Hicks Rumored To Have Borrowed Money From MLB To Make Payroll

If you're curious what a sports franchise in dire economic straits looks like, you may get a chance to view one up close and personal.

It is being reported that the Texas Rangers needed to borrow $15 million from Major League Baseball to cover payroll and operating cost. When asked about the validity of the report, Rangers & Dallas Stars owner Tom Hicks referred the questions to team spokesman John Blake, who promptly had no comment. Rangers President and rumored potential buyer Nolan Ryan also had no comment on the report.



Evan Grant of D Magazine reported:

Club sources, however, said the team has paid its employees for the most recent pay period and that Hicks remains in control of the organization. According to a source familiar with the situation, the Rangers are continuing normal operating procedures and have financial resources to sign both draft picks and international free agents. The source, however, did not mention the possibility of increasing payroll at the trading deadline.

According to a source, a scenario has been in place for several weeks that would have allowed the Rangers to borrow from the MLB fund. It would not mean MLB would take control of the club, but under those circumstances, it’s likely MLB would have much more say on spending matters. The Rangers top two draft picks, LHP Matt Purke and RHP Tanner Scheppers, are both demanding bonuses well in excess of the current MLB-recommended “slotting” system.

It's well-known that Tom Hicks has been actively seeking a buyer for the Rangers since defaulting on an interest-only payment on a $525 million loan previously made to his U.S. sports operations.

While Hicks has claimed it's "business as usual" and that "both teams are able to make moves, if those moves make sense for the general managers" he also said "They have to be able to operate successfully and be profitable. That's just smart business.

"You can't continue to spend money if the team is losing money," Hicks added. "We are determined to create as much revenue as possible for each team, and that's one of the reasons we have changed things. One of our biggest challenges right now is to find ways to market and sell our teams."

Apparently, Hicks' Sports Marketing Group isn't what he meant by "business as usual."

Today, news has broken that Tom Hicks has dissolved the joint-marketing Rangers-Stars sales force, reassigning most of the employees previously working under the marketing groups umbrella.

Former Hicks Sports Marketing Group president Tom Lites' contract was not renewed but has said he would like to remain in the North Texas area and didn't rule out trying to put together a group of investors to make a push for the purchase of the Rangers.

"I've put in a lot of time here, and I like it here," he said. "I'm very proud of what we have accomplished."

Lites was hired as Stars president in 1993 by former owner Norman Green and acted in that capacity until 2007 when he was relieved of his duties in a front office shake-up.

The dissolution of the marketing group comes on the heels of layoffs that cost almost 10% of all Rangers front office personnel their jobs.

Tom Hicks Has A Change Of Wallet

Before yesterday's game against the Yankees, Texas Rangers owner Tom Hicks admitted that he is interested in selling off a piece of the franchise stating, "I am selling part of the Rangers. I don't know how big of a part. Yes, I'd be open to selling more than a minority share, but it depends on who the partners are."

Hicks went on to say, "My family and I want very much to stay involved with the club, but we understand that we have to be open to solutions that may include partners who own a controlling interest in the Rangers. There are some potential buyers who won't consider having only a minority interest."



Hicks has long said he wants the Rangers franchise to be something that could be passed down through the generations of his family. Why the change?

Speculation is that Hicks' recent troubles with creditors may only be the tip of the iceberg to his finacial troubles.

Rumors abound that if Hicks does finally decide to sell off a majority share in the franchise, current Rangers President and Hall of Fame pitcher Nolan Ryan, along with his longtime business partner, Don Sanders of Houston, could be potential buyers.



When asked for comment Ryan hedged his bet saying, "Knowing nothing about what the details are, there's no way I can comment on any of this."

For many Rangers fans, Tom Hicks selling off the Rangers would be a dream come true. A good percentage of fans have long accused Hicks of being more interested in lining his pockets rather than putting a top flight team on the field year in and year out. Fan indifference has shown in recent years as turnout for the games has been less than stellar.

Tom Hicks has been the Rangers principal owner for 11 years.

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.