While most of the city's attention Tuesday afternoon (and that of the local sports media) was centered on Nolan Ryan's return to the Houston Astros, on the other side of downtown Houston the asses of the Houston Astros' bankruptcy attorneys were being handed to them by Judge Marvin Isgur. And while the return of local legend Ryan to a PR-friendly role might make for good visuals and easy stories, what was happening in bankruptcy court was much more important to the short- and long-term future of the team.
The Astros appealed Isgur's ruling putting CSN Houston into Chapter 11 bankruptcy. And while appealing the ruling, the Astros requested that the judge stay his opinion, or stop enforcement of the ruling, until the appeal could be heard by Federal District Court Judge Lynn Hughes. Judges stay orders when they think there's a chance an opinion will be overturned, primarily when an area of law is still unclear, which it's not in this case.
As a result, the judge refused the Astros' request for the stay. He stated from the bench that the appeal was without merit and that it had no chance of success. He told them that the network could be a success, and that it was the team's duty, as one of CSN Houston's owners, to make the network a success.
To quote from Isgur's opinion that was issued on Wednesday:
The Astros' futility argument turns 'bad faith' law on its head. It is true that the petitioning creditors [Comcast] may not sustain an involuntary chapter 11 bankruptcy petition if a chapter 11 case would be futile. In this case (and contrary to the evidentiary record), the Astros now argue that the Astros, by exercising veto rights through its appointed director, can render any hope of reorganization to be futile. In this case, the alleged "futility" arises only because of the Astros' unsupported threats to cause a director to breach his duties. The Court is unaware of any case law that would support a dismissal based on futility that is engineered by the party seeking the dismissal.
Isgur further ruled in his opinion that the Astros didn't even have standing to challenge the bankruptcy and that while Comcast might have done an end run around the Astros to get the bankruptcy filed, it didn't matter because, unlike the Astros, Comcast was acting to save and preserve the network. The judge also accused the Astros of wanting to turn decades of established bankruptcy law on its head while offering zero legal support for its claims and arguments. In other words, the Astros attorneys struck out like Chris Carter did 212 times last season.
Isgur's written opinion was blunt and brutal. It was as if he was personally offended by the Astros' arguments before him, which is quite possible. And worse for the Astros, written opinions from bankruptcy judges tend to be a road map to follow for judges hearing the case on appeal. So when the court quotes Jim Crane saying the network can be a success with the right plan, then the odds of the appeals court giving in to the Astros are as slight as the team winning the World Series this season.
The Astros and the rest of the Comcast bankruptcy parties are set to appear before Judge Lynn Hughes Friday, February 21. The parties will talk to the judge and he'll probably come up with some kind of timetable for hearing the appeal and making a decision. But the Astros should not let it get that far. They should dismiss the appeal and get to work on reorganizing the network.
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SHOW ME HOW
Dear Astros, I get it. Judge Isgur gets it. We all get it. You think Drayton McLane lied to you. You think that Comcast is trying to cheat you. You haven't gotten all of what is owed to you for your media rights from last year. It looks like you won't get your media rights money this year. It's not fair, and you just want to take your ball and go home. But that's not how the law works. Not when you are an owner of the damn company. You have to figure out how to act like an adult and make it all work.
Crane removed himself from the CSN Houston operating board. Crane's replacement is the general counsel of the Astros. But here's another idea for Crane and the Astros: Why not put Nolan Ryan on the board? He's under contract to the Astros. He's a former MLB team owner. He's part of a group that owns two very successful minor league franchises. He's an astute businessman who understands the necessity of media rights fees to the success of a major league team, but he's also smart enough to realize the long-term importance of actually owning the network. Most important, Ryan is not emotionally invested. He wasn't lied to (allegedly) by Drayton McLane.
The Houston Rockets are convinced this network can be a success. So is Comcast. And according to the judge's opinion, Crane has said the network can be a success. So get it done. Come up with a new operating plan, come to the realization that Drayton McLane's rosy projections were just that, rosy projections. And get the carriage deals worked out, even if it means short-term losses for the network because what's more important to the Astros, short-term network losses or another year with no media rights fees and pissed-off fans who can't watch the games?