HICKS GOING DOWN IN FLAMES AS RANGERS RISE

By Murray Chass

June 2, 2009

Contrary to the appearance of his 11-year ownership of the Texas Rangers, Tom Hicks hasn’t always made wrong-headed decisions. For example, 16 months ago Hicks hired Nolan Ryan as the club president, and it’s no coincidence that the Rangers have flourished in the past two seasons and currently lead the American League West with the league’s best won-lost record.

But true to Hicks’ more prevalent record for making wrong-headed decisions, he is stepping all over his team’s refreshing success by undermining it financially and preparing to sell it.

“I don’t want any of this to be a distraction to the team and our fans,” Hicks said in a statement last week.

How can it not be a distraction? This is a team for which being in first place a third into the season is a new experience, and its players have to deal with reports and questions about the team being for sale.

Although Hicks has said he hasn’t decided if he will sell 50 percent of the Rangers, a majority interest or the entire franchise, he has to sell the whole team because two months ago he defaulted on about $540 million in loans and the only way he can pay off the loans is to sell the entire team.

Hicks said at the time he defaulted that it was a strategic decision not to pay the interest he owed on the loans from about 40 financial institutions, but nothing has developed to indicate that his strategy was any better than the strategy he has used to develop the Rangers into a contender.

“He tells everyone this is a way to negotiate with the banks,” said a person connected to one of the 40 lenders, “but without warning, the interest date comes due and he announced he wasn’t paying. What strategy is it to piss off the people who lend you money? He constantly says in the press he did this to bring the banks to the table. You go to your banks and say I have a problem; we need to restructure these loans. People complain but it gets done. You don’t say I’m not going to pay the interest.”

Hicks epitomizes the man who is successful in business, becomes wealthy enough to buy a team, buys it and proceeds to run it with incredible incompetence. If these owners had operated their businesses the way they run their teams, they would never have made the money they used to but the teams.

Tom Hicks, meet Vince Naimoli, meet George Argyros, meet Marge Schott, meet Peter Angelos. Baseball history is filled with such owners. Hicks is only the latest, but he will be remembered more than most if for only one act – his signing of Alex Rodriguez in December, 2000.

George Steinbrenner used to be accused of inflating the salary structure, but with that signing, Hicks shattered it. He was a one-man wrecking crew. The next highest offer Rodriguez received was $100 million less, but when Hicks, after meeting Rodriguez and having dinner with him, decided he had to have the glib, talented free agent, he asked Scott Boras what it would take to sign him, the agent told him and Rodriguez was his.

What did Hicks get for his extravagance? No post-season appearances; that’s for sure. How about three last-place finishes in three years?

That would not be the last bad signing for Hicks. The Rangers, always desperate for pitching, signed Chan Ho Park to a 5-year, $65 million contract before the 2002 season. He compiled a 22-23 record and a 5.79 earned run average in three and two-thirds seasons.

Four years later, after they had traded Park, they tried again to shore up their starting pitching signing Kevin Millwood to a 5-year, $60 million contract. In his fourth season with Texas, Millwood has a 39-40 record and a 4.68 e.r.a.

It could be argued that the Rangers’ general managers, not Hicks, made the decisions to sign Park and Millwood. But it was Hicks’ first mistake that led to those bad or at least questionable decisions.

Although the Rangers won the A.L. West title three times in four years, including Hicks’ first two years as their owner, he fired Doug Melvin, the general manager and architect of those championship teams, after the 2001 season.

While Melvin moved on to Milwaukee, where he has built a contending Brewers team, the Rangers have struggled, attaining a winning record only once in seven post-Melvin seasons.

Hicks also owns the Dallas Stars of the National Hockey League and once won the Stanley Cup with them, but they have lost their luster, finishing 23rd among the N.H.L.’s 30 teams this season. Hicks bought the Stars in 1995 for a reported $84 million and the Rangers in 1998 for $250 million.

Forbes magazine has valued the Rangers at $412 million, but Hicks is expected to get $500 million to $525 million for the franchise. Nolan Ryan, the Rangers’ president, did not return a call seeking comment on his interest in putting together a group of investors to buy the team.

A person familiar with a possible transaction said he believed Ryan would like to try to buy the team, “but there’s a lot of interest out there.” Hicks has hired a sales agent, Joe Ravitch, formerly of Goldman Sachs, who is the son of Richard Ravitch, baseball’s chief labor negotiator in the 1994 strike.

One sales agent Hicks didn’t consider was Sal Galatioto, who has shepherded sales of more sports franchises than any one in the business. Galatioto Sports Partners, a New York firm, is one of Hicks’ biggest creditors.

As recently as last week, Hicks was talking about attracting minority investors, saying he would let minority partners buy up to 49 percent of the Rangers, as well as the Stars. He said he owns 95 percent of each team.

“I’m bringing in minority partners, so I can pay off the loans,” he said. “I wouldn’t normally do that. In this particular environment, that’s what we should do.”

It is highly unlikely, though, that anyone would be willing to invest money with Hicks and be a limited partner. Hicks has made enough of a mess of the Rangers to have anyone help him bail out of his financial problems.

As Hicks plays out his so-called strategy, the interest on his loans is rapidly growing. Once he defaulted, the loans took on a default rate of interest and as one investment expert said, “It multiplies.”

If Hicks delays a sale, he faces the threat of the lenders’ assuming control and selling the Rangers after a six-month standstill period elapses early in October.

Once the team is sold, either by him or by the banks, Hicks can retire and commiserate with another former Rangers’ owner and his next-door neighbor, George W. Bush.

 

Comments? Please send email to comments@murraychass.com.