Rangers owner Tom Hicks is attempting to sell a minority share of up to 49 percent of the ballclub he purchased in 1998, he said on Tuesday at the team’s Spring Training complex.
Merrill Lynch, the international investment banking firm, which became a unit of Bank of America last year, has been hired to sell minority shares of the team either in whole or part, two baseball sources said. The Rangers were born as the expansion Washington Senators in 1961 and moved to Arlington a decade later.
Hicks says that he’s going to retain 51-60 percent of the team in order to retain control, but doesn’t see a percentage in owning a greater percentage.
And he’s probably right about that. One of the things that no one in baseball really wants to talk about is that it is almost inescapable that franchise values are on the decline. How can they not be? So much of the ownership of a team is tied up in real estate, be it from owning or at least profiting from stadiums and parking garages or from holding interests in commercial development around ballparks. More importantly, many baseball owners themselves are real estate guys first — think Lew Wolff — and have taken baths in the current economy. These guys either need cash now or, at the very least, see that the cratering of the real estate market and the overall economic downturn is going to contribute to a decline in franchise value. Get out now or get soaked later guys like Hicks seem to be thinking.
This is going to have consequences beyond the bottom line of some wealthy plutocrats. For years the owners cried poor due to arguably flat revenues, yet failed to do anything to reign in salaries because they knew that whatever was happening with revenues, franchise value was increasing, and therein lied the true reason to get in the baseball business. Because of this, salary cap talk was kind of a hobby, the upside of which would really only contribute to some relatively marginal financial gains for team owners. Now, however, when the real value in owning a baseball team is at serious risk — and how can it not be when owners are issuing press releases that 40% of their team is on the market — don’t be surprised to see a little more seriousness on the part of owners when it comes to cost containment.
UPDATE: A companion post to this item can be found here.
ATTENTION ROB NEYER READERS: Welcome! A third piece in this series can be found here. It’s much longer with much greater detail, thanks to a particularly insightful guest poster.