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View Full Version : Irony is holding up the sale of the Cubs


DumpJerry
05-30-2009, 02:53 PM
http://www.chicagotribune.com/business/chi-sun-cubsmay31,0,3534403.story

WGN television made the Cubs what they are today (a team with a national following). WGN is why the proposed sale to the Ricketts family is on rocky shores. Tribco suppressed how much WGN paid the Cubs for broadcast rights which now need to be valued a market value, among other issues. Now WGN would have to pay a higher fee for Cub games since the money is not going from one Tribco ledger to another (CSN is also affected by this to the extent that Tribco is selling its interest in it). The other issue is that the Cubs' revenues will rise under a new WGN deal because WGN is paying more money. More Cub revenues means a higher contribution from the team to MLB's revenue sharing pool.

It is definately looking like the $900M sale price to the Ricketts is too high and Zell does not want to drop it to a realistic (five or six bucks) level.

If the Cubs were not so popular nationwide, thanks pretty much to WGN, the sale would be moving along more smoothly and would have closed this month.

If the Ricketts drop out, Tribco will have an extremely hard time finding another buyer because the WGN information was not known by the potential buyers when the team was put up for sale. This is new information. Until the Cubs are sold, they are stuck with a somewhat inflexible position with respect to player contracts and trades. Poor babies.

The lesson to be learned:

"Run with the Devil. Sleep with the Devil."

DumpJerry
05-30-2009, 02:55 PM
The article does a very good job of explaining the issue facing Ricketts and Zell.

MarySwiss
05-30-2009, 03:31 PM
It is definately looking like the $900M sale price to the Ricketts is too high and Zell does not want to drop it to a realistic (five or six bucks) level.



:lol:

What I find most interesting about this sale is that the Ricketts are supposedly contacting celebrity "diehard Cubs fans" to try to get them to come in on the deal. So far, I haven't heard that any of them are rushing forward with checkbook open to come to the rescue of their favorite team.

Edit: Interesting article.

DSpivack
05-30-2009, 07:20 PM
:lol:

What I find most interesting about this sale is that the Ricketts are supposedly contacting celebrity "diehard Cubs fans" to try to get them to come in on the deal. So far, I haven't heard that any of them are rushing forward with checkbook open to come to the rescue of their favorite team.

Edit: Interesting article.

When I first read that [probably here] that seemed kind of a desperate move to me.

WSox597
05-31-2009, 06:41 AM
The Anchorage Cubs. It just kind of rolls off the tongue.

Picture that clown suit blue cap sitting in a snowbank.

In May.

Lots of money up in Alaska.

:D:

tebman
05-31-2009, 09:08 AM
Ironic, indeed. The reason the Tribune bought the Cubs in 1981 was because the company feared losing the games to the pay-TV venture that was being shopped by new White Sox co-owner Eddie Einhorn. The Wrigley family had tired of owning the team and had inheritance-tax issues to deal with, so they were anxious to sell. A willing seller met a willing buyer.

Despite the bleatings of Tribune officials past and present (Knue, Lipinski, Wycliff, et.al.), the ownership of the Cubs was always about raising advertising revenue at its "media properties." The newspaper, the radio station, the local and cable-national TV station, the cable-news station, and later the ditzy free paper were all part of the package. The irony is thick now that the company's avarice is disrupting the deal that might help it out of its self-inflicted bankruptcy.

I heard Bill Veeck say in an interview after he'd sold the White Sox that the Tribune was committed to the Cubs being a winning ballclub only as far as it affected the ratings on WGN radio and WGN-TV. He wasn't criticizing them, just stating a fact based on his knowledge of the business. The media-rights chicanery revealed in this dispute pretty much confirms what Veeck said over 20 years ago.

It's ironic too that the story is reported in the Tribune. Life is poetic.

SoxandtheCityTee
05-31-2009, 09:25 AM
No doubt this is more complex than the article can get across, but I'm struck by a couple things. First, that the buyer's due diligence examination of the seller's records and contracts had to get this far along before they figured out the underpricing of the broadcast rights and the back-end contract provisions that complicate severing WGN from the Flubs. This must have been some very murky stuff, even by MLB's notorious, which-set-of-books-would-you-like-to-see accounting standards. Even your average fan on the steet knew that this was a sweetheart arrangement, generally speaking. Why so long to uncover the particulars?

The other thing is the debt structure being asked of the buyer because of the Trib's tax position. Ricketts has to be steamed at what the financing is costing him at this particular point in time in the credit markets -- and meanwhile his ability to pull the broadcast cash in after sale is being constrained? No wonder the rhetoric is rising.

