Zell to Purchase Tribune Co., Sell Cubs

[Mephistopheles]

i dunno with an impending sale of the team, id say longterm contracts..fine. you dnt want to short change yourself talent and then watch the new owner slash payroll.

[Jon]

Here's the Tribune press release (pdf) on the planned sale of the Cubs.

 

Of note is that they also plan to sell their 25% stake in Comcast SportsNet Chicago. The TV deals could get interesting. Assuming they wouldn't just be selling it to the new owner of the Cubs, of course.

Edited April 2, 2007 by Jon

[Chris]

From the Cubs:

 

STATEMENT OF CUBS PRESIDENT JOHN McDONOUGH

ON THE ANNOUNCEMENT BY TRIBUNE COMPANY REGARDING THE SALE OF THE CUBS

 

“Our mission has not changed. The goal is to win a World Series for our great fans. Under the leadership of Lou Piniella, we are on track and believe 2007 will be a very successful season. We have been informed that a change in ownership will not occur until after the 2007 season and that will help us maintain our focus on the day to day operation of the Chicago Cubs. Tribune Company has provided tremendous support and resources which have dramatically improved our team over the past several years. We expect that support to continue through 2007 as we pursue a championship for our incredibly loyal fans.”

[E.J.]

I don't know how I feel about this. I'm actually pretty worried that the Cubs are going to get sold to an owner that is going to cut payroll and just use the Cubs as a money-maker instead of putting money into the team trying to make it a winner.

[Soul]

I don't know how I feel about this. I'm actually pretty worried that the Cubs are going to get sold to an owner that is going to cut payroll and just use the Cubs as a money-maker instead of putting money into the team trying to make it a winner.

 

It's a possibility, but I would presume the cost of the Cubs will be quite high, which would seem to preclude most budget-conscious buyers. Obviously that's not necessarily the case, but I would expect the odds to lean in that direction.

[CheeseHead Cubs Fan]

I don't know how I feel about this. I'm actually pretty worried that the Cubs are going to get sold to an owner that is going to cut payroll and just use the Cubs as a money-maker instead of putting money into the team trying to make it a winner.

 

Agreed! I am holding on to the 07 season first. Let Cuban win an NBA title and get ready to cut a check for the Cubs!

[E.J.]

This makes retaining Hendry look even dumber. He's been allowed to make huge financial committments that will require a huge payroll to contend for the next few years, meanwhile the Tribune was for sale. We have no idea what the new owner will do to the payroll. This is yet another reason why the Cubs should have used 2007 for rebuilding. Considering all the circumstances I find it almost impossible to imagine a more inappropriate time to attempt an overnight worst-to-first turnaround.

 

I don't think it makes Hendry look dumber. I think the Tribune told Hendry they were opening the purse strings because they knew if Hendry spent a bunch of money this year he would raise the value of the Cubs. I read somewhere that after this offseason the Cubs value has gone up to around $600 million.

[Vinestal]

This situation scares the beegeesus out of me. I guess we all just have to pray that the new owners are good ones that have alot of money and are smart enough to run the team the right way (winning).

[TheDude]

This makes retaining Hendry look even dumber. He's been allowed to make huge financial committments that will require a huge payroll to contend for the next few years, meanwhile the Tribune was for sale. We have no idea what the new owner will do to the payroll. This is yet another reason why the Cubs should have used 2007 for rebuilding. Considering all the circumstances I find it almost impossible to imagine a more inappropriate time to attempt an overnight worst-to-first turnaround.

 

Depends on the philosophy of a potential buyer.

 

Agreed. Read some of the statements/quotes from financial advisors. Many see the contracts as positive growth that inflate the value of the team for potential buyers.

[rocket]

uh oh

[daske17]

Just for a little perspective, when Arte Moreno bought the Angels a few years back, he increased payroll, lowered the price of beer and overall has been a very attentive owner.

 

The Cubs aren't likely to get Ebeneezer Scrooge as a buyer. I think the team will be fine.

[Amazing_Grace]

This is pretty much what I expected to happen to this point. Upping the payroll was an obvious ploy to drive up the team's value for a new owner. My guess is that the Trib actively suggested a plan to sell the team and use the cash to rebuild the company as they were trying to sell the entire company. A baseball team is something you can easily sell for a lot of cash, something the new owner will need plenty of to fix the rest of the company.

