A Win for the Cubs

At a time when real estate assets are moving slowly, other areas are being eyed for opportunity plays.  Bond salesman Thomas Ricketts had just about closed his bidding group’s purchase of the Chicago Cubs from the Chicago Tribune.  Documents relating to the fully financed transaction were sent to Major League Baseball over the 4^th of July weekend in a deal said to be worth between $850 million and $900 million.

The Tribune, which is under Chapter 11 bankruptcy protection, jump started the Ricketts family by renewing negotiations with rival bidders after the deal stalled over a disagreement about the value of the Cubs’ broadcast contracts.  Major League Baseball, the Cubs’ creditors and the Delaware judge overseeing the Tribune’s bankruptcy case still must sign off on the sale.

Then, New York investor and former Chicagoan Mark Utay threw a monkey wrench into the Ricketts deal. Utay, who is a managing partner with Clarion Capital Partners, LLC, is said to be offering a higher – though undisclosed – amount of money for the Cubs, though with less upfront cash than the Ricketts deal.

The Ricketts bid features an estimated $450 million financed with debt, with the remainder paid in cash by the Ricketts family, who are the founders of TD Ameritrade, Inc.  The Tribune wants the sale to be partially financed with debt to limit its exposure to capital gains taxes.  Once the final details are worked out, the Tribune will retain a five percent stake in the Cubs.  Wrigley Field and a 25 percent stake in Comcast SportsNet are included in the package.

“I don’t think it’s completely over yet,” said a source close to the negotiations, who asked not to be identified because the sale process is continuing.  “By the same token, Ricketts has a real edge here.”  A Major League Baseball source and a second individual familiar with the sales process said the draft agreement with Ricketts has been submitted for league review.  Nothing has been sent in for Utay, according to the league source.  Both sources said the Tribune is telling the Ricketts family that only its bid will be submitted to the court and Major League Baseball.

Just this week, the Tribune threw a curveball by suggesting that it might take the Cubs through a fast, pre-packaged bankruptcy that would protect its future owner from its creditors.