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Written by Maury Brown   
Thursday, 24 July 2008 23:00
The Sale of the Cubs

The thing about the sale of the Chicago Cubs, and all its trimmings (Wrigley Field and ComcastSports Chicago), is it may be unlike any deal prior. Forget looking at the Lerners and Stan Kasten with the Nationals. Forget looking at Liberty Media and the sale of the Braves from Time Warner. Forget the sale of the Dodgers to Frank McCourt.

It seems that we should expect the unexpected. This one is truely a breed apart.

First off, this sale is all about the money – the highest bid through either a package, or the assets broken out into separate pieces will most assuredly win the day as Sam Zell is looking to liquidate the baseball holdings to help pay down the $8.2 billion in debt that the Tribune Company is saddled with after taking it private. The chances of seeing a lower bid beat out a higher offer, which was the case with the sale of the Red Sox, seems virtually nil. MLB is very nearly riding shotgun on this one.

On the state of the sale, word to the Business of Sports Network is that there is actually a process by which three different bid offers can be done: The Cubs, Wrigley Field, or “The Package” where everything is pulled together. In most all cases, bidders interested in the Cubs are said to be submitting across all three bid types. Rumor has it that Mark Cuban is the only bidder to have only thrown his bid into just the package offer. If true, Cuban is looking at “all or nothing”. "Nothing" seems like the last thing the billionaire owner of the Dallas Mavericks has in mind.

A starting group of ten bidders is said to have been pared down in the second round of bidding to three.

The surprising news is that Madison Dearborn Partners CEO John Canning, Jr. is possibly out of the running after Tribune turned down his bid. Canning has been seen as the front runner due to his close ties to MLB (he is a minority owner of the Brewers) and by extension to Commissioner Selig. The rejection of the bid doesn’t throw Canning out of the running as he can certainly come back with a bid that will get him in the mix, but the question is, will he be willing? By coming in under the other bidders that made the cut, one wonders whether he really bought into the “could be worth $1 billion” value of the package deal as it appears that cartoonish figure may simply be the floor in the second phase of bidding, where the final sale price could wind up jaw-dropping. Cuban's current bid -- the highest, so far -- is reportedly at a whopping $1.3 billion.

The bad thing for MLB, should Canning drop out is that he has strong local ties to the Chicago area, something the other leading bidders can’t really claim. But as mentioned, this deal for the Cubs will be different than other recent deals. Where politicians in Washington, D.C. were concerned about having a strong local ownership component due to the massive outlay of public subsidy, the Cubs deal is now exclusively private.

Beyond Canning, here’s who we do know did made the cut.

Mark Cuban seems to be a serious player in the bidding process due to his incredible net worth. While other bidders can cobble together a bid through loans against holdings, Cuban is believed to be doing a cash heavy bid, an enticing aspect for Zell and Tribune.

The other bidders known to make the cut to the second phase of bidding is the family of Joe Ricketts, who founded Ameritrade, and Sports Acquisition Holding Corp., which includes Henry Aaron, and former Republican Congressman Jack Kemp.

Sports Acquisition Holding is the interesting player in the mix. While Aaron and Kemp are certainly well known figures, they certainly aren’t anywhere near being financially capable of providing the funds needed to go into the second phase of bidding, where the record sale price for an MLB club will surely be hit. As one insider said, find out where the money is coming from with Sports Acquisition Holding Corp, and you probably have a good story.

But, one should expect the unknown at the end of the day. There seems little doubt that moving bidders or others sitting on the edges into groups to help bolster their standing with MLB, or help gain more capital in order to remain competitive in the bidding. The wild card in all of this is of course, Sam Zell.

With Zell looking to get the most out of the bidding, there could be complex scenarios involving bidders moving around on the sale of Wrigley Field, absent the Cubs. If the deal does go the route of The Friendly Confines going separate from the Loveable Losers, the political dance between the owners of the facility and the owners of the Cubs will be key.

Of course, adding that extra something to this story is Mark Cuban; a man who would add considerable flavor to baseball’s ownership ranks. Adding Cuban to the mix is like adding 4 cloves of garlic to your spaghetti sauce. He’s an alluring aroma that can overwhelm. If Cuban does outspend all comers, some form of buffering will be attempted by MLB.

But, even if assurances were made by Cuban, the echoes of another owner will certainly come to mind. "I won't be active in the day-to-day operations of the club at all," said the new owner after purchasing another storied club in 1973. The club was the Yankees, and the owner was one George Steinbrenner. The idea of adding a “Maverick” back into Lodge after the likes of King George, or Finley, or Turner is certainly something MLB would probably like to avoid… if it weren’t for Sam Zell. If it weren't for Sam Zell.

 
 
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