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The Controversial Past of the Tycoon Behind the Astros
When Jim Crane bought Houston’s baseball team in 2011, the league had concerns about his business history.
Then the Astros became the epicenter of baseball’s biggest scandal.
By Andrew Beaton and Jared Diamond / WALL STREET JOURNAL
Feb. 22, 2020
Nine years ago, Major League Baseball owners and executives privately wrestled with a difficult question: Should they allow Jim Crane to buy the Houston Astros?
The Texas businessman had offered $680 million to purchase the team, a sum that would mark the second-highest price ever for a baseball franchise at the time. But behind closed doors, owners and executives, including then-commissioner Bud Selig, were concerned about Crane’s business history, people familiar with the matter said.
Just three years earlier, Crane had abruptly backed out of a previous deal to buy the Astros. Before that, his logistics business faced allegations of bigotry, sexism and systemic discrimination. His company was later accused of price fixing and defrauding the U.S. government to profiteer off the Iraq war.
The sale was ultimately approved. Now, nine years later, another of Crane’s businesses has been accused of breaking the rules: his baseball team.
The Astros, MLB determined, illegally stole signs with the use of technology on their way to winning a World Series championship in 2017. Their players relayed pitch information to hitters in real time by banging on a trash can positioned near their home dugout.
Crane said he had no knowledge of the scheme, and MLB has backed his denial. On Tuesday, MLB commissioner Rob Manfred said there was “literally not a shred of evidence to the contrary.” Manfred added that Crane “directed his subordinates to make sure that they were complying with the rules” after the league punished the Boston Red Sox for illicit sign-stealing in September 2017.
Last week Crane said, “I don’t think I should be held accountable” for the misdeeds of the franchise he oversees. In a statement to The Wall Street Journal issued on Thursday, he apologized for the Astros’ actions.
“I know that this has caused damage to the game of baseball,” Crane said. “For that, I am deeply sorry. I understand that I am ultimately responsible for this team, and I am entirely focused on implementing changes in our organization that will ensure that this never happens again.”
Concerns over Crane’s business history, including allegations that he discriminated against minorities and women, had surfaced long before he entered the rollicking world of professional sports—so much so that MLB investigators conducted an unusually exhaustive vetting process on him prior to the sale, people familiar with the process said. “We addressed every issue that came up, and our ownership bid was approved by unanimous vote,” Crane said.
Crane, 66 years old, founded the company then called Eagle USA Airfreight in 1984. The company, later called Eagle Global Logistics, went public in 1995 and grew to a business with thousands of employees and hundreds of millions in annual revenue.
But not long after, the Equal Employment Opportunity Commission issued a 104-page report—far longer than most—that accused Crane and EGL of discriminating against black, Hispanic and female employees. The federal agency found it paid these employees less than its white male counterparts, imposed undue discipline on them, failed to adequately investigate incidents of sexual harassment and went out of its way to avoid hiring these groups of people. Crane, according to the EEOC, told his underlings to not hire black employees.
“Once you hire blacks, you can never fire them,” the EEOC report alleged Crane said. He also allegedly reasoned that hiring black employees would lead to litigation because they would be mistreated by other bigoted employees at EGL. Crane and the company denied the allegations.
The investigation included interviews with more than 125 witnesses, produced thousands of documents and was ultimately settled in 2001 for $9 million. “While we continue to deny the EEOC’s allegations, we feel that it is in the best interest of our company and its future to resolve this matter at this time in a productive, forward-looking manner,” Crane said at the time of the settlement. In another EEOC case around the same time, the jury sided with EGL.
Crane, in his statement to The Journal, said the plaintiffs in the EEOC lawsuits didn’t receive any money. “It’s really unfortunate that, once allegations are made, they never go away,” Crane said.
Over the next decade, Crane’s business again faced trouble—this time allegedly involving profiteering during the Iraq war, kickbacks and price fixing, though Crane wasn’t accused of being involved with the actions. In 2006, EGL entered an agreement with the U.S. government to settle accusations of fraud, paying the U.S. $4 million to settle potential civil claims that the company had inflated invoices of military cargo shipments to Iraq with bogus “war risk surcharges.” The company’s internal investigation uncovered more than $1 million in false surcharges, it said in a 2005 SEC filing ahead of the settlement.
