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Right on the Money: The George W. Bush Profile
July 8, 2003
From the Buying of the President 2000 by the Center for Public Integrity

Part Two:

When Bush first embarked on the deal to buy the Texas Rangers 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 his father was the chairman of the RNC, Bush befriended one of his 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 underway, 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 DeWitt, Jr., Bush's partner in Spectrum 7, called to let him know that Eddie Chiles, the owner of the Texas Rangers, was looking for a buyer. 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, the 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 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, the Fort Worth billionaires who financed Harken's drilling in Bahrain. 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."

Nonetheless, Bush's partners rewarded him by upping his ownership stake in the Rangers, giving him another ten percent of the team.
"He had a well-known name, and that created interest in the franchise," Tom Schieffer, the Rangers 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, 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.

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 January 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 maintenance fees for the Rangers are $5 million; the total purchase price for the Ballpark at Arlington is $60 million. Thus, after twelve 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 (ASFDA), to manage construction. Using authority granted to it by the city, ASFDA seized several tracts of land around the stadium site for parking and future development.

While on paper ASFDA was a public entity, in practice it was merely a puppet for Bush and his partners. According to documents obtained by the Center, the owners would identify the land they wanted to acquire. A Rangers owner, realtor Mike Reilly, 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, AFSDA could take possession of their land and leave the price to be determined in court.

Several of the landowners took ASFDA 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. (In 1999 the Rangers, under new ownership, finally agreed to pay up.)

When confronted with the seamy details of the land grab, Bush professed ignorance. But Tom Schieffer, the team's president, has testified that he kept Bush aware of the land transfers. In October 1990, Bush also let 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 Hicks, the chairman of Hicks, Muse, Tate and Furst, Inc., a firm that specializes in leveraged buyouts and owns 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.

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 ten 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 twenty-five-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.

*    *    *

In his first race for political office in sixteen years, Bush showed that he had learned a lot all those years on the sidelines of his father's campaigns. He went up against Governor Ann Richards, a sharp-tongued Texas Democrat who, at the 1988 Democratic National Convention, took a shot at his father by saying, "Poor George, he can't help it, he was born with a silver foot in his mouth." She gave the younger George much the same treatment with nicknames like "shrub" (little Bush). But Bush didn't respond. Instead he stayed on four themes: frivolous lawsuits, welfare reform, juvenile justice, and education. His focus prompted Richards to comment years later, "If you said to George, 'What time is it?' he would say, 'We must teach our children to read.'" But his message reached voters, and in November they elected him with nearly 54 percent of the vote.

When Bush moved into the governor's mansion in January 1995, he arrived indebted to dozens of industries and wealthy patrons. He repaid some of his supporters with choice political appointments.

One of the most prestigious of political appointments in Texas is a seat on the University of Texas Board of Regents. The board is filled with Bush's top-dollar donors. The chair of the U.T. Regents is Donald Evans, Bush's old friend and longtime fund-raiser who, as the finance chairman for Bush's presidential bid, has overseen the campaign's record-shattering fund-raising drive.

Evans is the chief executive officer of Tom Brown, Inc., an oil and gas company based in Midland, Texas. In 1989, Bush joined the board as an outside director. He received $12,000 a year plus stock options for attending several meetings and participating in conference calls. He also sat on the compensation committee that boosted Evans's salary by $75,000 and awarded him a bonus of $35,000 before Bush left the company in 1994.

Shortly after he was elected governor of Texas, Bush sold his Tom Brown holdings for a profit of $297,550.


Another regent and top Bush patron is A.R. "Tony" Sanchez, the chairman and chief executive officer of Sanchez-O'Brien Oil and Gas Corporation. Sanchez started the company with his father and his father's business partner in 1974 after they discovered a major natural-gas source. Sanchez and his mother also own a controlling stake in International Bancshares Corporation, the holding company of International Bank of Commerce, a Texas banking chain founded by his father in 1966. Over Bush's career, Sanchez, members of his family, and employees of his companies have given him at least $320,150, making them his No. 2 career patron.

But Bush owed few people more than Richard E. Rainwater, the Fort Worth financier. "[Rainwater] just loves to make people rich," observed Alfred Checci, the former chairman of Northwest Airlines, who worked with Rainwater in the early 1980s. That's a passion Rainwater has had ample opportunity to indulge. When Rainwater started with the Bass brothers in 1970, they had an inheritance of $50 million. When he left in 1986, the family fortune had grown to at least $4 billion.

Rainwater provided much the same service for Bush. He was the man behind the Rangers deal that would ultimately net Bush a profit of more than $15 million. And when Bush was first elected governor, more than 60 percent of his income came from businesses in which he and Rainwater were partners, according to his 1994 financial disclosure statement.

Rainwater himself hails from modest roots. His father was a wholesale grocer and his mother worked at JC Penney to put him through school. At fifty-five, he still likes to cut million-dollar deals in faded jeans, tasseled loafers, and a baseball cap rather than a business suit.

Getting his name on a plaque wasn't going to cut it for the governor's personal rainmaker. With Bush in Austin, Rainwater soon found himself awash in potential windfalls. While some never materialized, many did.

