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News Report How George W. Bush Scored
Big
By
Charles Lewis (Washington, Jan. 18) When George W. Bush first
embarked on a deal to buy the Texas Rangers professional baseball team in 1988,
he already had his eye on the governor's mansion in Austin. But he knew that
to have a shot at winning, he would need better credentials than a string of
unsuccessful oil companies and a failed bid for a seat in the U.S. House of
Representatives. In 1989 he told Time magazine,
�My biggest liability in Texas is the question, �What's the boy ever
done?� He could be riding on Daddy's name.�
But his father's
connections were instrumental in helping Bush overcome that perception.
Back in 1973, when the senior George Bush was the chairman of the
Republican National Committee, Bush befriended one of father's assistants,
Karl Rove. Rove cut his teeth alongside the senior Bush's chief political
strategist, Lee Atwater. Rove would become George W.'s own Atwater, helping to
run his 1978 bid for Congress and laying the groundwork for his 1994 run for
governor. As the Rangers deal got under way, Rove told Bush that baseball was
his ticket to the big time. �It gives him . . . exposure and gives him
something that will be easily recalled by people,� Rove said.
Rove's calculation turned
out to be right on the money.
It all began in fall of
1988, when William O. DeWitt Jr., Bush's partner in a Texas oil-and-gas
exploration company called Spectrum 7, called to let him know that Eddie Chiles,
the owner of the Texas Rangers, was looking for a buyer.
Ueberroth Presses for Deal
Chiles, a family friend who
called Bush �Young Pup� when he was a kid, was eager to sell to Bush. And so
Bush and DeWitt quickly assembled a team of investors . They hit a snag when
Peter Ueberroth, then commissioner of Major League Baseball, told them he
wouldn�t approve the sale without more investors from Texas. Ueberroth
believed that local owners would be less likely to relocate the team. The
commissioner, a GOP donor himself, wanted the deal approved before his term
expired at the end of 1989, and so he and then-American League president Bobby
Brown took it on themselves to line up Fort Worth financier Richard E.
Rainwater.
Rainwater and Bush
weren�t exactly strangers. Rainwater was a contributor to his father's
presidential campaigns and, later, an overnight guest in the Bush White House.
Until 1986, he was the chief money manager for the Bass brothers, Fort Worth
billionaires who financed drilling in Bahrain by the Harken Energy Corp., a
company that in 1986 had bought out Spectrum 7, one of Bush's oil companies.
By 1988, Rainwater was
managing his own fortune. He agreed to put money in the Rangers, but only if his
trusted associate, Edward �Rusty� Rose, was installed as general managing
partner along with Bush.
With this arrangement in
place, Bush and his partners bought the team from Chiles on April 21, 1989, for
$86 million. To scrape together his $500,000 stake in the Rangers, Bush borrowed
the money from a bank in Midland where he once was a director. He owned 1.8
percent of the Rangers. (He later invested an additional $106,302).
Bush made up for his minor
stake by taking more than his share of credit for bringing the owners together.
�I wasn�t going to let this deal fail,� he said last year. �I wanted to
put together the group. I was tenacious.�
Others close to the deal
paint a different picture.
�George W. Bush deserves
great credit for the development of the franchise,� Ueberroth said.
�However, the bringing together of the buying group was the result of Richard
Rainwater, Rusty Rose, Dr. Bobby Brown, and the commissioner.�
Bush Gets Another 10
Percent
Nonetheless, Bush's
partners rewarded him by upping his ownership stake in the Rangers, giving him
another 10 percent of the team.
�He had a well-known
name, and that created interest in the franchise,� Tom Schieffer, the
Rangers' former president, said last year. �It gave us a little
celebrity.�
Usually parked in a
front-row seat by the dugout, with his feet up and a bag of peanuts perched in
his lap, Bush put a congenial face on a crooked deal, at the heart of which lay
a complicated land play.
When they bought the team,
the Rangers were playing in an old minor-league stadium. It didn�t have the
fancy sky boxes and other amenities that helped make other franchises much more
profitable. As a result, the team couldn�t compete with other big-city teams
for good players. But the new owners weren�t willing to finance the
construction of a new ballpark. They decided to hit up taxpayers for the money.
