U.S. Bankruptcy Judge Stacey Jernigan approved the $593 million sale at a court hearing today following a 16-hour auction in a Fort Worth, Texas, courthouse that ended early this morning.
“It’s a relief to get it done,” Ryan said in an interview after the bidding. “This has been a saga that has just gone on and on.”
The Rangers’ sale is the second-highest for a baseball team, said Sal Galatioto, president of Galatioto Sports Partners LLC, which provides investment banking services to professional sports teams. Galatioto is a lender to the Rangers and is advising owner Tom Hicks on his planned sale of the Dallas Stars National Hockey League team. The $845 million sale of the Chicago Cubs last year was the highest for a baseball team, according to Galatioto.
Judge D. Michael Lynn, who oversees the Rangers’ bankruptcy case and left today’s hearing early to catch a plane, said the auction led to “a remarkable result.” He said he hopes the team, which is in first place in the American League West division, goes on to win the World Series.
‘Long, Hard Fight’
“I want to congratulate the purchaser of the Rangers,” he said. “It was a long, hard fight.”
The Rangers went on the auction block despite an initial plan to sell the team to Ryan and his partner, attorney Chuck Greenberg, without competitive bidding. The Rangers reversed course when their chief restructuring officer, appointed by the bankruptcy court to evaluate the sale, pushed for an auction.
The ownership group, Greenberg said, is made up of 18 partners and includes Bob Simpson, chairman of XTO Energy Inc., and Ray C. Davis, a director at Energy Transfer Partners LP, a Texas pipeline company.
The sale price approved today is about $100 million more than the team would have received under the original deal with the Greenberg-Ryan group, lawyers said in court today. It doesn’t include the sale of land around the team’s stadium in Arlington, Texas, which was part of the original agreement.
The team’s lenders, which provided $525 million in loans to Hicks’ holding company, opposed the first Greenberg-Ryan agreement. They claimed the Rangers and Major League Baseball were ignoring higher offers for the team, and they fought for an auction. The sale approved today will pay them $340 million, lawyers for the lenders said.
“Everybody’s happy. The lenders got a lot of money,” Daniel Stewart, a lawyer for a group of senior lenders, said today.
Before the Greenberg-Ryan group can close the sale, 75 percent of Major League Baseball’s 30 team owners must approve the group as the new owner. Baseball Commissioner Bud Selig endorsed a sale to Greenberg and Ryan before the Rangers’ bankruptcy filing. The owners are scheduled to vote on Aug. 12 in Minneapolis.
Greenberg said he hopes to take over the team that day. The Rangers would then play their first game under the new ownership on Aug. 13 when they begin a home stand against the Boston Red Sox.
Eve of Auction
On the eve of the auction, the Rangers’ senior lenders reached an agreement with the Greenberg-Ryan group that would have canceled the bidding and allowed the group to buy the team, according to Lynn and Louis Strubeck, an attorney for the team’s chief restructuring officer. Junior lenders opposed the settlement, and Lynn said the auction would go forward, the judge said.
“Yesterday was a little expensive,” Greenberg said in an interview. “It’s all part of the color and pageantry of the affair.”
The group won the auction with an offer of $385 million plus the assumption of $208 million in team liabilities. Shortly after the group made the bid at the auction, Cuban and his partner, Houston businessman Jim Crane, bowed out. The cash portion of their final bid was $390 million, which was adjusted downward to $373.2 million, mostly to account for a breakup fee that would have been paid to the Greenberg-Ryan group.
“We bid to the limit we planned to bid to,” Cuban said after the bidding.
When Clifton Jessup, an attorney for Cuban and Crane, congratulated Greenberg and Ryan on their high bid, observers in the near-capacity courtroom applauded and cheered.
After winning bidding, Greenberg said he went to celebrate with others at the Red Goose Saloon in downtown Fort Worth.
The case is In re Texas Rangers Baseball Partners, 10- 43400, U.S. Bankruptcy Court, Northern District of Texas (Fort Worth).