Enron says it would consider buyout on Houston stadium agreement; Astros want deal abandoned
Tuesday, February 5th 2002, 12:00 am
By: News On 6
HOUSTON (AP) _ Enron Corp. says it's willing to consider a buyout from the Astros to remove its name from the baseball team's 2-year-old stadium. But team owner Drayton McLane says the energy company has it backward.
``There's really not anything to buy,'' McLane said Wednesday. ``They are actually the ones who owe us. They owe us for 27 years.''
McLane says Enron has benefitted from the recognition the company got from the prominent placement of its name on Enron Field. The company's name also is on signs at the stadium and everything from staff members' uniforms to cups, napkins, plates and tickets.
Now that Enron has collapsed, the team is trying to distance itself from the negative image associated with the energy trader.
When the 30-year, $100 million naming rights agreement was signed in 1999, Enron was a Wall Street darling and was quickly growing into one of the nation's largest corporations. But the company's stock price and credibility plummeted following the announcement of a federal investigation into accounting practices last year. Enron filed for bankruptcy in December.
``The Astros' business relationship with Enron leaves the Astros burdened with Enron's considerable baggage,'' attorneys for the team wrote in a motion filed earlier this week with the New York court overseeing Enron's bankruptcy.
The motion asks the court to force Enron to decide whether it plans to honor the naming rights agreement. It requests a hearing later this month and a decision from Enron by Aug. 30.
On Aug. 31, Enron is scheduled to make a $3.65 million payment to the team. So far, the company has made three annual payments totaling $10.25 million, the Astros said.
The Astros say Enron should abandon the naming rights agreement, arguing that it isn't realistic to expect the company to be able to make the next payment.
But Enron says it makes perfect sense to continue paying for what the company considers a valuable asset. After the bankruptcy filing, Enron spent $108,000 on a suite at the stadium and $90,000 for 2002 season tickets to live up to its contractual obligations with the Astros.
``Our responsibility is to get the maximum value for the asset for our creditors,'' Enron spokeswoman Karen Denne said. ``One thing we could consider is the Astros buying us out of the contract.''
The company may also try to sell the contract to a third party without consulting the Astros, according to legal experts.
Dallas attorney Steven Camp, who specializes in naming rights agreements, says Enron might be in the driver's seat since the bankruptcy court is in its corner.
``Bankruptcy courts have tremendous powers,'' he said. ``They could certainly sell (the naming rights agreement) without the Astros being involved.''
But Dean Bonham, whose Denver-based Bonham Group negotiates naming rights deals, says potential buyers approached by Enron wouldn't likely play ball.
``Any major corporation, in my opinion, would be hard pressed to negotiate with Enron knowing that the Astros would prefer that they negotiate with them,'' he said.
The Astros may be stuck with its contract with Enron until the bankruptcy court rules, which might not happen for months, Bonham said.
``The fact of the matter is if this is not settled soon, the Astros are saddled with the name of a company that is becoming more and more vilified on a daily basis,'' he said.