SBD/Issue 234/Franchises

Tribune Co. Finalizes Sale Of Cubs To Ricketts For About $800M

Ricketts Family Will Have
Full Control Of Cubs
Tribune Co. Friday announced that it has "signed an agreement to sell" the Cubs and related assets to the Ricketts family, according to Ameet Sachdev of the CHICAGO TRIBUNE. The Ricketts will pay about $800M to acquire a 95% interest in a package of assets: the Cubs, Wrigley Field and Tribune Co.'s 25% stake in CSN Chicago. The agreement values the team and related assets at $845M. Tribune will retain a 5% ownership stake in the joint venture to "minimize tax on the sale," but the Ricketts will have "full management control." The deal still is pending approval by the bankruptcy court and MLB owners, "which is expected in the fall." The family will "not gain control of the team until after the baseball season ends because there are still a few conditions of closing." Tribune Co. said that as part of the bankruptcy court's approval process, it will "place the Cubs in Chapter 11 bankruptcy so that the franchise can 'emerge free and clear' of the company's financial obligations." However, the filing will "not interrupt team operations, and player contracts and other agreements with ticket holders, sponsors and suppliers are not expected to be affected." Sachdev noted Tribune Co. selected the Ricketts family in January as the "winning bidder in a protracted auction," but the negotiations "took much longer than anyone expected and resulted in a lower price than initially anticipated" (CHICAGO TRIBUNE, 8/22).

COVERING THE BASES: In Chicago, David Roeder noted Tribune Co. currently is negotiating with lenders over a $13B debt load, and "how the proceeds of the Cubs sale will be handled will be decided at future hearings." Tribune Co. Chair Sam Zell said, "The Ricketts family will be a great steward of the franchise. They have a strong respect for the team, for the fans and for what the Cubs mean to the city of Chicago" (CHICAGO SUN-TIMES, 8/22). Meanwhile, the TRIBUNE's Sachdev cited sources as saying that WGN radio and TV will "retain long-term broadcast rights to the team under the deal." WGN Radio VP & GM Tom Langmyer said the station will "remain as the radio play-by-play home for the Chicago Cubs, and we look forward to our continued partnership with the club for many years to come." Sachdev noted the media rights "became a source of contention in negotiations," as the rights provide a "significant source of revenue" for team owners. But both sides "ended up compromising on media rights," lowering the purchase price originally set to close at about $900M (CHICAGOTRIBUNE.com, 8/21).

OVER-ZELLOUS: The SUN-TIMES' Roeder reported Zell's "long process" for selling the Cubs "probably cost his debt-strapped company at least" $150M. Sources close to the sale claim that Zell could have attracted about $1B for the team "if only he'd acted quickly a year ago." However, he instead "hatched a plan" to sell Wrigley to the state of Illinois, which "delayed the sale of the team for months, at a time the economy was worsening and lenders began cutting off promises of credit." By late '08, getting $1B in the sale was "out of the question" (CHICAGO SUN-TIMES, 8/23).

Crane Kenney's Future As Cubs Chair Will Be
Crucial Decision For The Ricketts Family
WAITING ON DECK: In Illinois, Mike Imrem writes Tom Ricketts should be "patient before making a decision as important as a club president responsible for reshaping the organization." Too many new sports owners "come into new situations and act like they have all the answers to all the questions." A "key to the process is whether Ricketts has cultivated enough contacts in the game while waiting for the Tribune to ordain him" (Illinois DAILY HERALD, 8/24). In Chicago, Phil Rogers writes Ricketts, "if he's as smart as we think he is, will run from Tribune Co. ties, beginning with" Cubs Chair Crane Kenney. Ricketts would "do well to hire someone" like former Padres CEO Sandy Alderson and "stick with him" (CHICAGO TRIBUNE, 8/23). ESPN CHICAGO's Jon Greenberg wrote Ricketts should replace Kenney "with a baseball guy, an experienced front-office hand who could work" with GM Jim Hendry to "build a consistent winner from the farm system on up or eventually usurp him" (ESPN.com, 8/23). In Chicago, Paul Sullivan offered "10 quick suggestions" for Ricketts, including "Thank Crane Kenney, tell him good-bye." Kenney "helped generate revenues at Wrigley Field, and the Captain Morgan Club is a huge success," but he also "oversaw ticket pricing changes that forced the average fan to stay at home and watch the games on TV" (CHICAGO TRIBUNE, 8/22). In Boston, Nick Cafardo wrote the Cubs "need a CEO/president who knows baseball, not marketing types," who will "hire the right GM and the right baseball staff." MLB Commissioner Bud Selig has a "lot of influence in these matters, and he has a short list of good people who have run successful franchises and want to do it again" (BOSTON GLOBE, 8/23).

