Dealwatch: Baseball

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Published June 10, 2008 at 9:34 AM

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The books have gone out on Tribune Co.'s Chicago Cubs and we know that at least Dallas Mavericks owner Mark Cuban is interested. Meanwhile, the state of Illinois' attempt to buy Wrigley field hit a wall again June 9 over tax issues.

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The last uproar over the Cubs auction bubbled up in late February as Tribune owner Sam Zell reiterated during a CNBC interview Feb. 26 that he would consider selling the naming rights to Wrigley Field, evoking outcry from baseball purists but mostly shrugged shoulders from others.

A sale has been delayed because of Zell's plans to sell the team and the stadium separately and to have the Illinois Sports Facilities Authority acquire and renovate Wrigley, according to the Chicago Tribune and several other reports. Here are a few takes on the naming rights issue:

USA Today gave a little history and suggested revenue for naming rights is "soaring" and pointed to the New York Mets deal in November 2006 with Citigroup Inc. to name their ballpark Citi Field (a 20-year contract worth more than $400 million). "Zell suggested the Chicago-based Wrigley Co. buy the naming rights 'after getting it free for so long.' The ballpark, originally called Weeghman Park, was named Wrigley Field in 1926 after then-team owner William Wrigley Jr., founder of the chewing-gum company."

One AP take via Sports Illustrated: "Any company dumb enough to fork over good money to slap its name on the park wouldn't find the confines friendly at the moment and historically speaking, naming rights have been a lousy investment -- not to mention bad karma."

Tribune's Rick Morrissey echoed that sentiment:

If a corporation is silly enough to plunk down $50 million a year to have its name grafted onto Wrigley Field or, worse, if it is silly enough to erase the very mention of Wrigley, let it. And if that corporation believes people are suddenly going to start referring to the ballpark as Viagra Field or Can You Hear Me Now Stadium, it not only is silly, it is delusional.

Meanwhile, the AP noted earlier in February the naming rights deal expected to break records is that of the new stadium for the New York Giants and New York Jets, scheduled to open in 2010.

Down in D.C., March 30, 2008 was Opening Day for Nationals Park. The Washington Nationals finally came home to a shiny new ballpark along the Anacostia Waterfront Sunday, March 30, to take on the Atlanta Braves. While the $611 million project was still in the final stages just weeks ago, D.C. was ready and tickets for the opener sold out in minutes.

This is the fourth season in Washington for the Nats, who landed in D.C. in 2005 after 36 years as the Montreal Expos. They finally got a new owner in 2006 and broke ground on the new park, which lets them waive goodbye to the weathered and historic RFK Stadium. (See more about the auction below.)

SLUGGER OF A DEAL

But back to Tribune and the Cubs. Zell closed his $8.2 billion buyout of Tribune Co. Dec. 20, 2007. Tribune had said Dec. 12 it foresees completing the sale of the team, the Wrigley Field stadium and related assets in the first half of 2008 and Zell affirmed it was the only planned divestiture with Tribune's close.

New York Times' DealBook pointed out in mid-September that things could get messy for the auction, citing a Chicago Tribune article, given that for the seller, the bottom line is reportedly price and for Major League Baseball, the best fit. As far as potential bidders go, a Tribune article Aug. 2 said Madison Dearborn Partners LLC chief executive John Canning, an 11% owner of the Brewers, was busy putting together a group of several Chicago business elites for a bid. Among the players, Tribune said, are McDonald's Corp. chairman Andrew McKenna, restaurateurs Larry Levy and Richard Melman, CDW Corp. founder Michael Krasny and Chicago PE firm GTCR Golder Rauner's David Donnini. (Zell also told CNBC Feb. 26 four to six bid groups had gotten MLB's OK.)

Earlier, in a Reuters report April 5, 2007, two prospective bidders voiced interest, but only if Wrigley Field was part of the package. Real estate developer and former Illinois State Senator William Marovitz and Tom Begel, the founder of Chicago private equity firm TMB Industries, said separately they wanted the team, but only with the stadium.

Also last April, Mavericks owner Cuban downplayed rumors of his interest but maintained on Jim Cramer's "Mad Money" that it was "too early to tell" whether he will make a pitch for the team. Cuban told The Deal's Chris Nolter via e-mail July 13 he wouldn't comment on reports that he has filed an application with MLB to review the Cubs' financials and potentially submit a bid.

Also eager to enter the bidding fray, the Tribune said April 6, was Don Levin, the owner of minor league hockey team the Chicago Wolves. Chicago attorney Thomas Mandler and businessman Jim Anixter have tried to acquire the Cubs several times, the paper said, having lost out to Tribune in 1981 when the Wrigley family put them on the block, and despite several letters to management over the years, were repeatedly told the club was not for sale. It is now and would-be bidders are lining up.

The Cubs aren't the only sluggers to change hands of late. And the Texas Rangers recently changed the name of their ballpark from Ameriquest due to the state of subprime industry. But back to recent trades...

