Posted on Wednesday, 4th August 2010 by Eden Fryett
There hasn’t been a bankruptcy auction of a Major League Baseball team in 17 years, but the Texas Rangers are about break that streak. Soon, the Rangers franchise could go to the highest bidder, according to the Houston Business Journal.
The saga of this baseball franchise’s bankruptcy is not necessarily coming to a close, however. If a particular group of investors that includes Hall of Fame pitcher Nolan Ryan and is fronted by Chuck Greenberg were to win the auction, it would likely set off a round of legal appeals from Rangers lenders.
These lenders, who the Houston Business Journal describe as “aggrieved,” have been contesting a sale to the Greenberg/Ryan duo for months now. They make the contention that higher bids have been made for the franchise than the one offered by that group.
There is also the possibility that another buyer will win the team. There are a few names bouncing around in that group, including outspoken owner of the Dallas Mavericks NBA team, Mark Cuban, and Houston businessman Jim Crane.
While there is much to be determined about the future of the Texas Rangers franchise, this upcoming bankruptcy auction could be a climactic moment. The chapter bankruptcy process began around 16 months ago, when Rangers owner Tom Hicks defaulted on his loans and put the future of the franchise into question.
Beyond the concerns of Hicks himself, however, and just the Rangers team, is the way that Major League Baseball will respond to the bankruptcy auction. It remains to be seen, for example, whether the league will approve or turn down the bidder accepted by the bankruptcy court.
If this were to happen, there would likely be a confrontation about the power of a league to determine who owns its franchises, and the power of the bankruptcy court when pressed against the league.
According to the Houston Business Journal, the issue of MLB’s power versus the bankruptcy court’s influence in the situation has been “skirted around since the team filed for Chapter 11 bankruptcy protection on May 24.”
“I am in charge, not MLB,” said Judge Michael Lynn of the North Texas federal bankruptcy court last month. He repeated similar idea over and over during the bankruptcy proceedings.
This stance comes in contrast to the position taken by the court when the Phoenix Coyotes of the NHL didn’t approve of a potential bankruptcy buyer. When the NHL decided that they didn’t approve of Jim Balsillie, the founder of Research in Motion, and found that he did not met the standards of ownership, the court acquiesced.
Judge Lynn, to the dismay of the lenders, waited several months into the bankruptcy proceedings to set an auction, and then set too soon a date, according to the group. This dispute over scheduling would “likely form the basis of their appeal,” said the Houston Business Journal.
The last team to be offered up to public auction was the Baltimore Orioles franchise. Current owner Peter Angelos was the one to buy them 17 years ago. In 1970, the Seattle Pilots franchise was bought by a car dealer named Bud Selig. He, of course, moved the team to Milwaukee, and later became the MLB commissioner.
Major League Baseball has been lenient with the Texas ball club recently, allowing them to make trades and add payroll to this year, a move that confused and upset some. The team is currently making a push for a spot in the playoffs.
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Tags: Auction, Bankruptcy Auction, Highest Bidder
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