Sizing Up Mark Cuban; Potential Owner Of The Rangers

We’re happy to announce that Maury Brown, owner of the Business of Sports Network, will be writing for us here every Tuesday. Please welcome Maury to the crew.

Well, this is a fine mess you’ve gotten us into, Tom Hicks. The Texas Rangers, mired in Chapter 11 bankruptcy when Hicks Sports Group defaulted on $525 million in loans, is about ready to go up for auction on Aug 4th. To place this in perspective, the last time this happened (it was also the first time) in MLB was with the Baltimore Orioles in 1993. Then, owner Eli Jacobs, had the club in bankruptcy and Judge Cornelius Blackshear held an auction that eventually came down to a group led by Peter Angelos and one by Jeffrey Loria. Angelos won the auction for $173 million over Loria, which, at the time, caused fans of the team in the courtroom to erupt into applause.

We all now know how that has tuned out with Angelos at the helm, which brings us back to the auction of Rangers.

Determining whether an owner will be good or bad is always a matter for history to decide. Looking to the past to try and predict the future is, at best, a tenuous endeavor. But, when Mark Cuban is one of those possibly in play to own the Rangers, you can assume he’d be something other than the normally placid owners that make up MLB’s ownership lodge at the moment. Cuban makes everyone stand up and notice. On Monday, Cuban’s lawyer Clifton Jessup told the chief restructuring officer in the Rangers case that by today, the Mavericks owner would  make a determination as to whether to continue possibly pursuing the purchase of the club.

In other words, much like Cuban in the NBA, you never know what you might get.

Cuban is, more or less, trying to land an MLB club through the backdoor with the bankruptcy court more concerned about satisfying creditors than what the league would do if the sale were outside of Chapter 11. He’s not exactly the personality type that fits Bud Selig’s ownership profile; he’s one who has a taste for getting fined by the NBA for comments regarding the quality of referees. His outspoken ways were partially to blame for knocking him down when the Chicago Cubs were up for sale (although funding was more at issue before the sale got into the final bidding phase). His 2002 infamous quote to the Dallas Morning News in which he said, “Ed Rush might have been a great ref, but I wouldn’t hire him to manage a Dairy Queen. His interest is not in the integrity of the game or improving the officiating” landed a then league-record $500,000 fine. To add to David Stern’s heartburn, when Dairy Queen got up in arms about his statement, Cuban apologized and then worked a shift at DQ to show he wasn’t above working there.

While a case can be made that controversial owners the likes of Charlie Finley or Ted Turner are ancient history, the fact remains that Selig has the league focused on growing MLB’s business instead of chasing maverick owners around, and has gone after getting the balance of power somewhat back in their court from the MLBPA. When you’re distracted with owners getting in trouble, it’s hard to focus on what’s in front of you. Cuban has a history of being a distraction.

Which is why Cuban has most likely married himself up with investor Jeff Beck and partner Dennis Gilbert. Gilbert, along with Roland Hemond and scouts Dave Yoakum of the White Sox and Harry Minor of the Mets, created the Professional Scouts Foundation in January 2003. Having Beck as the lead in a bidding group gives the perception that Cuban wishes to play nice and “help” another group, but it’s hard to imagine Cuban playing the part of “the background guy.” One could speculate that Cuban would simply bide his time, if the group won the auction, and slowly buy out majority ownership stake.

But is having Cuban as a majority owner such a bad thing? Would he be the same as he is as an owner in the NBA? It’s hard saying as owning the Mavericks and owning the Texas Rangers is a bit of an apples and oranges comparison.

What is known is that since he bought the majority stake in the Dallas Mavericks from Ross Perot, Jr. in 2000 he has made them relevant in a market consumed by all things Dallas Cowboys.  In the most recent Forbes NBA valuations, the Mavericks ranked 7th most valuable at $446 million. According to the USA Today NBA salary database, for the 2008-09 season (the most recent available), Cuban’s Mavericks ranked third in overall player payroll at $93,215,017 behind only the Raptors and Knicks. That spending has translated into Forbes showing the Mavericks running at an operating loss of $17.4 million. Playing to win can mean losing at the bottom line, which is bad for investors (and something Bud Selig would prefer not to see), but shows that he’s a passionate owner willing to put his money where his mouth is to field a contender. To place this in baseball perspective, the Rangers are shown to have a 2010 Opening Day payroll of $55,250,544, ranked as 27th out of 30 in the league. The most recent Forbes rankings for MLB has the Rangers as the 12th most valuable club in MLB at $451 million, up 11 percent from last year.

So, if Cuban is willing to open up his wallet to help make the Mavericks win, so, he too, will do the same for the Rangers, right? Not so fast.

