Sale of Cubs Update #24

[E.J.]

LA Times[/url]"]But Tribune, which also owns The Times, is now pondering whether it might get more money by selling the pieces separately, according to people close to the Tribune transaction. Among other things, that would limit Commissioner Bud Selig's influence over the deal because Major League Baseball's authority extends only to the team itself. Selig has been accused of steering previous franchise sales toward bidders he favors, even when higher offers have been on the table, and he may have a strong preference this time.

 

A piecemeal transaction would also make the sale more complicated and probably push the timeline for its completion past the end of this year. And the league says it would represent a change of signals from Tribune.

 

Zell would have veto power over major transactions once he becomes Tribune's chairman if and when the deal is completed, possibly around the end of this year. Yet even now Zell, who holds one of the seven seats on the Tribune board, has a significant voice in corporate matters and wouldn't take kindly to being strong-armed into accepting less than the highest bid.

 

The Cubs deal may develop into an unusual public spectacle. Unlike most franchise sales, which involve groups of private individuals as buyers and sellers, this one involves a public corporation that has a fiduciary duty to obtain the best return for shareholders by accepting the highest offer, regardless of the bidder's identity.

 

On the other hand, as a group of private franchise owners engaged in a joint undertaking, Major League Baseball has a clear interest in approving sales only to buyers with whom the owners are comfortable -- not necessarily the highest bidders. The transfer of any franchise requires the approval of 23 of the 30 team owners.

 

 

Under Zell's influence, Tribune may be signaling that it would not be willing -- or couldn't afford -- to accept a similar underbid.

 

"Notwithstanding Major League Baseball's desire to be in business with John Canning," a person close to the transaction said, "he's got to pay what the asset is worth."

 

Conventional wisdom holds that Tribune is under pressure to complete a Cubs sale quickly, preferably before New Year's. A quick transaction clearing several hundred million dollars would help alleviate the $12-billion debt burden of the Zell deal. Tribune's first-round financing includes a requirement that $750 million of the principal be paid down within 18 months, and another $750 million six months after that.

 

Moreover, any asset sales completed after Tribune is taken private would incur costly tax penalties because of the structure employed.

 

Tribune sources say some potential buyers may believe they can exploit the apparent urgency by offering a speedy closing in exchange for a price break. But they say they would pay down the principal from other sources of cash if they could get more for the Cubs by waiting. The tax liabilities conceivably could be worked around by tweaking the corporate structure to leave the Cubs in a tax-paying affiliate even as the rest of the company goes private.

 

This is definitely turning interesting.

[Coach C]

So let me see if I understand this. The Trib is wanting a highest bidder, regardless of who you are, and possibly without the Commish interference?

 

If that is the case, then Cuban's chances greatly increases here, IMHO.

[Fred Hornkohl]

So let me see if I understand this. The Trib is wanting a highest bidder, regardless of who you are, and possibly without the Commish interference?

 

If that is the case, then Cuban's chances greatly increases here, IMHO.

 

Not necessarily so.... just because the Tribune may want something doesn't mean they're going to get it, or even that they're entitled to. Similarly, if 23 of 30 owners don't approve the sale to the highest bidder, this could not be construed as Tribune Co failing in their fiduciary responsibility to their shareholders.

[vance_the_cubs_fan]

I think what is implied while not actually written is that Selig really wants the Canning group to be the owners and is pushing strongly for that. At the same time, the Canning group may not be offering what the Trib wants for the Cubs.

[Coach C]

I think what is implied while not actually written is that Selig really wants the Canning group to be the owners and is pushing strongly for that. At the same time, the Canning group may not be offering what the Trib wants for the Cubs.

 

Tha's what I'm concerned about. I mean, if I'm the seller of the Chicago Cubs (I wouldn't even sell them if I personally own them of course) I would expect top dollar for it. Nothing less.

[vance_the_cubs_fan]

I think what is implied while not actually written is that Selig really wants the Canning group to be the owners and is pushing strongly for that. At the same time, the Canning group may not be offering what the Trib wants for the Cubs.

 

Tha's what I'm concerned about. I mean, if I'm the seller of the Chicago Cubs (I wouldn't even sell them if I personally own them of course) I would expect top dollar for it. Nothing less.

 

Well, it may not be that they're not getting top dollar, but that Canning is significantly lower than many other bids.

 

Canning might be counting on his Selig ties to get the deal done. Imagine if Canning offered a bid of 680 million, while there were three bids at 800, 850, and 1 billion.

 

That would be a significant difference.

[Coach C]

I think what is implied while not actually written is that Selig really wants the Canning group to be the owners and is pushing strongly for that. At the same time, the Canning group may not be offering what the Trib wants for the Cubs.

 

Tha's what I'm concerned about. I mean, if I'm the seller of the Chicago Cubs (I wouldn't even sell them if I personally own them of course) I would expect top dollar for it. Nothing less.

 

Well, it may not be that they're not getting top dollar, but that Canning is significantly lower than many other bids.

