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.

Jose Canseco to join NBC Sports California as an A’s analyst

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Hey, I have a new coworker: Jose Canseco has been hired by NBC Sports California as an Athletics pregame analyst.

OK, maybe he’s not technically a coworker, as the folks at NBC Sports California — formerly CSN Bay Area — and I do not hang out at the water cooler, have potlucks in the conference room or exchange secret Santa gifts at Christmas time, but dang it, I’m gonna TELL people I work with Jose Canseco. The only downside will be people assuming that, because he and I are on the same team, my performance is something less than authentic. Or, perhaps, Canseco may write another book and tell all of my secrets.

Anyway, Canseco will be part of NBC Sports California’s A’s Pregame Live and A’s Postgame Live shows. Live TV can be hard. I’ve done a bit of it, and there is certainly more to that gig than meets the eye. You can’t always prepare for what happens on the fly. I’m sure Canseco will do well, however, as he’s great with coming up with the best stuff off the top of his head.

2017 Preview: Cleveland Indians

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Between now and Opening Day, HardballTalk will take a look at each of baseball’s 30 teams, asking the key questions, the not-so-key questions, and generally breaking down their chances for the 2017 season. Next up: The Cleveland Indians.

The Cleveland Indians almost won the World Series without their best hitter for the whole season and two of their starting pitchers for the playoffs. This year that hitter — Michael Brantley — is back and the starters — Carlos Carrasco and Danny Salazar — are healthy. Oh, and they added arguably the best free agent bat available in Edwin Encarnacion.

Baseball teams love to downplay their expectations, but given where the Indians are at the moment, anything less than another American League Pennant will have to feel like a disappointment, right? Fortunately for the Indians, they stand as the favorites to do just that.

They didn’t lose much in the offseason. Yes, World Series hero Rajai Davis is gone, but the Indians outfield will be fine if Brantley remains healthy. Mike Napoli‘s loss will be felt but it will be made up for with Encarnacion’s bat and probably then some. Coco Crisp left too, but he was not a key part of the equation.

The biggest losses are guys from last year who will start the year on the disabled list, most notably Jason Kipnis and Lonnie Chisenhall. Kipnis is just starting to work out following time off to rest his sore shoulder. Chisenhall ran into a wall the other day and is being evaluated. There is no sense that either will miss extended time, however.

Otherwise, the lineup should score a lot of runs, with on-base machines Jose Ramirez and Francisco Lindor setting the table for Encarnacion, Brantley and Carlos Santana, who is entering his walk year. The Indians trailed only the Red Sox in runs scored in the American League last year and they should score a lot of runs this year as well.

The strength of the club, however, remains its pitching. Corey Kluber looked like his old Cy Young self last year, particularly in the playoffs. Danny Salazar built on his excellent 2015 season in the first half before falling prey to injury. Carlos Carrasco posted an ERA+ of 141 before breaking his hand and Josh Tomlin and Trevor Bauer both stood out for fourth and fifth starters.

The bullpen is excellent too, as relief ace Andrew Miller is joined by Cody Allen, Bryan Shaw and newcomer Boone Logan make up one of the relief corps in baseball.

Pitcher health is probably the biggest uncertainty for any contender, but the Indians have the best pitching in the AL if everyone stays healthy. And maybe even if one or two guys don’t.

It’s hard to find much fault with the 2017 Cleveland Indians. They are the class of their division and, while the slog of the regular season turns a lot of surefire contenders into hash before it’s all said and done, there is no reason to look at the Indians right now and think of them as anything other than the best team in the American League.

Prediction: First place, American League Central.