Your thinking like a fan equating his sucess to wins and losses. The new ownership is going to measure his sucess by revenues and profits. And by this measure, under his leadership, the Cubs have shown an ability to attract fans (revnues) even when tehy lose, and he has shown an aqbility to put a high payroll team on the fireld (the Cubs had the 6th highlest payroll in baseball this past year) and turn a profit.

By these measure, that count to OWNERS, his a total winner.

700M predicted purchase price, I will bet the under

Cubs turned an operating profit AKA EBITDA of 8M on 180M of revenues in 2005 (90M of the 180M was ticket sales or gate receipts), at 700M this equates to a previous year revenue mutiple of 3.9 and EBITDA multiple of 87, these are the traditional multiples buyers look at when making acquisitions. Although the cubs have a lot of intangible worth in their brand name and tangible worth in Wrigley which is valued at 90M there will need to be a clear way to pretty quickly increase profitability (jacking up prices, new revenue streams, increase advertising, heaven forbid cut payroll) to justify these multiples. Possible but I don't see it happening.

Whoever is head of acquisitions/divestitures at Tribune should get a lifelong free pass to the best strip club in town if they pull that off.

I was not the one who brought up Oprah, I simply used the example for my joke.

How did they account for TV revenues? Remember the Tribune owns botht eh cubs and WGN. These numbers are whatever they say they are.

Once free the Cubs could demand a higher price for braodcast right as they will not be arguing them themselves

Good point, often the arrangements in these intercompany agreements are not arms length from a FMV pricing perspective

And don't forget the radio rights. ESPN 1000 has a hole in their prgramming since they lost the Soxs. They are also a 50,000 watt station. You think they might step up to become the flagship station if given the chance? How about WBBM Radio? They have the Bears Now? How About WLS Radio? They have ND Football now. Those are 50,000 watt as well.

I think Murph has detailed this several times. I cannot remember if he determined that it is a deal that is far below market for the Trib or for the Cubs. Either way it was definitely not arms lenght.

You are a simplistic idiot with no contacts. Who are you trying to fool?

What would happen if an investor group LBO’d the Cubs (Macphail or not)?

Sorry to say it long-term bad news on the field. Good news in the corporate suite.

Any highly leveraged investor group would need to raise revenues to pay off the debt. The cubs drew 3.1 million while losing 96 games. What do they draw if they win 96 games? Answer 3.1 million. They have no financial incentive to win. So, they only have to shoot for about 82 wins and this keeps the turnstiles moving.

The Cubs had a payroll of near $100 million, the fifth highest in baseball (behind the Yankees, Red Sox, Dodgers and Mets). They can win 82 games with a $85 to $90 million payroll. So look for a cut.

In 2005 the Cubs drew 3 million and had gate receipts of 90 million (average $30/seat). Look for a rise in ticket prices of 30% over two years to $40/seat. That brings in another $30 million or so.

What about Radio and TV revenues? WGN Radio and TV are owned by the Tribune. Thy have chronically underpaid for these rights. Once free, the new owners will bid out these rights. Look for WFLD-TV (Ch. 32) CIU-TV (Ch. 26) and Comcast Sports Net to bid against WGN for Cubs TV rights. Maybe they start their own station. But getting channel space would be tough in the short-term. This makes sense longer-term. So, they could generate more revenues here. (Could they buy CLTV from the Tribune and turn in the “Cubs network?”)

This is true with radio. Look for ESPN Radio, WBBM Radio (now has the bears) and WLS (now has ND football) to bid against WGN Radio for rights to Cubs broadcasts. If someone other than WGN gets the rights. Good bye "this old cub."

Merchandising/Other. How about a Uniform redesign? Special throwbacks and green or blue Uniforms for special days. Bring back the old one’s for 70s night. All of this would be done in an effort to get more sales. They now have the "Bud Light Bleachers." Could they sell the naming right to Wrigley all together? Reinsdorf took in $40 million (over 30 years) from U.S. Cellular. Could the future see Cubs fans going to Motorola Field to sit in the Kraft Food Box seats watching a homer into the Bud light bleachers getting replayed on the new Gatorade Diamond Vision scoreboard? Then stand for the Virgin Records singing of “take me out to the ball game” followed by a commercial on the Gatorade diamond vision board for that artists new CD? All of this can also bring in more revenues as well.

Finally, the Buffett concert was only the beginning. Look for more “road series events” like concerts and “away night at Wrigley (Motorola) field” where fans pay $10 to $15 to sit in the park and watch the game on the Gatorade diamond vision scoreboard. Also, centerfield could be rented out for corporate functions during away games as well. Would the new owners open a restaurant in the bleachers when the Cubs are on the road as well?

