Tuesday, July 13, 2010

The Crazy Rangers Bankruptcy Isn't Taking an All-Star Break

For some sports teams--just like for some of the people who follow them--things are never really easy. While the Texas Rangers have had a remarkable season so far, there's always been that unsettling undercurrent brought on by the team's efforts--frustrated so far by a variety of entities, including a legion of creditors (some undeserving in my estimation, but more on that in a minute) and a bankruptcy judge who might be allowing his ego to get in the way--to be sold to a group led by businessman Chuck Greenberg and team president/local icon Nolan Ryan.

Now, in one of the craziest occurrences in this entire odd sags, we have the following: The Greenberg-Ryan group is suing to force the team to be sold to them, which means that, yes, Ryan is suing his own team:
In Monday's suit, the Greenberg-Ryan group accused the club of breaching the purchase agreement the group struck with owner Tom Hicks on May 23, which it claims still gives it exclusive rights to negotiate the team's purchase.

If a new round of bidding is ordered, the action demands that the Greenberg-Ryan group be given the difference between their offer and whatever price emerges from an auction. It valued its package at more than $500 million, including a $304 million cash portion. It did not mention a $70 million side deal for property that's also part of the proposed purchase.

That purchase became part of the team's "pre-packaged" voluntary bankruptcy plan filed May 24. It has been challenged by lenders, who are owed $525 million. Their opposition prompted Snyder's appointment as chief restructuring officer to determine the best deal.

The lawsuit, drawn up by Greenberg's new attorney, Thomas E. Lauria of Miami, apparently was timed to beat his group's imminent loss of exclusive rights to negotiate the purchase.

It urges Lynn to prevent the team, under Snyder's direction, from discussing a sale with rival bidders and asked the judge to order that the May 23 deal be consummated. And the lawsuit wants a preliminary injunction stopping Snyder by 4 p.m. Monday. The team is scheduled to emerge from Chapter 11 bankruptcy July 22 under new ownership.
This whole situation brings up several questions to me:
  • Some of the creditors involved in blocking the sale aren't the original creditors of the club at all; rather, they are firms who bought the existing debt for pennies on the dollar. But they're trying to assure that they are paid the entire amount of the debt, which is exponentially more than what they paid themselves. I'm certainly all for capitalism, but I'm also wary of the whole seemingly sleazy industry of debt-purchasers. Do they really have a right to be assured of recouping the entire amount of what was owed to the people from whom they bought the debt (who have since written off that amount, of course), or is it only important that they be assured of making some profit?

  • It still seems like Tom Hicks is getting off a little too scot-free in all this. I'm not saying that they should seize his personal assets or anything, but it's not like the guy is out of business; in fact, he just announced some new ventures a few months ago. Can't they force him to pay some of the team's debt out of his other business assets?

  • And finally, Major League Baseball needs to be able to approve anyone buying one of its teams. What happens if the team really is sold at auction, but to someone whom the owners reject? Doesn't the whole mess start all over again?
I certainly hope that this mess comes to an end soon, and it needs to conclude with Ryan retaining his team presidency, since the team's turnaround this year can almost certainly be credited to his work. I'm interested to see how this latest move fits into the grand scheme of things.

1 comment:

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