In 2002, I wrote a cover story for D Magazine examining the financial problems Tom Hicks was having. The owner of the Texas Rangers and Dallas Stars was experiencing big losses at his investment firm, and I wondered how this might affect his sports teams. Seemed like a reasonable question.
Hicks and I talked for over an hour at his Dallas office. His take was that the investment biz and the sports teams had nothing to do with one another. But the thing I remember most about the meeting was Hicks’ attitude that the news media shouldn’t even be raising the issue. I was not capable of analyzing the complex world of investment firms and sports teams, he told me, so I shouldn’t even be writing about this stuff.
So when I noticed earlier this month that Hicks was one of the potential buyers of the Austin American-Statesman, I thought about how he would handle being a newspaper owner. I have no problem with Hicks lining up to make an investment in a paper where he might see profit potential. And since this is in Austin, Hicks would not be using the paper as a public relations organ for his North Texas sports teams.
But what about the University of Texas at Austin? He is a UT grad, has served on the school’s board of regents, and has made big contributions to its business school and other programs. His brother, R. Steven Hicks, is on the board now. And that’s just the beginning.
After George W. Bush became governor in 1994, Hicks lobbied Bush, from whom he bought the Rangers, to privatize some of the university’s investments. In 1996, Bush signed a law creating the University of Texas Investment Management Company (UTIMCO), and Hicks was appointed chair of the company. His task was to oversee $1.7 billion in university funds.
From the beginning there were conflicts. Hicks fought and got UTIMCO exempt from open meetings and some public records laws. In 1999 the Houston Chronicle reported that almost a third of the $1.7 billion was invested in companies run by Hicks’ business associates or friends. The paper also found that UTIMCO was investing in five funds owned by major Republican donors.
UTIMCO passed out a lot of money to friends of Bush and Hicks. The Carlyle Group, whose partners included Bush Sr. and former Secretary of State James Baker III, got $10 million. North Texas billionaire Richard Rainwater’s equity fund got $9 million. Hicks’s own equity firm got $13 million, according to reports from the time.
Hicks resigned in 2002, but UTIMCO is still operating. Recently the board chairman of the private investment fund resigned after state lawmakers questioned why a $1 million bonus was paid to UTIMCO’s chief executive officer last fall, in addition to more than $2 million in bonuses to other UTIMCO employees.
I wonder how a Hicks-owned Austin American-Statesman would have covered the recent university investment fund controversy. Would he have stayed in the background and let editors and reporters flesh out the story? Or would he have told them to leave it alone because they didn’t know enough about the investment biz?
Issues involving UT are of major concern to Texas taxpayers and to Austin residents in particular. Student admissions rules, educational questions, the awarding of huge university contracts to private firms, and billions of dollars in other financial issues are all at stake. Not to mention sports coverage.
There is one other issue with Hicks. All of his pro sports teams – the Stars, Rangers and Liverpool Reds soccer team in England – have made deals with local governments to get tax money for stadiums and arenas. If Hicks owned the American-Statesman, how would the paper cover public/private investments?
Maybe Hicks just wants to buy the paper because it’s a great deal, at a time when the market value of dailies has dropped even faster than the nation’s overall economic freefall. Following his pattern, he might find a way to boost the profit margin, then sell it off, and make loads of cash. Or he could break up the paper’s assets and sell them off individually.
But what am I saying? Who am I to wonder about how those conflicts and concerns might play out? I’m probably not capable of analyzing such complex questions. At a Hicks-owned paper, maybe no one would be.
