 1:42 PM

    I would agree that the fact that this is totally about money kills any idea of there being irreparable harm, but I’ve had that argument fail too many times as a result of hometown and/or lazy judges who were easily dazzled by fancy drafting to say it’s a sure thing. It shouldn’t lead to an injunction, and if the forum is Dallas — which it probably should be — it likely won’t, but you just never know with this stuff. Tom Hicks has pissed off a lot of people over the past few years. What’s to say a local judge isn’t one of ‘em?

  7. Jay - May 3, 2010 at 1:52 PM

    Craig-
    Hicks has the gall to hold a piece of the team for himself after the sale, after having stiffed the creditors.

  8. Old Gator - May 3, 2010 at 2:30 PM

    Yeah, for all we know that judge’s phone number may scrawled on the back of Frank Nitti’s matchbook.

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