i may have mentioned this as well, but i concur. at this point, i believe the sale is contingent on an AL agreement...i hope the sale falls through, even if that means Drayton is still owner 3 years from now.
The more I learn about this Crane guy, the more I hope this deal falls through. Discriminatory employment practices, war profiteering, etc. Long but very illuminating article from Forbes. Sorry if it has already been posted. Why Jim Crane Could Become Baseball's Most Controversial Owner Owning a Major League Baseball club has a gratification and ego element that, for some, far surpasses a corporate takeover or merger. To buy a team means entering a rare fraternity where you become part of baseball’s incredible lineage. For some, there may be a passion for the sport that has been with them since childhood — a dream of owning something coveted. But, ballclubs are also unlike other businesses in other ways. They are community assets. The team name is synonymous with the city that hosts it. There is, quite simply, an unquantifiable value to them. They are, for better or worse, a representation of the city itself. From ESPN, to the sports sections of local and national papers, the club is tied to the host city. So, with that, their owners and executives are held to a higher standard. They too, become a representative of the community, not too far removed from elected officials. For the Houston Astros, the tenure of Drayton McLane is about to end. After 18 years, the Chairman and Chief Executive Officer of the Houston Astros Baseball Club is selling the club’s majority interest. McLane’s philosophy for the Astros has been, “We have two missions: to be a champion, and to make a positive difference in the community!” McLane has been shopping the Astros for some time. Now, he appears to have the deal all but wrapped up with Houston businessman Jim Crane, entering into an exclusive agreement to purchase the club for a reported $680 million, which includes the lease on Minute Maid Park, and a stake in a newly created Comcast SportsNet Houston, a regional sports network partnership with the NBA Houston Rockets which will launch in 2012. The sale price would rank behind only the $845 million sale of the Chicago Cubs, which also included Wrigley Field and a 25 percent stake in Comcast SportsNet Chicago. The auction sale of the Texas Rangers in August of last year for $593 million likely boosted the Astros value, as well. Crane, who earned a degree in industrial safety from Central Missouri State University in 1976, and was a pitcher for the Mules during that time, has long sought ownership in an MLB franchise. He was in line to purchase the Astros in 2008, was involved in bidding for the Cubs as late as 2009, and married up with Dallas Mavericks owner Mark Cuban last year in a public auction to purchase the Texas Rangers, where they lost to a group assembled by Nolan Ryan and former owner Chuck Greenberg. Persistence appears to have paid off. But, there are little-reported aspects of Crane’s business history that will place him under the microscope of MLB’s owners, and the public at large. These issues, none small in nature, bring a man who has been clouded in controversy for years to MLB’s lodge. Crane Backs Out of 2008 Astros Deal at the 11th Hour As mentioned, McLane has been shopping the Astros for some time. Indeed, in 2008, he thought he found a buyer in none other than Jim Crane. The exclusive sales agreement was so close to being consummated that McLane and the Astros PR staff were reportedly on the verge of sending out a press release announcing the sale. Crane backed out of the deal, thus putting McLane in a bit of an embarrassing situation. It has overshadowed Crane’s attempts to purchase clubs ever since. Accordingly, McLane didn’t exactly go to bat for Crane during the Cubs and Rangers sales. Some reports have said that McLane actually talked down Crane, although he has denied that. MLB’s owner like certainty. Having an owner back out at the last minute cast doubt on Crane. Whether that plays itself out now when it comes time for MLB’s owners to approve the sale, will remain to be seen. Crane Continues to Negotiate with Tom Hicks after Reaching Exclusive Agreement with Greenberg and Ryan Through the entire Texas Rangers auction process, Crane was the under-current story. It was reported that he was not in favor with the owners, the fallout from the 11th hour back-out of the Astros sale in 2008. And, even after former owner Tom Hicks reached an exclusive agreement with the Nolan Ryan and Chuck Greenberg group, Hicks kept negotiating with Crane to try and get a higher sale price, something that so infuriated MLB that they issued a statement in April of 2010 reading, “As part of the Texas Rangers sale process, Tom Hicks selected the Chuck Greenberg/Nolan Ryan group as the chosen bidder on December 15, 2009 and entered into an exclusive agreement with that group. …. Any deviation from or interference with the agreed upon sale process by Mr. Hicks or any other party, or any actions in violation of MLB rules or directives will be dealt with appropriately by the Commissioner.” Crane’s Eagle Global Logistics and Allegations Of Discrimination Against Blacks, Hispanics and Women of Child-Bearing Age