Published July 06, 2010
FORT WORTH, Texas (AP) — Got half a billion dollars? The Texas Rangers are set to go on the auction block next week after an unexpected snag in the team's bankruptcy plans.
Don't call your banker just yet. Major League Baseball will decide who can participate in the auction based on some strict guidelines — including a $1.5 million deposit and an opening bid of more than $500 million. And the league still can reject the highest bidder and select the runner-up.
Outside experts suggest the narrow limits are a clever maneuver to push through the long-delayed sale to MLB's preferred buyer, a group led by Hall of Fame pitcher Nolan Ryan, the team president, and Pittsburgh sports attorney Chuck Greenberg.
"This bankruptcy has turned into a fiasco, a three-ring circus, and this auction is very unusual in the sports world," said Wayne McDonnell Jr., a professor at New York University's Tisch Center for Hospitality, Tourism, and Sports Management. "The auction is on the up-and-up, but this favors the Greenberg-Ryan group based on the time constraints."
The team filed court documents late Monday seeking the auction, following the suggest of a court-appointed restructuring officer who will recommend whether the Rangers' bankruptcy plan should be approved at a July 22 hearing. That means potential bidders have about 10 days to pull details together for the July 16 auction, if it is approved as expected by U.S. Bankruptcy Judge D. Michael Lynn.
It's unclear whether the judge will change the proposed bidding process controlled by MLB, which is requiring bids of at least $20 million more than the Greenberg-Ryan group's offer, valued at $502 million. The league also will do a "financial investigation" of interested buyers before deciding who can submit a bid.
The auction is the latest eyebrow-raising development in the proposed sale of the Rangers. Texas is believed to be only the third MLB team to wind up in bankruptcy and the most recent, the Cubs, were in and out in a matter of days. Before that, the Baltimore Orioles were sold in a bankruptcy auction in 1993 after owner Eli Jacobs filed for Chapter 11.
This is the 50th season of the franchise that began as the Washington Senators in 1961, and moved to Texas in 1972. The Rangers won their only three American League West titles in a four-year span at the end of the 1990s, and have never won a playoff series. The Rangers are in first place in their division now and hoping to make a postseason run without distractions.
Instead, the team filed for Chapter 11 protection in May with a plan to pay creditors $75 million and sell the Rangers to the Greenberg-Ryan group, a deal stalled for months by lenders' concerns over $525 million in loan defaults by team owner Tom Hicks' ownership group. Creditors also argued that the Greenberg-Ryan bid of $575 million wasn't the highest and urged the judge to reopen the bidding process.
Little has been heard from the unsecured creditors, who would be paid in full, plus interest, under the Rangers' plan. That list of 30 is topped by New York Yankees star Alex Rodriguez, who is owed $24.9 million in deferred compensation six years after he was traded.
Although even the judge has said he understands why the highest bidder might not have been chosen, the team agreed to an auction after realizing its plan was in serious trouble even after it submitted an amended version that restored creditors' rights. William K. Snyder, the restructuring officer appointed to make sure the team was maximizing its assets, indicated he would approve the Rangers' plan only after an auction, according to documents filed by the team.
Potential bidders include Houston businessman Jim Crane, who lenders say had the highest bid before the Greenberg-Ryan group was chosen by MLB, and Dallas businessman Jeff Beck, who helped finance a bid by former sports agent Dennis Gilbert.
Greenberg and Ryan, who have waived their exclusive rights to buy the team, said they have secured full financing for their offer and still expect to close the deal.
Major League Baseball wants the Greenberg-Ryan group "in the worst possible way" because Ryan is not only a baseball legend but has been successful with his minor-league franchises, McDonnell said.
"Even if (Dallas Mavericks owner) Mark Cuban wanted to buy the Rangers, Major League Baseball would reject him because of who he is, even though he is brilliant and talented," McDonnell said. "MLB doesn't want someone who will rock the boat."
Cuban did not immediately respond to requests for comment by The Associated Press. After losing in a bid to purchase the Chicago Cubs last year, Cuban said he was still interested in buying a baseball team.
Separately, a confidential mediation session started Tuesday in Dallas with the team, league, creditors, restructuring officer and others.