Thursday, October 29, 2009

Sports and the Law: Cubs Sale Complete

Two weeks ago, we discussed the news out of Chicago that the Cubs had filed for and emerged from Chapter 11 bankruptcy protection within a 48 hour period. (Click here for previous coverage on the Cubs bankruptcy.) The bankruptcy filing was part of the sale process of the team from the Tribune Co. to the Ricketts family. As expected, the sale of the Chicago Cubs has now been finalized, and the team is now in control of billionaire Joe Ricketts.

The total value of the sale is approximately $845 million. That amount is the most that has ever been paid for a franchise, topping the $660 million that was paid for the Boston Red Sox and its related properties in 2002. For its $845 million, Joe Ricketts will receive not only 95% of the Cubs franchise, but also Wrigley Field and and 25% of Comcast Sportsnet, the television station that broadcasts most of the Cubs' games. Tribune Co. will retain the remaining 5% of the team. At the end of the day, Tribune Co. will actually receive about $740 million after taxes and fees are taken out.

So was it a good deal for Tribune Co.? In April, Forbes valued the franchise at $700 million, a number that included a $149 million valuation of Wrigley Field. The Forbes valuation took into account the pending sale to the Ricketts family, although at the time, the price tag was $900 million - $60 million more than the final number and less than other bidders were then offering for the club. In fact, some reports after the first round of bidding for the Cubs in late-2008 stated that bids were made as high as $1.3 billion. On the other hand, the Red Sox, a team now valued at $833 million by Forbes, sold for $660 million only 6 years ago. So, in only 6 years, the price for a Major League Baseball franchise rose almost $200 million dollars, and that is for a team (the Cubs) arguably less valuable than the previously sold team (the Red Sox). So, to answer the initial question, this appears to be a good deal for Tribune Co., or at least a fair deal for both parties. What do you think?

Tim Cedrone is a judicial law clerk in the New Jersey Superior Court, Appellate Division. This blog post and all others written by Mr. Cedrone are his work and his alone and express only the author's views. Nothing in this blog post or any other blog post written by Mr. Cedrone represents the views of the New Jersey Superior Court or any related entity.

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Acnehorror said...

oooh - the cubs caught the ricketts -- wow i sure hope they can recover -- i have heard that that can be devastasting