The Rangers go to court today

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For what it’s worth, I continue to stand by my story about the Rangers-Astros talks. A deal may never happen because of all the financial complications surrounding the team, but that doesn’t mean the front office has simply given up the notion of trying to improve itself. Quite the contrary, actually.

And though he was the first to say I was full of it regarding the Oswalt thing yesterday, Buster Olney is right about one thing: the hearing that’s going down in a Dallas bankruptcy court this morning regarding the Rangers’ sale is going to tell us an awful lot about how aggressive Jon Daniels will be able to be in adding pieces to his contending ballclub.

For those who missed it or whose eyes glaze over at such things, today’s hearing is going to determine the time frame of the Rangers’ bankruptcy proceedings and ultimately the sale of the team.  If things go smoothly, there could be a schedule in place that has the team emerging from bankruptcy before the trade deadline.  If they don’t go smoothly, the process could be protracted and Major League Baseball will continue to foot the bill in Texas. That would likely mean no big shiny pieces added for the playoff stretch.

The complicating factor: on Friday, the creditors to Hicks Sports Group made a filing in which they purported to establish that one of the losing bidders — the Jim Crane Group — had a superior bid to the Greenberg-Ryan Group. The emails that were part of the filing are not flattering for the Rangers, inasmuch as they show Hicks Sports Group people (i.e. the ones selling the Rangers) admitting that Crane was offering more money. Perhaps $13-20 million more.

Major League Baseball counters, however, saying that those communications and the money discussed therein reflected unauthorized negotiations during a time when Greenberg was supposed to have exclusive dealing rights, so they don’t count. More importantly, baseball says that during that same time (i.e. the exclusive negotiating window) Greenberg’s offer improved dramatically itself, so the communications are misleading at best.

I understand what baseball is trying to say here, but they probably need to be careful about how hard they hit the notion that baseball’s bidding calendar and exclusive negotiating periods control the matter.  For one thing, one of the most important party to the deal — Hicks Sports Group — apparently didn’t give a rat’s butt about the exclusive window, because it was apparently still negotiating with Crane.

For another thing, baseball’s right to control these kinds of sales, to pick the bidders and to ultimately pick the winners, is not as iron-clad as it likes to pretend it is.  It’s hardly ever challenged so, yeah, in practice it has always had the right to do it. But at least one federal court has held that baseball cannot control this process like it thinks it can. Though it would likely be a logistical nightmare, if a given team owner and a prospective team buyer wanted to do their own deal and leave MLB out of it, they could theoretically do it.

This case would be different in that, rather than a team owner who wants to reject MLB’s wishes, it would be a court substituting its judgment for the bankrupt team.  Specifically, the bankruptcy judge is tasked with figuring out what’s best for the creditors here, not what’s best for Major League Baseball’s interpretation of the breadth of its antitrust exemption, and he could very well say “Hey, Crane had a higher bid here before he was shut out; we need to reopen this bidding to make sure the best deal is done.” I have no clue what the judge will do with all of this. The easy play would simply be to defer to MLB and the Rangers and get the sale done. But he could be a maverick and decide to reopen the sale.

In any event, we’ll definitely have a better idea after today of what is within the realm of the possible for the Texas Rangers.

The Padres owners try to explain why they aren’t spending money

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There was an interesting article in the San Diego Union-Tribune over the weekend about the Padres, their owners and their finances.

The article purports to be a rare look into the finances of a big league club. And yes, the owners opened their books, to a degree, to the writer of the story, talked about the team’s financial position, its debt and its approach to team payroll, past, present and future. The upshot: the team has had lots of debt, has had to do a lot of work to get out of that situation and now, with some restructuring out of the way, the club looks forward to spending more on players. Eventually. Like, maybe in 2020 or 2021.

On the one hand, yes, it’s actually got some good information in there! Some details about team finances you don’t often see. Which is totally cool as far as that goes. The problem is that the article doesn’t go nearly as far as it may seem and, in the end, is just a far more elaborate than usual excuse from a team about its failure to spend money.

The tell here comes from what is not mentioned as opposed to what is. For example, while it talks about how much is being spent on various things — baseball salaries, operating, marketing, etc. — nowhere does it talk about the owners’ own take. Rather, it leaves you with the impression that the owners haven’t seen a dime from the team in the several years that they’ve owned it. Color me extraordinarily skeptical about that. As we’ve seen with other clubs — most notably the Marlins, but most do it — broad categories such as “baseball operations” or “non baseball operations” often include substantial payments to owners in less-than-obvious line items. Payments to LLCs and partnerships for “consulting” or “management fees” or what have you. Do the Padres have similar expenditures? We can’t tell from this article, but it’s telling to me that they have spent about as much on front office/miscellaneous baseball ops stuff as player salaries over the past several years. A lot of that has been at building a strong minor league development system, but I’m guessing not all.

Similarly, there is an awfully large portion of the article aimed at telling the tale of the clubs’ massive debt and its restructuring. Yes, debt service can be a killer for liquidity, but it doesn’t really talk too much about the debt for its own sake. Such as the fact that (a) the current owners knew full-well of the debt they were inheriting from the previous owner, John Moores, when they bought the team; and (b) that by assuming the debt, their purchase price for the team was lowered, as it always will be in transactions that involve a lot of debt-assumption. The current owners have had the team since 2012. I don’t recall them telling the public then that there would be a near decade’s worth of swimming against the current of debt before they started paying for players. That’s never been in the season ticket brochure.

It’s also worth noting that, for as much as the debt restructuring is talked up in the story, it is saving the Padres only $8 million a year. They’ve been at least $60 million below the luxury tax threshold for several years now. It’s more than the club’s debt keeping them from spending money. It’s largely been a choice.

Again, none of which is to say that the article is not interesting in its own right. It certainly is. There is certainly more information here than one typically sees in an article about a team’s finances. But it is just partial information. Moreover, it seems to be aimed at justifying another year or two of non-contention to fans without satisfactorily explaining all of the many years of non-contention which preceded it. The Padres famously went all-in and spent some money on players in 2015. Why did that make sense then if this debt problem has been there all along? Why did they give Eric Hosmer over $100 million last year? The article wants to portray ownership as sober and responsible and prudent and use that to explain why the Padres have stunk on ice for a good long time, but it is not very convincing in communicating some consistent, rational thread from ownership.

That all of this comes at a time when clubs are being criticized for not spending money is no accident, I suspect. As such, I am choosing to read the piece for some interesting information it conveys while understanding that it has a pretty significant P.R. component to it as well.