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From The Rangers Beat: Friday Notes

BOSTON – With the MLB draft coming up next week, the signing period for Latin American players beginning next month and the trading deadline arriving at the end of July, the questions surrounding a team for sale are often about finances.

Rangers owner Tom Hicks, however, said that his search for significant investment – even if it means selling majority ownership in the team – will not impact his management’s team ability to acquire talent.

“It’s business as usual,” Hicks wrote in an email this week about how the club might be impacted by the uncertain future of ownership.

While the Rangers haven’t had much need to add payroll at the trade deadline the last few years, they have shown a willingness to break from the “slotting” program recommended by MLB as a way to control bonuses for draft picks. They also have invested significantly in Latin American talent. Last year, the Rangers paid 1B Justin Smoak a $3.5 million bonus, more than $1 million above his recommended slot. In recent seasons, they’ve made notable exceptions to the slot system for OF Julio Borbon and RHP Neil Ramirez (2006) and INF Marcus Lemon (2006).

The Rangers have been strongly connected to Latin American teen Guillermo Pimentel and Jurickson Profar, another teen from Curacao. The Latin American signing period does not start until early July and is kept exceptionally hush-hush. But it does not appear the Rangers have shied away from their previous plans.

Glavine interest minimal: Jettisoned by Atlanta, 43-year-old LHP Tom Glavine remains interested in pitching and says he’s been contacted already by several clubs. Could the Rangers be a fit? After all Glavine was close with Greg Maddux and Maddux’s brother, Mike, is now the Rangers pitching coach. And a veteran lefty like Glavine might just make a good mentor for young lefties like Matt Harrison and Derek Holland.

“Unlikely,” is what a Rangers official told me.

The Rangers appear willing to move forward with what they’ve got, which is potentially six starters, if they don’t do anything with Padilla. If the Rangers make a move, it’s much more likely to be for somebody at the front end of the rotation such as Roy Halladay (if the Blue Jays can’t stop their skid), Roy Oswalt (if the Astros ever make a decision about their future) or Cliff Lee.  Adding to the back of the rotation right now doesn’t seem prudent or in line with the club’s philosophy.

Washington a “lame duck?” ESPN’s Howard Bryant says so. He might not be a wounded duck, but I’m not so sure he’s gone lame yet.

Washington is in the final year of his contract, which is a sign of potential “lameness.” He was nearly fired last year, also symptomatic of lameness. But he’s got the club in first place and playing well and playing hard. The jury may be out on Washington’s future and in this day and age of making prudent business decisions, it may take the full season for the Rangers to evaluate Washington.

Shelby Miller out of playoffs: Jeff Miller sends along this link that RHP Shelby Miller, projected in a pair of Baseball America mock drafts to be the Rangers’ choice at No. 14, was ousted from the Texas High School baseball playoffs Thursday. What I like most about the story is that Andrews’ 1B is named Malachi Melton. I’d draft the kid somewhere on name alone.

Briefly: OF Nelson Cruz said he was a little surprised that Yankees RHP A.J. Burnett received a six-game suspension for throwing near his head on Wednesday night. Cruz said Burnett apologized immediately after throwing the pitch and also sent a clubhouse attendant to the Rangers clubhouse Thursday to extend apologieis again. “When it was over, it was over as far as I was concerned,” Cruz said. “But I guess if you are going to throw at somebody, you shouldn’t throw at their head.” … Manager Ron Washington said OF Brandon Boggs would get his first start since his callup earlier this week on Saturday. … INF Jose Vallejo was activated from the DL on Friday at Triple-A Oklahoma City. INF German Duran replaced him on the DL.

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12 Comments to “From The Rangers Beat: Friday Notes”
  • Jack Daddy

    Evan,

    Buster Olney is scooping my idea (put forward a few nights ago) for the Rangers to pursue Nick Johnson by suggesting the Red Sox may make a move on that. For all the reasons why he points out that would be a great move for the Sox, it would be for Tex as well.

    I want that guy (a much better version of Blalock). I also keep seeing that the Sox are looking at Vizquel and saw that Jeff Wilson mentioned Vizq and Blalock might be enought to get Buchholz. No way on that, I would imagine. But what if we were to add Vallejo or Kiker?

    That has the added benefit of moving Blalock’s salary. The beauty of beating them to the punch on Nick Johnson is also that they would be more inclined to take Blalock.

    So, Blalock, Vizquel and Kiker/Vallejo (frankly any pither thay want other than Holland/Main/Feliz/Perez/Beavan) for Buchholz; and

    A pitcher such as Moscosa or Poveda (frees up a 40 man spot) or David Murphy for Johnson.

    Whaddaya think?