First, the new owners
threatened to move the team out of Arlington, Texas, sending local officials
scurrying to put together a deal they couldn�t refuse. Under the resulting
agreement, the taxpayers of Arlington would raise $135 million, the bulk of the
cost of construction, through a hike in sales taxes. During a campaign to sell
the sales tax increase to Arlington voters, then-mayor Richard Greene
said the team owners would put $50 million of their own money into the
deal up front. It didn�t quite work out that way; the owners raised a hefty
portion of their down payment from fans, through a one dollar surcharge on
tickets.
Sales Tax Hike Approved
The city spent $150,000 on
an advertising campaign to persuade voters. Opponents of the deal couldn�t
compete with glossy brochures, telemarketing calls, and a �Hands Around
Arlington Day.� On Jan. 19, 1991, citizens of Arlington voted two-to-one to
approve a sales-tax increase dedicated to building the new park.
Between the sales-tax
revenue, state tax exemptions and other financial incentives, Texas taxpayers
handed the privately owned Rangers more than $200 million in public subsidies.
Taxpayers didn�t get a return from the stadium's surging new revenues,
either. The profits went almost exclusively to the team's already wealthy
owners.
The stadium's lease is a
case in point. Unlike an apartment tenant, the rent that the team's owners pay
is applied toward purchasing the stadium. The maximum yearly rent and
maintenence fees for the Rangers are $5 million; the total purchase price for
the Ballpark at Arlington is $60 million. Thus,
after 12 years the owners will have bought the stadium for less than half of
what taxpayers spent on it.
But Bush and his partners
weren�t satisfied lining their pockets with average Texans' hard-earned
cash. They wanted land around the stadium to further boost its value. To that
end, they orchestrated a land grab that shortchanged local landowners by several
million dollars.
As part of the deal, the
city created a separate corporation, the Arlington Sports Facilities Development
Authority, to manage construction. Using authority granted to it by the city,
the ASFDA seized several tracts of land around the stadium site for parking and
future development.
Puppet for Bush, Partners
While on paper the
Arlington Sports Facilities Development Authority was a public entity, in
practice it was merely a puppet for Bush and his partners. According to
documents obtained by the Center for Public Integrity, the owners would identify
the land they wanted to acquire. A Rangers owner, Mike Reilly, a Realtor, would
then offer to buy the parcels for prices he set, which in several cases were
well below what the owners believed their property was worth. If the landowners
refused to sell to the Rangers at the offered price, the Arlington Sports
Facilities Development Authority could take possession of their land and leave
the price to be determined in court.
Several of the landowners
took the authority to court over the seizures and won settlements totaling $11
million. In a final insult to taxpayers, the Rangers resisted paying the
settlements, trying to pass off yet another cost to Arlington residents. (The
Rangers, under new ownership, finally agreed to pay up last year.)
When confronted with the
seamy details of the land grab, Bush professed ignorance. But Schieffer, the
team's former president, has testified that he kept Bush aware of the land
transfers. In October 1990, Bush also let this slip to a reporter for the Fort
Worth Star-Telegram: �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.�
It was a strategy that
would have an enormous payoff for Bush personally.
After he became governor of
Texas, Bush put his all of his assets into a blind trust, with one notable
exception: his stake in the Rangers. Schieffer kept Bush apprised of the
owner's efforts to sell the team to Thomas O. Hicks, the chairman of Hicks,
Muse, Tate and Furst, Inc., a firm that specializes in leveraged buyouts and
until recently owned AMFM, Inc., the nation's largest chain of radio stations.
Hicks and employees of his companies are Bush's No. 4 career patron, having
given him at least $290,400.
25-Fold Return on
Investment
In 1998, Hicks helped
provide Bush with an even greater windfall. He bought the Texas Rangers for $250
million, three times what Bush and his partners had paid 10 years earlier. The
new stadium and the real estate around it greatly boosted the final sale price.
And, since his partners had upped Bush's stake in the team from 1.8 to 11.8
percent, his cut from the proceeds of the sale was $14.9 million, a 25-fold
return on his investment of $606,302. Rainwater, who had put far more money into
the team than Bush, made $25 million.
Just as important as the
cash, however, was the cachet that came with the deal's success. The Ballpark
at Arlington finally opened in April 1994, just as Bush was running for
governor. He touted the new stadium as a win-win proposition for taxpayers and
the team. �Am I going to benefit off it financially?� he asked reporters. He
answered his own question: �I hope so.� Four years later, everyone would
know by how much. Excerpted from The Buying of the President 2000 (Avon), by Charles Lewis and the Center for Public Integrity. Annys Shin contributed substantially to this report while a senior associate with the Center. Related Reports:
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