Z Signs, Z Bails?

By now you've all heard that Carlos Zambrano has signed a five-year, $90 million contract extension with the Chicago Cubs. This can only mean one thing:

Sam Zell is bailing on buying the Chicago Tribune.

Follow this. Back in April, the day before the season opens, Zell announces that he's going to be buying the Trib. A late deal put together by Jim Hendry was accepted by Zambrano and ready to be signed.

Whoops! Zell comes in and the deal is off! "Can't create future obligations for the team that a buyer of the franchise would have to assume." was Zell's thinking.

Now, Zambrano signs? Why now instead of back in April? What's changed?

Simple. The Trib has continued to see declines in its advertising revenues. Cash flows and profits are shrinking. The stock of the company has been falling like Derrek Lee's batting average. This morning's price is $25.04 per share. Zell's deal was to buy the company at $34 per share. That's a 26.4% discount to the purchase price. What is Mr. Market telling us?

That the market doesn't believe the deal is going through.

That Carlos Z is signed is good news for the Cubs and their fans. It also means that Sam Z is heading out, back to the land of real estate.

And it still means the Cubs will be sold, just with Carlos as part of the asset base.