The Cubs Sale Thread

[third eye]

Billionaire Mark Cuban, who's trying to buy baseball's Chicago Cubs, received a recommendation from an unexpected source: National Basketball Association Commissioner David Stern.

 

The owner of the Dallas Mavericks has been fined more than $1.3 million by Stern for criticizing referees. When asked what he would tell Major League Baseball owners about Cuban, Stern replied in an e-mail, "They should welcome him."

http://www.dailyherald.com/story/?id=224434&src=152

 

Hmmm, Stern is very much a traditionalist and would fit well in perceived "good ole boys" clubs. Seems like his recommendation would have quite a bit of impact for anyone riding the fence on Cuban.

 

Stern knows Cuban has been good for the NBA, referee criticisms aside. Cuban took over the Mavericks and not only made them a contender, but also made them one of the most popular franchises in the NBA. Cuban may have been a disciplinary headache, but he's been one of the best things to happen to the NBA in the past few years.

 

After witnessing the mockery Stern has made of both himself and the legitimacy of the NBA here in Seattle this year, I find it very hard to imagine him as the benvolent commissioner looking out for the best interests of the league. As much as I dislike conspiracy theories about the NBA, I have a visceral distrust for him as a human being that forces me to be believe he may want Cuban's interests elsewhere.

[RedIvyCub]

Tribune is not a publically held company.

 

 

http://www.tribune.com/pressroom/releases/2007/12202007.html

 

That's right, but it's also not like selling a privately held company. Similar fiduciary obligations/issues apply as in the sale of a public company.

 

The fact that those harmed by acceptance of a lower bid are employees of the Tribune makes it all the less likely.

I think a key issue, though, is that it's the Trib that has the fiduciary responsibility, not MLB. If the Trib accepts the highest bid but MLB doesn't approve it the Trib couldn't be held liable. They will have done their part.

 

Sam Zell doesn't appear to be the type of guy that will would go down quietly. He bought the Tribune Co. to make money, and if Cuban is offering the most money, he is going to move heaven and earth to make sure that Cuban is approved.

 

One thing for sure, he cannot sue.

[Garwilly]

Tribune is not a publically held company.

 

 

http://www.tribune.com/pressroom/releases/2007/12202007.html

 

That's right, but it's also not like selling a privately held company. Similar fiduciary obligations/issues apply as in the sale of a public company.

 

The fact that those harmed by acceptance of a lower bid are employees of the Tribune makes it all the less likely.

I think a key issue, though, is that it's the Trib that has the fiduciary responsibility, not MLB. If the Trib accepts the highest bid but MLB doesn't approve it the Trib couldn't be held liable. They will have done their part.

 

Sam Zell doesn't appear to be the type of guy that will would go down quietly. He bought the Tribune Co. to make money, and if Cuban is offering the most money, he is going to move heaven and earth to make sure that Cuban is approved.

 

One thing for sure, he cannot sue.

 

With all due respect, nearly anyone can sue over anything. Dealing in the legal world I can assure that he can certainly file a lawsuit in this matter. That said, you appear to commenting on the viability of the lawsuit. Thats a whole different topic. The suit itself can very well be brought though.

[CubFanPhilly]

 

One thing for sure, he cannot sue.

 

The shareholder of the Tribune (the Trust established on behalf of the employees) can sue. The Trustee would be under considerable pressure to do just that. Not to mention that it would be a PR disaster for MLB to reject the highest bid when the survival of the Tribune Company and the retirement savings of its employees are on the line.

[CubFanPhilly]

An analogy:

 

You own a sucessful car dealership and you sell it to a Trust established on behalf of employees (an ESOP). You use the dealership's assets to leverage the Company to finance the transaction. The dealership struggles to make its debt payments. Now a year later a buyer offers 20% more than what the Trust paid for the dealership. However, the Company has a franchise agreement that states General Motors must approve the sale. GM doesn't like the buyer and rejects the sale, but lines up a buyer who pays 30% less.

 

Who has a cause of action?

 

-The shareholder (the Trust), because there's obvious financial harm.

