Ricketts Family Lines Up Financing For Cubs, Disputes Sale Price

Dispute Over Cubs Sale Could Delay Ricketts' Deal

Prospective Cubs Owner Tom Ricketts has "lined up financing" for his family's purchase of the franchise, but a "dispute over price is delaying the transaction," according to Saphir & Colias of CRAIN'S CHICAGO BUSINESS. The Ricketts family's original bid for the team, Wrigley Field and 25% of CSN Chicago was close to $900M, but a source said that the family "now believes the real price should be closer to $850[M]." The two sides "disagree over the value of the team's multiyear contract to broadcast games on Tribune's WGN network" (CHICAGOBUSINESS.com, 5/18). Cubs games are broadcast on Tribune-owned WGN-TV and WGN-AM, in Chicago, Ameet Sachdev reports industry observers “long have questioned whether the Cubs have received market value for those rights because the team and the stations are owned by the same company.” Sources said that the Ricketts family is “seeking certain concessions on the WGN contract such as changes in how advertising revenue is shared between the team and the station.” Meanwhile, Sachdev reports Ricketts has held discussions with a "handful of celebrities to raise money from them and other wealthy Cubs fans willing to pony up as much as” $25M to become investors in the team. Sources said that Ricketts two weeks ago met with actors Bill Murray, Jim Belushi and John Cusack, though the sources are “not sure if the talks had advanced.” Sources added that while Ricketts “has been trying to raise capital from private investors,” the fundraising is “not critical to reaching a deal with Tribune Co.” (CHICAGO TRIBUNE, 5/19).

RICKETTS LINING UP FINANCING: SPORTSBUSINESS JOURNAL's Daniel Kaplan cites financial sources as indicating that Ricketts is "close to lining up three banks to arrange the $450[M] financing necessary to complete his acquisition of the team ... positioning him to clear a substantial hurdle in the long-running sale of the club." Sources said that JPMorgan Chase, Citigroup and Bank of America are "set to commit to the deal as soon as the end of this week." But the deal "comes at a steep cost for Ricketts," as sources said that the banking fees are "substantial, and the banks are still negotiating a minimum for what the interest rate would be." A finance source said that the $450M is "split between a loan and a fixed-rate private placement, which represents loans from institutional investors like pension funds." The source added that the bank loan portion is "roughly $350[M]," and the private placement, "which the three banks are arranging, is about $100[M]." Kaplan notes the three banks are "committed to keeping the entire loan on their balance sheets if they are unable to find other financial institutions to buy pieces of it, a process called syndication." A source said once Ricketts' bid for the franchise is submitted, the court overseeing the bankruptcy filing of current Cubs Owner Tribune Co. "then would take 30 to 45 days to process the offer." MLB "at that point could wait until its August owners meeting to approve the deal or could call a special owners meeting to address the sale earlier" (SPORTSBUSINESS JOURNAL, 5/18 issue). All three of the banks are Tribune creditors “because they provided financing" for Tribune Chair Sam Zell’s $8.2B Tribune purchase (CHICAGO SUN-TIMES, 5/19).

OFF THE AGENDA: REUTERS' Ben Klayman cited two sources as saying that MLB owners will not vote on Ricketts' bid for the Cubs during this week's MLB Owners Meetings, "as some had hoped."  A source said, "There's a whole bunch of moving parts here, that's the problem. It's not going to be this owners' meeting, but it's sooner rather than later." MLB Senior VP & General Counsel Thomas Ostertag "would not confirm that the bid would not come up for a vote" at the meetings, but "alluded to the delays." Ostertag said, "Negotiations there are just dragging on and taking a lot longer than anyone expected" (REUTERS, 5/18).