In 1997, complaints were filed with the Equal Employment Opportunity Commission regarding Crane’s Eagle USA Airfreight and its position on hiring blacks and women of child-bearing age. The EEOC issued a scathing 104 page report (most EEOC reports are said to run 3-5 pages), found that to be true, and added that Crane’s company conducted a practice of paying “female and minority employees less than white men who do similar work; did not investigate employee complaints of sexual harassment; and destroyed evidence that the company was instructed to retain as part of the two-year EEOC investigation,” according to a Houston Chronicle article from 2000. In the Chronicle report: Crane told his subordinates not to hire blacks because “once you hire blacks, you can never fire them.” On other occasions, Crane explained the reason he wanted to keep blacks out of the company was that his top managers are bigoted and they would mistreat the minorities, “giving them no choice but to sue Eagle.” Witnesses also said Crane did not permit the company to advertise job openings because he did not want to create a paper trail of unhired qualified minorities. To discourage blacks and women from applying, Eagle managers refused to let female and minority applicants enter its secured facilities to fill out job applications. Eagle disagreed with that assessment. Crane also warned managers not to hire women of child-bearing age because their productivity would be low. And top company officers told employees that women aren’t suitable for management positions because male managers won’t work with a woman. The company’s General Counsel, Judith Robertson, testified in 1997 corroborating the claims made. In 1998, Eagle sued Robertson, alleging that she violated attorney-client privilege in her “whistle-blowing” testimony (prior to the existence of legislation protecting “whistle-blowers”). She ultimately agreed to settle with Eagle out of court. Eagle then sued to stop the EEOC investigation based on claims that the EEOC was ‘biased against the company’ and that they were using “privileged information” from their General Counsel (Judith Robertson). The EEOC denied that information from the General Counsel affected the investigation and explained that they had received testimony from dozens of employees. Ultimately, however, the original case was sealed until May 2000, when it was closed and a new case was opened for civil proceedings after the EEOC joined into a discrimination case as a plaintiff. (Eagle USA Airfreight, et al v. EEOC, “Civil Docket,” Case #4:98-cv-00316, U.S. District Court, Southern District of Texas; Eagle USA Airfreight, et al v. EEOC, “Civil Docket,” Case #4:2000-cv-01535, U.S. District Court, Southern District of Texas; Dube v. EGL, “Memorandum & Order,” Case #2:2000-cv-02461, U.S. District Court, Eastern District of Pennsylvania, July 5, 2000). Ultimately, a $9 million settlement was reached, with $8.5 million going to back pay and damages that were allocated to the class members, which consist of African-Americans, Hispanics, and female employees employed by Eagle at any time between December 1, 1995 and December 30, 2000, and former applicants who sought employment at Eagle during the period December 1, 1995 to December 31, 2000. In addition, Eagle paid $500,000 to establish a Leadership Development Program, a program intended by Eagle and EEOC to benefit minorities and women by preparing them for leadership roles in employment at Eagle. In 2005, U.S. District Judge Lynn Hughes ruled that approx. $6 million be credited to Eagle. A review found that 203 of 2,073 claims had merit. About $900,000 was paid to applicants or employees, according to the court. But, even after the EEOC case against Eagle, the company has been sued 11 more times in Federal employment discrimination cases. When asked about the discrimination claims during a press conference announcing the McLane had now entered into an exclusive agreement to close the sale, Crane dismissed the subject. “If you’ve done your homework on that, there really wasn’t a problem there,” Crane told ABC 13. “We can address that later. But I don’t think it’s going to be a problem whatsoever.” Crane’s Eagle Global Logistics and Profiteering from Iraq War Effort Crane has more than one business endeavor, but his global supply chain company business is where he got his start and has grown his net worth. A further matter that will sure to raise eyebrows, Crane’s Eagle Global Logistics has settled war profiteering charges with the Justice Department. All told, EGL was sued four times by the Department of Justice. In August 2006, Eagle paid $4 million to settle a civil lawsuit brought by the Department of Justice alleging that the company had inflated the costs of military shipments to Iraq. The company had allegedly added $0.50 for each kilogram of freight transported to Baghdad, war risk surcharges, on shipments from Dubai to Iraq from November 2003 to July 2004. In June 2007, Eagle paid $300,000 to settle allegations of overcharging the government. Many details of the allegations are not available as civil records for the case prior to 2010 are sealed. In November 2008, Eagle paid $750,000 to settle allegations of providing kickbacks in order to procure