May 10, 2010, 8:15 AM EDT
What was merely suggested a week ago now appears all but certain. In response to Major League Baseball’s warning that it was going to seize the Texas Rangers from Tom Hicks and invalidate the debt that held by the creditors to Hicks Sports Group, the creditors have voted to reject the deal, reports Daniel Kaplan of Sports Business Journal.
The result of this is that when baseball makes its move — which should happen following the owners’ meeting scheduled for later this week — the creditors will sue, forcing the Rangers into bankruptcy court and potentially opening the sale up for other bidders. It would be up to a bankruptcy judge to determine whether that comes to pass or, alternatively, if Selig is within his powers to kick the creditors to the curb.
Which seems like a lose-lose for baseball.
If the creditors prevail it quite obviously delays the sale of the team and possibly takes Chuck Greenberg and Nolan Ryan out of the owners’ suite in favor of a higher biddder, should one emerge. This is clearly not what Selig wanted, inasmuch as everyone seems pretty pleased with the Greenberg/Ryan team.
But say baseball wins the battle, is able to shrug the liens off the Rangers, and pays them a pittance to go away, thereby paving the way for the sale. If that happens, isn’t every bank and investment fund who ever considered lending money to a sports team going to freak out? Why on Earth would any of them give money to a sports team if they have good reason to believe that the debtor could simply refuse to pay up and then have the league come in and invalidate the debt in the first place?
Sure, there’s a lot to be said for team owners being forced to operate within their budgets and not rely on so much debt. I’ve said plenty on the subject in the past. But I don’t think most team owners agree with me on that score, and they can’t be all too happy about the prospect of having all sources of credit dry up.
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