“If an alternative process is established, we’re going to be guided by the court’s procedures, subject to of course, our ultimate right to approve any owner submitted to us.”

– MLB Commissioner, Bud Selig – July 12, 2010

As this reporter documented here in May 2010, the still impending sale of Major League Baseball’s (MLB) Texas Rangers has suffered no shortage of legal and financial machinations and maneuvers, including political manipulation, for many, many months. Yet, it has been nearly a year and a half since Texas Rangers owner, Tom Hicks, defaulted on a $525 million loan in March 2009, eventually ending up in bankruptcy.

Unfortunately to date, the sale of the Rangers still awaits finalization and most importantly, the investment group to be awarded the final sale of the club has yet to be determined by the U.S. Bankruptcy Court and ultimately to be approved by MLB and its respective owners.

But Mr. Selig’s above referenced recent quote indicates that despite the length of time and resources expended by the U.S. Bankruptcy Court, and the hundreds of millions of dollars at stake for the Rangers’ numerous creditors, Bud Selig will fight all obstacles in securing the group he sees fit to own and run the Texas Rangers; namely the Greenberg-Ryan Group. It is comprised of Pittsburgh sports attorney, Chuck Greenberg and present Texas Rangers president and minor league team owner, Nolan Ryan and their entity, Rangers Baseball Express, LLC.

It unfortunately takes far more than a good score keeper to not only understand but to keep track of all of the twists and turns in this case, Texas Rangers Baseball Partners, 1043400, U.S. Bankruptcy Court, Northern District of Texas, (Fort Worth), even since May 2010.

The upshot is that there will be an auction in U.S. Bankruptcy Court on August 4, 2010. However, prior to that date on July 22, 2010, the Rangers shall emerge from Chapter 11 Bankruptcy Protection, initiated on May 24, 2010. At that hearing, U.S. Bankruptcy Court Judge D. Michael Lynn will hold the Ranger’s reorganization confirmation hearing.

Additionally, Judge Lynn will hear complaints on July 20, 2010, regarding new auction rules for the August 4^th date. It concerns creditors’ issues primarily due to MLB’s acceptance of the lowest of the three bids previously offered for the Rangers, and its clear preference to award the club to Greenberg-Ryan.

The two previous higher bids were from former sports agent, Dennis Gilbert in collaboration with Dallas businessman, Jeff Beck and the other came from Houston businessman, Jim Crane.

Crane, whose bid was the highest, backed through lender, J.P. Morgan Chase & Co., previously filed a motion with the U.S. Bankruptcy Court stating that MLB deliberately blocked his negotiations with the Texas Rangers. In fact, Selig wrote an April 30, 2010 letter to J. P. Morgan Chase & Co. in response to that motion, reiterating his “best interests of baseball” motives, in his attempt to diffuse the matter; albeit unsuccessfully.

And since creditors are owed approximately $576 million on first and second-lien debt, that includes interest, by Tom Hicks’ HSG Sports Group, LLC, they want every opportunity to be given the best chance to recoup their losses.

However, an 11^th hour wrinkle has also emerged, which perhaps may be the best resolution of all; according to various financial experts, legal representatives, sports industry analysts and many involved with some business facet of MLB.

And that magic bullet would be none other than Dallas Mavericks owner, Mark Cuban. Cuban made a bid for the Chicago Cubs three years ago, when it was up for sale by the Tribune Co. At that time speculation surfaced that Cuban’s brash outspokenness and aggressive management style would clash with that of MLB’s.

It seems pretty ironic now, given that a former MLB owner, one George M. Steinbrenner, who was eulogized this past week, was but praised for having some of those very same qualities, which Cuban seems to also behold.

Mark Cuban’s recent interest in the past couple of weeks in the Texas Rangers is especially intriguing in that he may have interest in placing his own bid before the August 3, 2010 deadline for acceptance of bids for the August 4^th auction.

Or, Cuban may ask to become just one of the investors of a group, by supplementing the capital of one of the other investment group’s bid, since the new auction guidelines require that to qualify a bid must now clear the Greenberg-Ryan bid by $20 million.

Cuban recently stated, “With some of the court rulings, it’s changed the economics of everything…I wanted to make sure that I was at the table, just in case.…I’m hoping I’m more of a backstop than anything else.”

It would be hard to believe that Mark Cuban would want to be anyone’s backstop, no more so than would George Steinbrenner.

But one thing is more certain in this whole messy scenario as concerns the sale of the Texas Rangers and that is that there will be no lack of drama and last minute antics by all parties involved; especially given Cuban’s entry into the fray and just under the wire.