Crane said the incident was isolated to two employees in the Middle East and that he was “not involved in any way.”
“When we became aware of it, the company cooperated fully with the government to ensure that these employees were brought to justice,” Crane said.
Five years later, the company agreed to plead guilty and pay millions more in a case that alleged employees, “including high-level personnel,” conspired with other freight forwarders to collude on prices. Although he was in charge of the company, Crane wasn’t named as having been involved with these acts.
Crane said he first neared a deal to purchase the Astros from Drayton McLane in 2008—only for it to fall apart at the last second. He was then involved in the bidding for the Texas Rangers two years after that.
When he purchased the Astros in 2011, the people familiar with the matter said the deal was put through an unusually extensive vetting process because of the weighty allegations against Crane and his businesses. Selig was particularly sensitive to the accusations of racism and discrimination because of the sport’s historical trouble with integration, two of the people said. The so-called “Selig Rule” requires every team to interview minority candidates for jobs such as manager and general manager. Selig, who retired as commissioner in 2015, declined to comment through a spokesman.
During the course of the process, MLB investigators did extensive outreach to people with details of his dealings, including the EEOC case, one of the people said. The approval process, which typically takes just a matter of weeks, lasted six months. Some within the league were skeptical he should or would have been approved, people familiar with the matter said. About a month before the approval, Selig and Crane met one-on-one, a meeting the commissioner at the time called “constructive.”
The people say Crane had a couple important factors on his side that helped usher the deal through. For one, he was willing to move the Astros to the American League, a move others were unwilling to make. MLB was so keen on making this happen that Crane wound up receiving a roughly 10% discount on his purchase price.
“The negotiation of the Astros move to the American League was the driving factor in the length of the vetting process,” said Giles Kibbe, the Astros’ senior vice president and general counsel. “Switching from the National to American League required renegotiation of terms, which took months.”
Moreover, there was that price: Even with the discount, it was among the highest ever for a baseball franchise, and a rich sale has the effect of boosting club values for all owners across the league.
Crane was approved by a unanimous vote of team owners in November 2011. Less than a month later, he hired Jeff Luhnow to be the Astros’ general manager. In a statement after the sale was completed, Selig thanked Crane and his group for “their patience and determination throughout a long but necessary process, which allowed us to accomplish our due diligence.” MLB officials have considered him a model owner for his efforts in philanthropy and promoting youth baseball.
“They conducted their diligence, looked into my companies and determined that there was no reason for concern,” Crane said. “Since that time, I have operated one of the most diverse clubs in baseball.”
Under Crane, the Astros embarked on an unprecedented rebuild and organizational overhaul. It reflected Crane’s businesses: Some of the tactics were controversial but proved successful. The Astros won the 2017 World Series and became the sport’s standard-bearer.
That reputation rapidly unraveled last fall, starting with the firing of an executive who profanely taunted a group of female journalists in the clubhouse by defending the Astros’ employment of a pitcher previously accused of domestic violence. The team at first defended the executive, assistant GM Brandon Taubman, and accused one of the journalists of attempting to “fabricate a story.” Crane later apologized.
Then came the reckoning of their sign-stealing scandal, which resulted in MLB suspending Luhnow and manager A.J. Hinch for the entire 2020 season, after which Crane fired them. Crane replaced Hinch by hiring Dusty Baker, the second black field manager he hired during his tenure. The Astros ranked third among all teams in MLB’s annual survey of diversity in the workforce.
Although MLB’s investigation described the sign-stealing scheme as player driven, the team’s front office laid the groundwork for their illicit actions by creating an Excel-based application called “Codebreaker” to decode opposing catchers’ signs, according to a private Jan. 2 letter from Manfred to Luhnow that was reviewed by The Wall Street Journal.
Crane was not disciplined by MLB. The league fined the Astros $5 million and took away top draft picks—“a reflection of the fact that we felt there was organizational responsibility,” Manfred said.
