In 1998, the Texas Rangers ownership group formerly chaired by George W. Bush sold the team to Tom Hicks for $250 million. Hicks, a leverage buyout billionaire, had previously purchased the Dallas Stars in 1995, and bought the Rangers with two principal intentions: to develop the real estate in the ballpark's surrounding area in Arlington and to create a sports ownership empire called Hicks Sports Group.
By 2006, the Rangers had become profitable and by 2010, the team had an estimated value of $451 million.
HIcks' empire as a whole had fared well. He added a portion of English Premier League club Liverpool F.C. in 2007 -- an investment that both proved to be financially disastrous, and to draw the ire of English fans. When the current financial crisis first began shortly thereafter, Hicks took more financial battering, piling up huge amounts of debt in HSG.
So who does Hicks owe money to? The answers are pretty interesting.
Much of the debt is owned by hedge fund Monarch Alternative Credit, a firm that profits by buying sub-prime debt for cheap (basically what caused the recession in the first place). The rest of the debt is owed to former players, most notably that of Alex Rodriguez's $250 million deal.
A group headed by Rangers legend Nolan Ryan and lawyer Chuck Greenberg has offered to buy the team for $570 million and Hicks agreed to the sale in early 2010, with a separate sale for his surrounding real estate holding also brokered. Unfortunately, it couldn't be that easy.
Hicks' creditors, namely Monarch, want to be paid back at very high interest rates as part of the transaction, and MLB only wants to guarantee the debt on the player contracts in the sale. As a result, a stalemate has ensued, which resulted in Hicks having the team file for bankruptcy in Fort Worth.
The Texas Rangers are not actually financially defunct. They are the twelfth most valuable franchise in the MLB, up from 16th in 2008, and their income sheet is firmly in the black. It is Hicks who is in financial peril, and the bankruptcy was filed to protect his interests not those of the Texas Rangers.
The team is scheduled to go up for auction on August 4. More lawsuits have been filed. The latest was filed by JP Morgan/Chase Bank on July 16. www.scribd.com/doc/34534979/Chase-v-Rang
Mavericks owner, Mark Cuban has also entered the fray. Cuban's bank account could pave the way for one of the two major competing groups to take control of the team. The situation certainly needs resolution, but don't look for it to be over by August 4.