The entire deal was made in 1989. Krugman's assertions are factually without basis.
>>In 1987 and 1988, while still a consultant to Harken, Bush took time out to help in his father's successful campaign for the White House. When President Bush was elected, George W. returned to Texas to contemplate his next move. That same year, 1988, a Fort Worth oilman named Eddie Chiles, who had owned the Texas Rangers for many years, began to think about selling the club. When word of that got out, one of the first people to hear was none other than William DeWitt, Jr., the Ivy Leaguer who clicked with Bush at the lunch that led to the Spectrum 7 deal. DeWitt, whose family until recently had owned the Cincinnati Reds baseball team, began to put
together a group of investors to buy the Rangers.
But Major League Baseball Commissioner Peter Ueberroth had problems with the lack of local money in DeWitt's group. "We met with Ueberroth and he said, 'You've got a good group, but why don't you get more Texas investors,'" DeWitt recalls. "It was clear at the time, as it is now, that the control person needs to be a resident of the city or area where the team is located." So DeWitt undertook to enlist some Texans in the deal--and he immediately thought of Bush. "We were close friends throughout the period," DeWitt says. "George was a great baseball fan. We used to go to games together when we'd be on the road."
But Bush had a problem. He wasn't rich, at least not by the standards of people who buy large interests in professional sports teams. Still, he had something no one else had, at least in quite the same way: a connection to Eddie Chiles. "On a personal level, George had the most contact with Eddie," DeWitt says. "I never really talked to him." DeWitt needed Bush to win the owner's blessing for a sale.
As it turned out, Chiles was a fan of the Bush family. "Eddie had lived in Midland and was very good friends with the Bushes," remembers Chiles's widow Fran, referring to the president and Barbara Bush. Chiles recalls her husband referring to George W. as a "young pup" back in the 1940's and 50's. Bush's presence in the ownership team, Fran Chiles says, sealed the deal for her husband. "Eddie didn't want to deal with anybody else after George got involved," she says. "He was delighted to turn the team over to younger people and especially George Bush."
Bush was also helpful in bringing deep-pockets Dallas businessmen Richard Rainwater and Edward "Rusty" Rose into the deal. Each of them put in several million dollars--Texas dollars that would please Ueberroth. Bush also brought in a big investor from New York, an old college friend named Roland Betts, who had initiated Bush into the Delta Kappa Epsilon fraternity years earlier at Yale and went on to make millions financing movies.
It worked; Chiles and Ueberroth approved and the sale took place in March 1989. The purchase price was $46 million. Bush, who didn't have lots of cash available, borrowed $500,000 ("fully collateralized," according to his spokeswoman) to put in the deal, later adding a little more for a total investment of $606,000. That bought him a 1.8 percent interest in the team. But he had another agreement with his partners through which he would be handsomely rewarded for his role in putting the deal together. The contract called for Bush to be a managing general partner; once all the partners recouped their investment with interest, he would be given an additional ten percent interest in the team. Then, instead of owning 1.8 percent of the Rangers, he would own 11.8 percent. It was the deal that would make Bush a rich man.<<
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