Thursday, May 28, 2009

Exit Gambit?

It's not a secret that the sale of the Cubs to the Ricketts family is on thin ice. Just how thin was made clear in two Chicago Tribune articles today.

The first appeared in Phil Rogers' column this morning:

As the transfer between Sam Zell -- the Tribune Company chairman and CEO who said he didn't want to own the team but has been in charge for almost 2 1/2 seasons now -- and Tom Ricketts plods along, the sides seemingly at odds over the structure of an agreement in principle reached four months ago, Selig must be getting close to doing a Zambrano.

According to sources, he speaks to both the Zell and Ricketts camps frequently, hearing their sides of the gridlock that has kept the deal from being passed along to Major League Baseball's 29 owners for approval. It's easy to imagine steam coming out of Selig's ears when he gets off the phone, angry that one of his premier franchises remains in such an awkward state of limbo.

You can picture Selig wadding up some document he had just been faxed and flinging it against the windows of his Milwaukee high-rise. He wanted this deal done in 2007, would have settled for 2008 and long ago was assured it would happen by Opening Day. No one seems to know when it will happen, which could leave the hands of Cubs general manager Jim Hendry tied at the July 31 trade deadline.

Selig has declined to speak publicly on the subject. But it's clear he wants it resolved, sooner rather than later.

A highly placed MLB source said Wednesday that the slow pace has been due to the ongoing negotiations between Ricketts and Zell, as well as between Ricketts and the banks, not any red tape on MLB's end.

"It's not even on our desk," the MLB source said. "We can't do anything until we have it. We wish we had it already."

You wonder if the announcement of the sale to Ricketts may have been premature. The sides haven't been able to finalize the deal. While there have been no indications of the deal potentially falling apart, the MLB source indicated that, at times, both sides have spoken about difficulties dealing with the other side.

So, unlike stories reported last week, and disputed here, the financing is NOT done yet and doesn't appear to be close. The sides are having "difficulties" dealing with each other. This is not a deal that is close.

Then, late today, Sam Zell gave an interview to Bloomberg TV. He made this ominous statement (emphasis added):

"These are very difficult times. These are difficult times to arrange financing," Zell said in an interview, adding that if the Ricketts deal falls through, he is confident the media company--which filed for Chapter 11 bankruptcy protection in December--will find another buyer for the ballclub.

"We've made it very public that the Cubs don't fit into the long term picture of the Tribune," he said. "So if the Ricketts deal doesn't get done, I'm sure there will be other ones."

Translation: We're selling the team and there's a good chance it won't be Ricketts. You hear me all other interested buyers? We're SELLING THE TEAM AND IT'S NOT SOLD YET!

This is a clear signal that the Ricketts purchase is in doubt. Has anyone verified that the Ricketts stock sale has actually been executed?

Corn Cob Dress over at Wax Paper Beer Cup (POP!) adds in his concurring opinion that this deal is dying. What he and his commenter misses is that the financing is still not complete. Here's what we know has been lined up and the source:

$403 million - Ricketts family sale of stock (either cash on hand or pending sale)
$350 million - committed from banks.

That's it. A total of $753 million is ready for closing.

Another $100 million was proposed as part of a private placement, but this money has not been committed to or funded according to published reports. The last gap of $47 million (which gets to the $900 million agreed upon purchase price) was being sought from minority investors like Bill Murray and Jimmy Woo Woo.

As of right now, there's a $147 million financing gap. And that's why this deal is falling apart.

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