Many people are puzzled over Sam Zell's highly leveraged $8.2 billion purchase of the Tribune Co. in light of the decline in the newspaper business. One of the diamonds in the deal, however, is the Chicago Cubs, and indications are that he intends to quickly mine that gem for all it's worth.According to the Los Angeles Times, the Tribune Co.'s (NYSE:TRB) avowed intention to sell the Cubbies may be considerably more complex than most franchise sales. The Tribune owns not only the ball club, but also the ballpark, and 25% of the cable TV network that carries its broadcasts, and could choose to sell them separately.
The Cubs, despite a century-long title drought, continue to draw capacity crowds to legendary Wrigley Field, over three million last year alone. This year, to the surprise of most prognosticators, the team is fighting for the NL Central pennant, great timing for the sellers. According to Forbes, the team alone is currently worth $592 million, on an operating income of $22 million.
Sale of the 41,118-seat Wrigley Field would have few precedents on which to estimate value, as most major league ballparks are either publicly owned or built in partnership with the local government. However, the park, club and cable TV rights all told could bring over $1 billion to the Tribune Co.
Part of the reason for such a split-up of assets may be to avoid granting other team owners, who have the right of approval on the Cub's sale, a say in the sale of these other assets. However, I believe that if the park is sold before the team, an agreement on stadium rental would have to be nailed down before the team sale would be approved.
Once the sales are complete, look for the new owner(s), drooling over the team's current 93% of capacity sales, to risk heresy by suggesting expansion of Wrigley Field. That should become a slugfest.
Part of the reason for such a split-up of assets may be to avoid granting other team owners, who have the right of approval on the Cub's sale, a say in the sale of these other assets. However, I believe that if the park is sold before the team, an agreement on stadium rental would have to be nailed down before the team sale would be approved.
Once the sales are complete, look for the new owner(s), drooling over the team's current 93% of capacity sales, to risk heresy by suggesting expansion of Wrigley Field. That should become a slugfest.
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Reader Comments (Page 1 of 1)
9-17-2007 @ 6:46PM
Seth said...
NewsVisual.com wrote an interesting article and created a Knowledge Map on this deal. According to the Knowledge Map if John Canning Jr. is seriously interested in purchasing the Cubs, then there is a good chance he will go through John Madigan, a former President and Chairman/CEO at the Tribune Company as well as a former Partner at Madison Dearborn. http://www.newsvisual.com/newsvisual/2007/09/tribune-comany-.html