One of Cuban’s biggest assets with the Mavericks is American Airline Center, of which he currently owns 50 percent. The facility has been a cash cow in terms of non-NBA related revenues, and that has placed American Airlines Center’s value of somewhere in the mid-$200 millions for Cuban. Those revenues have helped drive pouring money back into the Mavericks.

While winning this year has seen sellout games during the recent homestand against the Angels, the Rangers rank 15th in attendance at an average paid attendance of 28,326. The Ballpark at Arlington is not part of the auction process, and indeed, the lease transfer for the ballpark is up in the air as JPMorgan Chase has filed a lawsuit claiming the Rangers fraudulently transferred the lease during the bankruptcy process. If Cuban were to win the auction for the Rangers, chances are that he will not be the “next Steinbrenner” and would likely run player payroll above where it is now, but nowhere near the top of MLB’s player payroll ranking.

Cuban also has interest in other sports endeavors investing in the fledgling United Football League in 2010. The investment was done to get his foot in the door with HDNet, of which Cuban is Chairman. HDNet will broadcast ten regular season games for the UFL this year. According to the SportsBusiness Journal, the UFL lost roughly $30 million in its debut year, $6 million more than the league’s founders projected. Cuban could possibly look to swing some kind of broadcast deal for the Rangers for HDNet, although it’s uncertain how that would cannibalize the current deal with FOX Sports Southwest where ratings have been robust. Still, it’s a possible consideration for Cuban to try and eek out more revenues through the Rangers to his main business holding, HDNet.

But, the real question becomes, does Cuban get in through the backdoor by outbidding the group led by Chuck Greenberg and Nolan Ryan? The league has backed the Greenberg/Ryan group pretty much from the beginning as they see transitioning as a smooth ride, whike a Beck/Cuban group would be riddled with question marks.

At the center of those questions is Nolan Ryan. Ryan, a fan and league favorite, has been sitting in the position of president with the Rangers during this whole debacle. It’s unclear whether Ryan would want to be in a group with Beck and Cuban, or whether Ryan would be fired to get Dennis Gilbert in the picture.

Which adds to MLB’s claims that the Greenberg/Ryan group would be a better transitional fit for the Rangers, who are sitting pretty atop the AL West and charging toward the playoffs, a promised land they haven’t been in in over a decade. Clearly, Ryan has his Hall of Fame pitching background to stand on, but he also owns the Corpus Christi Hooks, which play in the Class AA Texas League, and the Round Rock Express, a Class AAA team in the Pacific Coast League. Chuck Greenberg, whom Ryan sought out when the Rangers came up for sale, helped work out the bankruptcy sale of the Pittsburgh Penguins to Mario Lemieux. He’s also  owned the Double-A Eastern League’s Altoona Curve and been president and managing partner of the Myrtle Beach Pelicans, which has seen recent attendance records. The two are portrayed as a symbiotic pairing with Ryan knowing a lot about baseball matters and has a good understanding of business, while Greenberg understands running baseball clubs with a solid business background.

So, there’s a case to be made that Cuban isn’t good for any group looking to gain access to the Rangers, as MLB might not approve any ownership group he’s in. But here’s the thing: having Cuban in the auction mix is actually good for the process.

Judge Michael Lynn, who is overseeing the bankruptcy case, has said that even if the Greenberg/Ryan group were to win at auction, he might overrule if he determines that there wasn’t a fair process in the sale. Cuban would assist in making the process “fair” by adding capital into the mix, and likely helping push the Beck group into a competitive position. In a backwards sense, Cuban would then help Greenberg/Ryan, if they have the muster to be competitive. Winning out over other competitive bidders would blunt talks that the process was unfair, and Lynn would then easily be able to approve a Greenberg/Ryan sale, if, as mentioned, the group is in it to win, and by all accounts, they are.

In the end, what Mark Cuban brings is a series of question marks. He’s questionable to MLB. He might, or might not, be a good MLB owner for fans. He might, or might not, stay out of trouble with the league. What is known is this: Cuban, or just about any other owner, for that matter, would be better than Tom Hicks, arguably the most hated man in baseball at the moment. At least fans, who either love or hate Cuban, can find middle ground in that.




Print This Post



Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey, as well as a contributor to FanGraphs and Forbes SportsMoney. He is available for freelance and looks forward to your comments.


34 Responses to “Sizing Up Mark Cuban; Potential Owner Of The Rangers”

You can follow any responses to this entry through the RSS 2.0 feed.
  1. don says:

    I would bet a case of beer that any Cuban owned team would be in the top third, payroll wise, within 5 years.

    Vote -1 Vote +1

    • Chad says:

      Considering the size/population of the DFW area, the Rangers should be having a top third payroll more often than not.

