May 25, 2010

The Texas Rangers officially filed for Chapter 11 bankruptcy protection yesterday, in an effort to help expedite a sale from current owner Tom Hicks to team president Nolan Ryan and Chuck Greenberg (a Pittsburgh attorney, and a generally nice guy, based on what i’ve heard from mutual friends).  Lets just jump into the details.

Under the plan to be presented at a court hearing Tuesday, the Rangers would pay the $75 million of the club’s debt tied up in Hicks’ financially strapped ownership group. That would remove the team from the additional claims by creditors against Hicks Sports Group that have held up the sale.

A 21-page filing in U.S. Bankruptcy Court in Fort Worth included the top 30 unsecured creditors, a list headed by Alex Rodriguez, who is owed $24.9 million in deferred compensation six years after he was traded. The next five are also current or former players: Kevin Millwood ($12.9 million), Michael Young ($3.9 million), Vicente Padilla ($1.7 million), Mickey Tettleton ($1.4 million) and Mark McLemore ($970,000). (via HuffPo)

It is interesting to note that because the Rangers as a team filed bankruptcy, not Hicks Sports Group, the current cash-strapped owners of the team.  That means that the various creditors to whom HSG owes money could object to the sale (HSG’s unsecured creditors would argue that preference shouldn’t be shown to those creditors tied into the Rangers versus HSG’s creditors generally.)

Assuming the bankruptcy issue is settled, there’s still the issue of baseball’s owners approving the sale.  75% of baseball’s owners would need to approve the sale, although if Bud Selig’s recommendation letter is any indication, approval by baseball’s owners shouldn’t be a problem.

Lets not forget that baseball has seen its share of bankruptcy filings in the past.  The Cubs were involved in a chapter 11 case last year, as the club was being sold to the Ricketts family, and the Orioles had filed for bankruptcy protection back in 1993.

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