Tom Ricketts and family, who made their fortune launching the Ameritrade financial empire in Omaha, have been selected by the Tribune Co. as the buyers of the Chicago Cubs and Wrigley Field. Now comes the hard part: arranging financing for the $900-million transaction.
Tom Ricketts and family, who made their fortune launching the Ameritrade financial empire in Omaha, have been selected by the Tribune Co. as the buyers of the Chicago Cubs and Wrigley Field. Now comes the hard part: arranging financing for the $900-million transaction.
The Ricketts were the last ones standing after a two-year auction process that saw the value of the team and the ballpark start at around $600 million and rising to over a billion dollars before the crash of the global economy and a crisis in the credit markets lowered the value to around $900 million. Along the way, high-profile bidders like Mark Cuban, Henry Aaron and Jerry Colangelo expressed great interest in the team (and, indeed, the specific makeup of some of those bids will never be fully disclosed; let’s just say there were some interesting names associated as minority investors). Still, that $900 million is much more than many experts predicted when the Cubs first went on the market and represents a nice profit for Tribune Co.
The selection is just the first step in a longer process. Technically, the Tribune Co. and the Ricketts family have not reached a final agreement: they must work that out, and given Tribune Co. owner Sam Zell’s propensity for complicated financial transactions designed to minimize tax liability, you can expect those negotiations to take a while. After that final agreement is reached, the Ricketts family must then arrange financing (more on that later). After that, the sale must be approved by 23 of the 30 Major League Baseball owners.
So there are more than a few steps needed for the transaction to be competed, which is why we think the Cubs ownership is overly optimistic about having the deal done by the beginning of the season. In addition, the Tribune Co. is in bankruptcy, and although the Cubs and Wrigley Field were specifically left out of the bankruptcy filing, that doesn’t mean the transaction is outside the purview of the bankruptcy court: you’re not allowed to strip healthy assets out of the mix in bankruptcy, and all it takes is one disgruntled unsecured creditor to petition the court to put the transaction under some sort of review. And we all know bankruptcy courts move at their own pace.
The other complicating factor, of course, will be the state of the credit markets. Now, there’s money out there; we’ve seen records lately for financing levels (witness the line of credit extended to LyondellBasell after their bankruptcy filing). The Ricketts family partly won the Cubs because they walked in offering $450 million on the table, leaving a smaller amount to be financed. But the amount of money the Ricketts request probably will exceed the purchase price of the ballpark and their equity investment: it’s no secret Wrigley Field needs a lot of work, and Tribune Co, put off a bunch of work in the ballpark and on a proposed building housing team offices and a parking ramp. Put the two together, and you’re probably talking about a need for $800 million or so — not right away, but certainly within the next few years.
Still, for lovers of baseball, a Ricketts ownership has much potential. As Chicago natives, they’re openly nostalgic about Wrigley Field and the importance of the Cubs to the city. We won’t see a flee to a new ballpark, nor will we see any wholescale changes to Wrigley Field. And a return to family ownership for one of baseball’s cornerstone franchises can only be a good thing.
More from the Chicago Tribune.
What’s likely to happen to Wrigley Field.
A look at the Tribune’s ownership of the Cubs: financial success, but no World Series win.
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