 

What happens with the Cubs and payroll will depend on the new owner. Whether WGN continues to carry Cubs games nationally will depend on whether Zell and Co. think there's some other way to make the cable station profitable. There's nothing we can do as fans but wait and see.

[frostwyrm]

This makes retaining Hendry look even dumber. He's been allowed to make huge financial committments that will require a huge payroll to contend for the next few years, meanwhile the Tribune was for sale. We have no idea what the new owner will do to the payroll. This is yet another reason why the Cubs should have used 2007 for rebuilding. Considering all the circumstances I find it almost impossible to imagine a more inappropriate time to attempt an overnight worst-to-first turnaround.

 

I don't think it makes Hendry look dumber. I think the Tribune told Hendry they were opening the purse strings because they knew if Hendry spent a bunch of money this year he would raise the value of the Cubs. I read somewhere that after this offseason the Cubs value has gone up to around $600 million.

 

How does spending a bunch of money in an inflated personnel market make a team more valuable? Are the Royals more valuable because they signed Gil Meche? I'm not an economics wiz but I always thought organizational debt was an undesirable thing for a business.

[E.J.]

This makes retaining Hendry look even dumber. He's been allowed to make huge financial committments that will require a huge payroll to contend for the next few years, meanwhile the Tribune was for sale. We have no idea what the new owner will do to the payroll. This is yet another reason why the Cubs should have used 2007 for rebuilding. Considering all the circumstances I find it almost impossible to imagine a more inappropriate time to attempt an overnight worst-to-first turnaround.

 

I don't think it makes Hendry look dumber. I think the Tribune told Hendry they were opening the purse strings because they knew if Hendry spent a bunch of money this year he would raise the value of the Cubs. I read somewhere that after this offseason the Cubs value has gone up to around $600 million.

 

How does spending a bunch of money in an inflated personnel market make a team more valuable? Are the Royals more valuable because they signed Gil Meche? I'm not an economics wiz but I always thought organizational debt was an undesirable thing for a business.

 

Chicago Business[/url]"]An economic consulting firm has estimated the value of the Chicago Cubs at $600 million, 34% higher than the latest figures from Forbes magazine. Forbes’ estimates are the most widely cited valuations of sports franchises.

 

The Cubs’ massive, almost-$300-million investment in high-priced free agents such as center fielder Alfonso Soriano and new manager Lou Piniella during the offseason, plus the addition of several new revenue streams including new seats and signage in Wrigley Field, have pushed the team’s value up significantly, says Tim Mahon, a Chicago-based economist with Anderson Economic Group LLC.

 

Mr. Mahon says he and two other Anderson economists and baseball fans, Ilhan Geckil and Patrick Anderson, performed a “serious study” with “econometric rigor” using the discounted cash flow method of asset valuation to come up with the $600-million figure.

 

The team’s offseason signings, which include third baseman Aramis Ramirez, starting pitchers Ted Lilly and Jason Marquis and second baseman Mark DeRosa, are akin to a large corporation’s acquisitions of smaller rivals, Mr. Mahon says.

[erik316wttn]

What will their relationship with WGN be like?

 

As long as they're on WGN radio still I'll be ok with it.

[Soul]

This makes retaining Hendry look even dumber. He's been allowed to make huge financial committments that will require a huge payroll to contend for the next few years, meanwhile the Tribune was for sale. We have no idea what the new owner will do to the payroll. This is yet another reason why the Cubs should have used 2007 for rebuilding. Considering all the circumstances I find it almost impossible to imagine a more inappropriate time to attempt an overnight worst-to-first turnaround.

 

I don't think it makes Hendry look dumber. I think the Tribune told Hendry they were opening the purse strings because they knew if Hendry spent a bunch of money this year he would raise the value of the Cubs. I read somewhere that after this offseason the Cubs value has gone up to around $600 million.

 

How does spending a bunch of money in an inflated personnel market make a team more valuable? Are the Royals more valuable because they signed Gil Meche? I'm not an economics wiz but I always thought organizational debt was an undesirable thing for a business.

 

Chicago Business[/url]"]An economic consulting firm has estimated the value of the Chicago Cubs at $600 million, 34% higher than the latest figures from Forbes magazine. Forbes’ estimates are the most widely cited valuations of sports franchises.

