Cubs’ owner may sell small share
NEW YORK — The owner of the Chicago Cubs is willing to sell a smaller share of the baseball team than initially planned because the credit crunch has made it tougher for potential buyers to obtain loans, a person familiar with the talks said Friday.
Tribune Co. was looking to sell a 95 percent share of the Cubs and other sports properties for more than $1 billion.
Company officials have told representatives for the bidders in recent weeks that Tribune was willing to be flexible, said the person, who asked not to be named because the talks were confidential.
The Wall Street Journal reported in Friday’s editions that Tribune was willing to take bids for a 50 percent or smaller share. The amount a bidder must borrow to finance such a deal would decline accordingly, and the Journal said Tribune could sell additional stakes in the properties over time. The paper did not name its sources.
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Tribune spokesman Gary Weitman declined comment.
The company, which owns the Los Angeles Times, Chicago Tribune and other newspapers along with television stations, has about $12.5 billion in debt, primarily from a complex buyout that real estate mogul Sam Zell orchestrated to take the company private.
Tribune has a $593 million principal payment due in June and has been trying to generate cash by selling the Cubs, Chicago’s storied Wrigley Field stadium and the company’s 25 percent stake in a regional sports cable channel.
To make a payment this year, Tribune sold the Long Island daily Newsday to Cablevision Systems Corp. for $650 million.
Tribune retains a 3 percent stake in Newsday, which affords it more favorable tax treatment than an outright sale would have, and it was looking to retain a 5 percent stake in the sports properties for similar reasons.
The company also has been looking for a deal that involves heavy financing to get better tax treatments. But after Tribune narrowed its bids to five groups this summer, the financial market collapsed and most lending of substantial sums vanished with it.
Zell first stated his intentions to sell the Cubs and Wrigley more than a year ago as part of his agreement to take control of Tribune. Efforts to sell the stadium alone to an Illinois state agency fell through after months of talks.
One former bidder, Don Levin, said Tribune would have been better off completing a deal months ago, before the credit crunch. He said the weak economy also means that auto makers, banks and other companies have less for sponsorship deals, making ownership of the stadium less valuable.
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"If anything, it would be worth less" today, said Levin, chairman of the Chicago Wolves minor league hockey team.
If Tribune generates less cash than anticipated by unloading a smaller share of the sports properties, it might also have to sell other assets to make next year’s debt payment.
Tribune has been considering selling its iconic headquarters building in Chicago, called Tribune Tower, and the headquarters of the Los Angeles Times, known as Times Mirror Square.
Mike Simonton, a Fitch Ratings bond analyst who specializes in media companies, said the bigger worry for Tribune is meeting lender-imposed financial targets as the drop in advertising revenue squeezes cash flow.
That, he said, could be pressuring Tribune to generate cash at any cost.
Any sale of the Cubs requires approval of three-quarters of Major League Baseball owners.