When Jim Crane bought Houston’s baseball team in 2011, the league had concerns about his business history.
Then the Astros became the epicenter of baseball’s biggest scandal.
By Andrew Beaton and Jared Diamond / WALL STREET JOURNAL
Feb. 22, 2020
Nine years ago, Major League Baseball owners and executives privately wrestled with a difficult question: Should they allow Jim Crane to buy the Houston Astros?
The Texas businessman had offered $680 million to purchase the team, a sum that would mark the second-highest price ever for a baseball franchise at the time. But behind closed doors, owners and executives, including then-commissioner Bud Selig, were concerned about Crane’s business history, people familiar with the matter said.
Just three years earlier, Crane had abruptly backed out of a previous deal to buy the Astros. Before that, his logistics business faced allegations of bigotry, sexism and systemic discrimination. His company was later accused of price fixing and defrauding the U.S. government to profiteer off the Iraq war.
The sale was ultimately approved. Now, nine years later, another of Crane’s businesses has been accused of breaking the rules: his baseball team.
The Astros, MLB determined, illegally stole signs with the use of technology on their way to winning a World Series championship in 2017. Their players relayed pitch information to hitters in real time by banging on a trash can positioned near their home dugout.
Crane said he had no knowledge of the scheme, and MLB has backed his denial. On Tuesday, MLB commissioner Rob Manfred said there was “literally not a shred of evidence to the contrary.” Manfred added that Crane “directed his subordinates to make sure that they were complying with the rules” after the league punished the Boston Red Sox for illicit sign-stealing in September 2017.
Last week Crane said, “I don’t think I should be held accountable” for the misdeeds of the franchise he oversees. In a statement to The Wall Street Journal issued on Thursday, he apologized for the Astros’ actions.
“I know that this has caused damage to the game of baseball,” Crane said. “For that, I am deeply sorry. I understand that I am ultimately responsible for this team, and I am entirely focused on implementing changes in our organization that will ensure that this never happens again.”
Concerns over Crane’s business history, including allegations that he discriminated against minorities and women, had surfaced long before he entered the rollicking world of professional sports—so much so that MLB investigators conducted an unusually exhaustive vetting process on him prior to the sale, people familiar with the process said. “We addressed every issue that came up, and our ownership bid was approved by unanimous vote,” Crane said.
Crane, 66 years old, founded the company then called Eagle USA Airfreight in 1984. The company, later called Eagle Global Logistics, went public in 1995 and grew to a business with thousands of employees and hundreds of millions in annual revenue.
But not long after, the Equal Employment Opportunity Commission issued a 104-page report—far longer than most—that accused Crane and EGL of discriminating against black, Hispanic and female employees. The federal agency found it paid these employees less than its white male counterparts, imposed undue discipline on them, failed to adequately investigate incidents of sexual harassment and went out of its way to avoid hiring these groups of people. Crane, according to the EEOC, told his underlings to not hire black employees.
“Once you hire blacks, you can never fire them,” the EEOC report alleged Crane said. He also allegedly reasoned that hiring black employees would lead to litigation because they would be mistreated by other bigoted employees at EGL. Crane and the company denied the allegations.
The investigation included interviews with more than 125 witnesses, produced thousands of documents and was ultimately settled in 2001 for $9 million. “While we continue to deny the EEOC’s allegations, we feel that it is in the best interest of our company and its future to resolve this matter at this time in a productive, forward-looking manner,” Crane said at the time of the settlement. In another EEOC case around the same time, the jury sided with EGL.
Crane, in his statement to The Journal, said the plaintiffs in the EEOC lawsuits didn’t receive any money. “It’s really unfortunate that, once allegations are made, they never go away,” Crane said.
Over the next decade, Crane’s business again faced trouble—this time allegedly involving profiteering during the Iraq war, kickbacks and price fixing, though Crane wasn’t accused of being involved with the actions. In 2006, EGL entered an agreement with the U.S. government to settle accusations of fraud, paying the U.S. $4 million to settle potential civil claims that the company had inflated invoices of military cargo shipments to Iraq with bogus “war risk surcharges.” The company’s internal investigation uncovered more than $1 million in false surcharges, it said in a 2005 SEC filing ahead of the settlement.
