Is Tom Hicks Going Broke?

Not everyone is so sure. The Daily Deal's Kosman thinks the situation is more serious for Hicks Muse than the firm is letting on. "They are a house of cards ready to fall apart," he says. "Ten years ago they were a top 10 buyout firm. Today they are about 60th, and the problem is, there are just too many firms chasing too few deals."

Jay Fewel of the Oregon Public Employees Retirement Fund, which has invested with Hicks Muse in the past but passed on Fund V, doesn't go that far, but he does sound a cautionary note: "If they don't do well with this current fund, it will be difficult to raise money for a Fund VI."'

Others look at the switch in strategy and wonder about the motive. "Hicks saw [Mavericks owner Mark] Cuban running around with all this money, and I think it made him a little crazy," says an investment banker who works closely with Hicks Muse. "Tom likes to say it was other people in his firm pushing these New Economy investments, but he was the guy behind it all. He saw Cuban walking around with five times his net worth after he had been working his whole life for his money. The problem was he got the religion too late, and by then it was too late to get out. He got seduced, and he got stuck. But so did a lot of others."

Not all the problems are New Economyrelated. Eyebrows were raised on Wall Street by Regal Cinema-the $500 million movie theater bomb-and Viasystems, an electronics manufacturer into which Hicks Muse has pumped $700 million and whose stock over the last 12 months has dropped from $4.25 to 7 cents. "These call into question the method, manner, and care with which Hicks Muse is selecting its investment opportunities," says one fund manager.

"You can see a change in Tom," says a friend. "Before he owned the Stars and the Rangers, he was content to sit in the background and make money. Owning the sports teams has increased his profile, and despite how he protests about all the publicity, he really likes it. It's made him a little more reckless."

The Man Couldn't Help Himself

While Tom Hicks clams up when it comes to talking about Hicks Muse, he can get positively loquacious about his sports franchises.

Before he bought the Stars in 1995 for $84 million, Hicks claims he originally had an endgame in mind-at least that's what he says no", (more on this later). Hicks says his plan was to invest in the Stars, make them a playoff team, and get them moved into the American Airlines Center. The increased revenue would double or triple the value of the team, and Hicks would walk off with a big wad of cash. (Which is exactly what fellow arena investor Ross Perot Jr. would do with the Mavericks.) But after he bought the team, Hicks says he looked across town at what Jerry Jones was doing with the Cowboys and he began to develop a different perspective. "I used to think sports didn't make economic sense," he told Fortune last year. "But seeing what Jerry did opened up my eyes to what a wellmanaged organization could do."

In his office last month, Hicks elaborated. "Two things happened to make me look at sports long-term," Hicks says. "I fell in love with hockey. Then I started seeing what the sports business is all about, and I started doing the buy-and-build thing because I couldn't help myself. Having the two teams [he bought the Rangers for $250 million in 1998] changed the whole dynamic. We had leverage over Fox because we could create our own network or let Fox pay what it was really worth." What it was worth to Fox was $550 million over 15 years, one of the most lucrative media deals in sports. It was a deal that also placed the Stars and Rangers among the top revenue producers in their leagues.