Tom Hicks, the owner of the Texas Rangers baseball team and the Dallas Stars NHL franchise, has defaulted on a $525 million loan related to the teams.
Hicks has downplayed the importance of the default, saying that it's just a bargaining tactic to bring the lenders back to the bargaining table to negotiate better terms. But industry experts tell The Associated Press that that's unlikely to be the full extent of it. A default on a loan is usually a sign of serious financial problems, but analysts think that Hicks has enough equity in his teams to maintain control -- even if he does end up selling minority stakes to outside investors.
Whatever form Hicks' efforts to raise capital take, it will be interesting to watch in light of the current state of the economy. The new Yankee Stadium has opened to lackluster ticket sales, and it may be that opportunistic cash-rich investors will be able to score a deal -- if Hicks needs to raise cash as badly as some analysts believe he does.
Across Major League Baseball, some analysts are expecting the souring economy will motivate some financial weak teams to take early steps to shore up their finances -- by dumping big-ticket players on other teams at fire-sale prices. Buster Olney reported that "Many executives expect that within weeks of the start of the season, there will be a veritable fire sale of players throughout the game. Financially troubled teams will look to dump assets, like companies unloading stocks to maintain some liquidity. The Tigers are one of the teams most frequently mentioned as a candidate to employ that kind of sell-off."
The recession could make this any exciting season for baseball fans with unprecedented levels of trade activity -- a chance for well-capitalized team to pick up pieces at bargain prices, much the same way that companies that didn't lard themselves with debt are having a chance to make deals at previously unheard of valuations.
Reid Hoffman: LinkedIn will go public (at some point)
Retailers can't wait for Black Friday, open Thursday
Tiffany's serves up solid quarterly earnings
