Texas Rangers Bankruptcy
Texas Rangers Bankruptcy
Several years ago, the Texas Rangers
(baseball team) went bankrupt. There were several competitive and contentious
bids. One group won out. Imagine that you are an investor. You are going to
write a letter to the Chairman of the corporation. Of course, your letter has
to indicate that you are either happy or unhappy with the way things are.
Do some research on how the new Texas
Rangers (following bankruptcy) are doing. The paper is not about how many games
they win but about their financial situation. Here are a few considerations:
l Are they operating in the red or the black?
l Are the stockholders happy?
l What are they doing wrong?
A few additional considerations
l This is not about sports or marketing; it is about finance.
l You are either happy or unhappy, not both at the same time.
After reviewing your draft and making
necessary changes, upload it as a Word document (doc not docx) to the drop box.
Tom
Hicks who used to operate his private equity sold Texas Rangers’ stock to Nolan
Ryan who is team president. When Hicks bought the team in 1988 from a group
that included former president George Bush, the market cap is $250. The market
capitalization was constantly growing up. However, this year’s market cap
failed from $412 in last year to $405 and then, Hick determined to sell the
stock to investors due to the fact there were so many claims which suffered
their management. In my opinion, investors benefit is large because the sold
price is $575. However, the good price is including all debt which Rangers used
to incur. The new owners of Rangers need to hedge these risk and required to
know how to optimize their profit in this condition.
To
keep player’s motivation is one of big issues. Alex Rodrigues is 25 million
dollar creditor. Game has to be fair. Baseball shouldn’t give them other
consideration such as money. This kind of bankruptcy would affect disorder of
national sports world.
There
were several reasons which brought about this bankruptcy. First is their
mismanagement. It is that Rangers usually ignored creditor’s vote in spite of
their right to join management. Second is their mismanagement of franchising.
They were required to improve their past franchising process and made
prepackage plan due to the fact they actually could expect their franchising
failing.
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