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The Rangers file for bankruptcy

May 24, 2010, 12:12 PM EDT

We’re still light on the details (Maury has the press release and some analysis), but the Texas Rangers filed for Chapter 11 bankruptcy this morning. It was a voluntary filing that is being characterized as a “prepackaged” bankruptcy proceeding, which means that all the terms of the bankruptcy are agreed
to before filing, which can result in a shorter turnaround time.  The team is characterizing it as a necessary step to allow Hicks Sports Group to sell the team to Chuck Greenberg and Nolan Ryan. The target date according to the filing: “midsummer.” You may recall that the Cubs did something like this prior to their sale to the Ricketteseseses.

This just came down so the details are still a bit sketchy, but something that sticks out to me is that the creditors of Hicks Sports Group — the ones who have been causing all the problems — aren’t part of the filing. If that’s the case, how could they have agreed to the terms of the “prepackaging?” Moreover, the verbiage in the press release says that the deal will provide “for all Rangers creditors to be paid in full.”  That can’t be technically right, because if there is enough money in the sale to fully satisfy all outstanding debts, the bankruptcy filing — which basically says that part X owes creditors more money than it has — would be tossed out, right?  This deal can’t be a “paid in full” thing. It has to be a “we’ve been paid enough to be happy” thing.

Another possibility — a pretty good one actually — is that there is separate deal in place between Hicks Sports Group and the creditors to settle the outside debt on some sort of payment plan or something else, but to do it outside the framework of the Rangers sale.*  If that were the case it would not necessarily have to be a part of this bankruptcy case. We just don’t know, however, based merely on the terms of the bankruptcy filing.  I will say that it would be pretty reckless for the team to file like this without any creditor signoff, official or otherwise, because it would invite the sort of proceeding — creditors going deep into the Rangers’ business — that they had been threatening to do back when they were at each others’ throats.

The primary upshot: there has to more going on here than meets the press release, probably in the form of some backroom dealing that will (a) keep the dirty financial laundry of the Rangers, Hicks and Major League Baseball out of bankruptcy court discovery proceedings but (b) makes the creditors happy. Otherwise, there’s no point to this filing.

Secondary upshot: if this is going down as the Rangers say it is, the team will be out of ownership limbo within a couple of months and, hopefully, able to resume normal operations, sign draft picks and add payroll in a way that a team in their competitive position should.

More on this, obviously, as the story develops.

*I’m aware that most of the debt at issue is not technically owed by the Rangers — it’s owed by Hicks Sports Group, thereby meaning that the big creditors like Monarch Alternative Captial couldn’t really go after the Rangers. But that’s kind of beside the point. All along these creditors have been making noises about dragging the team itself into bankruptcy if they weren’t paid, and it the suggestion has been strong that they would try to advance legal theories — however novel — that would allow them to encumber the team in order to get the money they are owed by Hicks.  For MLB and the Rangers to make this filing today, they have to think that such a move is not a threat.  This underscores my belief that some sort of side deal between Hicks and the creditors has to have taken place.

  1. APBA Guy - May 24, 2010 at 12:40 PM

    The side deal theory makes sense here, as otherwise the creditors would be screaming all the way to the courthouse, churning out suits and motions at every step.
    As a baseball fan, I certainly hope the deal is completed before the trade deadline. Otherwise I don’t think the Rangers will have enough pitching depth to win the division.
    Now if Hicks will just sell off Liverpool…

  2. J. McCann - May 24, 2010 at 1:03 PM

    Nothing to see here, move along.
    How dare you suggest there is any problem or delay with the sale! (a year ago.)

  3. RoyceTheBaseballHack - May 24, 2010 at 1:59 PM

    Just one view point on this whole thing: as one who works, literally, in the shadow of Ranger’s Ballpark, and having a few friends who actually do work there for games, and have for many, many years, this mess Hicks started is causing even more trouble than you think.
    Here’s a small example. I have a friend who worked at the original Rangers Stadium. His dad even worked there as a beer vendor when they first moved the team here, because it was a matter of civic pride. Everyone in Arlington wanted to do everything they could to make the team’s move here a success. Anyway, one tradition they’ve had since the very first season was ice cream after the game. After the stadium was clear and the teams were taken care of, the entire crew working the stadium that night, ushers, vendors, janitors, everybody, all sat down and had ice cream together. It’s one of those small little things that everyone who’s ever worked there has looked back on as one of their favorite things about the experience. So, to give a you hint of how out-to-lunch the Rangers finances are, they canceled after-game ice cream for the stadium crews this season. Something that might cost the team, maybe $100.00 a game, in true costs, and the Hicks group (who are still in control of the team..), axed it.
    As far as I’m concerned, the jerk has no business running a bloody Subway sandwich store, much less a baseball team.

  4. I Only Need The Edge! - May 24, 2010 at 7:46 PM

    I don’t have anything constructive to add :\

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