 

The Cubs’ massive, almost-$300-million investment in high-priced free agents such as center fielder Alfonso Soriano and new manager Lou Piniella during the offseason, plus the addition of several new revenue streams including new seats and signage in Wrigley Field, have pushed the team’s value up significantly, says Tim Mahon, a Chicago-based economist with Anderson Economic Group LLC.

 

Mr. Mahon says he and two other Anderson economists and baseball fans, Ilhan Geckil and Patrick Anderson, performed a “serious study” with “econometric rigor” using the discounted cash flow method of asset valuation to come up with the $600-million figure.

 

The team’s offseason signings, which include third baseman Aramis Ramirez, starting pitchers Ted Lilly and Jason Marquis and second baseman Mark DeRosa, are akin to a large corporation’s acquisitions of smaller rivals, Mr. Mahon says.

 

LOL, econometric rigor. That's a good one.

[frostwyrm]

This makes retaining Hendry look even dumber. He's been allowed to make huge financial committments that will require a huge payroll to contend for the next few years, meanwhile the Tribune was for sale. We have no idea what the new owner will do to the payroll. This is yet another reason why the Cubs should have used 2007 for rebuilding. Considering all the circumstances I find it almost impossible to imagine a more inappropriate time to attempt an overnight worst-to-first turnaround.

 

I don't think it makes Hendry look dumber. I think the Tribune told Hendry they were opening the purse strings because they knew if Hendry spent a bunch of money this year he would raise the value of the Cubs. I read somewhere that after this offseason the Cubs value has gone up to around $600 million.

 

How does spending a bunch of money in an inflated personnel market make a team more valuable? Are the Royals more valuable because they signed Gil Meche? I'm not an economics wiz but I always thought organizational debt was an undesirable thing for a business.

 

Chicago Business[/url]"]An economic consulting firm has estimated the value of the Chicago Cubs at $600 million, 34% higher than the latest figures from Forbes magazine. Forbes’ estimates are the most widely cited valuations of sports franchises.

 

The Cubs’ massive, almost-$300-million investment in high-priced free agents such as center fielder Alfonso Soriano and new manager Lou Piniella during the offseason, plus the addition of several new revenue streams including new seats and signage in Wrigley Field, have pushed the team’s value up significantly, says Tim Mahon, a Chicago-based economist with Anderson Economic Group LLC.

 

Mr. Mahon says he and two other Anderson economists and baseball fans, Ilhan Geckil and Patrick Anderson, performed a “serious study” with “econometric rigor” using the discounted cash flow method of asset valuation to come up with the $600-million figure.

 

The team’s offseason signings, which include third baseman Aramis Ramirez, starting pitchers Ted Lilly and Jason Marquis and second baseman Mark DeRosa, are akin to a large corporation’s acquisitions of smaller rivals, Mr. Mahon says.

 

I don't understand. Investing $21M in a crapbucket player like Jason Marquis is considered a good thing? In that case Hendry should have signed Jose Macias to a 3/30 deal and pushed the team's value up even further.

[Warren Brusstar]

White Sox games were more popular than Cubs telecasts last season (for the first time in over 20 years); the net effect is that during the 2007 season, WGN can make more advertising dollars for Sox broadcasts.

 

Do you have any support for that assertion?

 

With that in mind, I am merely bringing up the potential negatives that could arise.

 

If you're implying that Zell might look to ratings in 2006 and decide to cut back on Cubs programming, while increasing White Sox programming, don't you think a man that was able to make billions as an investor is more sophisticated than to base such a decision on ratings for only the last year? Also, doesn't it also assume that you're right about your initial point - that the cost of advertising on White Sox games will be more than the cost of advertising on Cubs' games? I would be quite surprised if that's true.

 

On your first question, it's common knowledge that the Sox beat out the Cubs in radio and TV ratings (2006) for the first time in over 20 years. It really isn't a surprise considering the Cubs won 66 games and the Sox were basking in the glow of a WS.

 

It was published in the Tribune so you may want to search the archives.

 

On your second point, no, my view is that Zell doesn't care about the baseball part of the Tribune (he's admitted as much).

