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Written by Maury Brown   
Thursday, 08 May 2008 04:19

CubsThe sale of the Chicago Cubs will move beyond pure discussion when Sam Zell and the Tribune Co. deliver the financial “book” to the six prospective bidding groups sometime this week.

The “book” is a financial assessment of all the holdings being sold by Tribune in association with the storied franchise, including the team, Wrigley Field, Comcast SportsNet Chicago, and Wrigley Field Premium Tickets. A separate “book” is also being distributed with Wrigley Field removed as part of the sale. Zell has been in discussions with the Illinois Sports Facilities Authority about selling it off separately, a move seen as a negative for prospective owners.

As for the six groups bidding they include Madison Dearborn Partners CEO John Canning, Jr., the Ricketts family, Dallas Mavericks owner Mark Cuban, the partnership of attorney Thomas Mandler and businessman Jim Anixter, MVC Capital Chairman Michael Tokarz and private-equity investor Thomas Begel.

As we have reported at the outset, from MLB’s perspective, the leading candidate is John Canning, Jr. due to his close ties to MLB and deep financial resources. He is a minority owner in the Milwaukee Brewers and has had close ties to Commissioner Selig. As reported by the Chicago Tribune, MLB could pass on any of the prospective buyers, even they are acceptable to Zell and Tribune, or offer more money than an owner they see as working well within MLB’s close-knit ownership framework.

The Canning group has "every leading citizen of Chicago," said a highly placed Major League Baseball source, who estimated the individuals in the group have a combined net worth of $10 billion to $15 billion.

"If you were to say, 'What are you looking for?' you're looking for a group of responsible people who are in it for the long term," the source said. "That kind of describes this group."

[…]

Asked what would happen if Tribune strikes a deal with an individual or group who is unacceptable to the owners, the MLB source said, "We turned down Eddie Gaylord [to purchase the Texas Rangers]. This is nothing new. In fact, the Chicago White Sox wouldn't be Reinsdorf's team if we hadn't turned down Eddie DeBartolo."

There are other examples, as well. Most recently, the Charles Dolan offered more money for the Boston Red Sox, but was passed over in favor of an ownership group headed by John Henry.

The reasonings for selecting a bidder that would offer less money has to do with the current CEO model that baseball is functioning under, with Bud Selig acting as the pseudo Chairman. A prospective owner such as Mark Cuban would not fit in with the dynamic that MLB currently is witnessing, with owners being far more subdued than Cuban. The notion that an owner would sit in the bleachers with fans, or run a personal blog is intriguing to fans, but unappealing to the ownership brethren.

With Wrigley Field in the mix, the sale price could be as high as $1 billion. With the Cubs being the third highest in brand recognition behind the Yankees and Red Sox, and Wrigley being a historic jewel in a key market, it is possible that the lofty $1 billion figure is possible. However, given the large backloaded contracts afforded players such as Soriano, Zambrano, Ramirez and Lee, new ownership will be constrained by an even larger player payroll within the next 2-4 years. Based upon this, my valuation sees the Cubs sale price ranging between $725-$880 million.

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