One of Rainwater's first ventures after leaving Bass Enterprises was the creation of Columbia/HCA, Inc., which is now the nation's largest for-profit hospital chain. Columbia/HCA's operations were controversial from the start. Physicians at the hospital chain have a financial stake in the operation, which critics say carries the risk that they will put their own profits ahead of patient care. In 1997, federal agents raided Columbia/HCA facilities in Florida, Texas, and other states as part of an investigation, still ongoing, into whether the company had defrauded the federal government out of millions of dollars in Medicare reimbursements. The FBI, the Internal Revenue Service, and the Department of Health and Human Services are all involved in the probe.

In 1995, Bush vetoed a Patient Protection Act that, among other things, spelled out the obligations hospitals and health-care providers have to those who need medical care. In a written statement explaining his veto decision, the governor argued that the bill "unfairly impacts some health care providers while exempting others." He ultimately instructed his Insurance Commissioner to implement many of the bill's provisions as new state regulations. One notable exception was a provision that would have cut into the profits of Columbia/HCA.

The provision in question would have required health maintenance organizations to let patients see doctors outside their own networks. Giving patients this choice would undermine Columbia/HCA's ability to hammer out agreements with health maintenance organizations (HMOs) and preferred provider organizations (PPOs).

In 1997, Bush proposed in his biannual budget that the state look into privatizing Texas's mental-health hospitals, just as Rainwater was in the midst of building a mental-health-care chain. Rainwater launched an investment company in 1994, Crescent Real Estate Equities Company. Besides Rainwater, Crescent's management team included Bush's fellow Rangers owners Gerald Haddock and John Goff and Rangers lawyer William Miller. In 1997, Crescent purchased ninety-five mental-health hospitals from Magellan Health Care Services of Atlanta and also became a fifty-fifty partner in Magellan's Charter Behavioral Health Systems. It quickly became the nation's largest provider of private mental-health-care services. The governor's proposal was never enacted. Charter Behavioral struggled for profitability, and Crescent's plan to buy out Magellan for sole ownership of the chain soon collapsed.

In 1997, Bush backed a plan to cut state property taxes that would have saved Crescent some $2.5 million in state taxes. Though the Texas House passed the proposal, the Texas Senate ended up scuttling it and passing a scaled-back version.

Later that year, however, Bush signed a bill into law that produced a $10 million windfall for Crescent, and millions more for Ross Perot, Jr., and Thomas Hicks, the leveraged buyout expert who bought the Rangers from Bush and his partners in 1998. Perot, who owns the Dallas Mavericks basketball team, and Hicks, who owns the Dallas Stars hockey team, wanted to build a new stadium to enhance the value of their teams.

Just as with the Rangers deal, Dallas taxpayers were to foot most of the bill for the new sports arena. But before city officials could negotiate with the team's owners, the state legislature had to pass a bill allowing cities to raise taxes to finance the project. While the bill wended its way through the Texas Legislature, Rainwater, through Crescent, bought a 12 percent stake in the Mavericks. Under the purchase agreement, Crescent will get the $10 million when the arena is completed in the fall of 2001. Then the legislature passed the bill allowing the sales-tax hike and Bush signed it in June 1997.

When it comes to taxpayer money, Bush has been more than willing to use it to repay the largesse he's received over the years from his patrons. The Texas Teachers Retirement System, which manages the pension fund for the state's 800,000 public school teachers, sold two office buildings and a mortgage on a third to Crescent in 1996 and 1997 at a $70.4 million loss. As first reported by R.G. Ratcliffe of the Houston Chronicle, two of the sales were done without public bids, and the Teachers Retirement System refused to disclose what the initial bids were on the third. At the time of at least one of the sales, Bush owned about $100,000 worth of Crescent stock.

The University of Texas Investment Management Company, which manages the state university system's $12 billion worth of assets, sank at least $8.9 million into Crescent Real Estate. The company's chairman is none other than Hicks. Under Hicks's watch, UTIMCO has steered close to $1.7 billion of its assets into private investments; a third of that money has gone into funds run either by his business partners or by Bush patrons.

In July 1998, a month after Hicks purchased the Rangers from Bush and his partners, he led a meeting of UTIMCO directors hundreds of miles away from UTIMCO's office, in the boardroom of the Ballpark at Arlington. There, they approved a $96 million investment into Maverick Capital Fund of Dallas, a hedge fund run by Sam and Charles Wyly of Dallas. The Wyly brothers are ninth on Bush's list of career patrons.

Finally, nine years after its investment in Harken helped save Bush from financial ruin, Harvard Management Company got a deal on a piece of real estate it bought from the Texas Teachers Retirement System. In 1995 the TRS sold the Anatole Hotel in Dallas to a partnership that included the Crow family, which owns a controlling interest in Trammell Crow Company, one of the nation's top real estate management companies, and Harvard Management. Without taking bids, the TRS reportedly sold the hotel for $27 million less than it had spent to make improvements on the structure.

Harvard, Rainwater, and Hicks are not alone among Bush patrons who have received favors from the governor. Industries that have provided the bulk of Bush's campaign contributions have gotten his help in a variety of endeavors, from staving off pesky environmental regulations and shielding themselves from consumer lawsuits to driving off meddlesome investigators.

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