Are the Rangers going to stiff Alex Rodriguez?

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UPDATE: OK, some more research leads me to believe that the answer in the headline is “no” A-Rod is not going to get stiffed. At least probably not.

It’s possible and, in “prepacked” bankruptcies like this one, common, for the debtor (i.e. the Rangers) to  file for bankruptcy when it has the assets
to cover the liabilities but can’t pay the liabilities exactly as they come due
. This sort of Chapter 11 may allow the debtor to hold a sale — say, to someone like Chuck Greenberg! — to get fresh
cash and to restructure the timing of payments.

Upshot: A-Rod and all of the other creditors (which includes Mickey Tettleton of all people) are still quite likely to get their money, even if there is some sort of delay or disruption.

I think we all learned something today kids: bankruptcy is difficult to understand. And kind of boring, frankly. So unless a ballplayer shoots someone this afternoon, it’s going to be actual baseball content for the rest of the day.

2:09: I am obviously not a bankruptcy expert, but thankfully some of you are, and you have informed me that I got some stuff wrong below. Let me, to the best of my ability, fix it.

The notion that unsecureds don’t get paid is not accurate. They do get paid, and often, but it’s usually pennies on the dollar. Moreover, they are paid at the same rate, so if Alex Rodriguez gets, say, 50 cents on the dollar, all the unsecured creditors get 50 cents on the dollar.  It would not be kosher, then for A-Rod to get his $24.9 million and the others to get stiffed.

The practical implication of this is that yes, A-Rod is likely to get at least partially stiffed. Because if he gets all of his $24.9 million, all the creditors get all of their money and then, by definition, there is no point of a bankruptcy (i.e. a bankruptcy is defined by owing more money than you have). Since the Rangers filed for bankruptcy it means they don’t have enough money to pay all of their unsecureds at a 100% rate. That means that A-Rod should not get all the money he thought he’d get and all of the ugly union/team dynamics set forth below come into play.

Another point of clarification: there can’t be a “side deal” between the Rangers and A-Rod, because that would violate bankruptcy laws which prohibit a debtor agreeing to make preferential payments to certain creditors before the filing. I didn’t intend that meaning when I said “side deal” — I really meant that there was some understanding on A-Rod’s part that he would be taken care of in the normal bankruptcy process — but that seems far less likely given the pro-rata thing outlined above, even if it were proper for the Rangers to make such an assurance, which I’m not sure is the case.

I’d ask that the bankruptcy experts among you continue to help me out with this stuff, but for now anyway, it seems like, yeah, A-Rod is gonna walk away with less money than he bargained for.  I can’t help but think that this will become something of a problem for baseball going forward.

1:15 P.M.: Pfun Pfact from the Rangers bankruptcy filing: the largest unsecured creditor is Alex Rodriguez, who is still owed
$24.9 million in deferred compensation from his big $250 million deal.

“Unsecured” means that Mr. Rodriguez does not have any collateral for the amount of money he is owed.  Unsecured creditors rarely if ever get any of the money they’re owed when the debtor goes into bankruptcy. Your mortgage company is secured (i.e. it has a lien on your house) which means that if you stiff them, they can take the house back to satisfy what you owe them.  Your credit card company, in contrast, is an unsecured creditor. If you stiff them they can try to collect from you and can ruin your credit rating, but they can’t take your stuff and, for the most part, once you file bankruptcy, its game over for them. Which is the biggest reason why credit card companies donate a lot of money to Congressmen in order to get them to make it harder for you and I to file bankruptcy.

But that’s a subject for another blog. Let’s you and I stick to Alex Rodriguez. Is A-Rod SOL?  Are the Rangers going to really just walk away from the money they owe him? The short answer: I don’t know.

The longer answer: man, I can’t see them just doing that. Lots of teams owe deferred compensation to players. Indeed, I think the Diamondbacks spent more time in the last decade working on deferred comp deals than they did playing baseball games.  If a team were to suddenly renege on a major deferred compensation deal you’d have to think that the union would scream and the other teams — who might like to convince some of their own high-priced players to take deferred compensation — would scream even louder.  If there’s a chance they’re going to get burnt, why would any player take such a deal again?

As is the case with the Tom Hicks creditors, I can’t help but think that there is a side deal to pay Mr. Rodriguez what he is owed, be it from the Rangers or some other source.* Otherwise, the team and the league will have just created a big labor headache that no one needs.

*How that is specifically being done — if indeed it is being done — is a pretty interesting question, because I think it’s unprecedented in baseball history.  The most recent parallel I can think of is Mario Lemieux, who was owed so much in deferred compensation that he just up and converted all that debt into an equity stake with the Penguins and now owns the team.  That can’t happen with A-Rod because baseball prohibits players from doing such a thing.  Seems like it would have to be a cash thing.

