by Robert Bryce
Gov. George W. Bush and the other owners of the Texas Rangers are deadbeats. Rich deadbeats, but deadbeats nevertheless. Last week, Bush and his partners hit what can only be described as a towering home run by selling the Texas Rangers to Thomas Hicks for $250 million. Bush, in particular, made a killing. For his 1.8% share of the club, which initially cost him $605,000, Hicks will pay the governor between $10 million and $14 million. That is a return of up to 23 times Bush's original investment in less than nine years. (His contract included an accelerated equity clause.) But even though Bush and his cohorts are raking in the dough, making nearly three times what they paid for the club in 1989, they still haven't paid the $7.5 million they owe the city of Arlington.
illustration by Doug Potter
The Rangers owners owe the money because of a court judgment against the Arlington Sports Facilities Development Authority (ASFDA), the entity set up by the city to condemn land for, and administer, the Ballpark at Arlington project. In May of 1996, a Tarrant County jury found that the ASFDA had not paid a fair price for 13 acres of land it condemned; the court subsequently awarded the owners of the land, the Mathes family, more than six times what the city had agreed to pay for the land. That $5 million award then sat in escrow with interest accruing at a rate of about $1,800 a day. A year after the jury's decision, the city finally decided not to appeal the verdict and paid the judgment. That's where the Rangers' obligation comes in.
When the Rangers and the city signed their deal in 1990, the Rangers agreed to pay any costs on the Ballpark at Arlington project that exceeded $135 million. The city of Arlington's position has been and continues to be, that the $7.5 million judgment should come from Bush and the Rangers.
Two days after Hicks' purchase of the Rangers was announced, Arlington city attorney Jay Doegey told the Chronicle, "We have a contract with them that says they will pay anything over $135 million. The costs in the condemnation case are over that amount." But Doegey has not sent a letter to the Rangers demanding payment, and it appears that Arlington city officials are reluctant to irritate the Rangers' ownership.
Tom Schieffer, the president and general partner of the Rangers, says of the $7.5 million, "It's not our debt. That's the position we have taken. And that's consistent with what the master agreement says." But now that he and Bush are cashing in their chips with the Rangers, wouldn't it be a nice gesture to make good on the debt? "I'm sure we will work out something," said Schieffer.
While Arlington waits for its money, Bush is laughing all the way to the bank. Asked about the Hicks buyout, the governor told the Fort Worth Star-Telegram last week, "I think when it is all said and done, I will have made more money than I ever dreamed I would make."
He's making millions because the Ballpark at Arlington is a gigantic cash machine. Last year, Financial World magazine named the Ballpark as the most profitable venue in baseball. Hicks didn't buy the Rangers because he wants Juan Gonzalez's autograph; he bought them because he can make a lot of money at the stadium that Bush takes credit for building.
In 1993, while walking around the stadium, Bush told a reporter from the Houston Chronicle, "When all those people in Austin say, `He ain't never done anything,' well, this is it." But Bush would have never gotten the stadium deal off the ground had the city of Arlington not agreed to use its power of eminent domain to seize the property that belonged to the Mathes family. And evidence presented in the Mathes lawsuit suggests that the Rangers owners -- and remember that Bush was the managing general partner at the time -- were conspiring to use the city's condemnation powers to obtain the 13-acre tract a full six months before the ASFDA was even created.
In an Oct. 26, 1990, memo to Schieffer from Mike Reilly, an Arlington real estate broker and part owner of the Rangers,Reilly says of the Mathes property "in this particular situation our first offer should be our final offer... If this fails, we will probably have to initiate condemnation proceedings after the bond election passes."
That memo suggests a sharp contrast between Bush's personal profiteering and his public stance in defense of property rights. While running against Ann Richards, Bush said, "I understand full well the value of private property and its importance not only in our state but in capitalism in general, and I will do everything I can to defend the power of private property and private property rights when I am the governor of this state." Where was that concern when it came to the Mathes family's personal property?
But let's forget about Bush's philosophical problems when it comes to property rights and the Ballpark deal. And let's set aside the notion that he may have earned exorbitant amounts of money on his investment. Instead, let's focus on the facts of the deal: Bush and his partners used the city's powers to condemn the land for the stadium. They relied on taxpayers to repay the bonds sold to build the ballpark, thereby getting what amounts to a direct $135 million subsidy. Now, after tripling the amount they paid for the Rangers, Bush et al are refusing to pay the city a measly $7.5 million. Talk about a debt to society.
On the very first day of his campaign in 1993, Bush said that "the best way to allocate resources in our society is through the marketplace. Not through a governing elite." By selling the Rangers, Bush and his fellow sports moguls demonstrated the power of the market place. By refusing to pay their debt to Arlington, they are also proving that the governing elite live by a different set of rules than the rest of us.