Bottom line – What I’m trying to show is if a highly leverage new owner buys the Cubs, they have incentive to make the on-field product worse. They can cut payroll to save money and turn Wrigley into a North-side version of the Cell. The reason is the loyal fan base shows up they just offer a .500 season and another Pie (or Patterson before him) in the minors.

How does this change? Only if fans boycott Wrigley. Then to keep the gate receipt high, they would have to win.

Given all I listed above, would this cause a boycott where only 23,000 attended the typical home game? I hope it does as I do not like the future I just laid out.

What is Hendry's mission this off-seaon? It is NOT, repeat NOT, to put a winning product on the field. It is to set up the team to get maximum value on a sale. What does this mean?

No long-term deals. No high priced veterans. No Soriano, A-Rod, Sheff or Zito. These types of contracts reduce EBITDA as lower the value of the team. So, he's probably been instructed to expenses low and cash flow high. Try and improve the team with a lower payroll than last year.

If the Cubs were serious about winning now, they would not have a caretaker in John mcDonough running the team. His job is to take up space until the sale.

This doesn't mean he does nothing. He will bid market value for some players as long as the deals are shorter in length. That means a bunch of younger players eligible for free agency in a year or two.

Anyone thinking this is year one of the national league version of the Tigers has to wait until new ownership arrives. Wait till next year yet again.

Don't you get tired of trying to impress people on all the message boards with your same cut 'n paste post? I guess your firm doesn't take confidentiality too seriously. Oh wait, that would imply you actually had any real knowledge.

You got me score, I made it all up!! Truth is I suppose to run interference for the real story - Oprah is buying the team and Tom Cruise is running it.

Since you seem to have it all figured out, why don't you tell us what is going to happen?

Howard Stern has that kind of money

What's going to happen is nothing close to your fantasy.

Score, it says you have posted 586 time on this site. If the best you have? What a waste of space.

The only waste of space is your fantasy speculation. If you were involved with investment banking, which obviously you aren't, you would be fired for even posting this crap on a message board. In fact, the SEC would be very interested in these claims if you worked in the investment field. I think I'll forward them your posts on various boards and let them get the records and talk to you. No investment bank would let a fool like you post, let alone be employed.
Good luck in your job search if indeed you do work as a clerk in the investment field.

All you know comes out of the newspaper and your imagination lets you act out your fantasy. You have no inside info, and very little outside info.

I agree, this is all pure specualtion and conjecture. All wrong I might add.

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Score, face it the Cubs are in play. Put your jealously aside and ask what buyer would NOT want MacPhail involved? He knows more than anyone alive about this organziation and is currently unemployed. And, tell me what 12 year stretch for Cubs was more sucessful since 1908 that the 1994 to 2006 period? In answering this question, think of what is important to an owner (profits) and not a fan (wins). From an owner's standpoint, he was wildly scuessful. If he wants the team, Bain Capital et. al will line up down the block to fund him.

Maybe MacPhail's investor group does not get the Cubs. There not the only one interested. But whoever does get the Cubs would be crazy not have him as part of the deal. maybe not as a public face, but certainly as a McCaskey type behind the scenes making all the real decisions.

Score, see the article below, Tribco is a dying organziation. The status quo will not hold. Major changes are coming. The Chandlers are demanding it. Fitzsimmons is a lame duck.

The two properties out the door first are the LA Times and the Cubs. Why the Cubs at the top of the list? Becasue of the way MacPhail ran them.

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Did Tribune Blow Its Deadline?
Newspapers and Other Assets
May Pull in Less Than Expected
When Chandlers Pressed for Sale
By JULIA ANGWIN and SARAH ELLISON
THE WALL STREET JOURNAL
November 3, 2006; Page C1

http://online.wsj.com/article/SB1162522 ... jie/6month

When Tribune Co.'s biggest shareholder, the Chandler family, first began agitating publicly earlier this year for the media empire to be sold or broken up, they argued such a radical move was needed to lift the company's long-stagnant stock price.

The Chandlers cited Wall Street analysis to suggest the stock, which had been trading around $30, could be worth as much $42 to $46 in a breakup.

The Chandlers may soon be regretting those arguments. Now that Tribune has finally taken their advice, putting the company on the market, the situation isn't looking so bright. With conditions in the newspaper industry deteriorating rapidly, the consensus on Wall Street is that Tribune shareholders should expect a sale to generate no more than the $32-$33 level at which the stock has lately been trading.

Yesterday, a day after reports emerged that several private-equity groups had submitted preliminary bids valuing Tribune in the "low $30s," Tribune stock fell 1.1% to $32.26 on the New York Stock Exchange. And even though Tribune is signaling it is now willing to accept offers for individual assets -- and many well-heeled buyers have been circling some of Tribune's better-known properties, such as the Los Angeles Times -- analysts are doubtful the combined value of a breakup of the company would be much higher.

