Texas Rangers’ Sale Ends Months of WranglingJanuary 25, 2010, 4:08 pm
The sale of the Texas Rangers baseball team ends months of wrangling between the Hicks Sports Group, headed up by the former private equity maven Thomas O. Hicks, and the team’s debt holders, made up of various investors including hedge funds and wealthy individuals.
The purchase price of the deal, reached over the weekend, was not disclosed, but a person familiar with the deal told DealBook that the team fetched $520 million to $550 million. The Rangers were acquired by Rangers Baseball Express, an investment group headed by Nolan Ryan, the legendary pitcher who now serves as president of the team, and Chuck Greenberg, a Pittsburgh lawyer.
The investment group also bought 153 acres around the Texas Rangers ballpark and the Dallas Cowboy Stadium in Arlington, Tex., a Dallas suburb, in a separate transaction, bringing the total purchase price up to around the $600 million mark, according to the person familiar with the matter, who spoke on condition that he not be identified because the deal is private.The strong purchase price comes with the hope of leveraging more cash down the road with the introduction of a cable channel that will show Rangers and Dallas Stars hockey games, which remains part of the Hick Sports Group, this person told DealBook. But there is as yet no formal plan to start such a channel, which would be similar to the Yes Network in the New York area, which broadcasts games of local sports, including the New York Yankees.
A group of wealthy Dallas-based investors brought most of the money to the table, financing well over 50 percent of the purchase price, this person told DealBook. But it will be Mr. Greenberg and Mr. Ryan who will be the investors most heavily involved in running the day-to-day operations of the baseball team, which claims fans mostly from north Texas through the team’s base in the Dallas/Fort Worth Metroplex.
It is also a bittersweet day for Mr. Hicks, who bought the team from an investor group in 1998 that included George W. Bush, then the Texas governor and now a former president. Mr. Hicks paid $250 million for the Rangers, which was at the time the second-largest amount ever paid for a Major League Baseball team. Mr. Bush received nearly $15 million for his stake in the deal and was not among the wealthy set of individuals who bought back into the team this weekend, another person familiar with the deal told DealBook.
Mr. Hicks wanted to raise the profile of the team and lead them to the World Series, something that had eluded the Rangers throughout its franchise history. In 2001, Mr. Hicks struck a deal to sign Alex Rodriguez in a 10-year, $252 million contract, which remains one of the most lucrative in baseball history. But while Mr. Rodriguez performed well, the team still floundered. He was later traded to the Yankees.
Mr. Hicks continued to acquire other major baseball stars, but the team never managed to bring in enough wins to spur ticket sales and generate strong positive cash flow, the first person familiar with the matter told DealBook. The other team in the Hicks Sports group, the Dallas Stars hockey team, was also unable to generate enough cash to cover much of its costs.
Mr. Hicks began borrowing money to finance the team during the credit boom. He also levered up in 2007 to buy a 50 percent stake in the Liverpool Football Club, which he bought with along George Gillett, the former owner of the Montreal Canadiens hockey team, for a total purchase price including debt of £218.9 million, or $356 million.
But by March 2009, amid the financial crisis, Mr. Hicks defaulted on nearly $525 million in debt he borrowed to bankroll the team. This weekend, the debt holders finally signed off on the after months of negotiating with Mr. Hicks over the real estate connected to the team.
The Major League Baseball commission was said to be heavily involved in the sale and has given its blessing. The deal will become official after a vote of all the league’s owners, and the person familiar with the sale process told DealBook that obtaining the league’s approval was not expected to be a problem.
Bank of America Merrill Lynch, Raine Advisors and Perella Weinberg Partners served as the financial advisers to the Hicks Sports Group while Morgan Stanley, Evolution Media Capital and CAA Sports Media Venture represented Rangers Baseball Express.
– Cyrus Sanati
http://dealbook.blogs.nytimes.com/2010/01/25/texas-rangers-sale-ends-months-of-wrangling/