contracts. Many details of the allegations are not available as civil records for the case prior to 2010 are sealed. The company was accused of conspiring with other shipping companies to price fix and overcharge the U.S. and British governments in the war effort. The Department of Justice ultimately agreed to stop pursuing the criminal charges against Eagle when Eagle fired its employees involved in the scheme, paid a $4,486,120.00 fine and agreed to cooperate in the government’s investigation. However, Chris Cahill, Eagle’s former regional VP in the Middle East and India, was jailed for 30 months beginning in August 2006, issued 2 years supervised release and a $10,000 fine (read the conviction). In fairness to Crane, when you have a management team, likely in the thousands, you can’t mind every aspect of your business. However, the repeated nature of the war profiteering, and continued settlements – on top of the discrimination issue – bring a look to MLB’s ownership make-up not seen prior. Crane and Claims of Breaches of Fiduciary Duty While the discrimination and war profiteering charges could be explained as being not directly tied to Crane, shareholders have had issues with him regarding a merger agreement. In 2007, New York-based Apollo Management, LP entered into a merger agreement with Crane’s Eagle Logistics and associated business vehicles for $38 per share. But, in a suit filed by Apollo (PDF), it was claimed that the “Merger Agreement was the product of a sham process, controlled and manipulated by Crane, with the tacit or express connivance of the remaining defendants, in order to allow Crane to reap significant financial benefit from a coerced, self-dealing transaction.” The suit continued to claim that “throughout the sale process, Crane has abused his position and influence over the board and management of the Company to prevent any third party from making a competitive offer for EGL and to preclude fair consideration by the board of EGL and its Special Committee of third-party bidders for EGL in order to secure his own acquisition of the Company at the lowest possible price.” In the end, Apollo won the bidding and purchased EGL for $2 billion. Crane did not comment on the sale. However, at the time, in a U.S. regulatory filing, Crane and five senior EGL executives said they considered pursuing unspecified “legal action” against Chief Marketing Officer Joseph Bento, saying Bento shared confidential information with Apollo related to Crane’s bidding strategy (press release). The Financing of the Sale to Crane: Debt, but within Reason While there are some that will certainly have concerns about Crane’s business dealings, the bottom line for the Astros (and MLB) is how sound the sales transaction is structured. In light of the current woes of the Dodgers and Mets, how much debt will the Astros be saddled with? Recently, the Los Angeles Times reported that there are currently nine clubs in MLB out of compliance with the league’s self-imposed debt service rule. In a separate article, The Biz of Baseball broke down each of the nine, giving details as to why. So, will the deal between Crane and McLane also put the Astros on the list? The answer is yes, but that doesn’t mean it should be an ominous warning. In fact, while there is a debt component in the deal between Crane and McLane, it’s actually expected. In speaking with representatives of Major League Baseball, the debt service rule is designed to allow flexibility for sales transactions to be in violation of the rule, if only for a short period. As one league source said, “If we didn’t make an exception for the rule, no sales transactions would take place.” Indeed, according to the SportsBusiness Journal, Crane’s deal reportedly sees a $220 million debt component from Bank America. But, in a sign that financial institutions are looking more closely at how debt is collateralized, Crane has considerable capital in the deal. As the SBJ reports, the loan “is conservatively structured, with covenants, for example, requiring Crane to pre-fund expected losses. Some of the loan also is set aside for interest reserves, the sources said. “ The interest rate on the deal is 275 points over the London Interbank Offered Rate, or LIBOR, a floating rate index, according to the SBJ. The report goes on to say that the Astros already have borrowed approx. $55 million in debt from MLB’s league-facility fund. While other reports have said that Crane will be getting a loan from MLB, the league denied that to be the case, but did say that the Astros would continue to have access to the league facility fund. How Does the New RSN Factor? A large piece of the sale between Crane and McLane centers on the new Comcast SportsNet Houston deal that launches in 2012 and begins seeing Astros games carried for the 2013 season. That new source of revenue is deemed to be significant and therefore, allows Crane to take on debt now in the sale while the league knows that there is a healthy up-front payment out of the RSN to help move the Astros out of the debt service violation much quicker. How Does MLB Factor Into Crane’s Approval? The stark reality of club sales really center on a buyer and a seller. If a club owner really wants to sell, if the financial structure