Submitted by Jen Jones on Fri, 07/31/2009 - 4:46pm
The Tribune Company, which owns the iconic Chicago newspaper of the same name, has almost completed the process of relinquishing ownership of another Chicago icon. To the tune of $900 million, the Chicago Cubs, famously consistent losers and one of baseball's most beloved clubs, is being purchased by Tom Ricketts, who had won exclusive negotiating rights as early as January of 2009. The Ricketts family founded the company that eventually became the discountÂ brokerage TD Ameritrade. The Tribune Company's sale of the team comes as no surprise, as Tribune Company owner and CEO Sam Zell had announced his intention to sell the team since he acquired Tribune Company in December 2007. The Tribune Company owned the team for 28 years; in 1981, it purchased the team and Wrigley Field from the Wrigley family for $20 million.
The Tribune Company filed for Chapter 11 bankruptcy in December 2008, after sustaining third quarter losses of $124 billion. Struggling with more than $13 billion in debt and only $7.6 billion in assets,Tribune Company is expected to emerge from Chapter 11 bankruptcy by the end of 2009. The sale of the Cubs was expected to help Tribune Company complete the process. Most of the Tribune Company's enormous debt was incurred whenÂ Sam Zell led the effort to take the company private in 2007.
The company's financial quagmire was compounded by the widespread troubles of the print media industry. As the medium competes with others in a time when readers have a huge range of news options, advertising revenues for the industry are in a free fall. Tribune Company's Chicago Tribune is the 8th largest newspaperÂ in the United States by circulation, trailing another Tribune Company holding, the Los Angeles Times. In addition to the sale of the Cubs, Tribune Company has announced or undertaken the sale of the L.A. Times building in Los Angeles, the Tribune Tower in Chicago and Newsday.
The sale of the Cubs has been considered to be in the final stages for some time, merely pending approval from Major League Baseball. Because the Cubs are an MLB franchise, other MLB owners have veto power over the sale. Before the sale could be completed, it needed approval from 23 of the 30 club owners. As many as 10 other buyers, all offering $1 billion, have been in the running since Zell listed the club and Wrigley field for sale.
In mid-July, several sources reported that the company was considering filing a separate bankruptcy for the Cubs. In order for the bankruptcy to go through, the Tribune Company would have to work out an agreement with the buyers, with Tribune's creditors approving the sale before the deal went before a judge. This is known as a prepackaged bankruptcy. Many were startled to hear this news, given the popularity of the Chicago Cubs, but the bankruptcy would not necessarily result from financial difficulties faced by the team. Instead, the bankruptcy was characterized as a legal maneuver. A bankruptcy sale would give the new owners clear title, and would not need to be revisited once the judge had given his approval. According to one Bloomberg source, it was believed that Zell had used to team as collateral for some of the company's debt.Â A bankruptcy filing for the Chicago Cubs would not interfere with the day to day operations of the club.
The Cubs have won 11 of 14 games since the All-Star break and currently hold first place in the NL Central. Holy Cow!
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