The Chicago Cubs – one of MLB’s crown jewels – will have a new owner in place before the start of next season. Here’s a break down of who’s in the hunt to own them.
With the All-Star Game approaching quickly, eyes are starting to focus on the sale of the Chicago Cubs — a major transaction that will happen between the end of the this season and the beginning of the 2008 season.
In-between, one of the most storied teams in all of baseball will be talked about, with the contenders and pretenders jockeying for position.
Remember this is the Cubs. They aren’t the Marlins, or A’s, or any other club for that matter, Red Sox or Yankees, the exception. The idea of owning them causes potential owners to go into Pavlovian fits of drooling that are of epic proportions. Billion dollar corporate takeovers ain’t got nothin’ up on owning a baseball treasure, and few, if any, would dispute that that is what the Cubs, and Wrigley Field are… a treasure.
The Cubs have incredible brand recognition. You go most anywhere from sea-to-shining sea and beyond, chances are, you’ll find a Cubbies fan. Walk into a Smallville USA bar or tavern, and someone is most likely wearing a Cubs cap. One might dare say that odds are pretty good that you’ll spot the trademark blue cap with the red and white “C” most anywhere around the world.
And, it’s not just The Loveable Losers that are attractive to a potential owner, it’s The Friendly Confines of Wrigley Field; a place that a friend once said was like Disneyland.
“You go take some pictures. Eat some food. Take in the ride… er, ballgame.”
Wrigley is a destination unto itself.
As mentioned, with the exception of the Yankees and Red Sox, there is arguably no more valuable a commodity in MLB than the Cubs. Due to that stature, potential owners are lining up, and MLB is doing their due-diligence.
Plainly put, the Cubs are a hot commodity, and the sale price will be indicative of that. In a “supply and demand” world, MLB is preparing to see a sale, with Wrigley in tow, that may pass the $1 billion mark.
Take the figure in again… $1 billion.
Bud Selig and the rest of 245 Park have been focused on making sure that whoever offers up the ducats for the storied franchise, they fit a very particular profile. At the announcement of the sale of the Tribune Co. to Sam Zell, and with that, Zell’s announcement that he would be unloading the Cubs, Selig set the tone.
“The thing I've always said ... when viable local ownership is available, you bet," Selig said. "You always like to see local ownership, assuming everything else is good. Sometimes it just doesn't work out that way."
But, it will work out that way.
Here’s a break down of the four groups have that have stepped up, at least for now, and are making a case to MLB for the right to win the prize that is the Chicago Cubs, Wrigley Field, a 25% stake in ComcastChicago, and Wrigley Field Premium Ticket Services, which is also part of the mix.
Select Read More to see details on who is in the mix to purchase the Cubs, as well as a history of who has owned the Cubs in the past, along with the sale prices
The Field of Four
John Canning, Jr. – Canning is Chairman and Chief Executive Officer of Madison Dearborn Partners, a private equity investment firm that was recently behind the $5.7 billion purchase of Nuveen Investments and the recent $7.3 billion buyout of CDW Corp.
Canning has been rumored to be a front runner since nearly the day the Tribune Co. was sold to Sam Zell, for good reason.
As Selig mentioned, getting someone with local ties to the targeted club up for sale is extremely important in MLB. With the Cubs, it’s even more so.
Canning, and Madison Dearborn Partners are based in Chicago. While MDP will not be in the mix, Canning has strong ties to Chicago, with exceptionally deep pockets.
He also has something that the other suitors don’t have: ties to Selig. Canning is currently a minority owner in the Brewers, has known Selig and the ownership brethren for years, and actually tried out for the Milwaukee Braves at one point as a catcher.
Like the others I will mention, fully working capital has not yet been defined for the sale of the club. Rumors have Canning working with around $750 million at this time, but as with all the serious players, that figure is bound to rise.
If Canning lands the franchise, he would have to divest himself in his share of the Brewers, and there seems a very good chance that that will happen. Handicapping the field, I give Canning a 4:1 chance of landing the sale.
Jerry Colangelo – Colangelo is a sports executive that hardly needs introducing. The former owner of the Phoenix Suns, and Arizona Diamondbacks has deep ties to the Chicago area (Colangelo prepped at Bloom Township High in Chicago Heights, Ill. and grew up in Chicago Heights). He sold the Suns in April of 2004 for $401 million. During his tenure as an NBA owner, he was Chairman of the NBA’s Board of Governor, and served on the Finance Committee, Long Range Planning Committee, Expansion Committee and Competition and Rules Committee.
In the context of baseball, he was the man responsible for bringing MLB to Phoenix. He was granted an expansion team in 1995, with the Diamondbacks playing their first games in 1998. Late in the 2004 baseball season, Colangelo sold his controlling interest in the Arizona Diamondbacks to a group of investors lead by Jeff Moorad.
Colangelo has reportedly been able to pull together an ownership group with approx. $850 million in working capital. While he has been an owner in MLB, and therefore knows the Lodge, many owners are upset with the manner in which Colangelo back-loaded a number of contracts to gain high profile free agents, such as Randy Johnson and Curt Schilling. While the move landed the Diamondbacks the World Series Championship in 2001, it left the club saddled with debt, which they are only now digging out from.
