Mark Cuban’s Potential Purchase of Texas Rangers Could Be Blessing or Curse


Mark Cuban's Potential Purchase of Texas Rangers Could Be Blessing or Curse As one of sports' most outspoken and prodigal owners, Mark Cuban has garnered himself a great deal of fame and praise both in the Dallas area and nationally.

Even with his antics, reality TV flops, and gratuitous spending, one fact trumps everything: The Mavericks win.

The club couldn't win its way out of a wet paper bag before he took over the NBA franchise, particularly during their doormat era in the 1990s directly prior to Cuban's purchase.

Perhaps because he has been so successful, or because he can afford it, or because he wants a new game to master, Cuban is now looking to become a part of the group attempting to secure the purchase of the Texas Rangers. He may even buy the team himself.

The saga of the current Texas Rangers bankruptcy and sale is a complicated one, so let's start at the beginning.

In 1998, the 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, though, 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 outstanding player contracts, 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 their drastic interest rates as part of the transaction, and the 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 recently having the team declared bankrupt.

Don't be fooled. 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 ploy was simply meant to move the dispute to bankruptcy court.

If it is not resolved soon, though, the team will go up for auction on August 4.

Enter Mark Cuban.

Cuban, who attempted to buy the Cubs in 2007, and earlier this year denied interest in acquiring a stake in the Rangers, has changed his tune in the last couple of weeks. 

"I want to see the Rangers run," Cuban said to KTCK-AM in Dallas. "I
think Chuck and Ryan deserve a lot of credit and what they're doing is a
good thing, but with the way the deal has been structured, there is
some risk there. And so I offered to help on a bunch of different levels
so let's see what happens."

As for why Cuban all the sudden became interested, he cited Hicks' bankruptcy ploy:

"If you were to ask me a couple weeks ago if I was going to be involved,
I would have said probably not. But now
with some of the court rulings, it's changed the economics of
everything," he said.

With the Rangers winning baseball games and Cuban throwing his name into the mix, many down in Texas are excited, but they should proceed with caution.

The best reason to be worried about a potential Cuban regime is right in front of us — which is what has happened with the current owners. Hicks, like Cuban would be, has been an owner of multiple Dallas franchises, and such has been a major reason for his downfall.

If one looks around the sports world, nearly every example of one person or group owning multiple teams has been a massive failure. The Glazer family currently owns both the Tampa Bay Buccaneers and Manchester United. Their investments have been financially disastrous to the extent that they have been hesitant to spend on Man U, a team that has Yankees-like habits and expectations. As a result, fans of the team have tried to organize billions to make the world's most expensive franchise fan-owned like the Green Bay Packers, but the Glazers have stubbornly held out. They are now even more hated in England than Hicks is.

Elsewhere, George Steinbrenner purchased ownership of both the New Jersey Nets and the New Jersey Devils in the late 1990s with intentions of leveraging his YES Network into profit for both teams. Steinbrenner, who was very notably hands-on with the Yankees, barely involved himself in Nets or Devils operations and when they failed to make money, he sold them.

The best success story with a multiple franchise owner is likely Chicago Bulls and White Sox boss Jerry Reinsdorf. Even Reinsdorf, despite championships and new stadiums for both clubs, has always had a reputation for being cheap and is not generally well-liked by fans.

There exists some notion that Cuban is so rich that financial failure couldn't affect him, but his net worth is nearly identical to that of the Glazers, who clearly are not recession proof.

Additionally, what has made Cuban so popular is that he has run the Mavs much like Steinbrenner ran the Yankees — spending huge amounts of money, being actively involved, and embracing controversy. Surprisingly, when Steinbrenner bought the two other local professional teams, he exhibited no such passion. He refused to spread his interests thin. It's hard to believe that Cuban would somehow be different.

Still, Cuban's bank account likely could pave the way for Nolan Ryan to take control of the team, which would clearly be a good thing. The situation needs resolution, and he certainly can aid in that effort.

But Rangers fans shouldn't expect to see Mark signing Albert Pujols to a $250 million deal or screaming at umps from right behind home plate for poor strike calls.

Even if he is Mark Cuban, that's just not how sports ownership works.

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