And if U.S. Bankruptcy Judge Lynn still has anything to say about it he said plenty when asked on July 12, 2010 about Bud Selig’s public remarks about his preference for the Greenberg-Ryan bid, “I don’t believe MLB can frustrate this process any longer.” Hopefully Judge Lynn is right, this time.

Once again, stay tuned…

Copyright ©2010 Diane M. Grassi

Contact: dgrassi@cox.net

Back in 1989, it was but a no-brainer for George W. Bush to inject himself into the proposed purchase of the then flailing Major League Baseball (MLB) Texas Rangers. His goals in mind were to propel himself into the governor’s mansion in Austin, TX and eventually to the presidency of the United States, while even making a little bit of cash along the way. And he succeeded on all fronts.

And just a dozen years after the sale of the Rangers by Bush and his investors in 1998, the Texas Rangers organization is again immersed in financial wheeling and dealing, with an upside down ledger. For its expected imminent sale by owner, Thomas O. Hicks, has been met by a major snag from both his creditors and Major League Baseball (MLB), which has injected itself into the middle, with its purported takeover of the Rangers in the very near future.

Should MLB proceed to seize the club, it could be facing an involuntary bankruptcy by creditors, and tied up in court indefinitely while owners of MLB’s 29 other clubs incur the cost of operations of the Rangers. But that prospect does not seem to deter MLB commissioner, Bud Allen Selig, as he believes that MLB’s taking control of the Rangers will offset any bankruptcy proceedings; but another gamble.

But in order to fully appreciate the present predicament of a franchise that has mightily underachieved since arriving in Texas in 1972, from Washington as the Senators, and reaching the post-season only 3 times since, it is worth retracing some highlights of how the Rangers wound up in such a mess.

George W. Bush, with the help of then-commissioner of MLB, Peter Ueberroth, gathered a group of wealthy Texas investors who had political and business connections to his father, then-president of the U.S., George H.W. Bush. In 1989, George W. Bush initially invested his $106,302.00 for a 1.8% stake in the club and later took out a $500,000.00 loan to up his ante to a total of $606,302.00, increasing his interest to 11.8% in the Rangers. While the club eventually sold in 1998 for $250 million, Bush and his investors’ purchase price was a cool $25 million.

In short order, plans for a new stadium were under way, financed completely by Arlington taxpayers, including a surcharge on game tickets and state tax exemptions, totaling over $200 million. And all profits went directly back to the owners. Of note, however, this model of commandeering stadium construction on the backs of taxpayers has been replicated over and over again both before and since, throughout cities across the U.S., with no greater beneficiary of such corporate profiteering than the New York Yankees.

By the time the Rangers Ballpark in Arlington was opened in 1994, George W. Bush was nearly governor of Texas, as he put his assets into a blind trust, with his interest in the Rangers being the exception.

The upshot being that for his original $606,302.00 investment, George W. Bush got a 25-fold return on his original investment, clearing a $15 million profit. And such got him the capital and gravitas he curried for his run to the White House.

Enter billionaire, Tom Hicks, co-founder and CEO of Hicks, Muse, Tate & First, Inc. from 1989 to 2004, a nationally prominent private equity firm specializing in leveraged acquisitions, including multi-media broadcast entities, banks and real estate. And it was the Hicks Sports Group, LLC of HMTF that purchased the Texas Rangers Baseball Club in 1998 for that $250 million.

Hicks also purchased the National Hockey League’s (NHL) Dallas Stars Hockey Club in 1996, which went on to win a Stanley Cup Championship in 1999. Since then Hicks has been noted for his controversial purchase of a 50% interest in the Liverpool Football Club, an English Premiership League team known as “Britain’s Most Successful Football Club”, purchased in 2007 and much to the dismay of British fans.

Similarly to the Rangers, Hick’s is selling his interest in these other franchises as well. He wants double the price he paid for the Liverpool club and is currently working with NHL commissioner, Gary Bettman, on the sale of the Stars.

But the sale of the Rangers has proven to be far dicier. Bud Selig and MLB have far more to worry about, however, than Tom Hicks at this point, as MLB is now the intermediary in the ongoing negotiations with prospective buyers of as well as the Texas Rangers’ creditors. But a $525 million loan default, threats of court decisions from potential litigation, bankruptcy and the future fiscal health of the team that includes keeping it afloat, will rest with MLB.

What’s next? MLB taking over the Los Angeles Dodgers, while its owners, Frank and Jamie McCourt duke out their divorce decree?

Yet, MLB makes no apology for its policy of sequestering its own books from both the Major League Baseball Players Association (MLBPA) and the public-at-large. For MLB to hold itself in higher regard than Tom Hicks, an evident capitalist who pushed the envelope only as far as his creditors would allow, and at the time with the blessings of MLB, is but the height of arrogance.

