Rangers Owner On The Ropes?

The Wall Street Journal is reporting that the Hick's Sports Group, a team of investors headed by Texas Rangers/Dallas Stars owner Tom Hicks, is in peril. Creditors to the financier have declared the group in default, a move that could well cost Hicks control of both sports franchises.

This is the latest and most damning indication that the current state of the U.S. Economy is now having a detrimental effect on the state of professional sports. Earlier in the year, several NBA franchises were forced to take out bank loans in an effort to continue their day-to-day business activities. Several team owners are readying themselves for what will no doubt be a series of messy showdowns against lenders.

A New York Times report states, "The Rangers baseball team and the Stars hockey team are now unable to pay both their operating expenses and their debt service."



In a statement issued today, Tom Hicks said, "As has been previously reported, HSG missed its most recent quarterly interest payment. As a result of that payment default, HSG's lenders have now sent the expected and normal default notices to HSG. But nothing has changed at the baseball and hockey clubs while the negotiations continue at the HSG level. Both Major League Baseball and the National Hockey League have strong protections for their franchises when discussions such as these are underway. These are complex negotiations and there are some very smart people working on them. As an owner and lender to HSG, I am working to negotiate something that will make economic sense going forward for me, HSG and its lenders."

Many lenders are vexed by Tom Hicks' stance, angered that he is thusfar unwilling to make up the difference through his own personal funds. The default notice opens up the very real possibility that the lenders could find themselves in control of both franchises. While nothing is imminent with respect to the Dallas Stars(NHL provisions prevent immediate forclosure), things are quite a bit different where the Rangers are concerned as no such provision exist within Major League Baseball. This could well result in the lenders eventually forcing an MLB-sanctioned sale of the Rangers.

Hicks doesn't believe it will ever come to this saying, "I'm confident that I'll be able to reach agreement with 51% of the lenders because I will be able to fund all the cash needs of the two teams during the period that I'm bringing in new partners, which will help us to drastically reduce if not eliminate HSG's debt."

As previously reported by several media outlets, Hicks is currently seeking to sale off a minority equity interest in both the Stars and the Rangers. While Hicks is doing his best to put a positive spin on the efforts, one has to wonder why an intelligent businessman would be trying to sell off 49% of his franchises during a time when, with the economy is such turmoil, one could expect to get pennies on the dollar. A selloff at this juncture could well result in a loss of hundreds of millions of dollars and may well be the most obvious proof that all is not well in the financial world of Tom Hicks.