      Vote -1 Vote +1

  2. Maury Brown says:

    Being in the “top third” is not “Steinbrennerish” … Still, for discussion purposes, the Twins had the 10th highest Opening Day payroll this year at $97,559,166…. Talk amongst ya selves…

    Vote -1 Vote +1

  3. LJ says:

    HDNet is a national broadcaster – those rights have been sold, so they wouldn’t be eligible until bidding came back up. WGN is the only local station still on national carriage last time I looked, but the Cubs have been shifting games from that to their O&O anyway so there’s likely no advantage. I think you completely missed it on this. As for Cuban, Selig’s never going to approve him as an owner, so the entire article is pointless.

    Vote -1 Vote +1

  4. Jeff says:

    Some people think that if Cuban gets the team they will keep Cliff Lee. Even if Cuban comes on board, he isn’t going to suddenly overmatch the Yankees.

    Vote -1 Vote +1

  5. Maury Brown says:

    A) HDNet was never mentioned as a “It’s gotta be happening right now!” factor, so any businessman worth their weight in salt would say, “At some point at sometime, an asset I have could be leveraged here.” B) As to never being approved…

    I have long said this, but if you have been following the proceedings you’ll find that Judge Lynn has made it clear that MLB’s process isn’t as important to him as getting skin back to the creditors. It’s also why I mention Cuban as a backseat partner in the Jeff Beck group (wait a sec… wasn’t that a killer band out of the early ’70s?). Approving “Beck” is different than having Cuban a minority owner of his group. There’s a difference between that and Cuban going solo.

    Vote -1 Vote +1

  6. Alan says:

    Maury Brown will be a great asset to this site. Welcome aboard.

    Vote -1 Vote +1

  7. James Feldman says:

    Welcome to Fangraphs, Maury. Always been a big fan.

    Vote -1 Vote +1

  8. RG says:

    Maury,

    Do you think the MLB would dare block the winning bidder? I would think that they just want this mess over with and will accept whoever wins the auction.

    Vote -1 Vote +1

  9. Maury Brown says:

    @RG…. Kaplan at the SportsBusiness Journal wrote a while back that Bob DuPuy met with Jim Crane and that it was possible — repeat possible — that the league might be willing to accept his group, should they win the auction. League would say, “well, the auction process didn’t drive us to accept him. We think, on his own merits, Jim will be a fine owner.”

    If it were Cuban, by himself, that won outright, I say the league goes to the mat and says, “No way. We have a right, just as all sports leagues do, to determine who is part of the ownership brethren.”

    There is a solid case to be made that just because you have the most money to buy a franchise, you may not be a good owner that pushes a league’s agenda. And make no mistake… the league is all about pushing their collective agenda.

    Vote -1 Vote +1

    • DaveP says:

      Has anyone put a $ value on MLB’s “anti-trust exemption”?

      “If it were Cuban, by himself, that won outright, I say the league goes to the mat and says, “No way. We have a right, just as all sports leagues do, to determine who is part of the ownership brethren.” “

      Vote -1 Vote +1

    • Avi says:

      Maury,

      While Selig and Major League Baseball may have a legitimate argument in terms of Cuban’s possibly negative impact of the sport, is that enough to overcome the financial aspect? If Cuban pays the highest price, will Judge Lynn force MLB to accept it?

      It seems that the bottom line here is not who Selig thinks should be part of the ‘ownership brethren,’ rather who will do the best job at paying back the creditors. The judge overseeing that bankruptcy probably factors in who Selig likes, but it would appear that’s secondary to repaying the debt.

      Vote -1 Vote +1

  10. RG says:

    Yeah, I can see that (regarding the league pushing their agenda and stopping a solo Mark Cuban bid).

    At this point, though, I just wonder if they would be willing to accept him rather than keep financing the team and watching the bankruptcy debacle continue to unfold for who knows how many more months.

    Last winter, Cuban was in the news about buying a minority share of the Stars (at the time, he said he was waiting for the Rangers sale to wrap up). Have you heard anything about this? I’m wondering if he is trying to put himself in position to eventually hold controlling interest in Mavs/Stars/Rangers. Then he could do something with the TV rights to all three down the road (and who knows what else). Seem possible?

    Also – if Cuban is part of another group and doesn’t hold a majority share, would he require league approval down the line to buy out a larger percentage of the team (thereby winding up with majority ownership down the line)?

    Thanks, Maury!

    Vote -1 Vote +1

  11. Jeffrey Gross says:

    Oh so the MLB will approve Cuban to own the Rangers but not the Cubs? WTF???

    Vote -1 Vote +1

  12. Maury Brown says:

    @Jeffery Gross… Cuban was flying solo on the Cubs… If he does the same with the Rangers, the reaction would be the same. It’s why I mention in the article marrying up with Jeff Beck as a minority partner. Makes it much harder in Chapter 11 for MLB to disapprove a legit bid by Beck, if Cuban is simply listed as a minority partner.

