Sale Update, New Figures Released

[Jon]

There's a ton of information in this article, so it's hard to quote enough to provide the full picture. However, here are some key points:

 

The difference in the Cubs situation, however, is that Zell is trying to pass muster with both the Internal Revenue Service and Major League Baseball, which has its own set of rules and requirements. That adds an extra level of complexity as potential new owners prepare preliminary bids due in early July.

 

Two sources said the documents peg the Cubs' 2007 cash flow at $31 million. Revenue, one said, is in the $250 million range. Given that experts have built expectations that Tribune Co. could fetch more than $1 billion for a package of the team, Wrigley Field and Tribune Co.'s 25 percent share of the Comcast SportsNet Chicago cable network, the first challenge is to devise a way to fund such a lofty price tag.

 

Added to the complexity is Zell's requirement that the transaction allow Chicago-based Tribune Co. to avoid as much tax liability as it can while "monetizing" the team. Even if the price ultimately falls below $1 billion, Tribune's capital-gains exposure from an outright sale would be enormous, analysts said. The company, which owns the Chicago Tribune, bought the Cubs in 1981 for $20.5 million.

 

The sources said they are skeptical. Only recently, they pointed out, Tribune Co. was saying Wrigley would require urgent, costly repairs as it negotiated with a state agency interested in buying the park. The new documents make no such claims. Moreover, Tribune Co. is widely credited for squeezing as much revenue as possible out of Wrigley.

[Derwood]

how can they possible avoid a capital gains tax on this sale?

[third eye]

how can they possible avoid a capital gains tax on this sale?

 

 

Companies can sell subsidiaries in which they have a very low basis through tax-efficient transactions like Reverse Morris Trusts and tax free spins to shareholders, but they usually involve the parent company or its shareholders receiving stock consideration. There are some debt + derivative trades that can allow for tax-efficient monetizations, but it is unlikely you could do it with an asset like this. Since it seems that the Trib needs/prefers cash consideration, I highly doubt they can find a way to make this a tax-efficient sale. The only thing I can think of is doing some kind of securitization of revenue streams or licensing fees as part of the deal. That could be a possibility.

[jacey]

That's exactly what I was going to say

[chuckywang]

how can they possible avoid a capital gains tax on this sale?

 

 

Companies can sell subsidiaries in which they have a very low basis through tax-efficient transactions like Reverse Morris Trusts and tax free spins to shareholders, but they usually involve the parent company or its shareholders receiving stock consideration. There are some debt + derivative trades that can allow for tax-efficient monetizations, but it is unlikely you could do it with an asset like this. Since it seems that the Trib needs/prefers cash consideration, I highly doubt they can find a way to make this a tax-efficient sale. The only thing I can think of is doing some kind of securitization of revenue streams or licensing fees as part of the deal. That could be a possibility.

 

You're smarter than me.

[third eye]

how can they possible avoid a capital gains tax on this sale?

 

 

Companies can sell subsidiaries in which they have a very low basis through tax-efficient transactions like Reverse Morris Trusts and tax free spins to shareholders, but they usually involve the parent company or its shareholders receiving stock consideration. There are some debt + derivative trades that can allow for tax-efficient monetizations, but it is unlikely you could do it with an asset like this. Since it seems that the Trib needs/prefers cash consideration, I highly doubt they can find a way to make this a tax-efficient sale. The only thing I can think of is doing some kind of securitization of revenue streams or licensing fees as part of the deal. That could be a possibility.

 

You're smarter than me.

 

Didn't mean for the post to come across as know-it-all or whatever. My apologies if it did. I work in that field, so the lingo is what I'm used to :blush:

[Roast]

how can they possible avoid a capital gains tax on this sale?

 

 

Companies can sell subsidiaries in which they have a very low basis through tax-efficient transactions like Reverse Morris Trusts and tax free spins to shareholders, but they usually involve the parent company or its shareholders receiving stock consideration. There are some debt + derivative trades that can allow for tax-efficient monetizations, but it is unlikely you could do it with an asset like this. Since it seems that the Trib needs/prefers cash consideration, I highly doubt they can find a way to make this a tax-efficient sale. The only thing I can think of is doing some kind of securitization of revenue streams or licensing fees as part of the deal. That could be a possibility.

 

You're smarter than me.

 

+1