In a meeting a few weeks ago, a banker crystallized what's going on right now in the credit markets. "We are undoing 30 years of underwriting in 18 months," he said. What this means is that over the last 30 years, banks got more and more aggressive on lending higher and higher percentages of corporate assets. These percentages are now being rapidly lowered.

What this means for companies us that they need to focus clients this year on their balance sheet. Deleveraging is the name of the game. If banks are going to led less, businesses need to replace the debt with capital. Those businesses that can do this will weather the storm and emerge stronger. Those that can't will close up shop.

The Chicago Cubs roster certainly seems to be in a similar situation. Right now, they have several under performing assets. With Aramis Ramirez hurt (and possibly headed to the DL), Geovany Soto under performing (and also somewhat hurt), Milton Bradley hurt, but potentially recovered, and Derrek Lee hurt, the Cubs lineup is missing its central core. Just think of where the team's record would be if Alfonso Soriano was repeating his April from 2008 and Kosuke Fukudome was repeating everything after April 2008.

All these injuries have left the Cubs puttering along near .500 and 3 games behind the Cardinals. This has induced panic among many Cub fans and much teeth gnashing among others.

This worry is unfounded. Why? Just look at the Cubs' balance sheet of talent.

Over the next few days, the Cubs are going to add Aramis Ramirez, Milton Bradley and Derrek Lee to their lineup. And Soto will likely improve when his World Baseball Classic enhanced shoulder injury clears up. That’s a lot of talent to add to a team that’s already over .500.

Now. it is possible that A Ram could be hurt far worst than the team is telling us, Bradley could spend 100 days on the DL, Soto isn’t hurt and is having a horrid sophomore slump, and Lee is just continuing the death spiral he looked to be on since last May.

But is all that really likely? No.

This is a well-capitalized team. Strong capital positions give you the opportunity to emerge quite healthy from hard times. The 2009 Cubs are a good bet to do just so.

Buried in the game notes story about extra base hits and carpeting jingles was this brilliance from the Cubs front office:

"People understand that we obviously don't want to get into the Jumbotron business and we don't want to add 15 million signs all over Wrigley Field, and it's with the understanding that 100 percent [of the advertising revenues] goes to player payroll," (Cubs marketing director Matt Wszolek) said.

Yes, Matt. We understand that.

We ALSO understand that, if 100% of a certain revenue stream is dedicated to one certain expense category, revenues from other streams can be diverted to other uses.

Matt expects us to believe that if he were to sign a deal with, say a fast food company, all that new money would go to salaries. But since salaries are contracted before the season starts, does this mean that every player gets a raise with the new money? What if a new advertiser comes in mid-year? How does that money make its way to salaries?

But, a even better question would be to ask what happens to the money that paid those salaries before the new deal got signed? Does that money, say, from TV revenues, get distributed because there is more ad revenue now? Where does it go? To the Tribune to support their debt service?

It probably shouldn't go to the marketing department spokesman, that's for sure.

As I wrap up my civic duty and plan for a two day business trip out of town, Crain's finally realizes that Tom Ricketts and his family have no chance of getting $450 million in bank debt to buy the Cubs:

Tom Ricketts is offering private investors a stake in the Chicago Cubs as he works to finance a $900-million acquisition of the team by his family.

Crain's has learned that Mr. Ricketts - scion of the TD Ameritrade Inc. fortune - is trying to raise $100 million or more through the sale of preferred stock to wealthy individuals. Money raised from investors would reduce the amount the Ricketts family would have to borrow from banks to finance the Cubs deal.

The preferred shares would represent an ownership interest in the team but confer no voting privileges or other rights of control. Investors would be entitled to a 6.5% dividend on their shares, according to people familiar with the terms.

They also would get front-row seats at Wrigley Field, opportunities to hobnob with players and a place on an "advisory board" that would meet regularly to discuss the team's future. After 15 years, they'd get their original investment back without sharing in any appreciation in the value of the franchise over that period.

People close to the Ricketts group say Mr. Ricketts hopes to find five to 10 investors willing to put up $25 million apiece.

So, the Ricketts family was going to put up $450 million of their own money. They are now looking for another $250 million in private equity to back the purchase. If they get this, there is a huge positive for Cub fans. A lower amount of bank debt means less debt service which means less cash flow needs to be diverted from operations.

This frees up lots of money for free agents, new front office personnel, capital improvements to Wrigley Field, etc. All good things.

But what really are the chances of finding a large number of people to have $25 million to become silent partners in exchange for a good return compared to current debt markets, but lousy compared to historical equity returns? Pretty weak, you have to think.

This is EXACTLY what Mark Cuban said when he bowed out of the bidding (emphasis mine):

With the credit market on the fritz, the other option was to add investors and just pay cash. However, if we were going to pay cash, I was not going to bid anywhere near 1 Billion dollars for the assets. Once the credit crisis hit, the value of cash went through the roof. It was not just a matter of how much the Cubs were worth, it was also a matter of how much more money I could earn with that cash. Cash was and is king. Distressed investment opportunities were rolling in the door that could make me multiples of what any sports team could. I could not see any scenario where the Cubs were worth anywhere near the numbers that had been discussed in the media. There is one publicly owned team, the Atlanta Braves, that are owned by Liberty Capital. The market cap of ALL of Liberty Capital net of cash and debt got as low as $250mm dollars, and today trades for about $500mm dollars, and they own far more than just the Braves.