    Which goes to @RG’s question… Yes, the league (by 75% vote) must approve all ownership transfers, even if it’s “in-house” such as a minority owner purchasing majority stake.

    Vote -1 Vote +1

  13. Maury Brown says:

    To all that are wishing me a warm welcome, I’m exceptionally flattered. Hope to bring you good stuff each week.

    Vote -1 Vote +1

  14. RG says:

    Oh, and welcome, Maury. Glad to see you hear at Fangraphs.

    And thanks for answering questions…

    Vote -1 Vote +1

  15. Tuesdays with Maury… really?

    Vote -1 Vote +1

  16. Maury Brown says:

    Mitch Albom… Mike Lupica… You can see how I get the two confused. Thanks for slapping me around on the gaffe

    Vote -1 Vote +1

  17. Cidron says:

    Personally, I am in favor of Nolan getting control of the team. Under his watch, the team has steadily improved where it never has before. Pitching. Plain and simple, they arent afraid to pitch there anymore. Nolan knew how to pitch when he “just didnt have it”, and he is getting it into the philosophy there, how to pitch. Both when you DO have it, as well as DONT. It isnt a 5-inning and then go sit down for half the game anymore. Its go for 7-9 for all. Thats Nolan’s doing. Cubans doing would be.. Jumping out of the box seat right along the baseline to argue with the umpires, beating the manager to that.

    Vote -1 Vote +1

  18. Michael says:

    By all accounts, Mark Cuban is only “the crazy owner” in the sports media, which as we know likes to amplify the behaviors they disagree with (LeBron “can’t win titles,” Ichiro is disliked by teammates because he stretches by himself, etc.).

    Behind the scenes by all accounts he’s worked with the NBA to implement systems and rules to help the sport, and isn’t an outcast of some kind at owners’ meetings. He has ideas and isn’t afraid to talk about them, but that’s good for baseball. He also lets his people run his team, in much the same way Steinbrenner finally did when he wanted to actually win championships again.

    Comparing Cuban to Peter Angelos does yourself a disservice as a journalist by suggesting you haven’t done full research.

    And on that subject, maybe you’re saying that if Loria had won the Birds over Angelos, we’d only be stuck with one incredibly bad ownership group instead of two, and MLB would never have made the incredibly bad and taxpayer-screwing move of sending the Expos to DC? Because that’s the only way I’d agree that picking either one would conceivably be a good thing.

    Vote -1 Vote +1

  19. Maury Brown says:

    Comparing Cuban to Peter Angelos does yourself a disservice as a journalist by suggesting you haven’t done full research

    Well. I’d say, “I hear you!” if that’s anywhere near what was said. The context was in regards to the last (and only) open auction process MLB has witnessed. Cuban or Crane, or Greenberg and Ryan, whomever… As the article states, it’s hard to judge the future based on one’s past.

    In other words, Cuban could be great or a failure. The fans thought Angelos was their savior over Loria, and look what that got them.

    Have no idea where you got me comparing Angelos or Loria to Cuban. It was a point about how the fans were rooting so hard for an owner that, in the end, didn’t exactly turn out that great.

    Vote -1 Vote +1

  20. I’d still be cheering for Angelos over Loria. Jeff Loria has to be the worst owner in baseball.

    Vote -1 Vote +1

    • joser says:

      Exactly what I thought. I doubt there’s an Expos’ fan alive who wouldn’t take anyone, including Angelos, over Loria. If Joe Giardi lost his job with the Yankees do you think he’d be willing to go back to the Marlins if the Orioles job was open instead? Loria is an evil genius as a businessman, but from a fan’s perspective he’s easily the worst owner in baseball. Sometimes I think the other owners bend over for him so often (taking the Nats off his hands, arranging loans to buy the Marlins, etc) just because having him around means they all look better in comparison.

      Vote -1 Vote +1

  21. Magnificent post. I found it to be very informative and gave me the information I was looking for. Will come back – thanks for the info.

    Vote -1 Vote +1

  22. Eve says:

    Such a great analysis! I have no clue how you came up with this report..it’d take me weeks. Well worth it though, I’d assume. Have you considered selling ads on your blog?

    Vote -1 Vote +1

  23. diet doctors says:

    This review is from: Allen Carr’s Easyweigh to Lose Weight (Allen Carrs Easy Way) (Paperback). I finished reading this book today, but its effects have already …

    Vote -1 Vote +1

  24. I simply couldn’t go away your site before suggesting that I actually enjoyed the usual info an individual provide for your visitors? Is gonna be again frequently to inspect new posts

    Vote -1 Vote +1

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>