 

Canning might be counting on his Selig ties to get the deal done. Imagine if Canning offered a bid of 680 million, while there were three bids at 800, 850, and 1 billion.

 

That would be a significant difference.

 

Of course, and I absolutely agree with you. If I were selling the team, as I mentioned before, I would expect the top 2 highest bidders, regardless of what the Commish thinks.

 

I wonder if there is still a way around (a loophole?) the 32 owners vote and such?

[Bruce Miles]

Two words: antitrust exemption.

That means the owners can do pretty much as they please as far as whom they'll approve to own the team.

[E.J.]

Two words: antitrust exemption.

That means the owners can do pretty much as they please as far as whom they'll approve to own the team.

 

John Canning, come on down...

[seanimal]

What percentage of the owners have to approve of the sale? Unanimous?

[NewUserName]

So let me see if I understand this. The Trib is wanting a highest bidder, regardless of who you are, and possibly without the Commish interference?

 

If that is the case, then Cuban's chances greatly increases here, IMHO.

 

Not necessarily so.... just because the Tribune may want something doesn't mean they're going to get it, or even that they're entitled to. Similarly, if 23 of 30 owners don't approve the sale to the highest bidder, this could not be construed as Tribune Co failing in their fiduciary responsibility to their shareholders.

 

 

I agree with this but, What kind of public relations nightmare would it be for Selig, Canning and the owners who voted against Cuban. Anything short of winning a WS in a couple of years would create a Canning lynching party.

 

I know its not the same thing but it would be like the Cubs being highest bidder for ARod. ARod accepting the offer, Then somehow MLB ruling the contract unfair and ARod going back to the Yankees. I know its not the same thing but thats how the general public would see it.

[CubColtPacer]

So let me see if I understand this. The Trib is wanting a highest bidder, regardless of who you are, and possibly without the Commish interference?

 

If that is the case, then Cuban's chances greatly increases here, IMHO.

 

Not necessarily so.... just because the Tribune may want something doesn't mean they're going to get it, or even that they're entitled to. Similarly, if 23 of 30 owners don't approve the sale to the highest bidder, this could not be construed as Tribune Co failing in their fiduciary responsibility to their shareholders.

 

 

I agree with this but, What kind of public relations nightmare would it be for Selig, Canning and the owners who voted against Cuban. Anything short of winning a WS in a couple of years would create a Canning lynching party.

 

I know its not the same thing but it would be like the Cubs being highest bidder for ARod. ARod accepting the offer, Then somehow MLB ruling the contract unfair and ARod going back to the Yankees. I know its not the same thing but thats how the general public would see it.

 

People forget about those sorts of things. Remember when A-Rod was being traded to the Red Sox? The union blocked the deal that both A-Rod and the Red Sox were happy with , A-Rod went to the Yankees, and a year later nobody cared.

 

It would be the same thing except even more so for ownership situations. A lot of casual fans might not even pay attention in the first place to who is getting ownership until somebody is actually approved.

[Bruce Miles]

Commissioner Bowie Kuhn stopped Edward DeBartolo from buying the White Sox in 1980 even though DeBartolo had vast resources and probably could have outbid anybody. The owners and the commissioner don't care how it "looks."

[rocket]

What percentage of the owners have to approve of the sale? Unanimous?

 

23 out of 30

[Outshined_One]

Two words: antitrust exemption.

That means the owners can do pretty much as they please as far as whom they'll approve to own the team.

 

I think the antitrust exemption would allow for MLB to get the owner it wants, but that fiduciary duty is going to be a hell of a sticking point. I don't know if other teams have been sold under these circumstances before, but I'm willing to guess the antitrust exemption would not prevent MLB from getting slapped with a potentially successful lawsuit for interfering with that duty. As the article mentions, this is an unusual situation.

 

I'd have to look into it more, though.

[CubFanPhilly]

Two words: antitrust exemption.

That means the owners can do pretty much as they please as far as whom they'll approve to own the team.

 

I think the antitrust exemption would allow for MLB to get the owner it wants, but that fiduciary duty is going to be a hell of a sticking point. I don't know if other teams have been sold under these circumstances before, but I'm willing to guess the antitrust exemption would not prevent MLB from getting slapped with a potentially successful lawsuit for interfering with that duty. As the article mentions, this is an unusual situation.

 

I'd have to look into it more, though.

 

Fiduciary duty should indeed be a sticky point in this case. Fiduciary duty to the shareholders, and the fiduciary duty of the Trustee of the ESOP which owns Tribune on behalf of its employees. Yes MLB has the power to block the sale. But the Tribune's board and the ESOP Trustee have an obligation to seek the highest bid. They should reject any inferior bid regardless of the probability that MLB would approve the sale.

[NewUserName]

So let me see if I understand this. The Trib is wanting a highest bidder, regardless of who you are, and possibly without the Commish interference?

 

If that is the case, then Cuban's chances greatly increases here, IMHO.