  • 63DaysOfHicksDefault

    business as usual from hicks is pretty funny stuff……..tell that to the bankers preparing the default sale this october…….which courthouse steps will they be sold at?

  • JustSaying

    Wash doesn’t know if he has a job because Nolan and JD don’t know if they have jobs after the sale……….New ownership can go a lot of different ways or they might leave everything alone for a year…….

  • Jack Daddy

    The loan on the Rangers won’t be called. The lenders are over-secured and (I believe) there is a ML guaranty. The bigger issue for Tom is that (I understand) he has personal guarantees on his “claw-back” relating to his Hick Muse carried interest payments that were made, and now those guarantees are being called.

    The way private equity funds are structured, the General Partner gets 20% of every dollar of net income as a “carry” and the limited partners get 80%, with the payments computed on an investment-by-investment basis (in other words, after each deal is “realized” payments are divied up). However, most of these funds have a “clawback” which corrects the situation where the Fund had gains or returns on early investments that were exited or sold at the front end of the Fund’s life, followed by losses later in the Fund’s life. In other words, Hicks Muse had some early home runs where the GP (some entity controlled by Mr. Hicks) received large sums of money (its 20%). However, the recent investment exits have been losses (most likely, some total flushes). The clawback works to recoup those early payments back from the GP (it looks to what the GP SHOULD have received if you examined the total performance of the Fund at the end of the fund, and not on an investment-by-investment basis).

    For example, lets say deal #1 was a huge home run (e.g. when they sold 7UP) and the GP (controlled by Tom) was paid $20MM on a $100MM gain. Now let’s assume the next 5 deals all lost money so that overall, the fund only earned $10MM. Well, the GP would be entitled to $2MM (this ignores things like return of capital and preference returns, etc.). But it was paid $20MM from the 7UP sale. So, it owes $18MM under the clawback.

    Of course the GP doesn’t have that money – it distributed that money away to its own investors (i.e., Tom and his various trusts). If Mr. Hicks has personally guaranteed that clawback obligation of the GP (which is typical and, again, I understand to be the case), he has to come up with the liquidity to pay it back. Thus the Rangers are for sale.

    Clear as mud?

    So, Tom isn’t broke, he just has a major liquidity crisis. Like all of us that lost a boat load of money in our 401ks, he surely had a significant portion of his wealth or investments in stocks and probably lost 20-50%. So he needs to come up with cash and the Rangers are probably his most liquid investment that hasn’t lost a significant amount of the original invested capital (I have no idea what his personal wealth is tied up in – I know he has a really large house and probably a pretty impressive tie collection).

  • David C

    I hope no changes are made. This thing is moving in the right direction, and the trio of Wash, Nolan, and JD are the ones that are responsible for that.

  • David C

    Jack Dadddy, Thanks for the explanation.

    I like your trade proposals also.

  • Jack Daddy

    I stayed at a Holiday Inn last night :)

  • Evan Grant

    @Jack Daddy: Thanks for the explanations on the financial situation. Seems like every situation in which Tom Hicks is involved right now is a very complicated situation.

    As for Blalock, I’ve been asked today by Boston area media how interested the Rangers would be in moving Blalock. My answer: They’d be willing to talk. They could play Andruw Jones full-time at DH and keep an above average defensive option like Brandon Boggs on the team.

    I’m just not sure the Red Sox are as desperate as they appear to be. That could all change by the All-Star break, but I’m not sure they are desperate to replace Ortiz just yet. I’m sure they are worried something fierce, but gut tells me they’d probably be willing to give him a couple more weeks to break out of the season-long slump.

  • Jack Daddy

    Thanks Evan. I assume we would have to move Blalock before we could take on Johnson’s salary? They are both about the same $$s.

    Regarding Tom’s finances, I surely don’t have first hand knowledge of his situation and am not one of his lawyers (the good folks at Weil Gotshal would have that info), but this is how PE funds work and I have heard second hand that he does have a guaranty on the clawback (and you have to assume, based on this market that the clawback payments have been triggered). I just don’t want Mr. Hicks people to read this and think I’m saying this is the case. It is just a VERY likely explanation as to his financial situation (and it definitely wouldn’t be unique to him, by any stretch). It also doesn’t mean he’s lost money on these investments – it just means he has to pay back money it turns out he shouldn’t have received in the first instance – something that is happening at PE and debt funds all over the country.

    I hate it, because I fear what a change in ownership could do to our long-term plan. To Tom’s credit, he as stuck to this vision and plan over the last few days.

  • Jack Daddy

    last sentence should have read “over the last few years”. Hey – its Friday! Heading home to see my kiddos and the missus.

    Go Rangers!

  • Jack Daddy

    by the way, nobody got my Fletch reference regarding the tie collection? I though that was somewhat amusing.

  • JustSaying

    last few days is accurate……

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