Crane said the incident was isolated to two employees in the Middle East and that he was “not involved in any way.”
“When we became aware of it, the company cooperated fully with the government to ensure that these employees were brought to justice,” Crane said.
Five years later, the company agreed to plead guilty and pay millions more in a case that alleged employees, “including high-level personnel,” conspired with other freight forwarders to collude on prices. Although he was in charge of the company, Crane wasn’t named as having been involved with these acts.
Crane said he first neared a deal to purchase the Astros from Drayton McLane in 2008—only for it to fall apart at the last second. He was then involved in the bidding for the Texas Rangers two years after that.
When he purchased the Astros in 2011, the people familiar with the matter said the deal was put through an unusually extensive vetting process because of the weighty allegations against Crane and his businesses. Selig was particularly sensitive to the accusations of racism and discrimination because of the sport’s historical trouble with integration, two of the people said. The so-called “Selig Rule” requires every team to interview minority candidates for jobs such as manager and general manager. Selig, who retired as commissioner in 2015, declined to comment through a spokesman.
During the course of the process, MLB investigators did extensive outreach to people with details of his dealings, including the EEOC case, one of the people said. The approval process, which typically takes just a matter of weeks, lasted six months. Some within the league were skeptical he should or would have been approved, people familiar with the matter said. About a month before the approval, Selig and Crane met one-on-one, a meeting the commissioner at the time called “constructive.”
The people say Crane had a couple important factors on his side that helped usher the deal through. For one, he was willing to move the Astros to the American League, a move others were unwilling to make. MLB was so keen on making this happen that Crane wound up receiving a roughly 10% discount on his purchase price.
“The negotiation of the Astros move to the American League was the driving factor in the length of the vetting process,” said Giles Kibbe, the Astros’ senior vice president and general counsel. “Switching from the National to American League required renegotiation of terms, which took months.”
Moreover, there was that price: Even with the discount, it was among the highest ever for a baseball franchise, and a rich sale has the effect of boosting club values for all owners across the league.
Crane was approved by a unanimous vote of team owners in November 2011. Less than a month later, he hired Jeff Luhnow to be the Astros’ general manager. In a statement after the sale was completed, Selig thanked Crane and his group for “their patience and determination throughout a long but necessary process, which allowed us to accomplish our due diligence.” MLB officials have considered him a model owner for his efforts in philanthropy and promoting youth baseball.
“They conducted their diligence, looked into my companies and determined that there was no reason for concern,” Crane said. “Since that time, I have operated one of the most diverse clubs in baseball.”
Under Crane, the Astros embarked on an unprecedented rebuild and organizational overhaul. It reflected Crane’s businesses: Some of the tactics were controversial but proved successful. The Astros won the 2017 World Series and became the sport’s standard-bearer.
That reputation rapidly unraveled last fall, starting with the firing of an executive who profanely taunted a group of female journalists in the clubhouse by defending the Astros’ employment of a pitcher previously accused of domestic violence. The team at first defended the executive, assistant GM Brandon Taubman, and accused one of the journalists of attempting to “fabricate a story.” Crane later apologized.
Then came the reckoning of their sign-stealing scandal, which resulted in MLB suspending Luhnow and manager A.J. Hinch for the entire 2020 season, after which Crane fired them. Crane replaced Hinch by hiring Dusty Baker, the second black field manager he hired during his tenure. The Astros ranked third among all teams in MLB’s annual survey of diversity in the workforce.
Although MLB’s investigation described the sign-stealing scheme as player driven, the team’s front office laid the groundwork for their illicit actions by creating an Excel-based application called “Codebreaker” to decode opposing catchers’ signs, according to a private Jan. 2 letter from Manfred to Luhnow that was reviewed by The Wall Street Journal.
Crane was not disciplined by MLB. The league fined the Astros $5 million and took away top draft picks—“a reflection of the fact that we felt there was organizational responsibility,” Manfred said.