 

My point about the Sox was specific to the poster I was replying to---who implied that WGN must be profiting because they are running Sox games--as if to say there is minimal profit in Sox telecasts. My reply is two fold: because of the recent success of the Sox, WGN can charge more per advertiser in 2007 than they can for Cubs games... Also, the Cubs, Sox, and Bulls will always be shown locally in Chicago because it is a local station (with a national following).

 

You missed the point. Do you have support for your assertion that the cost of advertising on White Sox games will be greater in 2007 than the cost of advertising on Cubs games?

 

I don't think that is true.

[wastra]

White Sox games were more popular than Cubs telecasts last season (for the first time in over 20 years); the net effect is that during the 2007 season, WGN can make more advertising dollars for Sox broadcasts.

 

Do you have any support for that assertion?

 

With that in mind, I am merely bringing up the potential negatives that could arise.

 

If you're implying that Zell might look to ratings in 2006 and decide to cut back on Cubs programming, while increasing White Sox programming, don't you think a man that was able to make billions as an investor is more sophisticated than to base such a decision on ratings for only the last year? Also, doesn't it also assume that you're right about your initial point - that the cost of advertising on White Sox games will be more than the cost of advertising on Cubs' games? I would be quite surprised if that's true.

 

On your first question, it's common knowledge that the Sox beat out the Cubs in radio and TV ratings (2006) for the first time in over 20 years. It really isn't a surprise considering the Cubs won 66 games and the Sox were basking in the glow of a WS.

 

It was published in the Tribune so you may want to search the archives.

 

On your second point, no, my view is that Zell doesn't care about the baseball part of the Tribune (he's admitted as much).

 

My point about the Sox was specific to the poster I was replying to---who implied that WGN must be profiting because they are running Sox games--as if to say there is minimal profit in Sox telecasts. My reply is two fold: because of the recent success of the Sox, WGN can charge more per advertiser in 2007 than they can for Cubs games... Also, the Cubs, Sox, and Bulls will always be shown locally in Chicago because it is a local station (with a national following).

 

You missed the point. Do you have support for your assertion that the cost of advertising on White Sox games will be greater in 2007 than the cost of advertising on Cubs games?

 

 

USUALLY, advertising revenues for sports are based on either 3 or 5 year averages- at least that's how it works in most of the country on college sports- I've no experience with Major league baseball programming for local broadcast rights. But i do have some mild experience in both radio and TV programming (local rights) for major division I colleges.

 

Regardless, WGN will likely profit more from Cubs advertising because they pay less for the rights to SHOW Cubs games due to the favorable deal they have for being owned by the same company. So even if by some oddball chance they can charge more for Sox commercials, they're not making as much on that money.

[Soul]

Those weekend Cub/Sox games are literally the ONLY reason to watch WGN on Sat/Sun. Without that, their weekend viewership goes right into the toilet -- probably on par with the soap opera network. It's death for the so-called 'superstation.'

 

Expect WGN to fight to keep Cub games on their network, regardless of who owns each entity.

[Mephistopheles]

The only things I watch on WGN are the Cubs and Home Improvement

[Brian]

I would think that in either case (owner that is interested in baseball and wants to win, or an owner that wants to make money) keeping the Cubs on national tv would be a priority.

[rocket]

The only things I watch on WGN are the Cubs and Home Improvement

 

ruffruffruffruffruff

[CubinNY]

I would think that in either case (owner that is interested in baseball and wants to win, or an owner that wants to make money) keeping the Cubs on national tv would be a priority.

 

As long as the new owners don't charge WGN a high fees I belive the Cubs will stay on for at least as much as they are on now. The question will be how much will new owners charge the WGN. When the Cubs were owned by the Wrigley family the cable industry was just getting started. Things are a lot different now. I do think Cub fans around the country should be prepared to have to pay to watch them when they are not on ESPN.

Edited April 2, 2007 by CubinNY

[KingCubsFan]

USUALLY, advertising revenues for sports are based on either 3 or 5 year averages- at least that's how it works in most of the country on college sports- I've no experience with Major league baseball programming for local broadcast rights. But i do have some mild experience in both radio and TV programming (local rights) for major division I colleges.

 

Regardless, WGN will likely profit more from Cubs advertising because they pay less for the rights to SHOW Cubs games due to the favorable deal they have for being owned by the same company. So even if by some oddball chance they can charge more for Sox commercials, they're not making as much on that money.

the cubs and sox have virtually the same TV deal, both on WGN and Comcast