Sources Indicate A $200-250M Project Will
Create New Bars, Restaurants At Wrigley Field
HONEY-DO LIST: ESPN CHICAGO's Bruce Levine wrote the "ultimate goal for the new owners will be to find new ways to generate revenue," and a "big part of the future picture" is renovating Wrigley Field. Sources indicated that a $200-250M project will "create new bars and restaurants both in the ballpark itself as well as outside the park in a new building next to the existing structure." The new facility will be an "extension to the park all the way to Clark Street and Waveland Avenue, where parking lots now exist," and will house the team's front-office staff, "Cubs-based retail outlets as well as a projected area" for a Cubs HOF. In addition, a "multitiered parking structure where the present players' parking lot now exists also is promised to the city as part of the new renovation" (ESPN.com, 8/21). ESPN CHICAGO's Greenberg noted Cubs fans "need to know how Ricketts plans to add more talent while keeping ticket prices under control." Greenberg: "My guess is that the pricey seats, which top out at $100 for 'platinum games,' will see either a price hike or the addition of personal seat licenses, or probably both." The auctioning of "prime seats has delivered some extra revenue for the club, and could be expanded" (ESPN.com, 8/23).

A FEW WORDS OF ADVICE: In Chicago, Mary Ellen Podmolik wrote Ricketts should "go into the community, be accessible, state a goal and back that up with the team's behavior." The team "isn't owned by a corporation anymore, and after so many months of uncertainty it's time for fans to get a feel for the personalities and the perspectives of the Ricketts family." Blackhawks Chair Rocky Wirtz said, "Go out there and talk to people. The fans need to know the owner." Univ. of Oregon Warsaw Sports Marketing Center Managing Dir Paul Swangard: "Ownership can set the tone for the operation. Fans do care that the owners are, in essence, committed to the same thing that they are" (CHICAGO TRIBUNE, 8/23).

Soriano Hopes New Owner Will Lead To
Better Team, More Shots At Winning
IMPACT ON CUBS: Chicago Tribune reporter Chris Kuc said, "I think that the Ricketts family has shown that they’re going to spend the money and do what it takes" ("Chicago Tribune Live," CSN Chicago, 8/21). Cubs 1B Derrek Lee said he hoped the Ricketts are "in this to win and not just to say they own the Cubs, and they're willing to keep the payroll the way it is and we can do what we need to do." In Chicago, Gordon Wittenmyer noted Cubs management, including Hendry, this season have been "hamstrung in addressing" issues with the franchise "because of the ownership instability." Lee said of the sale, "I wish it came about a month earlier. I think Jim's hands were a little tied. Actually, I wish it came about eight months earlier" (CHICAGO SUN-TIMES, 8/22). Cubs LF Alfonso Soriano: "I'd like to meet my owner, my boss. Three years with no boss? Now we know what we can do. With a new owner, if he shows he wants to win, we can have a better team and we can play together more and have more shots (at winning)." Cubs manager Lou Piniella: "This thing here has been in a bit of a flux in the three years I've been here. And now things are heading in the right direction, I think it's very positive and very encouraging for this organization" (CHICAGO TRIBUNE, 8/23).

GONE WITH THE WIND: In Chicago, Dan McGrath wrote the sale relieves Chicago Tribune Sports Editor Mike Kellams of an "obstinate problem: how to provide fair, balanced and objective coverage of a team your parent company happens to own." McGrath served as Sports Editor from '98-'02, and he wrote, "'Covering' the team objectively hasn't been difficult." McGrath: "Colleagues past and present have followed the Cubs with a highly critical eye for the entire 28-year run of common ownership. ... It's the perception that we're soft on the Cubs or that we favor them over the White Sox -- that's what has given us all frequent heartburn." Former Tribune Sports Editor Tim Franklin said, "The larger issue was dealing with the public perception that the Tribune gave the Cubs favorable treatment. I heard complaints from senior people with the other pro teams in the city. More than that, though, I heard it from readers." But McGrath noted in his 12 years as an editor with the paper, there was "not a single instance of a top editor or a suit from the Tower suggesting we go easy on the Cubs or play down the White Sox" (CHICAGO TRIBUNE, 8/23). McGrath added, "It’s been hard for us, the joint ownership thing. No matter what we did, we could not convince people that we were neutral as far as covering the two teams is concerned" ("Chicago Tribune Live," CSN Chicago, 8/21). A CHICAGO TRIBUNE editorial stated, "The fact that the Cubs and this newspaper have been corporate cousins is a constant vexation for Tribune sportswriters and editors: No matter the coverage, some readers ... will accuse the paper of rampant favoritism. ... In future years, we'll miss the cousins" (CHICAGO TRIBUNE, 8/23).

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