Posted by chicagomedia.org on August 21, 2009 at 18:23:21:
Tribune Co. inks deal to sell Cubs to Ricketts family
August 21, 2009 3:53 PM
The Chicago Cubs will have a new owner, and it's who everyone expected it to be back in January.
Tribune Co. said today it has signed an agreement to sell the iconic franchise to the Ricketts family. The family is paying about $800 million to acquire a 95 percent interest in a package of assets: the team, Wrigley Field and Tribune Co.'s 25 percent stake in Comcast SportsNet Chicago, which broadcasts many Cubs games on cable television.
The agreement values the franchise and related assets at $845 million, less than the Rickett's winning bid in January of $900 million. Tribune Co. will retain a 5 percent ownership stake in the joint venture.
"Our family is thrilled to have reached an agreement to acquire a controlling interest in the Chicago Cubs, one of the most storied franchises in sports," Joe Ricketts, a billionaire who founded the Omaha-based online brokerage TD Ameritrade Holding Corp., said in a statement. "The Cubs have the greatest fans in the world, and we count our family among them. We look forward to closing the transaction so that we can begin leading the Cubs to a World Series title."
The announcement is somewhat anticlimactic because in January Tribune Co. had selected the Ricketts family as the winning bidder of a protracted auction for the franchise. There were nine other prospective buyers.
But negotiations took much longer than anyone expected to seal the deal. Tribune Co. executives got so fed up that they solicited a second buyer two months ago to re-enter the sales process, setting up an unexpected second bidding war. A group led by New York investor and former Chicagoan Marc Utay re-entered the process.
Ultimately, though, Tribune Co. came to terms with the Rickettses.
"This joint venture will provide dedicated, local family ownership and management for the team," said Tribune Co. Chairman Sam Zell. "The Ricketts family will be a great steward of the franchise. They have a strong respect for the team, for the fans, and for what the Cubs mean to the City of Chicago."
Joe Ricketts hails from Omaha, but three of his four children live in the Chicago area. One of his sons, Tom Ricketts, a low-key investment banker, led the family's pursuit of the team and is a diehard Cubs fan. It isn't at all clear what specific plans the Rickettses have for the team and Wrigley, or what style of ownership they foresee, because Tom Ricketts has not spoken publicly since the family became a bidder.
The transaction would represent a return to family ownership for the team known as lovable losers because the Cubs have gone more than a century without a World Series title. Before Tribune Co. bought the team in 1981, the Wrigley family, founders of the chewing-gum company, owned the team for 65 years. The Wrigleys sold the team to Tribune Co., which owns the Chicago Tribune, for about $20 million.
While Tribune Co. has been criticized for its failure to put a championship team on the field, it's hard to argue with its success off the field. The transaction's $845 million value is more than 40 times what Tribune Co. paid nearly 30 years ago.
The Cubs attract more than 3 million fans a year to watch a mediocre team in an aging ballpark that lacks most of the amenities of modern stadiums. The team has a national following because the games have been broadcast for years on Tribune Co.'s WGN cable superstation.
WGN will retain long-term broadcast rights to the team under the deal, according to sources familiar with the transaction.
The media rights became a source of contention in negotiations. Outside of stadium revenues, media rights are a significant source of revenue for baseball owners. Without spending hundreds of millions of dollars to make major improvements to Wrigley Field and the surrounding area, the family will be hard-pressed to generate more revenues from the stadium.
Both sides ended up compromising on media rights, which resulted in a lower of the purchase price. The family's winning bid in January had valued the team and related assets at close to $900 million.
Aside from media rights, the souring economy also hurt the franchise's value since January. While the club still sells out most games, revenues from sponsors, advertisers and suites have been affected by the recession.
Still the $845 million represents one of the highest prices ever paid for a baseball team.
The family will not gain control of the team until after the baseball season ends, probably sometime in October, because there are still a few conditions of closing. Tribune Co. has been in Chapter 11 bankruptcy since December, and a major disposition of assets requires the court's blessing.
As part of the court's approval process, Tribune Co. said it will place the Cubs in Chapter 11 bankruptcy so that the franchise can "emerge free and clear" of the company's financial obligations.
The company said that the Cubs bankruptcy will not interrupt team operations, and player contracts and other agreements with ticket holders, sponsors and supplies are not expected to be affected.
Court approval is expected because Tribune Co. has run a robust sales process that has kept creditors informed throughout, sources said.
Major League Baseball owners also have to approve the deal.
-- Ameet Sachdev, Chicago Tribune