This year’s last-place team is really just part of the pattern. What’s becoming clearer, however, is that it’s not an accidental pattern – but a part of owner Tom Hicks’ business plan. A perpetually last-place team wouldn’t seem to make much sense in the regular business world, but the business of baseball in Arlington is quite different from the rest of the country, and Hicks has figured this one out.
Consider some basic facts about the Rangers: They are 21st in the league in payroll, and when you crunch the numbers and the odds, payroll has a great deal to do with winning. In the past 11 years, since major-league baseball went to the wild-card play-off format, 65 percent of the teams that made the play-offs were in the top third in payroll. And the numbers don’t lie when you move down the list: A quarter of the play-off teams came from the middle third in payroll terms, and just 10 percent from the cheapest-paying bottom third.
So Hicks is playing the odds here, but doing it from the bottom. Attendance for Rangers games is fairly constant whether they win or lose – about 2 to 2.5 million a year. When you look at it from Hicks’ perspective, it makes little sense to spend more money on better players for odds to win. Because he makes the same regardless. Keep the payroll low, and you’re assured of a profit. That team also has a slight chance to move up and increase the profit numbers with higher attendance. Increasing the payroll would give the Rangers a better chance of winning, but there’s still a chance that the team could finish lower in the standings.
So an increased payroll just risks the profit certainty, a proposition anyone in business would avoid. Some have called for Hicks to sell the team, but I don’t think he will, at least not for three to five years. That’s because the Rangers are an important part of Hicks’ biggest investment, the Glorypark real estate deal surrounding the ballpark.
When Jerry Jones got Arlington voters to help pay for his new Cowboys stadium, the voters also gave Hicks a big present. Since the baseball stadium was built in 1994, there’s always been a plan to develop the 200 acres around it. But the risk was too great with just the baseball games to bring customers in. With the Cowboys next door, the acreage has become very hot, giving owners a better chance of making huge profits. Hicks is planning a $600 million mixed-use development – residential, entertainment, and offices – on 75 acres. The Arlington City Council recently approved a $135 million tax break for Hicks’ company to help pay for infrastructure.
But Hicks needs the Rangers for more than an anchor to bring people to Glorypark. The team is no rich man’s hobby – it’s his bread and butter. In fact, since they bring him about $11 million a year, you could say the Rangers are his cake and caviar, too. When he controlled the Hicks Muse Tate & Furst investment company, that was where his money came from. But bad investments by Hicks Muse forced Tom into early retirement, and his sports teams are now his basic paycheck providers.
The big question is, how does Hicks raise the $400 million to $500 million he needs to develop Glorypark? Once again, he is betting a big upside. Hicks recently announced he was floating a “blank check” public company on Wall Street. Investors don’t know what they are getting, but they give money to Hicks, and he has two years to invest it in whatever he determines and turn a profit for those who’ve bankrolled him.
And what a deal it is. According to news reports, Hicks puts up just $25,000 and controls 20 percent of the investment. The investors put up $400 million and get 80 percent. Whether Hicks will use the money for Glorypark is pure speculation at this point, but if it all works out, Hicks will get $80 million for his $25,000 investment.
Rangers fans, of course, have been giving Hicks their blank checks for all these years of cellar-dwelling. Ticket prices keep rising, parking rates are obscene, and the price of a ballpark beer now tops $5, but the fans still show up. It is a blank loyalty, and Hicks takes that to the bank.
It’s maddening and ironic. But baseball fans might find it even more ironic when they see the proposed ticker name for the “blank check” company: HICK-U. Change the first two letters, and you have what Hicks has been telling Rangers fans for many years – and apparently plans to keep on telling them.
