Posted by Dogwood on August 25, 2009 at 12:49:03:
If the deal is approved by MLB and the bankruptcy court, the Trib Co. has locked up radio and TV rights for the next 12 years.
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Ricketts family wasn't afraid to play hardball in bid for Chicago Cubs
Court documents show Rickettses issued ultimatum on sale
After months of intense negotiations to buy the Chicago Cubs, the Ricketts family threw a curveball at Tribune Co. late last month.
The family gave the company an ultimatum: Complete a deal within a few weeks or it would walk away.
The dramatic twist and other details of the negotiations are contained in hundreds of court documents Tribune Co. filed late Monday in connection with an agreement announced Friday to sell 95 percent of the franchise to the family of Joe Ricketts, the billionaire founder of online brokerage TD Ameritrade Holding Corp., for about $800 million. The court filings are part of Tribune Co.'s Chapter 11 bankruptcy case.
The possibility of the Rickettses walking reveals how the sale of one of Major League Baseball's most storied franchises turned into a game of chicken.
The showdown came after Tribune Co. in May restarted talks with a second bidder, a group led by New York investor and former Chicagoan Marc Utay, when discussions with the Rickettses had failed to produce an agreement. Tribune Co. had selected the family in January as its favored buyer in a protracted auction among 10 bidders for the team, Wrigley Field and 25 percent of Comcast SportsNet Chicago.
The Ricketts family in late July gave Tribune Co. a deadline of Aug. 7 to finalize terms. The company said it would try to meet that time frame but also continued to negotiate with Utay, court papers said.
On Aug. 7, Tribune Co. had a deal largely completed with the Rickettses but not with Utay. The company, owner of the Chicago Tribune, then entered into a two-week exclusive negotiating period with the family.
On Aug. 20, the day before Tribune Co. announced the deal, it received a letter from Utay that contained an updated offer, details of which were not contained in court documents. Tribune Co. officials, after notifying the Rickettses of the letter, rejected Utay's last-ditch proposal.
The sale of the Cubs requires bankruptcy court approval. Tribune Co. will receive after-tax proceeds of about $740 million and retain 5 percent of the franchise. The joint venture was set up to help the company minimize its capital gains taxes from the deal.
A Tribune Co. spokesman declined to comment. A Ricketts spokesman said the family is "pleased" the deal has been reached and hopes it is approved.
In court papers, Tribune Co. lawyers outlined a two-step process for court approval, which includes having the team file for bankruptcy at a later date. The company wants the team to be in bankruptcy for just a few days, according to court documents. An extended stay in court could damage the Cubs' baseball operations, team Chairman Crane Kenney said in court papers.
"The process of competing for player talent in MLB is incomparably fierce, and by operating in Chapter 11 the Cubs would face a severe competitive disadvantage in their ability to retain, acquire or trade for players, based on the perception that the transaction would require Bankruptcy Court approval or might be unwound at a later date," Kenney said.
Tribune Co. also faces paying the Ricketts family a $20 million breakup fee if the transaction does not close in the fourth quarter of 2009, court papers said.
Tribune Co. disclosed extensive details of its nearly 2 1/2 -year process to sell the baseball team as part of its request Monday to avoid another auction overseen by the court. In some corporate bankruptcy cases, judges make sure a company has gotten the best offer for an asset by ordering an auction.
Court papers also revealed that Tribune Co.-owned WGN will retain rights to broadcast certain Cubs games on radio and television through Oct. 31, 2022.
The judge presiding over the bankruptcy case agreed Monday to expedite procedures regarding the sale of the baseball team. An initial hearing is scheduled for Monday.