Hicks’ run at Texas Rangers at an end

[Erik T]

Article from yesterday's FT. Sorry if it's been posted already, I didn't see anybody mentioning it on the FF front page.

 

Hicks’ run at Texas Rangers at an end

 

Tom Hicks’ turbulent 12-year ownership of the Texas Rangers is ending in the bankruptcy courts after the prominent US private equity investor agreed to a voluntary Chapter 11 filing to speed a sale of the US baseball franchise.

 

Mr Hicks, co-founder of private equity group Hicks, Muse, Tate & Furst, bought the team for $250m in 1998 from an investor group that included George W. Bush, the then Governor of Texas, burnishing the future president’s reputation as a businessman.

 

Mr Hicks’ ownership was marked by high spending on players, most controversially when in 2000 he approved a $252m 10-year deal for Alex Rodriguez, which at the time was the richest contract in baseball history.

 

Mr Rodriguez was traded to the New York Yankees in 2004 but the Rangers agreed to cover part of his original contract, leaving him as the team’s largest unsecured creditor with a $24.9m claim.

 

Heavy spending and the Rangers’ failure to win a World Series left Mr Hicks heavily indebted. He is also looking for buyers for Liverpool Football Club, the English Premier League team, where a spiralling wage bill and crippling interest payments has left him him unable to raise financing for a new stadium, and the Dallas Stars hockey team.

 

The Chapter 11 filing in the US bankruptcy court for the northern district of Texas lists the liabilities of Texas Rangers Baseball Partners as between $100m and $500m and its assets in the same bracket.

 

A concession by Mr Hicks to also sell 153 acres around Rangers Ballpark in Arlington cleared the path to a $575m sale to Rangers Baseball Express, a group led by Nolan Ryan, Rangers president, and Chuck Greenberg, a Pittsburgh lawyer who leads the sports practice at Pepper Hamilton.

 

Mr Hicks had been exploring a possible sale for about a year, but creditors holding about $500m of debt initially opposed the sale in the hope for a higher offer from another bidder.

 

Bud Selig, the commissioner of Major League Baseball, had threatened to employ a rarely used rule which could have let him seize the Rangers, invalidate creditors’ liens on Mr Hicks and transfer the team to the Greenberg-Ryan group if he deemed it in the best interests of baseball.

 

The MLB made a similar move in 2001, taking over the Montreal Expos before moving the franchise to Washington, but a letter from Mr Selig to Mr Hicks said he had determined that selling the Rangers to the Greenberg-Ryan group would be in the sport’s interests.

 

The Rangers said it would pay creditors’ claims in full and Mr Ryan said it would remain active in the player acquisition market.

 

Mr Selig and Mr Greenberg poured praise on Mr Hicks, who will be chairman emeritus. Mr Hicks said his family had “taken great pride and joy in our association with the Rangers”.

 

The sale is expected to be completed by mid-summer, subject to court approval, allowing an exit from the Chapter 11 process.