Owning a professional sports franchise is often perceived as a license to print money. Apparently not so, in the case of Hicks Sports Group LLC, the parent company of the Texas Rangers who defaulted on a staggering $525 million in debt last year, including unpaid salary to six players.
The Rangers filed for bankruptcy protection in Ft. Worth federal court this week, in part to orchestrate the sale of the team to a group of investors led by Hall of Famer Nolan Ryan (currently the team’s president) and attorney Chuck Greenberg.
The Wall Street Journal reports that the sale price is $575 million, but must be approved by the bankruptcy judge. A court hearing on the sale is scheduled for July 9.
No one will need to hold a bake sale for Yankees’ third baseman (and former Ranger) Alex Rodriguez, but bankruptcy papers revealed that the team owes him about $25 million in deferred salary. A-Rod is the top unsecured creditor as detailed in the bankruptcy documents submitted in court. The club is also on the hook to other current or former players for back pay: It owes Kevin Millwood approximately $13 million, $4 million to Michael Young, $1.7 million to Vicente Fox, $1.4 million to Mickey Tettleton, and about $1 million to Mark McLemore.
An unsecured creditor is someone who holds no collateral (such as real estate or other physical property) to secure a debt. Unsecured creditors are usually last on the bankruptcy priority list, and often receive pennies on the dollar, if anything. Greenberg has, however, announced that the players will be paid in full.
The Rangers’ major secured creditors, however, may only recover $75 million of the amount in default. For that reason, many of them opposed the sale to the Ryan/Greenberg group because apparently higher offers are on the table. Major League Baseball backs the sale of the team to the Ryan faction, so the skids seem to be greased for the sale to go through.
In the meantime, MLB gave the Rangers a a $21.5 million loan to stay afloat while the sale is pending, Bloomberg reports.
The proposed sale will also allow soon-to-be former owner Tom Hicks, who will take on the title of chairman emeritus, to keep his season tickets and parking pass.
Tags:
Alex Rodriguez, Chuck Greenberg, Nolan Ryan, Texas Rangers, Texas Rangers bankruptcy, Tom Hicks
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