of the deal makes sense, there’s little reason for the league to question it. In that sense, the Crane deal is sound. But, are there any concerns about Crane’s background? In speaking with league sources, they made it clear that they never encourage clubs to hold press conferences in advance of an ownership transfer vote, such as was the case with the Astros and Crane. With several clubs seeing troubling financial and legal issues (Dodgers, Mets, and Rangers, prior), the league is looking much more closely at each prospective owner’s background and financial structure, according to Rob Manfred, MLB’s Exec. VP of Labor. “For a variety of reasons, we are placing special emphasis on the ownership approval process,” said Manfred. What Does Crane Have to Say? We approached Jim Crane for comment on these aspects within his past. Crane has declined comment while in the midst of the Astros sale process, instead deferring to Bill Miller, a high-powered public-relations representative that, among other aspects, has been involved in crisis management. Miller was quick to point out the court’s reversal on the EEOC charges, but did not mention the claims after the class-action suit was settled, nor any of the quotes directly attributed to Crane. On the war-profiteering that Crane’s company was involved in, Miller deferred to Global’s senior management, such as Cahill. “The overseas shipments for Kellogg Brown & Root (KBR) involved two rogue employees, who defrauded the U.S. Government over a two-year period while in the employ of Mr. Crane’s company,” said Miller. “They were terminated and plead guilty in subsequent trials. The company, Eagle Global Logistics, reimbursed the government and paid a fine due to the actions of the men. Because of its handling of this matter, the company resumed participating in U.S. Government contracts after this event.” From 2001 to 2006 EGL procured $82,500,000.00 in government contracts from the Department of Defense. (See: FedSpending.org, “Advanced Search for Contracts: EGL,” http://www.fedspending.org) Miller said that Crane showed strong, direct resolve to meet challenges out of these two cases. Why Crane’s Past Actually Could Bode Well for the Astros One would be hard pressed to find a more controversial ownership background for one coming into MLB than Jim Crane, regardless of the workforce size. After all, Crane’s company size is not the largest of business owners in the league. Indeed, the McLane Group where Drayton McLane is Chairman is larger, and has avoided such incidents. The issue of race, especially in Texas, is a hot-button issue, and certainly war profiteering is something most all American’s frown upon. But, in a case of the past possibly being a cleansing agent for the future, with so many eyes focused on Crane due to his past dealings, it’s likely that he will work extra hard to distance himself from those unattractive elements with the Astros. Quite simply, the Astros are not a global corporation – the size of the staff is fractional by comparison. The league is held up each year as having a high level of women and minorities at the executive levels of not only the clubs, but at the league level. In that, Crane is likely to be made to understand the unwritten law that being part of Major League Baseball means playing along with that dynamic. And finally, while Crane may be the head of the Astros at some stage, ultimately, he will simply be one of 29 other owners lead by the Commissioner/CEO of the league in Bud Selig. He will not be at the top of the heap, but rather need to work toward pushing the league’s agenda forward. Crane will be an extremely visible man in Houston, and one of 30 cogs in MLB’s pecking order. As to when, or if, Jim Crane is approved as the new owner of the Houston Astros, league sources indicate that the vote will likely take place as part of the quarterly owners meetings in August. Final approval requires 75 percent of the league’s 30 owners to agree with the sale to complete the transfer. It seems likely that he will be approved, but given his background, he shouldn’t expect it to be a clean slide to home plate. There will likely be questions about his background. There will likely be comments made. And there will surely be many watching him afterwards, should Jim Crane be approved as the new owner of the Houston Astros. Given his past, why wouldn’t there be?
The article is kinda old...but more to the point, the facts in the article are super old. I have no problem with MLB saying, "hell, no!" to Crane. None at all. But all these allegations are AT LEAST 10 years old and Crane's name has been well known among MLB owners as a prospective owner. He's been up for consideration for quite a while now, and these facts are super public. It's time to vote up or down....UNLESS IT'S REALLY ABOUT THE WHOLE AL REALIGNMENT THING. Then you can pretend to have problems with a past you already knew about (and never said anything to Drayton about when you knew Crane was among the very few suitors for the club) and use that as leverage to force what you want. Vote him down on his past and let's move on...call him every name in the book and assume the allegations are true. Let's move on. Oh, and keep my 'stros in the National League, thanks.
