Monday, June 22, 2009

Finding The Bottom

News of the Marc Utay's original offer for the Cubs are making the rounds again in advance of him becoming a player for the team:

The group’s original bid, led by Glenview native and New York private-equity investor Marc Utay, proposed that Tribune keep 22% to 25% of the team, according to a person familiar with the matter.

Mr. Utay's bid was thought to be runner-up to the roughly $900-million offer from the family of Chicago bond salesman Tom Ricketts. Tribune recently resumed discussions with Mr. Utay’s group following five months of exclusive negotiations with the Ricketts clan, several news outlets reported last week.

It's unclear whether Mr. Utay's original proposal is still in play, or if it's been revised. The value of his bid could not be learned.


For a deal like Mr. Utay's original plan to work, Tribune's creditors would have to accept a larger equity stake in lieu of cash. The team is not included in Tribune's ongoing Chapter 11 bankruptcy proceedings, but the sale effectively would need the creditors' blessing.

"There is more to consider than how many dollars you get upfront," said a person close to the Tribune. "The (Tribune), board and creditors all want to do a deal in the best interest of the company long term."

In general, creditors have become more open in recent years to accepting equity stakes instead of cash, said Douglas Baird, a bankruptcy expert at the University of Chicago.

"If Tribune's investors thought holding onto a 25% stake in the Cubs provides the maximum value long term, then they'd be fine with that," Mr. Baird said.

What Mr. Baird is suggesting is very interesting, and has some implications for the rest of baseball. Such a deal could have less cash than the Ricketts' deal, but actually provide a higher purchase price. This benefits 29 other owners as their franchise values will be a function of what the Cubs are monetized for.

More on this on Wednesday, but tomorrow, we take you back 25 years with some video.

Comments: Post a Comment

Subscribe to Post Comments [Atom]

<< Home

This page is powered by Blogger. Isn't yours?

Subscribe to Posts [Atom]