So there was the issue of valuation. There was also the issue of the economy. It was impossible to predict the full impact of these tough times on any sports team. That uncertainty created two issues. The first of course was valuation. How much would I be willing to pay for the team ? I wasn’t sure. More important to me was the cash flow. If the economy had a significant impact on future revenues, it would also impact how much I could invest in players. The absolute last position i wanted to be in was paying so much for the team, that if revenues fell off, I couldnt play to win.

So when it came down to it, I did what I thought was the only smart thing to do. I asked for an extension. I knew that if they got the money they wanted for the team, well my bid was not going to be high enough anyway. If they didnt, or the other bidders couldnt come up with their money, they would come back to me.

I’m still waiting

You may not have to wait much longer, Mark.

There's no way that the Ricketts close this deal giving the Tribune $900 million at close. They may still get the team, but not at the agreed price in a lump sum.

Hopefully, post biz trip, Ivy Chat will return to discussing developments, not simply awaiting them.

While all the chatter today is on Gordon Wittenmyer's self serving, unsubstantiated, reporter-making-the-news column on "racist" Cubs fans (see Andy Dolan's takedown of the column for a great response), the real news remains on the injury front.

Lou Piniella gave an update on Geovanny Soto, Milton Bradley and Aramis Ramirez on his pre-game WGN radio show. Soto returns to in the lineup today, but will get this Sunday off. With no game on Monday, Soto's back gets back-to-back days of rest. A Ram's injury is kind of curious. He's getting another day off, but Lou says that he's available to pinch hit. There's no real detail on what the injury is or if it's expected to be a chronic thing. This bears watching.

But Bradley's status is very interesting. Lou says that Bradley needs a few more days. No word if he's available to pinch hit or not. No word at all. What makes this so interesting is Bradley's contract. Bradley is guaranteed two years and $20 million. His third year (and another $10 million) vests if Bradley spends fewer than 75 days on the disabled list between now and the end of the 2010 season.

It seems clear now that this current injury will cost Bradley about 7 days. With three starters nursing injuries, the Cubs could get into a shortage of position players. It probably makes sense to DL Bradley and get a live body onto the roster. One wonders if the decision to DL or Not To DL is being affected by that vesting clause.

He's got more kids?

So, last night, while awaiting election returns and getting kids in bed, I glance from time to time at the Cubs game. All of a sudden, I hear Len Kasper say that Koyie Hill is getting his first at bat of the season. This doesn't strike me as strange until I realize that it's not the second or third inning. It's more like the fifth.

Uh oh... Where's Geovany Soto?

Well, it seems he has a bad shoulder:

"I kind of over-exposed my shoulder a little bit," Soto said. "There was a little discomfort in my shoulder. I felt some weakness in it, and I felt I didn't have a shot if somebody else [tried to steal]. I need to keep up my exercises, and we'll see how it is in a couple days."

Soto said he had the same problem in Spring Training and doesn't expect to miss much time, according to the report.

Soto hurt this in spring training? I don't recall him being in spring training that much. I wonder what he was doing that he could have hurt himself? Maybe throwing too hard somewhere before he was really ready?



If Geo misses any significant amount of time, this is all on Bud Selig.

The Cubs are back in action today for their 133rd season. All the usual platitudes apply. Hope springs eternal. Baseball and spring are a sign of renewal and rebirth. Hell, you can even throw Terence Mann's speech into the mix. It's great to have baseball back.

That said, this Cubs season has all the appearance of waiting in line for the real show. Given the last two post-season results, Cub fans are focused pretty heavily on post-season success. There would be few genuine fans out there who will tell you that they would be satisfied with anything less than a season that included at least advancing past the Divisional Playoff Series.

So, with post-season success the determinant of the whole season, the regular season really becomes nothing more than a big dress rehearsal. We don't want to see a bunch of mopes just going through the motions 162 times, but we really need to see the play on the big stage before we give out anything more than tepid applause.

The drama for this year will be all about how this team can best compete come October. The record should take care of itself given how piss poor the rest of the division looks. That means we get to focus on Derrek Lee's bat and Rich Harden's pitch speed and Kosuke Fukudome's ballet moves and Alfonso Soriano's hop and Milton Bradley's mental spasms.

With the ownership still in flux and the credit markets not helping the Rickett's family buy the team, there's little reason to think that Jim Hendry has any bullets left to add payroll this year. That means that what we see is what we fans are going to get. Reinforcements in the event of injury are in Iowa, not San Diego.

Regardless, it's great to have the season back. Call me when the leaves start turning brown.

If you are going to build a football team's offense via the draft, it generally pays to draft the QB a year or two before you draft a running back. The shelf life these days of a good running back is maybe 5 or 6 prime years. The quarterback usually takes two years to get up to speed. If you draft the RB first, you may waste some of his most productive years drafting and grooming a quarterback.

So, last year, the Bears drafted Matt Forte. While Forte is not the best back in the NFL, the guy did very well as a rookie and still has plenty of upside. The problem was that the Bears didn't have a competent passing game to go with him. Yes, Kyle Orton wasn't the only problem with the passing game, but does anyone beyond the twelve toed goofs who call Boers and Burnstein really think he was part of the answer?

Jerry Angelo could have drafted a QB this year and, if he panned out, have a good QB right around the time Forte was past his peak.

Instead, he spent two draft picks and swapped positions on a third to get a 25-year old Pro Bowl quarterback in Jay Cutler. And he dumped the contract of the guy Cutler is replacing in the process.

There's a downside here?

Balls out, Jerry. And nice gamble on Orlando Pace, too. Now for a wide receiver or three. Hey! As long as you are signing old ex-Rams, why not Tory Holt?