The Atlanta Braves landed a new owner in 2007 after a year of negotiations. Time Warner Inc. sold the team to Liberty Media Corp. in a $1.5 billion deal that that valued the club at close to $461 million. Also included in the tax-free swap was about $960 million cash, 68.5 million Time Warner shares and Time Warner's craft magazines Leisure Arts. In exchange, Liberty retained a 2.8% stake in the company.

The Braves went on the block in December 2005, as Time Warner tightened the team's payroll and its attendance began to slip. The Braves deal came nine months after the last franchise auction wound up.

Seventeen months after beginning a search of its own, the Washington Nationals finally landed a new owner May 3, 2006--and they broke ground on a new stadium. Real estate developer Theodore Lerner and his investor army of seven took the Nationals from Major League Baseball for $450 million.

POWER HITTERS

The lofty valuations for the both clubs fall behind the New York Yankees, Boston Red Sox and New York Mets, worth $1.2 billion, $736 million and $724 million respectively, according to Forbes. The Braves and the Nats, Forbes says, are worth $458 and $447 million, while the Cubs are valued at $592 million.

The Braves and the Nats also have a common tie. Lerner, who is local to D.C., which gave him a significant edge in bidding for the Nats, added former Braves president Stan Kasten to his bidding consortium one month ahead of winning the team.

The groups Lerner and Co. beat out were led by Thayer Capital Partners chairman Fred Malek, also a Washingtonian, and Emmis Communications Corp. CEO Jeff Smulyan of Indianapolis, an outsider, viewed as a long shot.
What had long delayed a deal was the D.C. City Council, which just couldn't make up its mind on whether to build a new stadium. The argument centered around whether the structure would displace low-income residents while redeveloping the waterfront. In December 2005, a decision was postponed until January and dragged on until February, when the group reversed an 8-5 vote against it, for a 9-4, in favor within hours. The final hurdle was cleared in March.
An early prospective bidder, financier George Soros, drew heated criticism from Republicans who didn't want a prominent Democratic supporter to control the franchise.
Another stalling point was that MLB ran the auction without an investment bank, drawing harsh criticism.
The Nats went to Washington in 2005 after 36 years in Montreal as the Expos.

THE DEALMAKERS

The winning bidding consortium for the Nats included CBS' NFL Today host James Brown, former cabinet members under President Clinton and other notable Washingtonians. Rodney E. Slater, Clinton's transportation secretary, told the Washington Post one thing he would focus on is getting "youngsters interested in baseball." It's about time.

The Nats play was Lerner's third time vying for a baseball franchise. Lerner, who built D.C. suburban staples Tysons Corner Center and White Flint Mall, tried in 1971 to coax then-commissioner Bowie Kuhn to bring the Washington Senators back to the capital after they skipped town for Texas. He also made a bid for the Baltimore Orioles. For the love of the game.

BASEBALL FEVER

In 2005, baseball dealmakers had quite an off-season. In November, a group of Cincinnati businessmen swapped $270 million for a 70-to-80% stake in hometown Reds for $270 million. Meanwhile, Cuban was rumored to be eyeing the Pittsburgh Pirates.

--Carolyn Murphy

Dealwatch executive summary
The Date	The Action
3.30.08	Nats home opener. Fans pounced as tickets went on sale.
2.2008	Zell will consider selling naming rights to Wrigley Field. Among others, Tribune, USA Today, SI (AP) weigh in.
12.2008	Zell closes Tribune buyout.
8.02.07	Will the Yankees say yes to a deal? Chicago's business elite pull together massive bid group for the Cubs.
7.13.07	Cuban won't comment on speculation he wants the Cubs.
4.06.07	Wolves' Levin, Mandler and Anixter want a shot at the Cubs.
4.04.07	Prospective bidders surface for the Cubs, but only if Wrigley Field is part of the package. Mark Cuban says it's "too early to tell," if he will make an offer.
4.02.07	Cubs face off against the Reds with a new manager and new owner, for now.
2.13.07	Atlanta Braves reportedly have new owner.
5.04.06	The team breaks ground on site of its new stadium in Washington along a soon-to-be-redeveloped strip of the Anacostia waterfront.
5.03.06	A Lerner-led team wins the Nationals with a $450 million bid.
4.2006	Lerner adds Kasten to his team.
3.06.06	The last hurdle to a deal clears; a lease is signed for a new stadium.
2.2006	Washington's City Council overturns its vote on a new stadium from 8-5 against to 9-4 in favor within hours.
1.2006	The Nationals auction gains steam.
12.2005	A vote on the new Nationals stadium is postponed until mid-January, but will drag on until February.
11.2005	Deal rumors and action abound for baseball.
8.2005	The Comcast suit is thrown out but a deal won't come until after the World Series.
7.2005	Republican lawmakers publicize their disapproval of a possible Soros' bid for the Nats.
4.2005	MLB asks each bidder to submit two offers -- by May 31 -- as a lawsuit from Comcast Corp. over cable broadcasting rights, later settled, hung over its head.
2.2002	MLB buys the Montreal Expos franchise for $120 million from Jeffrey Loria, who now owns the Florida Marlins.
Source: The Deal

Dealwatch: Baseball

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