The most undercovered story of the summer, and maybe the year, is the outrageous circumstances of the sale of the Texas Rangers.
(Protip: Do not lend this man money)
Before your eyes glaze over, understand that this story is very important as it pertains to the financial future of individual major league clubs. It also could dictate if the Texas Rangers exist this time next year - if MLB’s rhetoric is to be believed.
If you’ve read this site over the years, you know by now that MLB has done all it could to turn over franchises to owners who either lack the financial resources, as in the McCourts, or the willingness, as in the late Carl Pohlad, to invest Yankee-esque sums into player payroll.
Most recently, MLB handed over one of the crown jewels of its league, the Chicago Cubs, to a highly-leveraged buyer in Tom Ricketts. Ricketts was chosen to take over the team despite his lack of liquidity and inability to field the highest bid for the franchise.
Why? Because MLB doesn’t want the Cubs to end up with a $200 million payroll, which would drive up costs for other owners, contribute to further competitive imbalance and possibly lead to additional labor strife.
Of course, if MLB had a revenue sharing agreement like the NFL, Cubs fans wouldn’t have to worry about having an underfunded owner running their beloved team. (In the third-largest market!) Because of the petty greed of the league’s individual owners, no such revenue sharing plan exists - forcing league commissioner Bud Selig to jury-rig MLB ownership ranks to prevent another Steinbrenner-type owner. (See shooting down Mark Cuban in his bid for the Cubs.)
That brings us to Selig’s latest payroll-chopping opportunity: The Texas Rangers.
Thanks to years of irresponsible borrowing and a subsequent mountain of debt, Rangers Owners Tom Hicks was forced by MLB to put the franchise up for sale last year. 15 months later, the team has not yet changed hands because the folks who lent the Rangers untold millions actually expect to … *gasp* … get paid! How dare they!
Despite the dire financial condition of the Rangers, Selig was hoping he could railroad Nolan Ryan and Chuck Greenberg into the Rangers ownership suite over a fully-financed bid from Houston businessman Jim Crane - among others - by forcing the franchise into bankruptcy.
But when a bankruptcy judge noted that Crane was willing to come a lot closer to making lenders whole than Ryan and Greenberg, he cut down Selig’s end run.
How far will Selig & Co. go in forcing their cronies onto clubs?
Today the NEW YORK TIMES has this reaction from MLB to the bankruptcy judge who refused to yield to Selig’s attempt to hand his buddies the Rangers - which would’ve immediately screwed lenders out of hundreds of millions:
One of Selig’s lawyers vowed profanely in a conference call that if the judge did not approve the team’s prepackaged bankruptcy plan, which would have sped approval of the Greenberg-Ryan bid, M.L.B. would terminate the franchise, according to a person on the call.
That’s right, MLB would shut down the Rangers if a bankruptcy judge did not allow them to give the team to Ryan and Greenberg. In other words, if you make Bud Selig & Co. actually follow the letter of the law, they’ll just take their ball and go home.
Rather than give the team to the current highest bidder, the bankruptcy judge now plans to put the club up for auction on August 4. The club’s creditors, like J.P. Morgan bank, think the team could ultimately fetch nearly $1 Billion, but with auction deadline just two weeks away and MLB threatening to “terminate” the franchise if its cronies aren’t gifted the team, can you see an outsider trying to crash Selig & Co.’s private club?
If Ryan and Greenberg do end up with the team, that’s good news for small market clubs who have less money to spend on payroll. But is end-running lenders out of hundreds of millions of dollars by manipulating the legal system really the way to make that happen?
I’m a Kansas City Royals fans, so I would stand to gain from the Rangers being unwilling or unable to field a nine-figure payroll, but somehow MLB’s underhanded methods don’t fill me with optimism.