-The Company's creditors.

-The employees (the beneficiaries of the Trust)

 

Against whom?

 

-The Board? Not likely, because entering into the franchise agreement was a reasonable and prudent action and they accepted the highest offer.

-General Motors? Perhaps if the rejection of the buyer was not for a legitimate reason or the franchise agreement is deemed to be unenforceable.

-The Trustee? Perhaps, if they sit on their hands and accept the lower bid.

 

The existence of the franchise agreement makes it a difficult argument, but it doesn't negate the right to sue. Even if the franchise agreement stated that the Company couldn't sue GM, it's not the party bringing the suit.

 

 

But set all of that aside, because it's not what really matters. What really matters is that the Cubs are owned by the Tribune, which is in turn owned by its employees. Let's say Cuban offers $1.4 billion for the Cubs, and that's $300 mil. more than the next highest bidder. The Tribune accepts the offer, but the owners reject Cuban. MLB has just hosed the employees of the Tribune Company out of $300 mil. in retirement savings. Worse yet, what if the Tribune can't meet its debt obligations and eventually files for bankruptcy?

 

Can you imagine the negative press?

 

btw- RIC, I know the Trustee and two of the attorneys who worked on the Tribune buyout. The Trustee is a bulldog, and I would not be surprised to see the Trust file suit (particularly if details of a rejected bid are leaked to the press).

[Guest]

Apparently AP says Canning somehow made the cut with Madison Dearborn Partners.

 

ESPN[/url]"]Tribune Co. CEO Sam Zell said Tuesday that the media conglomerate has chosen five bidders for the Chicago Cubs.

 

...

 

"We hope to have a deal to MLB by the end of the year," said Zell, the real estate mogul who led a $8.2 billion buyout of the company last year. He said he expects "rapid" approval.

 

Tribune is selling the ballpark, baseball team and a 25 percent interest in a local sports channel to raise cash to pay down $13.4 billion in debt, mostly related to the buyout.

 

Major League Baseball in June sent out financial books on the three properties to nine preapproved bidders.

 

The list reportedly included a group headed by John Canning, chairman of private equity firm Madison Dearborn Partners LLC; Internet billionaire and Dallas Mavericks owner Mark Cuban; and the family of online brokerage Ameritrade's founder, Joe Ricketts.

 

:|

[CubColtPacer]

Apparently AP says Canning somehow made the cut with Madison Dearborn Partners.

 

ESPN[/url]"]Tribune Co. CEO Sam Zell said Tuesday that the media conglomerate has chosen five bidders for the Chicago Cubs.

 

...

 

"We hope to have a deal to MLB by the end of the year," said Zell, the real estate mogul who led a $8.2 billion buyout of the company last year. He said he expects "rapid" approval.

 

Tribune is selling the ballpark, baseball team and a 25 percent interest in a local sports channel to raise cash to pay down $13.4 billion in debt, mostly related to the buyout.

 

Major League Baseball in June sent out financial books on the three properties to nine preapproved bidders.

 

The list reportedly included a group headed by John Canning, chairman of private equity firm Madison Dearborn Partners LLC; Internet billionaire and Dallas Mavericks owner Mark Cuban; and the family of online brokerage Ameritrade's founder, Joe Ricketts.

 

:|

 

That doesn't necessarily say that. It says that Canning was part of the original 9, not that he survived the cutdown to 5.

[Guest]

Hmm, you're right.

[David]

CCP beat me to it, as usual.

[Peoriaman]

again gyts, MLB will approve any of the remaining bidders. The Cubs hgave done their homework and MLB approved all these folks to bid on the Cubs.

[JonnyRed]

Just for sake of discussion, let's imagine the Cubs win it all this year, and final bids are due in November.

 

You're a bidder.

 

Does the WS win motivate you to increase or decrease your bid?

 

Or put another way, does the curse, the 100 years, the lovable losers, the wait til next year, etc. etc., does that stuff add value to the franchise?

 

I think winning does result in a net increase in the franchise value, but also those storylines that go away were adding value.

 

I don't think the Red Sox value has diminished. It probably enhances value in the short-run (5 years).

