Under The Knife: Pushi... (06/30)
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July 1, 2009 The Biz BeatThe Hundred Years War
I'll give Sam Zell of the Tribune Company this: the Cubs are just one of his many problems, and of all the mistakes he and the company have made, this repeatedly botched sale is actually one of the tamest. After all, compared to making a gigantic bet on the already-suffocating dead tree industry, losing a couple of hundred million dollars on a billion-dollar asset sale doesn't seem so bad. It has certainly been a very long road. TribCorp originally put the team up for sale in April of 2007, just after Zell used a leveraged buyout to take control of the company, and six months before the stock market peaked. The prospects were good; most experts predicted a ten-digit price tag, which would have been a first for Major League Baseball. But in the time since, the process has been filled with stop-and-go action, with reports circulating every few months that the Trib was close to picking a buyer, followed by an increasingly long negotiating period with winning bidder Tom Ricketts. While they've been waiting, both internal and external conditions have gone to hell. The housing bubble popped, credit evaporated, and the global economy tanked. The Tribune's business models, already on the ropes, finally became obsolete, as advertisers pulled money out of traditional media sources faster than even the most bearish pundits had thought. All roads led straight to bankruptcy court, where Zell and the Tribune are now trying to salvage whatever they can. Make no mistake, a deal will get done eventually. The Cubs are an extremely valuable non-strategic asset, and the Tribune's creditors and a bankruptcy judge will certainly see that the team is moved. You can also be sure that the eventual buyer, whether it's Ricketts or someone else, will be the one that's bringing the most cash. So after almost two and a half years and countless false starts, what's still holding things up? Here are the major issues still in play:
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Fantasy Focus: First Base Rankings Review
Shawn, you wrote "You can also be sure that the eventual buyer, whether it's Ricketts or someone else, will be the one that's bringing the most cash."
I would bet $1.00 that Mark Cuban would bring more cash to a Cubs sale than Ricketts. But I would also bet $1.00 that Cuban does not end up owning the Cubs.
If you're right, how do you resolve that contradiction?
I actually wrote about this last summer on Squawking Baseball. Had Cuban really been the top bidder, the Tribune would have had a very tough time saying no given their situation, and not at least challenging baseball's bylaws in court.
But the thing is, Cuban wasn't actually the top bidder. His peak offer was reportedly $1.3 billion, with $500 million of that being a very long-term ad deal with the Tribune. When credit went from tight to impossibly tight last fall, Cuban fell off the map, and wasn't even a finalist.