Home after a long, productive workweek, Yanks-Cubs on the flat screen, a frosty beverage close at hand, all is currently well in my world. However, somewhat big news came out today, and it prompted an interesting line of thought.
Much has been made of the effect the economy is having on sponsorship, advertising, ticket and concession sales. Simply put, baseball is seeing lower cash flows than it has in the past. This is going to have a big effect, especially on the lower market teams that were already struggling to attract fans to the ballpark, like the Marlins, Pirates, Reds and Royals. (any year previous, the Rays would top this list, but they may have won themselves some fans with last year's performance. If not, shame on Tampa). Teams' bottom lines will be affected.
But what about the top line? What happens if the team's finances are doing fine, but the owner is decimated financially? The Padres have seen their star fall a long ways from a few years ago when they were serious contenders, and when John Moore got stuck in a nasty divorce, he was forced to sell the team so that he could give up the half of his kingdom required by the courts.
Tom Hicks has made a fortune in Private Equity. He was recently features on the Forbes "World Billionaires" list, clocking in at #701 on the exclusive (and expensive) list. He is the owner of not only the Texas Rangers, but also the Dallas Stars (NHL) and the English Premiere League football club Liverpool (50%). He missed a scheduled interest payment on $525 million of debt today. If I were a Rangers' fan, I wouldn't be too optimistic about the finances of my chosen team.
It will be interesting to see how badly the assets of the MLB owners are hit, given that MLB teams are, at the deepest level, illiquid assets. Owners can't even choose whom they sell to--like a Co-Op, the MLB old boys club gets to choose who is most fit for the job, sometimes passing up tens of millions of additional dollars.