The sale of the Chicago Cubs may be delayed by the global financial crisis unless owner Tribune Co is willing to accept a lower price for the storied baseball team, people involved in the sale said.
Tribune was expected to pare the list of bidders this month for the Cubs, the club's historic ballpark, Wrigley Field, and a stake in a regional sports television network.
Analysts had expected the deal to top $1 billion due to the Cubs' national TV exposure and history of being "lovable losers."
But stock markets have been hit hard by the global credit crisis. The benchmark S&P; 500 index dropped below 900 points for the first time in five years on Friday after having already fallen for seven straight sessions.
"It's going to impact price," said one person close to the auction. "If they're looking to get top dollar on the Cubs, they better wait.
"People are just not going to be willing to play when they don't know where markets are, where credit markets are, where capital markets are, where the fans are going to be in terms of buying tickets," added the person, who asked not to be identified as the sale is ongoing.
Internet billionaire Mark Cuban, who reportedly submitted a bid of $1.3 billion early in the process, said on Thursday night the deal's price and timing could not help, but be affected by the market turmoil.
"Any time the cost of capital goes up, the cost of assets goes down, which is what you're seeing in the stock market," Cuban told reporters at a basketball game in Chicago, where he watched his Dallas Mavericks beat the Chicago Bulls.
If the value of a popular property like the Cubs can be hurt, others could be under pressure, analysts said.
"All sports franchises are under pressure, more so this week than three or four weeks ago because the value of the revenue streams that they're basing their profit on are all impaired," said Robert Boland, professor of sports management at New York University.
Major League Baseball officials said they have not been advised of any delay and the sale appears to be moving forward. Tribune Co declined comment.
But real estate magnate Sam Zell, who led the $8.2 billion buyout of Tribune Co last year, told CNBC on Wednesday he still expected to sell the Cubs before year end and that Tribune would soon narrow the list of five bidders to two.
Tribune is selling assets to help pay down debt, which stood at $12.5 billion at the end of the second quarter. Declines in readership and advertising dollars at such newspapers as the Chicago Tribune and Los Angeles Times have added to the pressure to secure funds to avoid default.
Fitch Ratings media analyst Jamie Rizzo said Tribune needs to sell assets to meet debt obligations or negotiate an extension with its banks.
"Not only have potential buyers probably lost a decent amount of wealth, but also their alternatives for getting financing are drying up," he said. "Not many people willing to lend and anybody who's going to come in and buy this is going to rely on debt. Nobody's going to come in and write a check for hundreds of millions of dollars for a baseball team."
Cuban, who confirmed his comments in an e-mail to Reuters, indicated he was in no rush to close a deal.
"Honestly, they'd be crazy to do something now," he said of Tribune Co. "It's not optimal for them and it's not optimal for the buyer. So there's not really a rush.
"Until there's more certainty in the financial market, then uncertainty is expected. So it's going to cost either me, him, or both of us money. Any buyer and seller in any transaction. So, unless there's some pressing issue to sell it now, it doesn't make a lot of sense to do it."
Two other people who have followed the deal closely, but asked not to be identified said Cuban was right and debt financing has dried up.
Other bidders include Jim Crane, a Houston businessman who runs his own freight forwarding company and was a star pitcher in college; Tom Ricketts, chief executive of Chicago investment bank Incapital LLC and the son of the founder of TD Ameritrade Holding Corp; Marc Utay, a managing partner with New York-based private equity firm Clarion Capital Partners LLC and Chicago real estate executive Hersh Klaff.
(Source: Reuters)
