The Dallas Star-Telegram is reporting that Texas Rangers owner Tom Hicks is in a world of trouble financially. Things are so bad, he could lose the team. It says:
Dallas billionaire Tom Hicks risks losing control of the Texas Rangers and Dallas Stars now that his sports firm, HSG, has formally defaulted on $525 million in loans, financial experts say.
Although experts agree that creditors could force HSG into bankruptcy, that possibility also appears to be a long way down the road.
“A banker doesn’t want to own a baseball team, but it would be possible to put enough pressure on Hicks where the team ownership would be changed,” said Stan Block, a finance professor at the Neeley School of Business at Texas Christian University.
Lenders have notified HSG that it has formally defaulted on $525 million in loans. Hicks said recently that he intentionally missed the March 31 interest payment as he tries to restructure the debt.
According to The Wall Street Journal, Hicks missed a $10 million quarterly interest payment on HSG loans. The paper reported that the largest lender is Galatioto Sports Partners, a New York sport-financing group, which has lent nearly $100 million to HSG.
In a statement on Tuesday, Hicks reiterated that he is in negotiations to restructure HSG’s debt and emphasized that the baseball and hockey teams have not been affected by the discussions.
“Both Major League Baseball and the National Hockey League have strong protections for their franchises when discussions such as these are under way,” Hicks said. “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.”
However, experts say negotiating with lenders is much more difficult now because of the credit crisis and economic recession. And with the Stars not in the playoffs this year and the Rangers struggling to get fans through the gates, Hicks may also have a hard time attracting cash from new investors interested in buying a minority stake in a team.
“If you can find minority interest in the New York Yankees or the Boston Celtics, that’s one thing. But to buy a minority interest in the Texas Rangers is quite another,” Block said. “If that’s part of his strategy to bring in more minority-interest investors, I think that’s going to be much more difficult than in the past.”
Lenders could force Hicks instead to sell a majority of his stake in one or both of the teams. And if Hicks continues to miss interest payments, lenders could work with the league commissioners and attempt to find new ownership, experts say.
He’s not even able to make the INTEREST payments on the loan, much less pay back the principal. He’s clearly in a huge mess financially. Bud Selig will likely get involved in this, as he did when the Expos were failing. If Hicks can’t find new investors, which will be difficult in this economy for a money losing operation, then the bankers will pressure him to sell the team to raise cash and pay down his loans. In the meantime he will be looking to shed payroll, and fast.
Here’s their payroll.
Michael Young, Vincente Padilla, Hank Blaylock and Kevin Millwood all make significant money. You could probably have any of them for a song, talent-wise.
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