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.

Report: The Yankee Stadium charity is a secretive, self-dealing boondoggle

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The New York Times has a blistering report on the New Yankee Stadium Community Benefits Fund. The Fund is the charity the Yankees created in 2006 as a means of making up for the negative impact the construction New Yankee Stadium had on the surrounding community, primarily via its taking over 25 acres of parkland.

The idea of the Fund was a good one: to distribute $40 million in cash grants and sports equipment, and 600,000 free baseball tickets to community organizations in the Bronx over four decades. And it has been distributing funds and tickets. As the Times reports, however, the manner in which it has done so raises some red flags. Such as:

  • Charitable donations have, in an amazing coincidence, often gone to other charities which share common board members with the New Yankee Stadium Fund;
  • Funds have gone to many wealthy groups in affluent parts of the Bronx far away from the Stadium while the area around the stadium remains one of the most impoverished in the nation. For example, a private school in a wealthy part of the borough and a rec center in a gated community have gotten a lot money that, one would think anyway, could be and should be devoted to organizations closer to the ballpark that are in greater need; and
  • There has been almost no transparency or oversight of the Fund. Reports which were supposed to have been submitted have not been. And no one, apart from the Times anyway, seems to care. The Yankees certainly don’t seem to. Indeed, as the article notes, the team has worked hard to keep the Fund’s operations out of its hands. They just got their new ballpark and write the checks and hand out the tickets. Everything else is someone else’s problem.

Cronyism in private philanthropy is not uncommon. As is a lack of oversight. Often it’s the best connected people who receive the benefit of such funds, not the people most in need. This is especially true in charities whose creation was not born of a philanthropic impulse as much as it was born of a need to put a good face on some not-so-good business dealings.

If the Times’ report is correct — and the lack of anyone coming forward to dispute it on the record despite the Times’ requests that they do suggests it is — it appears as if the New Yankee Stadium Community Benefits Fund is one of those sorts of charities.

Who is the fastest sprinter in baseball?

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We’re not talking the 100 meters here. We’re talking practical baseball sprinting. That’s defined by the StatCast folks at MLB as “feet per second in a player’s fastest one-second window,” while sprinting for the purposes of, you know, winning a baseball game.

StatCast ranked all players who have at least 10 “max effort” runs this year. I won’t give away who is at the top of this list, but given that baseball’s speedsters tend to get a lot of press you will not be at all surprised. As for the bottom of the list, well, the Angels don’t pay Albert Pujols to run even when he’s not suffering from late career chronic foot problems, so they’ll probably let that one go. I will say, however, that I am amused that the third slowest dude in baseball is named “Jett,” however.

Lately people have noticed some odd things about home run distances on StatCast, suggesting that maybe their metrics are wacko. And, of course, their means of gauging this stuff is proprietary and opaque, so we have no way of knowing if their numbers are off the reservation or not. As such, take all of the StatCast stuff you see with a grain of salt.

That said, even if the feet-per-second stuff is wrong here, knowing that Smith is faster than Jones by a factor of X is still interesting.