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Hyundai Unicorns need a sale to survive

Jan 24,2007
Players train last week near Suwon Stadium, Gyeonggi province, the home of the Hyundai Unicorns. The future of the team remains unsure after Nonghyup abruptly pulled out of talks last week to purchase the financially troubled club. A Los Angeles-based company plans to draft a formal proposal today about buying the team. Provided by the team.
A decision by Nonghyup to back out of a deal to buy and bail out the Hyundai Unicorns baseball club means that one of the Korean league’s best franchises over the last 10 years might collapse.
The team’s fate now may hinge on a Los Angeles-based real estate investment company which contacted the Korea Baseball Organization on Monday to express an interest in buying the team, the league confirmed.
If the company, Pro-State Holdings, purchases the team, they’ll be getting a franchise with a rich history, but a troubled present. The Hyundai Unicorns, based in Suwon, Gyeonggi province, won Korean Series titles in 1998, 2000, 2003 and 2004, all after Hyundai took over the team previously called the Pacific Dolphins and switched the name to the Unicorns. After the 1999 season, the team moved from Incheon to Suwon.
On paper, the financing for a team owned by a giant conglomerate should be easy. In reality, it hasn’t been the case.
Hynix Semiconductor (formerly Hyundai Electronics), the majority owner of the Unicorns, entered court protection in 2001, causing a number of creditors to take control of its stakes. Hynix owns 76.2 percent of the team, but has done next to nothing in the way of financial support because its creditors, most of them commercial banks, have not shown interest in writing checks for a baseball club, despite the fact that Hynix finished 2006 with an operating profit of close to $2 billion. The banks have said Hynix could be sold this year.
Since 2001, the Unicorns have had to rely on aid from a number of Hyundai affiliates. Unlike other clubs, who receive funding from their ownership at the beginning of the season, the Unicorns have had to ask Hyundai affiliates for support every quarter.
Another blow to the club was the suicide of its founding owner, Chung Mong-hun, in 2003, while he was being investigated by prosecutors for creating slush funds. Beginning in 2004, Hyundai Group cut its annual, 4 billion won ($4.3 million) inflow into the club.
Poor attendance hasn’t helped, either. The team has not cracked the top five in attendance in the eight-team league since 1999, finishing dead last in 2002 and 2005, when about 161,000 attended the 62 home games. Figures are not available yet for last year, when Hyundai finished second in the league during the regular season.
Late last year, Hyundai Securities failed to make its 2 billion won commitment, and Hyundai-Kia Motor Group, one of the team’s staunchest supporters, announced it would stop providing its 8 billion won per year in financial aid.
“At this pace, the Unicorns won’t make it past July of this year,” an official with the Korea Baseball Organization told Sports Chosun last week. “To save them from going under during the season, finding a buyer has to be the priority for the league.”
And this is where the National Agricultural Cooperative Federation, commonly known as Nonghyup, stepped in. It fell out of the picture almost as quickly.
Last Monday, Nonghyup, which provides financing and other support for Korean farmers, expressed its intentions to take over the troubled Unicorns, and place the team in Seoul. The Korea Baseball Organization pledged its support in trying to revive the ballclub.
But the federation’s labor union, as well as other farmer activist groups, wondered aloud what baseball had to do with farming.
Then the Ministry of Agriculture, which oversees the state-run Nonghyup, sided with the farmers, saying the federation had to consult with related government officials before going public with its intentions. The ministry even threatened to suspend Chairman Chung Dae-kun from his duties if the federation went ahead with its plans. On Thursday, Nonghyup said it hadn’t given up its efforts to buy the Unicorns, but would slow them down, just five hours after it issued a press release saying it could name the new ball club “Farm Loving Baseball Team.”
Then, after denying for a few hours that it had given up on the team, Nonghyup said on Friday it had completely pulled itself out of the Hyundai talks.
So where do the Unicorns stand?
To discuss this matter, the baseball organization’s commissioner, Shin Sang-woo, and secretary general Ha Il-sung met Monday morning with the presidents of eight ball clubs, including the Unicorns, to discuss ways to keep the league together. The interest from the Los Angeles company came later in that day.
A board member of the firm, Pro-State Holding Company, told Ilgan Sports the company is looking to expand its horizons in Korea and “buying a baseball club would be one way to do so.” He added the U.S. firm’s board will meet today to draft its formal proposal, and some of its employees will meet with league officials on Feb. 4 in Seoul. There are no ownership restrictions on the purchase of a club by foreigners.
Pro-State Holding Company’s executive ranks include Korean-Americans and Korean-Canadians, according to Ilgan Sports.
In the meantime, Mr. Ha is encouraging Hyundai to support the Unicorns.
If the team does not get purchased, the key day for the Unicorns may be Feb. 25, the first payday of the year for Korean ballplayers.
Under KBO regulations, if a team fails to pay its players their salaries within 15 days of the year’s first payday (Feb. 25 this year), all of the players’ contracts are voided and they all become free agents. During the season, if a team cannot pay its players within 15 days of the monthly payday, that team enters league protection for 30 days. That team would either have to find new ownership or secure support from its current owners within that 30-day period, or fold altogether.
The Unicorns’ pitchers, catchers and four of their coaches flew to Florida Friday to begin training for this season. Manager Kim Si-jin said his players were predictably shaken at the news that Nonghyup had pulled out of the talks. He urged his players to remain calm and focus on the task at hand.
“We haven’t changed our training schedules,” Mr. Kim told reporters at the Incheon International Airport before the team’s departure. “Our players and coaches all believe no matter what happens, we will be playing baseball this season.”
Veteran starter Chung Min-tae, who took a 20 percent pay cut this season after making just one relief appearance in an injury-riddled 2006, said he was “puzzled” about the franchise’s troubles.
“Of all teams, I’ve always thought Hyundai would be the last club to be suffering from something like this,” said the 36-year-old, who has played his entire career for the Unicorns-Dolphins franchise, except for two seasons in Japan. “I hope the problem is resolved quickly, and with any luck, this will teach a lesson or two to other franchises, so that everyone will be working with each other to make this a better league.”


By Yoo Jee-ho Staff Writer jeeho@joongang.co.kr


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