Submitted by Jen Jones on Wed, 10/14/2009 - 11:54pm
It looks as if the sale of the Chicago Cubs will make it out of the bullpen and on to the playing field, after a bankruptcy judge approved the sale of the Windy City baseball team for $845 million. The family of billionaire Joe Rickets agreed to buy the team from the Tribune Co., which filed bankruptcy at the end of last year and along with the Cubs, owns The Chicago Tribune and the Los Angeles Times.
The sale will also include the iconic Wrigley Field, which the Tribune bought along with the team in 1980 for a mere $20 million. Tribune's owner, Steve Zell, is somewhat infamous for his aggressive business dealings, which occurred mainly in commercial real estate. He managed to sell his highly profitable real estate holdings at the peak of the market, timing it almost exactly with the start of the real estate market's rapid decline. His net from the sale was estimated at just over $900 million. He promptly purchased Tribune, which he now acknowledges as a mistake.
While the sale of the Cubs had been approved once already, it was done so again because the team filed a separate bankruptcy petition to protect itself from the creditors of its former owner.
The Cubs are the first major league baseball team to file in almost 40 years, doing so because the Tribune Co., one of the nation's largest media companies, pledged the team as collateral when it became a private company in 2007.
The Cubs are undoubtedly one of professional sports most popular franchises, despite their inability to reach the World Series in more than 100 years. They have millions of fans around the world, in part because of their position as the perpetual underdog.
The bankruptcy is expected to be brief and will allow the new owner to be free and clear of all Tribune creditors. The Cubs franchise, in and of itself, had been operating successfully. Tribune Co., however, owes more than $13 billion.
The Cubs bankruptcy demonstrates that a business does not have to be failing to file bankruptcy. Sometimes, it's simply the right business decision. A provision of the federal bankruptcy code, section 363, enables a company to dispose of assets "free and clear". It also does not always require a creditor's consent to execute.
The last baseball franchise to file for bankruptcy was the Seattle Pilots, who filed for protection in 1970. the team struck out financially and was bailed out by none other than Bud Selig, the current commissioner of the major league. The team was moved to Wisconsin and became the Milwaukee Brewers. In 1993, the Baltimore Orioles were sold as part of a bankruptcy plan but the team itself did not file.
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