Thursday, August 05, 2010

Mark Cuban's side of the Texas Rangers auction

Mark Cuban and Jim Crane bowed out of the bidding for the Rangers at the $600M level, and therefore Greenberg/Ryan will own the team as soon as MLB approves.

I made a mistake in this blogpost. I did not know that Cuban had only purchased $2M of Tom Hicks debt. Therefore, Cuban obviously paid as much or more ... in legal fees ... as he gained in profit from the sale price being raised by $85M. Cuban explains his side of the entire sale process at Blog Maverick.

Cuban only purchased the $2M in debt so he could gain access to the financial records of the Texas Rangers and the Dallas Stars. Cuban first looked at purchasing the Rangers in 2009, but believed Hicks had included undesirable non Rangers related debt into his demands. This was a deal breaker for Cuban.

In mid July 2010, Cuban learned that the bankruptcy process could eliminate the undesirable non Rangers related debts from the deal. This reignited Cuban's interest in owning the team. However, with Cuban having his own money tied up in various investments, and having only a few weeks in which to raise capital for the potential acquisition, the Cuban and Crane partnership was unable to raise more than $600M with which to bid for the team.


According to Cuban's account, and I've no reason to disbelieve him: Cuban fully intended to purchase the team, and was not acting from any nefarious secret strategy or motive.

Cuban's participation might have been the best thing which could have happened to the Rangers franchise. Here's why: the creditors believed a better price was out there, wanted to force an auction, and - absent an auction - apparently would have been able to tie up the sale of the franchise for years --- through 2012? 2014? 2016? Crazier things have happened. The creditors have the money both to pay for lawyers and to wait for resolution.

However, because Mark Cuban jumped in: an auction which satisfied the creditors' demand actually did happen, and now the team ownership will pass to the Greenberg/Ryan group within 10 days.

Cuban jumping in did cost the franchise an additional $85M. However, an additional $85M cost is preferable to having the franchise be operated by MLB through the 2015 season (and this is especially true b/c the Rangers will be serious World Series contenders during most or all of those seasons. Such likely would not have been the case if MLB had run the Rangers for 5 or so consecutive seasons.) Because I believe either Cuban's or Greenberg's ownership would have been excellent, therefore Cuban's jumping into the fray was the best thing which could possibly have happened.

Cuban is being portrayed, in many places in DFW, as the villain. In actuality, Cuban was the savior. If Chuck Greenberg did not now have to move his family into a trailer park, I'm sure Chuck would've sent Mark Cuban a bottle of champagne as a thank you.


Funniest Cuban quote in his blogpost:
What I have learned in 11 years in the sports business is that the dumbest guys in the room are always the media guys.

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