Report: Ricketts Forced To Take On Debt To Buy Cubs

This report came out Thursday, but I thought it deserved its own morning and afternoon for discussion. David Kaplan at CSNChicago.com wrote this detailed article regarding the sale of the Cubs from Tribune Company to the Ricketts family; if you have not yet read it, I urge you to do so. Here's the essential summary:

Multiple sources with intimate knowledge of the sale have confirmed to me that when Sam Zell and the Tribune Company decided to sell the franchise, there were several bidders who were looking to buy the team with a minimum of long-term financing needed to make the purchase. That included the Ricketts family, who multiple sources have confirmed to me wanted to use much more cash in their offer than Zell would accept due to tax implications on the transaction.

Tribune Co. retains a five-percent interest in the Cubs; had they not kept that, the company would have been subject to a huge capital gains tax on the sale, given that Tribune purchased the Cubs and Wrigley Field for $20 million in 1981, and were selling for more than 40 times that amount, $845 million. The article states that this break is "for several years going forward", but doesn't say when or whether it actually ends.

I don't profess to be an expert in financial deals, so I won't try to weigh in on the details of Kaplan's article, though this quote is telling:

One prospective buyer who quickly withdrew from the process told me "it was the most complex financial transaction he had ever seen," with another telling me that he wasn't willing to jump through all of the hoops that the deal required. However, the Ricketts family stayed the course before eventually reaching their breaking point. They told the Tribune and Zell in the summer of 2OO9 to either make a deal or they, too, were going to withdraw from the process. At that point, according to sources, the deal quickly moved towards completion.

There appear to be some "camps" of Cubs fans posting here; one group, pretty much all-in on the Theo Epstein rebuilding plan, are willing to wait it out and see what happens, even if that means multiple 100-loss seasons. The other wonders why the Ricketts are cutting team payrolls, and believes that the payroll should be maintained or increased in order for the Cubs to be at least competitive every year.

I fall somewhere in the middle. There's no question the team needs a good base to win consistently in the future. The Cardinals are a good example of an organization that has done this, while also spending on some free agents (and keeping their own players), all of this in a mid-range market.

It's clear to me that this conclusion drawn by Theo Epstein is correct:

Epstein said the Cubs need things like the Wrigley Field renovations and a new TV deal to continue to pump money into the team.

"The baseball department is spending every dollar that is allocated to baseball operations," he said. "Yeah, we’re spending it in the draft and we’re spending it in the minor leagues. There’s only so much you can spend there. We’re also spending every dollar we have available on the Major League payroll. We need a renovated Wrigley Field to produce more revenue. We need new TV deals so we can generate significant local revenue that way."

That's exactly right, in my view. The Cubs need a renovated Wrigley Field -- not just for more fan dollars, but for upgraded facilities to attract free agents (a view former Cub Kerry Wood shares), as well as a new local TV deal that will bring in what teams like the Dodgers and Rangers, and even smaller-market teams like the Reds and Padres, are getting.

Hopefully, WGN will be involved in that, if they are willing to meet the Cubs' price.

The Cubs have a game this evening, but until then, you can discuss this. I implore you to keep it civil.