 

The value of the Red Sox increased by 40% after the first WS title. Put very simply, winning = $$$ through higher advertising rates, promotional tie ins and in stadium revenue (ie more $7.50 beers)

[Banedon]

Hmm, you're right.

 

It looks like you and Steve Rosenbloom think alike, Raisin. He made the same mistake.

How fun for you.

[David]

http://mlb.fanhouse.com/2008/08/07/the-dugout-allow-cuban-to-buy-the-cubs-or-suffer-the-consequenc/

 

Just found this... had you guys seen it?

[moorecg]

I was talking with some baseball execs this weekend and they indicated that the whole Cubs sale was scarring the rest of the NL...he said they are afraid that a new owner for the Cubs could be like "waking a sleeping Giant" (think Red Sox/Yankees of the NL) that made me smile.

[Banedon]

http://mlb.fanhouse.com/2008/08/07/the-dugout-allow-cuban-to-buy-the-cubs-or-suffer-the-consequenc/

 

Just found this... had you guys seen it?

 

I totally got the "Ellis" thing before he mentioned it specifically. God I've seen that movie too many times.

[shnsajax]

I was talking with some baseball execs this weekend and they indicated that the whole Cubs sale was scarring the rest of the NL...he said they are afraid that a new owner for the Cubs could be like "waking a sleeping Giant" (think Red Sox/Yankees of the NL) that made me smile.

 

Exec's may be scared, but owners will be happy once their franchise value goes up 10-15% after the sale.

[Derwood]

my best friend just got hired by a Pittsburgh law firm that is going to be involved in the contractual parts of the Cubs sale.

[CubinNY]

my best friend just got hired by a Pittsburgh law firm that is going to be involved in the contractual parts of the Cubs sale.

Isn't Cuban from Pittsburgh?

 

2 + 2 = 6

[anabiono]

my best friend just got hired by a Pittsburgh law firm that is going to be involved in the contractual parts of the Cubs sale.

Isn't Cuban from Pittsburgh?

 

2 + 2 = 6

 

you are terrible at math

[David]

my best friend just got hired by a Pittsburgh law firm that is going to be involved in the contractual parts of the Cubs sale.

Isn't Cuban from Pittsburgh?

 

2 + 2 = 6

 

Didn't even put that together... good call, although it probably means nothing

[Derwood]

my best friend just got hired by a Pittsburgh law firm that is going to be involved in the contractual parts of the Cubs sale.

Isn't Cuban from Pittsburgh?

 

2 + 2 = 6

 

Sorry, I wasn't trying to imply that Cuban was/wasn't the buyer. I think they're representing Zell, or are just a 3rd party between Zell and whomever the buyer is. Either way, my friend has his 3rd year of Law School to finish and won't start until October 2009, so he won't be involved.

 

The good news (for me) is that his firm has skyboxes at both PNC and Heinz Field and he promises to bring me to many many games

[Hall7810]

Crane Kenney was just on CTL and was asked about Cuban's potential purchase of the Cubs. His response, "if Mark were the highest bidder, it's my feeling that he'd be approved by the ownership."

[David]

Crane Kenney was just on CTL and was asked about Cuban's potential purchase of the Cubs. His response, "if Mark were the highest bidder, it's my feeling that he'd be approved by the ownership."

 

Awesome.

 

Good news day today after a ton of crap for the past few days.

[Gmoney08]

Crane Kenney was just on CTL and was asked about Cuban's potential purchase of the Cubs. His response, "if Mark were the highest bidder, it's my feeling that he'd be approved by the ownership."

 

Well then I hope Cuban was serious when he said he would not be outibid!

[ZMovieman]

Just a bump because I heard Lawrence Holmes on the Score during his show with Dan Hampton mention getting texts from sources about the sale being complete. Alluded to Stone possibly addressing about it at 2PM on B&B. Anyone else hear this? Personally, I doubt anything actually happened because A) no one else has picked it up yet and B) that seems awfully fast for a decision to be made. Anyone tell me I'm at least not crazy for hearing that?