 

Not necessarily so.... just because the Tribune may want something doesn't mean they're going to get it, or even that they're entitled to. Similarly, if 23 of 30 owners don't approve the sale to the highest bidder, this could not be construed as Tribune Co failing in their fiduciary responsibility to their shareholders.

 

 

I agree with this but, What kind of public relations nightmare would it be for Selig, Canning and the owners who voted against Cuban. Anything short of winning a WS in a couple of years would create a Canning lynching party.

 

I know its not the same thing but it would be like the Cubs being highest bidder for ARod. ARod accepting the offer, Then somehow MLB ruling the contract unfair and ARod going back to the Yankees. I know its not the same thing but thats how the general public would see it.

 

People forget about those sorts of things. Remember when A-Rod was being traded to the Red Sox? The union blocked the deal that both A-Rod and the Red Sox were happy with , A-Rod went to the Yankees, and a year later nobody cared.

 

It would be the same thing except even more so for ownership situations. A lot of casual fans might not even pay attention in the first place to who is getting ownership until somebody is actually approved.

 

I think if it were Cuban the casual fan would notice. I would also say that is DeBartola was turned down by the owners in 1985 instead of 1980, White Sox fans would have been in a uproar.

[vance_the_cubs_fan]

Two words: antitrust exemption.

That means the owners can do pretty much as they please as far as whom they'll approve to own the team.

 

Bruce,

 

What's your take on this? Are Selig and the boys trying to ram Canning down the Trib's throat? Is there a lot more to this than what's being reported?

 

I sure would like RedIvyCub to make an appearance. She seems to have a handle of some of the inner workings of these things.

[SouthSideRyan]

What percentage of the owners have to approve of the sale? Unanimous?

 

1 out of 30.

 

Reinsdorf, and even that's really just what Selig wants too, so basically 0 out of 30.

[Bruce Miles]

Two words: antitrust exemption.

That means the owners can do pretty much as they please as far as whom they'll approve to own the team.

 

Bruce,

 

What's your take on this? Are Selig and the boys trying to ram Canning down the Trib's throat? Is there a lot more to this than what's being reported?

 

I sure would like RedIvyCub to make an appearance. She seems to have a handle of some of the inner workings of these things.

 

I'm not privy to a lot of this stuff, being with the team every day and all. MLB will have its preferences, but how hard they're pushing for one group or another, I don't know.

[vance_the_cubs_fan]

Two words: antitrust exemption.

That means the owners can do pretty much as they please as far as whom they'll approve to own the team.

 

Bruce,

 

What's your take on this? Are Selig and the boys trying to ram Canning down the Trib's throat? Is there a lot more to this than what's being reported?

 

I sure would like RedIvyCub to make an appearance. She seems to have a handle of some of the inner workings of these things.

 

I'm not privy to a lot of this stuff, being with the team every day and all. MLB will have its preferences, but how hard they're pushing for one group or another, I don't know.

 

Thanks for the input.

 

Will you have a greater knowledge of things once the season ends?

[seanimal]

What percentage of the owners have to approve of the sale? Unanimous?

 

1 out of 30.

 

Reinsdorf, and even that's really just what Selig wants too, so basically 0 out of 30.

 

So, 29 out of the 30 owners have to approve?

[NCCubFan]

Two words: antitrust exemption.

That means the owners can do pretty much as they please as far as whom they'll approve to own the team.

 

I think the antitrust exemption would allow for MLB to get the owner it wants, but that fiduciary duty is going to be a hell of a sticking point. I don't know if other teams have been sold under these circumstances before, but I'm willing to guess the antitrust exemption would not prevent MLB from getting slapped with a potentially successful lawsuit for interfering with that duty. As the article mentions, this is an unusual situation.

 

I'd have to look into it more, though.

To me this seems different that previous sales due to the Trib being a public corporation. Antitrust exemption or not, the Trib's stockholders certainly have a right to get the most possible from the sale of their stock. What seems to me like a logical solution would be that the owners can veto a sale, but they would then be liable to make up the difference between the high bid and what the team actually sells for. It would then be up to the owners to decide if they're so opposed to the high bidder that they're willing to make up the difference.

[SouthSideRyan]

What percentage of the owners have to approve of the sale? Unanimous?

 

1 out of 30.

 

Reinsdorf, and even that's really just what Selig wants too, so basically 0 out of 30.

 

So, 29 out of the 30 owners have to approve?

 

No my point is the owners will approve/deny what Selig wants. It's a dictatorship.

 

There's a few that will vote on their own (Steinbrenner, maybe Angelos), but it's not enough to overcome what Bud wants.

[vance_the_cubs_fan]

I guess one response of the Tribune would be to agree to sell the Cubs to Canning but sell Wrigley Field to another entity or hold on to Wrigley as well. If Canning offered 650 million and another buyer offered closer to 1 billion. The Cubs could tell Canning that his bid was only sufficient to buy the Cubs but not the Cubs and Wrigley.

 

I don't think there's anything that gives MLB power to say who owns Wrigley Field.