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Friday, July 09, 2010


Lee Trade 


要理解 Cliff Lee 這個交易,背後的經濟及商業動機比棒球的理由要來的重要。

對於 M's 來講,他們今年再度競爭無望,球季結束後要留下 Lee 的可能很低,所以趁現在賣個好價錢指望來年是常見的做法。

對於 Rangers 來說,事情就有意思的多了。他們的財務狀況不好,我們可以看下面這篇 The Economist 文章來了解大概的情況:

The Economist, 5/27/2010, "Game on. Creditors go to bat against the rules of a hallowed American sport"

簡單的說,Hicks 的 Hicks Sports Group (擁有 Rangers 以及 NHL 的 Dallas Stars 和 Stars 的球場)去年開始無法順利付出借款利息。他們跟 MLB 借了 $25M,同時還有 $40M 應該要存入一個支付延遲付款的球員薪資的戶頭卻無法執行。在 5/24 的時候,他們申請了 chapter 11 破產保護。

【後記:Hicks 實際上是替 Rangers 申請破產而非用它的母公司 Hicks Sports Group (HSG) 的名義申請破產。這個做法讓 Hicks 比較容易引用下面所談到的 MLB 的 anti-trust exemption 條款,亦即球團在出賣的時候必須經過所有球隊中 3/4 以上的老闆同意。在早先看到的 Nolan Ryan 和律師 Chuck Greenberg 帶領的團隊及 Hicks 的談判中,Hicks 還有留下一點控制權的可能。在把 HSG 分拆開來以後,Hicks 有可能在 Rangers 這部份還能拿回一點錢,但是在剩下來的 Dallas Stars 那部份大概就會虧的更慘。這有點像是我們在 2007, 2008 年次級房貸裡面看到的把戲,把一些債券重新包裝成不同風險等級的金融商品。Rangers 大概在這裡算是 senior debt。:p】

所謂『破產』並不是只有結清資產結束公司營運,把資金優先償債,然後股東等著看有沒有剩餘價值可撿這種可能。那是 chapter 7 破產清算的規定。chapter 11 讓債權人求償的權利在法院監管之下暫時凍結但是同時給債權人介入監督公司營運的權利 (債權人在正常情況下是沒有對公司營運發表意見的權利)。公司在 chapter 11 之下仍然可以繼續營運,不過通常在財務上面會做大幅度的調整,例如說關掉不賺錢的部門等等。

The Economist 這篇文章指出來一點很有趣的部份。由於 MLB 有一個行之有年的 anti-trust exemption 條款,讓他們不受反托辣斯法的約束,所以球團出賣時需要經過 30 支球團裡面 23 支球隊的老闆的同意 (3/4 以上同意)。換句話說,他們在資產清算的過程中不見得能把球隊賣給開價最高的對象。如果球隊欠債額度太高,這有可能會影響到債權人的權利。在 Rangers 申請 chapter 11 破產保護後本來是要賣給 Nolan Ryan 代表的一個團隊,不過這個計畫讓他們的主要債權人 Monarch Alternative Capital 不滿意,因為 HSG 欠他們 $525M,而從 Hicks 和 Ryan 他們預定的 $575M 交易裡面 (這個交易除了 Rangers 以外還包括附近的停車場土地,那些土地是 Hicks 另外持有,並非 HSG 的財產),他們只能拿到 $230M,而 Monarch Alternative Capital 認為有另外的潛在買家可以出更多。

由於當初借款不是單獨借給 Rangers 而是借給 HSG,使得問題變得很複雜。在全部貸款裡面,Rangers 直接擔保的只有 $75M,所以 MLB 認為 Monarch Alternative Capital 已經能拿到超過這個數據的金額,剩下來的部份要從 Stars 等其他 HSG 剩下來的資產去解決。話說起來是沒錯,但是扣掉 Rangers 之後,HSG 要能償還債務的可能性就更低了,也因此債權人並不接受這個說法,希望能從 Rangers 交易中擠出越多錢來越好。

這些是 Rangers 財務狀況的背景資料。目前的情況是球隊將要在 7/16 被 MLB 拿出來對他們事先核可的對象拍賣,因此球隊的價值是很重要的。

這裡就開始牽扯到 Cliff Lee 的價值了。他的合約到今年年底結束,所以他的服務只算是 current assets (員工在一般財務報表上是不列入資產的,不過這是職業棒球,我們應該可以允許這種例外),該付給他的薪水也只是 current liability,對於球隊的長期資本結構沒有影響。今年 Rangers 打得很好,在 AL West 暫時領先,如果加入了 Lee 以後能夠拿到分區冠軍甚至更上一層樓的話,對於球團價值會有正面的影響。在棒球上我們說 flags fly forever 時,常常就是用在為了拿到冠軍時值得付出一些重大代價而說的。冠軍旗會在球場上永遠飄揚下去,錢花掉了以後還會賺回來,球員交易掉了還會有其他球員進來。以 Rangers 目前的情況來說,Lee 剩下來的薪水有限,不過如果 Rangers 拿到冠軍,他們所能增加的價值將遠超過 Lee 的薪水。沒有人可以保證拿分區冠軍甚或聯盟冠軍,不過 Rangers 的機會在這個交易之後增加了是公認的事實。你我看得到,潛在的買家也看得到,在這個交易之後 Rangers 的價值會較先前為高。

至於送出去的新秀在資產負債表上連 footnote 都上不了,是無足輕重的。除了 David Price, Stephen Strasburg 這種新秀外,沒有人會對球團價值有立刻的影響,連 1995 的 Derek Jeter 或是 A-Rod 也未必能做到。Rangers 戰績不佳已久,他們在小聯盟裡選秀順位居前的人數較多,Lee 如果走人他們還可以拿到第一輪及三明治選秀權的補償,怎麼算都是划算的。

