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Did Texas Rangers Sell For Too Much?
CNBC.com | August 05, 2010 | 10:29 AM EDT

More than 15 hours after the auction for the Texas Rangers began in bankruptcy court in Fort Worth yesterday, Chuck Greenberg and Nolan Ryan had bested out Mark Cuban for the rights to own, subject to Major League Baseball’s approval, the Texas Rangers.

According to USA Today’s Bob Nightengale, in a bar in downtown Fort Worth, Greenberg toasted his attorneys, partners and friends in the early morning hours and said the words, “Finally.”

Today, you will hear people say that this is best for baseball. Despite Mark Cuban being who he is, you will hear how baseball really wanted this ownership group and, despite all the wrangling, might not have approved Cuban anyway.

You’ll also hear that it’s best for creditors. The all-out gunslinging raised the bidding by $77.5 million.

The creditors part is hard to argue with, but what about baseball and what about the fans?

You see, the Greenberg/Ryan group agreed to pay $385 million in cash and must also assume $205 million in debts. That brings the total price of this team to $590 million.

Let’s put that in perspective. In April, Forbes put the franchise value of the team at $451 million – that’s a 30.8 percent premium. It’s not an unprecedented jump. Last month, the Golden State Warriors sold for $450 million, which turned out to be a 42.8 percent premium over what Forbes said the team was worth.

The problem is that the new Rangers ownership is dealing with a system (baseball) that requires investing in more of the right players than basketball to turn things around. The sport also doesn’t have a salary cap – so teams that have money to spend can make more mistakes with talent evaluations.

What I’m saying is that we can’t just say Greenberg/Ryan won – now what? We have to look at the price that they agreed to pay as a possible impediment to making this team – which hasn’t made the playoffs since 1999 – better.

What we do know is the cash isn’t exactly pouring in. They haven’t averaged more than 30,000 fans a game since the 2005 season.

I think Mark Cuban is an incredibly smart businessman. At some point in the Cubs bidding, he decided he would stop – the point that he thought it would no longer make economic sense. And you have to assume that’s why he bowed out in the early morning hours on Thursday. And his calculations likely included the idea that a Rangers/Mavericks conglomerate could lead to a pretty good regional network upstart.

I know I’ve won some eBay auctions and celebrated until the time I laid my head down on the pillow. When I woke up, I had a sick taste in my mouth, realizing that the money I had agreed to spend made it harder to enjoy what I had purchased. I kind of wonder if Chuck Greenberg and Nolan Ryan are feeling the same way this morning.

Questions? Comments? SportsBiz@cnbc.com

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