Catching up on my blogging, I read Ted Barlow, who comments on and takes me back to Diane E., who comments on Mickey Kaus. The subject??
George Ws 10% partnership interest in the Texas Rangers baseball team, and Kaus defense of it, which is hammered on by Ted and Diane.
Sadly, this is a case of Too Little Knowledge on their part. Heres the deal; Ive spent the last year trying (unsuccessfully so far, but Im not done yet) to raise a bunch of $$ to start a business. Heres how these deals work: there is a division of ownership between capital the folks putting up the green and labor me and the rest of the management team (actually, to connect to an earlier discussion with Kevin R., there is a further division with intellectual property, with the folks (me, in this case) who came up with the idea getting an additional share).
What the management team and founders get is called various things, but a promoted interest is typical. It is a percentage of ownership in the company that we get, not in the form of options, but typically in the form of outright grants. It is very typical for the promoted interest to be subordinate to the investors capital and a defined return
essentially they loan the money, secured only by the value of the company, so they get their cash out and some interest rate. Then they share the income and value, withthe ‘labor’ side getting their for the work they did in putting the deal together and in advancing the interests of the company.
This is absolutely a generic prototype for buying a business, and anyone who is in business could tell you so. Bush wasnt gifted with his 10%, he earned it just like Jeff Bezos did.
Now why they chose Bush as the promoter, what other financial relationships the investors may have had with him, his dad, or his later campaigns, I cant speak to, because I dont know. There may be oodles of sleaze buried in there waiting to be discovered. There probably is.
But if our team attacks him on this point, were going to look really damn silly. Lets avoid that, OK?
Date: 08/06/2002 00:00:00 AM
If this article is accurate Bush earned profit what he did is make the deal happen. If former owner Chiles sold based largely on his (W’s) efforts, he certainly deserved something. Putting a deal together involves a staggering amount of effort, and success or failure is often based as the personalities involved as it is the numbers. I don’t doubt being Bush I’s son helped W, but in this particular deal it looks like he earned something.
Date: 08/06/2002 00:00:00 AM
One simple question: what, in fact, did W. DO to deserve the 10%? Back when the LP was formed, baseball teams were skyrocketing in value. You would have had to beat people off with a stick to keep them out of that partnership.Unless he did something of value, it appears that the partnership was formed in a way to give a hapless businessman with a great political future a huge chunk of cash. While that’s not illegal, it certainly raises questions about the president’s integrity (like HRC’s cattle future trades raised questions about her and bill’s integrity).So, what did W do to deserve the partnership interest? Bueller?
Date: 08/06/2002 00:00:00 AM
I may be wrong (I have been before), but it was my understanding that the Rangers were a limited partnership. As far as I knew, there was generally a general partner(s), who did all the work, and were compensated according to one schedule, and the limitted partners, who provided only money, and were compensated by another schedule. A general partner may have an ownership stake as well, and be compensated according to both policies at once. Now, if Bush were the general partner, he could have been awarded a bonus, but instead he was awarded stock, which he then sold (back to the group of limitted partners who granted the stock??). If he were a limitted partner, the stock deal seems like a way for him to be compensated as if he were the general partner, while only bearing the investment risk of a limitted partner. Could someone please explain this to me. I am not a complete idiot in such matters (I only play one on the internet)>
Date: 08/06/2002 00:00:00 AM
He has a valuable name and, just like any other property he might own, he has a right to trade on it and profit from it.Really?In 1989, Bush didn’t have a valuable name in the sense that Tom Cruise has a valuable name: no one was going to go to a Rangers game because W. was a co-owner of the team.Nor did he have a valuable name in the sense that Warren Buffett has a valuable name: no potential investor or contractor was going to have more confidence in the management of the Rangers organization because W. was a co-owner.The only respect in which W. had a valuable name was in the fact that W. was the son of the President of the United States. The “value” of that connection is the potential value to be realized by improper use of political power.
Date: 08/06/2002 00:00:00 AM
As someone who has lawyered a lot of deals, including limited partnerships, I can tell you that Bush’s deal with the Rangers was completely typical.Capital is raised largely on relationships, and managing partners are often brought in solely because they can help being in investors, from among their friends and acquaintances. NSorry to disappoint, but there is nothing sleazy about it.
Date: 08/06/2002 00:00:00 AM
I think you are making a too big an issue of his father’s presidency in this particular case. My point is that although Bush I had already been in government service for many years by 88, W was valuable to investors because of who he already knew. W attended elite schools (Yale, Harvard) and was a fixture on the social circuit well before Bush I was president. The contacts he made at school (and through family) are precisely what made him valuable; in your words, his Rolodex. I’m sure being the President’s son didn’t hurt any, but the preexisting contacts and the skill to work them are why he was involved in the Rangers deal.When other Presidential family members have been involved in embarrassing (sometimes financial) escapades – think Roger Clinton and Billy Carter, the issues tend to revolve around access to government resources. In this particular case, Bush II provided access to resources in rich people’s pockets.Personally, I’m far more concerned by the Harken energy deals where it is far from clear what Bush II provided, and there are (were?) allegations that people were trying to buy access to federal oil leases by paying off W/putting him on the board.wrharperwestsider/rider
Date: 08/05/2002 00:00:00 AM
Look, there is nothing wrong with GWB getting 10 percent of the Rangers if, stress IF, the only thing he brought to the table was his name. He has a valuable name and, just like any other property he might own, he has a right to trade on it and profit from it. His name as part of the ownership team certainly helped the other owners buy the team and get approval of MLB.