相對於其他球隊來講,大家要考慮今年以及明年的競爭力,所以在付出新秀時會比較謹慎。Yankees 對於付出 Jesus Montero 似乎就有一些疑慮。雖然傳言說在早上 Yankees 幾乎跟 M's 達成協議,不過這個說法我仍然置疑,同時也不認為他們應該或者可以拿出比 Rangers 更好的條件。

Rangers 接下來的老闆是誰,以及到底什麼時候會有新的老闆現在還在未定之天。7/16 的 auction 是不是一定會有結果現在沒有人能夠保證。對於 Yankees 來講,比較好的選擇應該是等到球季結束後等 Cliff Lee 成為 FA 之後再出手。假如 Rangers 的經營權陷入僵局,那麼幾乎可以肯定 Lee 會成為 FA。就算是在球季結束前經營權塵埃落定,新的老闆也未必會在一開始的時候花大筆鈔票留下 Cliff Lee。以 Yankees 的過往選秀記錄來看,第一輪選秀權和 Jesus Montero 之間我寧願選後者。再者,目前 rotation 雖然從開季至今常有亂流,但是真要交易來 Lee,也不是那麼容易挪出一個空位。這個時候,一動不如一靜。

Comments:
Hi, I have few questions, but before that I think there are some minor confusions:

1. I think only "Rangers" filed for bankruptcy, not the rest of "Hicks Sports Group", according to the article from The Economist.

2. Monarch Alternative Capital L.P. owes about $100 million from HSG, not $525 million.

My questions are:

1. Since only Rangers filed for bankruptcy but not the rest of HSG, can Monarch Alternative Capital claim assets other than Rangers at this point? Or they need to wait until HSG file for bankruptcy as well?

2. Why Monarch Alternative Capital vetoed the sale to Ryan-Greenberg? Ultimately MLB & 22/30 of the club owners has the decision to choose whatever the buyer of Rangers, and they don't have much to lose if the sale of Rangers is going to be postponed. On the other hand, MAC hold massive debts from the Rangers and they should be desperate to recoup the debts.

3. Can the lenders form a trustee and replace Hicks? And if such a trustee is formed, can players such as Alex Rodriguez be part of it?
 
1. Yes, you are right. I simplified things by a lot. Theoretically, HSG is going bankrupt because it, as the holding company of the Rangers, defaulted. By filing bankruptcy of the Rangers, Hicks fully exploited the anti-trust exemption of MLB. No wonder he made a fortune with LBO, this guy is smart. If HSG filed for bankruptcy itself, the legal issues involving the anti-trust exemption will be so complicated and there is a very good chance that Hicks cannot use the exemption to his advantage.

2. Monarch Alternative Capital must believe the Rangers is sold cheap to Ryan and Greenberg. HSG is a company which went under. Creditors should squeeze every bit possible from existing total assets. I am not familiar with NHL, but my guess is that the Dallas Stars is not as sexy as the Rangers. If the Monarch Alternative Capital wants to get the money back, it is important to take as much as possible from the Rangers.

There are one different thing in sports franchises from the rest of the corporations: they might go under, but it is easier to keep their operation alive. If the Apple is going through the dry spell the Sony is in and as a consequence it defaults its debt, it could very well cease to exist. It is not the case for these pro sports teams. Time is not necessary the enemy to the creditors.

3. Hicks is out already. He might have a small stake in the Ryan-Greenburg regime, but that is not certain yet. Nonetheless, he is not the boss of the Rangers anymore.
 
Thanks for the reply, I have more questions I would like to ask:

1. An unsecured creditors committee is formed and Alex Rodriguez is on the committee because he is owed $24.9 million. What can this committee do? Do they have the power to veto the sale as well? What happen if they disagree with the lenders group led by Monarch Alternative Capital?

2. Are lenders such as Monarch Alternative Capital secured because they have $75 million worth of collateral? Are they in front of unsecured creditors in the line of assets claim?

3. If unsecured creditors committee have a say in daily operations of Rangers such as dismissing the manager, singing & trading, will there be a conflict of interests for Alex Rodriguez?
 
OMG... RIP Bob. Your "Jeeteh" (close to Jeetah but not exactly; even Jeter tried to mock your voice during an interview.) introduction has been part of my memory.
 
jj,

Thanks for the head-up. I read Sheehan's twitter almost the same time you left the message (and you both posted around the same time).
 
To 小弟姓黑名貓,

I don't have the answers to the questions you asked. I can only offer my best guessing.

1. This I really don't know, but I don't think it could ever happen. MLB will not allow a player to intervene another team's operation. I even doubt Boras can represent A-Rod on this issue. My best guess is that MLB and MLBPA will work together to protect players' benefit, but get them out of the conflicts.

2. This is tricky because we don't know exactly how the obligation to creditors plays out between HSG and the Rangers. My best guess is that Monarch Alternative Capital only has $75M secured on the Rangers case. This hedge fund only has this much ahead of the other unsecured creditors. However, they can surely get more than that because there is no way the Rangers is worth that little.

3. I don't think the unsecured creditors committee will ever have a say on daily operations. Even Monarch Alternative Capital will not be granted that power. If the court ever grants this privilege to creditors, MLB will not allow A-Rod or other current players to have any influence on Rangers' operation. Most likely the Rangers will be taken over by a committee appointed by the Commissioner's Office if things go that far. All the creditors should and will discuss all the legal issues with this committee, and such a committee will play the function of a firewall to protect the management and the coaches/players from the financial turmoils faced by the team.
 
It's rare to see a baseball blogger that has a good knowledge in Corporate Finance. It's even rarer to see replies that are longer than my questions and they were written in such a quick manner. Thank you.
 
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