However, MLB has invoked its “not in the best interests of baseball” rule, by virtue of the commissioner’s charter, as reason to interfere with the proposed sale of the Texas Rangers. And in that effort, it is willing to accept the least lucrative bid made for the club’s purchase. MLB is determined to guarantee that the Greenberg-Ryan Investment Group which includes Rangers’ president, Nolan Ryan, will ultimately become the eventual owner, in spite of two legitimate and higher bids that were made.

But the “not in the best interests of baseball” rule is a reach at best, given the challenges that MLB will embark upon such as with Monarch Alternative Capital, which has a 57% interest in the Rangers’ debt along with 40 other creditors’ liens against the Rangers, that includes the CIT Group, Inc. They want to make good on the sale of the team in order to recoup their losses and have no fear of tying up the sale in court no matter how long it takes.

And it is there that the rub begins for Bud Selig, who himself appropriated more than $25 million in MLB loans to the Rangers in 2009, $16 million of which went to salaries alone, to keep the Rangers going until June 2010. And since 2009, MLB has embedded itself in Rangers’ management decisions. For example, 1^st-round 2009 draft pick, starting pitcher Matt Purke, declined the Rangers’ market value offer and opted to attend Texas Christian University instead, as it was reported that MLB would not permit the Rangers to tender an offer to him for more than the minimum ‘slot system’ specifies, in order to sign him.

If there is no resolution by creditors or a closing date set for the sale of the team soon, this June too could put salaries and bonuses for MLB draftees as well as projected trades for the July 31^st trade deadline in jeopardy, as well as put the future of the Texas Rangers franchise in peril for years to come.

MLB and Bud Selig calling all of the shots by fiat presents a clear conflict of interest in terms of the free marketplace. And clearly this is but a bailout by MLB with ramifications similar to those of the U.S. federal government in bailing out financial institutions, car manufacturers and insurance companies. Not only does the government incur a financial stake in these companies but is but purchasing the right to dictate corporate policy. And MLB is no different in that regard in this case.

Yet, on its face, the intricacies are more far reaching than MLB’s takeover of the then Montreal Expos in 2004, now the Washington Nationals. In this matter, after the layers are peeled back, we can see that the “not in the best interests of baseball” rule does not necessarily include taking on Wall Street brokerages, the multi-national banking industry and the U.S. Bankruptcy Court, all the while showing favoritism towards a specific group that wishes to purchase the team.

Volumes have thus far been written over the past year concerning an over-leveraged Tom Hicks. Yet, the same can be said of the entire U.S. economy and its players from Wall Street to Capitol Hill. While that is no excuse for alleged corporate malfeasance, with respect to MLB, cooler heads should prevail. And sometimes that should actually mean that the integrity of the game stands for something other than its bottom line.

In light of the Rangers’ 87-75 2009 win-loss record, far better than in years past, it would be a shame for the hopes and talents of some of its young players to be squandered by reckless decisions on behalf of Bud Selig and MLB. And hopefully, the remaining MLB owners will weigh in and fall on the side of common sense. Stay tuned.

Copyright ©2010 Diane M. Grassi

Contact: dgrassi@cox.net

It was 30 years ago when baseball legend, Willie Mays, was banned from Major League Baseball (MLB). Four years later, NY Yankee great, Mickey Mantle, met with the same fate as did Willie. And what was their supposed fall from grace? They each became promotional spokesmen for two Atlantic City casino hotels.

Willie Mays had a deal with the Park Place Casino – now Bally's Park Place – and Mantle contracted with Del Webb's Claridge Casino Hotel. The roles both played were as pitchmen for the resorts as they appeared in television and print ads for the respective properties.

At the time, it was MLB Commissioner, Bowie Kuhn, who made both then Hall of Famers "permanently ineligible" to participate in any capacity with MLB. In 1985, after Kuhn's retirement, then newly appointed Commissioner Peter Ueberroth exonerated both Mays and Mantle, thereby lifting their banishment. Ueberroth proclaimed, "A lot of people will misinterpret my position as being soft on gambling. My stance is as strong as any Commissioner's going back to Judge Landis. But there's a need for new rules."

And the argument could be made back then that both Mays and Mantle were not front-men for gambling, but rather were promoting entertainment interests of hotel resorts.

Fast forward to sometime around 2006 when MLB supposedly relaxed its rule on permitting direct relationships with gambling casino interests and its MLB teams. However, most such deals blossomed for this year's 2009 baseball season that includes large casino hotel properties as well as many lucrative agreements with Indian reservation hotel casinos.

Sponsorships and the financing of such throughout professional sports as well as amateur athletics are drying up by virtue of the worst recession in 70 years. Added to that is the negative public perception that corporations receiving federal tax bailout dollars should not be dabbling in multi-million dollar contracts for advertising at sports venues nor buying skyboxes and over-priced season tickets at stadiums.

