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October 24, 2005

For Sale: $400 Million OBO

(We're all baseball, all the time.)

If conversations with random strangers at suburban hot dog stands can be trusted conduits of timely and accurate financial news, the Tribune Company is thinking about putting the Cubs up for sale.

With its stock price down nearly 27% over the past year, the company is apparently looking at going beyond mere "cost-cutting" and will be considering selling off any of a number of non-core businesses, a list which includes a certain underachieving cash cow at Clark and Addison. (Along with all of the usual problems and revenue drains that attend newspaper publication in this digital age, Trib Co has also been slapped with an inherited IRS tax liability of up to $1 billion.)

Here's what Crain's has to say:

Tribune Co. CEO Dennis J. FitzSimons is considering selling assets to prop up his company's shares, and that's got some wondering if the Chicago Cubs could go on the block.
Investors expect Mr. FitzSimons' search for salable assets to focus on holdings not fundamental to the company's primary businesses of publishing and broadcasting.
Selling the Cubs "makes more sense now than it has in a while," says John Miller, a vice-president at Chicago-based Ariel Capital Management LLC, Tribune's fifth-largest shareholder. "They're trying to get the stock turned around, so they tried buying back their shares, and that didn't work. Now, they move on to non-core assets, like the Cubs."
...
Asset: Chicago Cubs (100% Tribune-owned)
Estimated sale value: $400 million to $550 million
Why sell? With Wrigley Field expansion set to begin and attendance at all-time highs, the team would fetch a premium. Tribune could demand long-term broadcast rights in any deal.
Why not? Tribune bought the team for $20.5 million in 1981, so the tax hit could be large. "They'd also be very wary of ever being in a position to bid for the Cubs' broadcast rights, no matter how far in the future it is," says Barrington Research Associates Inc. Analyst James Goss.

In what's probably little more than regurgitated AM radio speculation, my lunch-hour interlocutor has it that maverick billionaire benefactor Mark Cuban is an interested party. Bet he'd keep those purse strings loosened.

"For Sale: $400 Million OBO"
Posted by Dan at 05:35 PM

Comments

Mark Cuban? Yikes. He's just not . . . Chicago.

I would have figured the Cubs for a cash cow, myself. In fact, without knowing any of the numbers, it almost seems like holding the Trib and selling the team is the sentimental thing to do (even if broadcast rights are held.) Heck, does anyone see a bright future for the Tribune? Sell the paper, keep the TV and baseball. And the ponies, of course.

There is no dawg but Superdawg, and Mohammed is his messenger. If one is north and itching for a change, one hangs with the Hasidim at Ken's. That is all.

Posted by: JL on October 24, 2005 at 07:57 PM

> I would have figured the Cubs for a cash cow, myself.

Indeed, for years they've been accused of cashing in without turning the profit around into developing a quality team.

From 2001, a Baseball Prospectus article puts similarly evil shenanigans in Detroit into context:

...the Tigers are making good money in CoPa and have little to gain financially from a good season, so Ilitch decided to pocket the extra money instead, a move popularly known as "pulling a Tribune."

That said, Tribune deserves as much credit as blame for making the Cubs what they've been, lo this past quarter century. From Harry Caray and Steve Stone to the brick and ivy fetishism that is our adoration of the Friendly Confines, they brought an all-American product into America's livingroom via Thee Superstation.

Their branding has been so successful that I was told by some friends in Colorado that vendors at a Cubs–Rockies game at Coors Field this season were pouring Old Style, as the park was "made into Wrigley" for the day.

> There is no dawg but Superdawg, and Mohammed is his messenger.

Serious gourmands and sausage connoisseurs may disagree, but I think that in Chicago favorite hot dog joints are a lot like favorite bars: yours is usually the one that's a couple blocks from home.

Mustard's was always a quick bike ride away from my childhood home and is now a few blocks' drive from work. I'm a regular.

Another worthwhile North Shore institution, the Chuck Wagon, is probably more notable for it's Niki Special (a cheeseburger topped with gyros meat) than anything else. If we're talking Skokie chow, though, many swear by the Pita Inn.

Posted by: Dan on October 25, 2005 at 01:58 PM

Good lord - Old Style Light.

Didn't Old Style have an ad campaign a decade or so ago featuring some weird guy hoarding it? Very odd, not sure if I'm remembering it right. I think he said something like "Every one I get is one they can't have" or something like that. Very strange.

Posted by: JL on October 25, 2005 at 04:48 PM

The Old Style brand is owned by Pabst these days, the beer itself brewed by Miller. So, while it may be the Beer Dad Drank, it kinda sorta isn't.

The current owners of the old G. Heileman brewery in the mythic God's Country of La Crosse, WI, however, apparently brew a beer called La Crosse Lager that is supposedly made according to the original Old Style recipe, in all it's Fully Kraeusened glory.

In any case, Old Style's still worth the dollar per draught at Rose's.

Posted by: Dan on October 25, 2005 at 09:50 PM

The Old Style brand is owned by Pabst these days, the beer itself brewed by Miller. So, while it may be the Beer Dad Drank, it kinda sorta isn't.

Yeah, we had a similar problem with Narragansett. Sold to one of the biggies, and then - the ultimate indignity - brewed in Texas. Foul stuff. Some local guys have bought the label back and are trying to make a go of it, though the beer itself is brewed in Rochester, NY. Which is better than Texas, but isn't the clean, clear, crisp, cold waters of Providence, Rhode Island.

They have, quite naturally but still to their credit, referred to the beer's classic slogan ("Hi neighbor, have a 'Gansett") in their relaunch ad campaign ("Hi neighbor. Again." I believe is the copy on the billboards.) One hopes that when they get market awareness back, they'll return to the classic. Art angle: there's a painting at the Walker that shows a Boston (I think) city scene, maybe '30's, possible as late as '50's, with a Narragansett Beer sign prominently featured. Can't remember the artist, though.

I have to say that I can't understand the hipster attraction to Pabst. That's just some awful beer.

Posted by: JL on October 27, 2005 at 07:08 PM



Referenced in this post:

Chicago Cubs Official Site
Crain's Chicago Business: Tribune Co. taking hard look at holdings—Jeremy Mullman
Google Search: 'purse strings' 'tribune company' cubs
Google Search: stingy 'tribune company' cubs'
Metromix.com: Mustard's Last Stand in Evanston
NPR: Critics Say Tribune Cutbacks Affect Coverage—by David Folkenflik
New Tork Times: Profit Declines at Tribune Company After a Tax Claim Ruling (Bloomberg)
Poynter Online: Tribune Company: Aggressive, Indeed—Geneva Overholser
Tribune Company
Tribune Company: Historic Stock Quote Data— 1 Year Chart (Percent)
Wikipedia: Mark Cuban