Coming up fast on the business of sports radar is the sale of the Chicago Cubs, with all the trimmings owned by the Tribune Co. That would include the Cubs, Wrigley Field, a 25% share of Comcast SportsNet Chicago, as well as Wrigley Field Premium Ticket Services, Inc. As reported prior, the sale of these assets could total a staggering $1 billion. The total rendered has been based on all the assets bundled together. But, what if they were each sold piecemeal? Since MLB can only control the sale of the Cubs as a franchise, it’s possible that higher dollar figures could be obtained for assets such as Comcast SportsNet Chicago, given the sellers' market for regional sports networks (RSNs) as of late.
While there has been speculation that the un-bundling of the assets was a possibility, many analysts (this one included), believed that given the complexities of the interwoven parts, the deal would most likely be best served by a group grabbing all the assets. That may possibly change, which has the capacity to bump the sale date out, and add a level of complexity to the deal. Needless to say, selling the assets off separately might not sit well with MLB. As reported by the LA Times:
[Sam] Zell would have veto power over major transactions once he becomes Tribune's chairman if and when the deal is completed, possibly around the end of this year. Yet even now Zell, who holds one of the seven seats on the Tribune board, has a significant voice in corporate matters and wouldn't take kindly to being strong-armed into accepting less than the highest bid.
The Cubs deal may develop into an unusual public spectacle. Unlike most franchise sales, which involve groups of private individuals as buyers and sellers, this one involves a public corporation that has a fiduciary duty to obtain the best return for shareholders by accepting the highest offer, regardless of the bidder's identity.
What may transpire are two opposing processes. One which deals with garnering the highest bid for the sale against a sale that garners a member of MLB’s ownership brethren. The two can be in conflict, as noted by the sale of the Boston Red Sox which saw the sale being approved to a lower bidder by MLB in an effort to bring in a favorable owner. With this dynamic, the high interest in the Cubs as a storied franchise, and the incredible sale price that could come with the transaction(s), don’t look for the sale to be resolved any time soon. As further quoted in the LA Times article:
"You're asking to be a member of a club, and the club has a right to say no," a former MLB executive said. "So this pits the principle of fiduciary responsibility against the right to belong to a club. The odds are it's going to be a long, drawn-out process."
Maury Brown is the founder and president of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football and The Biz of Basketball (The Biz of Hockey will be launching shortly). He is also a contributor to Baseball Prospectus.
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