Chapman has trouble remembering convo with Cubs management about off-field behavior

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CHICAGO — Star closer Aroldis Chapman joined the Cubs on Tuesday, arriving to a mixed reaction in Chicago and saying he couldn’t remember what management told him about off-field expectations and behavior.

After Chapman’s awkward introductory news conference, Cubs president of baseball operations Theo Epstein insisted Chapman understands what the Cubs expect of him after an offseason domestic violence incident.

When the Cubs announced the trade with the New York Yankees on Monday, the team released a statement from Chairman Tom Ricketts saying they were aware of his 29-game suspension to begin the season under Major League Baseball’s new domestic violence policy.

Ricketts said he and Epstein talked by phone with Chapman before the deal was completed and “shared with him the high expectations we set for our players,” adding that Chapman was “comfortable” with them.

But when asked repeatedly about that phone conversation before Tuesday’s game against the crosstown White Sox, Chapman said through an interpreter that he couldn’t recall details because he was taking a nap at the time the call came in.

The question was asked several more times. A Cubs spokesman once asked the question himself to the interpreter, coach Henry Blanco.

“It’s been a long day,” Chapman said. “Trying to remember.”

Asked again several minutes later during the group interview if he could now remember what Ricketts said, Chapman shook his head.

“I still don’t remember,” he said in Spanish.

Epstein called it a misunderstanding and that Chapman was “pretty nervous” as he faced seven cameras and more than two dozen reporters.

“I was on the call, Tom was on the call, Aroldis was on the call and Barry Praver, his agent, was on the call. It happened and it was real,” Epstein said before the Cubs’ 3-0 loss to the White Sox.

Chapman was accused of choking his girlfriend and firing eight gunshots in the garage of a Florida home in October. The woman later changed her story and no charges were filed.

“You learn from the mistakes that you make,” Chapman said.

The case caused the Los Angeles Dodgers to back out of an offseason trade for Chapman. Cincinnati eventually traded him to the Yankees, and after his suspension, the 28-year-old Cuban converted 20 of 21 save chances for New York.

The Cubs have long boasted of stocking their roster with high-character players, helping earn the “lovable losers” label they’ve carried for decades since their last World Series title in 1908.

But the Cubs (59-40) have retooled their roster under Epstein and have the best record in the major leagues despite Tuesday’s loss in which Chapman didn’t pitch. Chapman, who threw a 105 mph fastball last week, fills perhaps the team’s largest hole as he replaces Hector Rondon as closer.

The Cubs sent four players to the Yankees, including shortstop prospect Gleyber Torres, to get one of the game’s top relievers. Epstein said they wouldn’t have made the deal if not for the phone call he and Ricketts had with Chapman.

“Tom laid out the exact same standards that he lays out to everyone in spring training,” Epstein said. “He said, extremely clearly, `Look, Aroldis, I tell all the players this in spring training and it’s important you hear it and I need to hear from you on this. We expect our players to behave. We hold our players to a very high standard for their behavior off the field. And we need to know you can meet that standard.’

“Aroldis said `I understand. Absolutely, I can.'”

The Cubs activated Chapman before Tuesday’s game and designated left-hander Clayton Richard for assignment.

Reaction to Chapman’s acquisition in Chicago has been tepid. While there were supportive fans on talk radio, the Chicago Tribune carried a front-page column Tuesday criticizing the move. The back of the Chicago Sun-Times tabloid read “Spin City” over a picture of Epstein.

Chapman said he expected a “good reaction” from Cubs fans. He was also asked during the 20-minute meeting with reporters in the visiting dugout at U.S. Cellular Field if we would consider working with organizations looking to prevent domestic violence. Chapman said no.

Cubs manager Joe Maddon defended Chapman.

“He did do a suspension, he has talked about it, he’s shown remorse,” Maddon said. “Everybody else has the right to judge him as a good or bad person. That’s your right.

I want to get to know Aroldis. I think he could be a very significant member and he’s got the potential, yes, to throw the last out of the World Series. And if he does, I promise you I will embrace him.”

Report: Padres working on trading Andrew Cashner

ST. LOUIS, MO - JULY 21: Starter Derek Norris #3 of the San Diego Padres pitches against the St. Louis Cardinals in the first inning at Busch Stadium on July 21, 2016 in St. Louis, Missouri.  (Photo by Dilip Vishwanat/Getty Images)
Dilip Vishwanat/Getty Images
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Jon Morosi of FOX Sports and MLB Network reports that the Padres are working to trade starter Andrew Cashner. He notes that a deal may be consummated before he takes the hill for Tuesday’s start in Toronto against the Blue Jays. The Marlins, Orioles, and Rangers have had reported interest in Cashner.

Cashner is 4-7 with a 4.79 ERA and a 61/27 K/BB ratio in 73 1/3 innings. He missed over three weeks between June 11 and July 2 due to a strained neck.

The right-hander is earning $9.625 million this season and will be eligible for free agency after the season.