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07-19-2008 05:00 AM |
Bidding for Tribune's Cubs Leads Off With 3-Bagger
Posted By: <b>bruce Dorskind</b><p>Bidding for Tribune's Cubs <br />Leads Off With 3-Bagger<br />By MATTHEW FUTTERMAN and SHIRA OVIDE<br />July 19, 2008; Page B5<br /><br />With initial bids for the Chicago Cubs baseball team and its related assets due Friday, the team's owner, Tribune Co., was expecting offers from as many as nine separate groups looking to acquire one of baseball's most-fabled franchises, people close to the situation said.<br /><br />At least three bids had come in for the team and its other assets by Friday afternoon, people close to the situation said.<br /><br />Two of the bids came from major financial players in Chicago: One is from John Canning, the head of private-equity firm Madison Dearborn Partners LLC, who has assembled a group that includes McDonald's Corp. Chairman Andrew McKenna. The other was from Tom Ricketts, chief executive of investment firm Incapital LLC and the son of TD Ameritrade Holding Corp. founder J. Joe Ricketts.<br /><br />Another bid came from a New York group representing Sports Properties Acquisition Corp. and led by Andrew Murstein, whose family amassed a fortune in the taxi-financing business. The company has raised $215 million in an initial public offering for the purpose of acquiring a sports franchise or similar assets.<br /><br />The size of the bids couldn't be learned, but given the team's history and the emotional attachment of fans, the bidding is expected to reach around $1 billion for the team, Wrigley Field and a 25% interest in a regional sports cable-television network.<br /><br />The buyer will have to produce much of the sale price in cash. Major League Baseball allows buyers to finance only roughly 10 times earnings -- in this case, about $340 million. Renovations to 94-year-old Wrigley Field, which lacks the amenities of most modern ballparks, could run from $200 million to $400 million for the team's new owner.<br /><br />Wringing the highest possible price is crucial for Tribune, which is weighed down by nearly $13 billion in debt, largely from its December deal to take the company private.<br /><br />Chicago real-estate mogul Sam Zell led the deal and expected all along to sell the Cubs, but keep intact the rest of Tribune, which includes the Los Angeles Times and Chicago Tribune newspapers as well as a string of television stations. Instead, declines in revenue in its newspaper division have forced Mr. Zell to consider additional asset sales. In May, Tribune agreed to sell nearly all of Tribune's Long Island, N.Y., newspaper Newsday for $650 million to cable-TV operator Cablevision Systems Corp.<br /><br />Tribune hopes a sale of the Cubs, combined with efforts to cut costs at the newspaper division, should help meet a $650 million debt payment by the end of the year and a $750 million payment in the first half of 2009.<br /><br />Tribune likely will retain a stake in the team of 5% or smaller to avoid triggering a steep tax obligation on the sale. The company took a similar tack when it sold Newsday.<br /><br />Write to Matthew Futterman at matthew.futterman@wsj.com and Shira Ovide at shira.ovide@wsj.com
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