As one analyst mentioned to me, Colangelo might be best termed as the “Fred Malek” of the Cubs sale. Malek, you may recall, was seen as a near lock for the Washington Nationals, but in the end, was passed over in favor of local investor, Ted Lerner.
I’m handicapping Colangelo at 8:1 on his own. His prior history with the Diamondbacks works mostly against him, not for him.
That doesn’t mean that Colangelo will wind up looking in from the outside at the end of the sale. As I will get into shortly, moving pieces could come into play.
Thomas Begel and William Marovitz – Begal is the CEO of TMB Industries, a private investment firm in Chicago, and Marovitz is a former state senator and currently a restaurant owner. The interesting twist is, Marovitz is married to Christie Hefner, Chairman and Chief Executive Officer, Playboy Enterprises, Inc. She was ranked at #80 in the Forbe’s list of the most powerful women in business.
We might be talking about these two as beyond the pretender role, if it weren’t for the fact that sources are saying they have the ability to pull together approximately $900 million of capital for the sale.
The partners, however, seem prime candidates for the role of ginning up the sale price, if that’s really necessary. Odds of them landing the Cubs: 30:1.
The Mystery Group – Word is that there is a fourth group looming out there. One that is shifting and we have little background on at this time. This might be part of Don Levin’s effort. Levin founded D.R.L. Enterprises in 1969, which is a holding firm that including tobacco processing, aircraft and medical-equipment leasing. He also owns the minor league hockey Wolves.
And, no… here’s who appears to not be in the mystery group...
Scratch Mark Cuban and Oprah Winfrey off the list. Cuban has the ties, and the deep pockets, but his personality simply would not work with MLB. Winfrey was somehow mentioned briefly at one point as having interest, but has since clarified that she really never was.
Moving the Pieces Around on the Board
As any knows watching MLB work the sale of a franchise, Bud Selig is a master of assembling pieces together to make a stronger group. Be that with the Red Sox ownership, or more recently with putting Stan Kasten and Ted Lerner together on the sale of the Nationals, Bud moves the pieces around to get what he feels will make the strongest ownership group.
With that in mind, the idea of a Canning/Colangelo synergy seems a possibility. Word is circulating that Selig is very much concerned about the 60/40 rule on clubs carrying debt with this deal, and while this maybe nothing more than common sense given the steep sale price, the words “Jerry Colangelo” and “carrying debt” have been synonymous in the past.
One person not mentioned is Ernie Banks. He has shown interest in the past and could be placed in the mix.
Odds and Ends
Also, the sale price itself may be of interest.
MLB being able to puff up its chest and say that they sold a club for $1 billion is certainly something to consider. The figure is undoubtedly impressive.
But, associating the “B” word may actually work against MLB. Given that no sale is in a vacuum, and impacts future sales, those sitting on the sidelines might be deterred when the next sale comes up. After all, is $990 million all that bad?
And interesting sidebar will be how MLB wishes to address selection of an ownership group that may not have the highest bid. In that case, they may be able to justify the action based on the total amount of cash in the deal.
Something else to take into consideration: Life moves pretty fast. If you don't stop and look around once in a while, you could miss it. While the reference to Ferris Bueller is somewhat comical, it has a bearing on how some sales have gone down in the past.
Often times, it is the buyer sitting quietly on the sideline watching it all play out that has won the day. While Canning seems to have the best chance at landing the Cubs, it’s certainly not a given.
The sale of the Cubs will be a milestone in the history of MLB. To place some context around the storied franchise, here’s a time line of ownership.
CUBS OWNERSHIP HISTORY
| Year|| Sale Price || Purchaser/Owner || Details |
| 1876|| Charter || William Hulbert Syndicate |
| Hulbert is one of eight charter members of the National League. Hulbert also serves as president of the new league. |
| 1882||Ownership Transfer|
| Albert Spalding takes over after Hulbert's death|
| 1902|| Unknown|
| John Hart|| |
| 1905|| $125,000|| Charles Murphy Syndicate|| Funded by Cincinnati Times-Star owner Charles Taft |
| 1914|| Unknown|| Charles Taft |
| 1915|| $500,000|| Charles Weegham Syndicate|| Weegham, a former owner in the Federal League, and nine others purchase the Cubs from Taft and move them to Weeghman Park at the corner of Clark and Addison.|
| 1921|| Take over |
| William Wrigley, Jr. |
| As Weegham's businesses falter, he unloads more and more shares of the Cubs to Wrigley, who takes over as owner in 1921 |
| 1981|| $20.5 million|
| Tribune Co.|| Includes Wrigley Field. When the Tribune Company buys the club from the Wrigley family, it ends the longest continuous operation of a franchise by the same family in one city. |
| 2007|| |
| Sam Zell |
| Sam Zell becomes the controlling interest in the Tribune Co., which is valued at $8.2 billion. Zell announces his intention to not own the Cubs. MLB announces that the club will be sold before the start of the 2008 season. |
| 2008|| Projected: $1 billion |
| ???? |
| The projected sale price of the Cubs, with Wrigley Field , a 25% stake in ComcastChicago, and Wrigley Field Premium Tickets might come in under $1 billion depending on how MLB intends to frame the sale. |
Maury Brown is the founder and president of The Business of Sports Network, which includes The Biz of Baseball and The Biz of Football. He is a contributor to Baseball Prospectus, and can be contacted here.