Monday, May 24, 2010

Dallas' Pro Sports - Some Trouble in the Promised Land

Dallas has 4 well known professional sports teams - the Cowboys, the Mavericks, the Stars, and the Rangers. (actually the Rangers and Cowboys are located in Arlington, but close enough ...)

Jerry Jones' Cowboys are one of the most successful, and most valuable, sports franchises in the world. The opening of Jerry World before last season has returned the 'Boys to the top of the heap in sports glamour - just where Jerry wants them. Like him or not, Jones is good for the Cowboys, and good for the NFL. Jerry bought the Cowboys and Texas Stadium leases in 1989 for $140 million. Today, the franchise is valued at $1.65 BILLION!

Mark Cuban's Mavericks are one of the most successful NBA franchises, since he took control of ownership. 10 50 win seasons in a row, something done by only 3 other teams in NBA history. Regular season success has not turned into a champiionship - yet. Cuban is a multi-billionaire, opinionated owner who regularly gets in trouble with David Stern and the league office. The NBA's little secret is they love Cuban - the excitement and controversy he brings to the table are good for the sport. Mark bought the Mavs in 2000 from Ross Perot Jr's group for $280 million. The franshise is valued today at $446 Million. It should be noted that previous owner Ross Perot Jr. retained a small (5%) ownership in the team, and has recently filed suit against Cuban, aledging that his mis-management of the team's finances have made the club insolvent. Cuban vehemently denies this.

Tom Hicks owns the Rangers and the Stars.

The Dallas Stars are the most successful of the NHL's 'sunbelt' teams. Although they have stumbled a bit in the past couple of years, they are the most recent 'world championship' team fielded from Dallas - the 1999 Stanley Cup. The team's success and popularity have been the biggest reason that hockey has taken off here in Texas. Multiple minor league teams all over the state owe their existence to the Stars' success. Hicks bought the team from Norm Green for $84 Million, just after the franshise moved to Dallas from Minnesota. Today, the Stars are valued at $246 Million.

The Rangers have been around for quite a while, and have had very few trips to the post season, and absolutely no success in the playoffs. They are usually fun to watch, have a beautiful stadium, and are an integral part of the local sports scene. Hicks purchased the team from an ownership group led by George W. Bush in 1998 for $250 Million. The team is valued at $451 Million today.

Hick's Sports Group, the legal entity that owns the Stars and Rangers, is in deep financial doodoo. The down turn in the financial markets hit the group hard. In addition to the Stars and Rangers, HSG is 50% owner of Liverpool FC, one of the world's most valued soccer franchises. HSG has been forced to sell the Rangers, and offers to sell both the Stars and Liverpool.

The Ranger's sale has been held up by HSG's creditors, who object to the purchase price that the new ownership group (including Nolan Ryan) would pay. MLB has stepped in and is forcing action. The Rangers have stated they will declare voluntary bankrupcy, which will clear the way for the sale to be finalized. The sale price is supposedly in the $545 Million range.

The Stars are being shopped around. A new ownership group is forming, including Stars' player Mike Modano in a minority ownership role.

Liverpool FC is being shopped around for $1 Billion.

With all of this money, why is HSG in trouble? It borrowed the money necessary to buy the franchises to begin with, in complex financial deals that crashed down along with the economy. All three franshises have suffered, with the teams handcuffed by low budgets and no money to go after marquee free agent players.

Sports is big business ... in Texas it is VERY BIG business.

Update - The Rangers did indeed file for voluntary Chapter 11 today.

A list of unsecured creditors was published in the local paper, listing several former players whose contracts say they still are due money. The largest debt owner? Alex Rodriquez (ARod), the self centered egotist who currently plays for the Yankees. One of the dumbest things Hicks ever did was to sign ARod to a $250 million contract way back when. When Hicks was able to unload ARod to the Yankees, much of that money was still due in future payments. In addition to the Rangers picking up half of ARod's salary during his time with the Yankees, HSG still owes him approximately $25 Million. Bet that makes Yankees fans happy ... they got their criminal, cheating hero, and only had to pay half price for him!

Update II - In a Dallas Morning News article today (5/26), HIcks was quoted as saying he will lose approximately $200 Million when the sales of the Rangers and Stars are finalized. He is confident he will recoup that amount on the Liverpool FC sale. Says a lot about the cost of professional sports, the impact of the economic downturn, and some poor financial investments (player contracts) when the owner of two US professional league teams and half owner of one of the biggest soccer franchises in the world hopes to walk away even.

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