Rangers borrow money from MLB
Major League Baseball within the last week loaned millions to Tom Hicks, the evidently cash-strapped owner of the Texas Rangers, and will continue to offer financial assistance to Hicks until he is able to sell the team, a major league source with direct knowledge of the situation told Yahoo! Sports on Thursday.
“He won’t be running the team much longer,” the source said. “Major League Baseball is helping him through this until someone else can be put in place to run the club.”
Rangers spokesman John Blake said the club would have no comment on the team’s financial situation. Rich Levin, a spokesman for the commissioner’s office, said MLB does not comment on its teams’ finances.
Reports of Hicks’ most recent difficulties surfaced during a radio show on XM/Sirius radio, when a caller said he’d heard the Rangers had not made payroll, and that Hicks had borrowed $15 million from MLB to do so.
A major league source told Yahoo! Sports the loan to the Hicks Sports Group was not made specifically to help Hicks with payroll obligations, and believed that the amount was for less than $15 million. A club source confirmed that the team met payroll and that the club is maintaining normal business operations, although earlier this season the team reduced its front office staff by 10 percent.
Hicks first announced he was willing to sell a minority stake in the club in March. But after the Hicks Sports Group defaulted on an interest-only payment on a $525 million loan to his U.S.-based sports operations, Hicks said he would be willing to sell a controlling interest in the team.
Hicks, who made his fortune in private equity, has an estimated personal worth of $1 billion, according to the 2009 annual survey by Forbes magazine. Hicks’ first major foray into sports came in 1995, when he purchased the NHL’s Dallas Stars, a team that twice went to the Stanley Cup finals since he took control. In 1998, he bought the Rangers for $250 million, but his baseball team has not come close to matching the early success he had with the Stars; the Rangers have never been to the World Series.
Hicks gained notoriety after the 2000 season when he signed Alex Rodriguez(notes) to a 10-year, $252 million contract, the largest in baseball history and reportedly at least $100 million more than any other team was willing to pay Rodriguez. The deal blew up on Hicks. The Rangers finished in last place in each of Rodriguez’s three years with the team, and Hicks traded him to the Yankees by agreeing to pay $67 million of the $179 million still owed Rodriguez in the deal, plus an additional $4 million in signing bonus.
Even after Rodriguez voided his deal with the Yankees, then re-signed a new 10-year, $275 million contract after the 2007 season, the Rangers were stuck with a $9 million bill in deferred compensation.
During his time with the Rangers, Rodriguez also tested positive for steroids. Hicks said he felt “personally betrayed and deceived” when news of the failed test broke earlier this year.
The Rangers’ opening day payroll this season was around $68.1 million, which ranked 22nd among MLB’s 30 teams and was less than $1 million more than its 2008 level. The Rangers until recently were in first place in the American League West, but Hicks’ financial woes would seem to make it unlikely that Texas GM Jon Daniels will be in a position to add payroll at the July 31 trading deadline.
A sale of the club does not appear imminent, and while names of prospective buyers have surfaced – Hall of Famer Nolan Ryan, the team’s president, is said to be interested in becoming part of a new ownership group – there would appear to be little chance of the team being sold before the end of the season.