A League of His Own
By Lee Russ
Monday, August 22, 2005 at 10:14 AM
After several ill-fated ventures into the oil industry, our illustrious president made a sizable chunk of money by investing in the Texas Rangers baseball team. In fact, his original $605,000 investment, using almost all borrowed money, produced $10 to $14 million when he sold his interest some 9 years later.
This story was kicked around the dark fringes of the media during the 2000 campaign, briefly raised its head in public after Bush was sworn in, and seemed to have completely disappeared by the 2004 campaign. How did our president get so lucky as to come up with $10 million or more from a modest investment over a fairly short time? Well, it's big time business, and big time power, so it isn't exactly pretty. But it seems worth bringing back into the light.
It is very possible that this was done with the complicity of then-governor Ann Richards, which would prove the new axiom that dollars are thicker than party lines. A lawsuit by the aggrieved landowners later resulted in am multi-million $$ judgment in their favor.
George W. Bush's first business success
A Big Slice of the Texas Rangers for a Little Money (and a Big Profit)
The third unusually easy deal for George Bush Junior was his involvement in the Texas Rangers baseball team. In a nutshell, he was offered a piece of this valuable franchise for only $600,000, by supporters of his dad who also bailed out his failing oil company. He sold his stake for $14 million - while Texas governor -- to a Texas millionaire with lots of businesses regulated by his administration. "When all it is all said and done, I will have made more money than I ever dreamed I would make," Bush told the Forth Worth Star-Telegram.
Bush was allowed to buy 1.8% of the team for $600,000 of borrowed money, and was even made one of the two general managers. His qualifications for partial ownership? Several years working at failing oil companies, and his political connections through his father. It's hard to be sure, but we're guessing that latter was probably more important.
Junior tripled his investment, like the other owners, with the help of massive government intervention and subsidies. But his real wealth came from simply being given 10% of the team as a "bonus" for "putting together the investment team."
Even if he really had done that work, it's an absurd bonus ($12.2 million), but the fact is that he didn't add much. Cincinatti financier William DeWitt brought Bush in, not vice versa, shortly after George Bush Sr. was elected president. (DeWitt had also invested in Junior's oil companies.). The only investor Bush actually brought in was Roland Betts, a Yale fraternity brother, and that wasn't good enough.
Under Junior's management, the deal was about to fall apart until baseball commissioner Peter Uebberoth brought in another investment group led by Fort Worth Billionaire Richard Rainwater and Dallas investor "Rusty" Rose. Since the deal, both men have profited greatly from business with the Texas administration of George Bush, Jr. Rose personally invested $3.2 million and became the other general manager of the team. Under the team partnership agreement, Bush Junior couldn't take any "material actions" wihtout Rose's prior approval. There was also a method for removing Junior as a general partner, but no way to remove Rose. Yet Rose's "bonus" for his role in setting up the deal was less than half of Junior's.
What kind of owners would approve such a big payoff to Bush? In addition to Rose and Rainwater, men with business pending before Texas government, the owners included William DeWitt and Mercer Reynolds, major contributors to President Bush who had also purchased Junior's failing oil company through their Spectrum 7 Energy company.
If this deal doesn't smell bad enough already, consider Bush's blatant hypocrisy. The main value of the team is its new stadium (ranked by Financial World as the most profitable in baseball) and 300 acres of vacant land the team owns between the stadium and 6 Flags of Texas, which is next door.
Putting Tax Money into Bush's Pocket
The hypocritical part is, the private owners of this very valuable land didn't want to sell. Bush and his partners gave them only a lowball offer, and when it was rejected they arranged for a new government agency (the Arlington Sports Facility Development Authority, or ASFDA) to condemn it for them.
The agency foreclosed the land and paid the owners a very low price, later judged by a jury to be only 1/6th of its actual value. The agency also floated bonds, guaranteed and repaid by taxpayers, to finance the purchase. This amounted to a $135 million subsidy for Bush and partners, compared with the $80 million they paid for the franchise. Since they sold the entire franchise for $250 million, it's easy to see whose money Bush and friends pocketed.
The next time Junior talks about tax cuts, remember this: Arlinton had to impose a new 1/2 cent sales tax just to pay for the subsidy Bush and his partners received.
To add insult to injury, Bush and his partners continue to stiff the taxpayers for $7.5 million they owe under the terms of the agreement. It held that the team would pay all expenses over $135 million. The original owners of just 13 of the acres sued the City of Arlington, saying that the ASFDA had not paid a fair price for the land. The jury awarded them $7.5 million, but even though the project exceeded the $135 million limit, the partners have refused to pay. Given their huge taxpayer subsidy and $170 million profits, it seems absurdly selfish.
George Bush, Jr. has said in campaign speeches "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." Apparently this deal was not covered by that statement, since he wasn't governor yet.
He claims that he "wasn't aware of the details" of the land condemnations, even though he was the team's managing general partner and has bragged about personally getting the stadium built. But he told the Fort Worth Star-Telegram in October 1990 that "The idea of making a land play, absolutely, to plunk the field down in the middle of a big piece of land, that's kind of always been the strategy."
And the key to their land play was always the strong arm of government. A memo from Arlington real estate broker Mike Reilly to Rangers President Tom Schieffer dated October 26, 1990 - the day before Bush's comment about the land play - said "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."
On the first day of the 1993 campaign, Bush said "The best way to allocate resources in our society is through the marketplace. Not through a governing elite." Not through a private sports team buying in the President's son cheap, and then getting the government to hand them extremely valuable land.