However, there now appears to be a new revenue stream, largely untapped, yet quickly assembled by many MLB teams and with Commissioner Bud Selig's blessings. But in order to fully appreciate the precariousness of such contracts that MLB has already approved, it is helpful to revisit MLB Rule 21:

(a)Any player or person connected with a club….or who being solicited by any person, shall fail to inform his Major League President and the Commissioner
(d)Any player, umpire, or club or league official or employee, who shall bet any sum whatsoever upon any baseball game in connection with which the bettor has a duty to perform, shall be declared "permanently ineligible."

And now the question must be asked. How does MLB oversee such sponsorships between MLB teams and those casino operations which allow legal sports betting on their premises, such as Harrah's Entertainment, which has become a major sponsor for the NY Mets' new Citi Field, most prominent in its outfield stands?

Harrah's is now a Signature Partner of the Mets and has a 12,000 square foot 900 seat capacity full-service restaurant called the Caesar Club. Harrah's hopes to recreate the atmosphere it provides at its Caesar's Atlantic City property. Harrah's will also benefit from naming and branding rights and orchestrate theme nights for baseball fans throughout the season.

It is important to note that Harrah's casino hotel properties that it owns in Las Vegas, such as Caesar's Palace, the Flamingo Hotel and Casino, Bally's and its Rio Hotel and Casino which is host to the World Series of Poker, among others, all have sports books where sports betting on all professional and amateur sports is legal. And such includes sports betting on MLB.

At the new Yankee Stadium, the Mohegan Sun Hotel & Casino also has a presence in its center field stands. Its Mohegan Sports Bar is a 4,900 square foot full-service restaurant with major signage and a naming rights deal with the Yankees. In addition, Seminole Hard Rock Entertainment will own and operate the NYY Steak restaurant as well as the stadium's new Hard Rock Café. The Seminole Nation is the primary proprietor of all Hard Rock Café and hotel casino properties worldwide, with the exception of the Hard Rock Hotel and Casinos in both Las Vegas and London.

The casino sponsorships for both the Yankees and the Mets are quite lucrative and in the millions of dollars, although MLB clubs do not necessarily accurately disclose the amount of their sponsorships, nor are they required to do so. But the NY teams are hardly in the minority when it comes to lining up for casino riches in the form of sponsorships. The Milwaukee Brewers inked a deal over the winter with the Potawatomi Bingo Casino of the Potawatomi Tribe.

The Brewer's deal with the Potawatomi Tribe is just second to its deal with Miller-Coors Beer. And in MLB's logic according to MLB's Chief Operating Officer, Bob DuPuy, "There is no sports book associated with Potawatomi and casino gambling is now part of the entertainment landscape in 40-plus states and a number of clubs have had advertising and sponsorship relationships with local casinos."

Perhaps DuPuy does not realize that Harrah's is in the sports betting industry?

In Detroit there appears to be a long-standing conflict of interest with respect to the ownership of the Detroit Tigers as well as the Motor City Casino, purchased by Ilitch Holdings, Inc. in 2005, which purportedly owns both entities simultaneously.

Michael Ilitch and his wife, Marion Ilitch, are listed as the Tigers' owner and the Motor City Casino owner, respectively. The question arose when it was revealed that Marion Ilitch is Vice Chairman of Ilitch Holdings, Inc. which also owns the Detroit Tigers. But Ilitch friend and Commissioner Bud Selig overlooked the proprietary conflict and asked his staff to stand-down.

There is indeed no shortage of casino sponsorships throughout the major and minor leagues of baseball. The Atlanta Braves, the Arizona Diamondbacks, the Los Angeles Angels, the Los Angeles Dodgers, the Florida Marlins and the Chicago Cubs all have contractual sponsorships with Indian casinos, gambling interests or state lotteries.

So what impact does this state of affairs have on the "best interests of baseball?" One could say that it was precipitated by Commissioner Ueberroth's comments"…there's a need for new rules." Or did Bud Selig's multi-billion dollar empire become too greedy for MLB's own good by accepting a strong presence of gambling partnerships throughout the leagues? Has the appetite for big bucks clouded Selig's judgment and has he crossed the line?

For MLB must be careful not to step on that 3rd rail; that which endangers its integrity. After all, MLB itself has already gambled on fan loyalty after nearly 20 years of the Steroid Era, also on Selig's watch.

And finally, if the apparent overlap between gambling interests and MLB is not clear to the MLB Commissioner, then why is he so clear on keeping Pete Rose "permanently ineligible" and forever denying his chance of realizing his place in the Baseball Hall of Fame?

Copyright ©2009 Diane M. Grassi
Contact: dgrassi@cox.net