The article is old... has been discussed quite a bit. The allegations and events listed are old, and it is hard to tie Crane directly to the events. At this point MLB needs to **** or get off the pot. Either approve him or reject him.
I doubt we'll hear anything until possibly the winter meetings at this point. MLB clearly has no interest in due process. They have the facts. They know the man and what the deal is. There's no excuse for the hold up other than to force the Astros hand at moving to the AL. Screw Bud Ada....Selig.
Sorry for the old article. I am late to even caring about the 'stros anymore and just found this guy to be severely lacking.
winter meetings may be too late. crane's offer expires 11/30. winter meetings are the first week in December. fine by me.
What worries me is that is exactly what happens. Not because I am wild about Crane, but because whoever the next owner wantabe is, he knows he is going to get Selig's 16 ton weight (Move to AL or else) hanging over his head. And this may drive away many potential future owners making this a very very long process at a time when a lame duck owner could make our 3-5 year rebuild process take 5-8 instead.
I don't even want Crane for the owner anymore. I was excited until I realized he paid so much that he was gonna have to get profit every single year to make ends meet. Then when he asked for a 60 million dollar budget, my fears were confirmed. Now that this whole Selig AL issue came up I'm ready to move on.
$60 million dollar budget is supposedly until they are competitive. His "plan" was to spend on international free agency and paying over slot for draft picks with the intention to add a lot of juice to our minor league system. I like the fact he is a former college baseball player, is a self made man, and has a real passion for baseball. Further, the people he is linked to (Friedman and Hunsicker) really know how to run a team. I don't know if he is racist/sexist honestly. I do know that it is possible when you have that many people working for you, it is possible to be out of the loop.... but maybe he really is intolerant. Honestly, at this point I do not care if he is a good owner and gives everyone a fair shake. I do not think Drayton or McMuller are exactly role models for diversity tolerance. I do not was a move to the AL, but I also do not want McLane or some other loser running the team.
McLane hired MLB's first full-time black general manager. There has also been a lot of diversity of the front office. To judge a man based on the 25 men on the field, would certainly be a mistake. He keeps Dave Clark around. He fired all the other coaches, but kept Dave freaking Clark as the 3B coach.
It would be the saving grace to this slap in the face. I wonder if he purchased the team, if Selig would feel he could get away with forcing the move. Of course, McLane now has a price, so he may hold out for someone else to meet it, and I'm not sure anyone will in the near future.
Not sure but Selig probably feels he could. Went from a 'non-issue' to 'We'd really really like you to move to the AL.' As for Drayton, we know he's ready to move on. Is he 'desperate' ready to move on(might take less) or would he hold out for his 680 million(even if it meant staying around another year or two or three)? [rQUOTEr]Friedman already has the blessing of Major League Baseball to go forward in his efforts to buy the Astros. "I was approved by Major League Baseball in five days," Friedman said. "I am told that was very fast." Friedman worked for the Astros in the 70's as outside counsel and said he as been a fan of the team for most of his life. "I view the Astros as a community asset and it should stay in the community," Friedman said. "I would be thrilled to be the lead owner of the Astros."[/rQUOTEr] We approved you Mr. Friedman but oh by the way....we'd really really like you to move to the AL. Do you accept or do you decline?
From the article: Maybe we could get Hunsicker's protege? Or at least, if we can start dealing with the Rays instead of the Phillies, we might get better talent back?
I dont know if we'd get Friedman. Certainly dont think it would hurt the chances though if his dad came on board. Deal with the Rays instead of the Phillies? Sounds good! Unfortunately not much to trade at this time.
Actually, it was the first black GM (Bob Watson). To that end, he did employee two black managers in the same season with Cooper and Clark. Frank Robinson was the first black manager.
I hate feeling powerless against assholes like Selig. I have the same feeling when it comes to politicians at the local, state, and federal level. Everyone is out for themselves and it's **** the little guy. Can't we start some kind of petition and get a lot of signatures to send to Bud for "NO AL MOVE"? Or is that just a colossal waste of time? Seriously, we lobbied hard for the Rockets back in the day, would the same work for the Astros?