Frater Perdurabo
05-31-2009, 10:01 AM
Wouldn't it just be rich if the Cubs deal fell through, and they had to sell the team for less than a "marquee franchise" supposedly is worth, and it forced Tribune into Chapter 7? There are few things more satisfying than seeing a house of cards tumble.

WSox597
05-31-2009, 08:03 PM
I've wondered for years why they're considered a "marquee" franchise in the first place.

Other than in their fans minds I mean. Channel 9 has been "berry berry good" to the Cubs.

Without the superstation they wouldn't have all of these "die hard" fans they've accumulated.

slavko
05-31-2009, 08:29 PM
No doubt this is more complex than the article can get across, but I'm struck by a couple things. First, that the buyer's due diligence examination of the seller's records and contracts had to get this far along before they figured out the underpricing of the broadcast rights and the back-end contract provisions that complicate severing WGN from the Flubs. This must have been some very murky stuff, even by MLB's notorious, which-set-of-books-would-you-like-to-see accounting standards. Even your average fan on the steet knew that this was a sweetheart arrangement, generally speaking. Why so long to uncover the particulars?

The other thing is the debt structure being asked of the buyer because of the Trib's tax position. Ricketts has to be steamed at what the financing is costing him at this particular point in time in the credit markets -- and meanwhile his ability to pull the broadcast cash in after sale is being constrained? No wonder the rhetoric is rising.

Could just be a little last minute bickering in the sales manager's office before mom and dad sign off on the new wheels. (That's a metaphor, Reuben) I'm sure seeing Zell get his is is in the back of everyone's minds, but the ownership is probably so structured that he is risking very little of his own fortune. Ask me what I think of the guy some time.

DumpJerry
05-31-2009, 09:12 PM
Wouldn't it just be rich if the Cubs deal fell through, and they had to sell the team for less than a "marquee franchise" supposedly is worth, and it forced Tribune into Chapter 7? There are few things more satisfying than seeing a house of cards tumble.
Tribco is already in bankruptcy, Chapter 11. Been there for several months. Chapter 7 is for indiviuals, 11 for corporations.

Red Barchetta
05-31-2009, 11:04 PM
Tribco is already in bankruptcy, Chapter 11. Been there for several months. Chapter 7 is for indiviuals, 11 for corporations.

Actually, Chapter 7 is also for corporations. This is when they liquidate all assets, pay off a percentage of their outstanding debt and essentially close shop. Chapter 11 bankruptcy allows the organization to continue to operate under a reorganization while also allowing all contracts to be renegotiated.

GM will be in Chapter 11 tomorrow...

Frater Perdurabo
06-01-2009, 06:37 AM
Tribco is already in bankruptcy, Chapter 11. Been there for several months. Chapter 7 is for indiviuals, 11 for corporations.

Actually, Chapter 7 is also for corporations. This is when they liquidate all assets, pay off a percentage of their outstanding debt and essentially close shop. Chapter 11 bankruptcy allows the organization to continue to operate under a reorganization while also allowing all contracts to be renegotiated.

I know TribCo is already in Chapter 11. I want them to have to liquidate and close up shop. So is that called Chapter 7? Or not? We have two conflicting stories. Can someone get a bankruptcy lawyer over here? :D:

DumpJerry
06-01-2009, 06:53 AM
I know TribCo is already in Chapter 11. I want them to have to liquidate and close up shop. So is that called Chapter 7? Or not? We have two conflicting stories. Can someone get a bankruptcy lawyer over here? :D:
Why the harsh approach? Do you know how many families will be in financial limbo if all Tribco employees were thrown on the street. What has Tribco done to you personally that would make you so angry? So they own the Cubs and are shamless boosters of the team every time they get a chance to do so. Boo hoo.

jabrch
06-01-2009, 07:41 AM
How in the hell would anyone come to a price that high without knowing the cost/revenue model associated with the internal Tribune cost transfers? That's crazy.

If Ricketts pulls out, this will get ugly fast.

RedHeadPaleHoser
06-01-2009, 09:46 AM
The comparison about the cable revenues (Cubs vs. Sox) is interesting. I wonder if this is the Trib/Zell's way of recouping their perceived losses in that market by holding fast on the sale $.

That said, Ricketts better hold his ground. You're landlocked in, you do max out your ballpark seats but that place will need MAJOR $$ to reconstruct, repair or modify....like JA said, if this gets shot down, mudslinging to ensue.

DumpJerry
06-18-2009, 04:50 PM
Tribco is now talking with (http://www.chicagotribune.com/business/chi-cubs-new-bidder-090618-,0,94280.story) one of the groups that lost out to Ricketts.