Several analyst reports issued yesterday predict that Tribune's assets will fetch about the same amount broken into parts as it is valued at today: about $8 billion in market capitalization.

That puts Tribune's board in a difficult position. Not only is it hard to stop the momentum of an auction once it is under way, if the company decides to back away from selling all or parts of the company, Tribune's stock is likely to plunge below $28, some analysts predict.

With the newspaper industry in turmoil, suffering a worsening decline in advertising and circulation to the Internet, investors and industry executives are closely watching the progress of the Tribune auction. Tribune owns some of the best-known newspapers in the U.S., including the Los Angeles Times, the Chicago Tribune and Newsday, as well as a big chain of TV stations. How Tribune fares in the auction is likely to influence whether other publishers, also under pressure from shareholders, take similar steps.

Investors have seen this picture before. Last year, money manager Bruce Sherman successfully agitated for newspaper empire Knight Ridder Inc. to put itself on the market. But the auction ended with only one bid coming in for the company, from fellow publisher McClatchy Co., while private-equity groups hovered without committing to a firm offer. Knight Ridder ended up selling for a mix of cash and stock valued at the time at $67.25 a share -- $1.75 above the average price paid by Mr. Sherman's Private Capital Management, a unit of Legg Mason Inc.

WALL STREET JOURNAL VIDEO


1
WSJ's Dennis Berman discusses2 why, despite well-publicized circulation troubles, the newspaper business is still flush with money and remains an attraction for private equity.Even one of the few bulls on Tribune's stock, Barry Lucas, senior vice president at Gabelli & Co. Research, a unit of Gamco Investors Inc., admits that, "this is not the easiest environment to sell what's charitably called 'legacy media assets.'"

Mr. Lucas has a "buy" on Tribune stock but predicts that a price above the high $30s will be difficult to get this year given Tribune's deteriorating financial performance. Gabelli's asset-management arm held a 0.45% stake in Tribune as of June 30, according to FactSet Research Systems Inc.

One reason for the pessimism is the deterioration of Tribune's business. In the most recent quarter, Tribune revenue fell 3% to $1.35 billion, while operating profit fell 17% to $235 million.

The other issue is taxes, which could make a breakup of Tribune prohibitively expensive. Craig Huber, a newspaper analyst at Lehman Brothers, calculates that the company could theoretically pay as much as $3.7 billion in taxes if it sold all its divisions separately. Although he estimates that Tribune could fetch $12.2 billion in total for its individual units, it would only receive a net of $8.5 billion after paying taxes. Then, he says, after subtracting debt, Tribune would really only be worth $4 billion, or $17 a share.

"It is not tax efficient to sell Tribune's assets piece by piece," he wrote in a note published yesterday. Mr. Huber has an "underweight" rating on Tribune stock and a price target of $21.

But some investors feel that Tribune could still sell of some of its larger assets, such as the Los Angeles Times and the Chicago Cubs baseball team, where potential buyers may be willing to pay more for their "vanity" value, some investors say.

Media giant News Corp. has expressed an interest in Newsday, which serves primarily Long Island, N.Y., according to people familiar with the situation. News Corp., which owns the nearby New York Post, among other properties, declined to comment. Individuals such as Frank Zarb are also said to be interested in Newsday. Other groups have looked at the Hartford Courant, of Connecticut.

Tribune has a low tax basis on its newspapers, however, which could be a major obstacle. To get around the tax problems, though, the company could do a so-called sponsored spin of an asset like the Los Angeles Times. That involves spinning off the paper as a separate entity with shareholders of its own.

One possible outcome, if management is unimpressed by the values it receives for either all of Tribune or its parts, would be a leveraged recapitalization, or "self-help deal," in which Tribune would borrow money and pay a one-time dividend to shareholders, and keep the firm public.

wow, you can cut and paste articles!!!

First off, there is no McPhail group, other than in your mind.
McPhail will be taking a job with the commissioner's office very soon.

Secondly, why don't you save everybody some time and just post a link rahter than the whole article?

Score, are you a woman? Your inability to answer a simple question until the fifth pass reminds me of my wife.

Ok, I got you down as MacPhail becoming Bud's lackey never to be heard from again. If he does this, he won't even make the short list for commish in 2009, he'll be a trivia question by then.

But let's drop MacPhail. I stated my position and you stated yours. To be revivied when some news comes out either way.

Do you:

Think the Cubs are being sold?

If yes, care to venture a guess as to who?

If a billionaire, give me a short list? If not, care to throw out some names as to who would be part of the investor group.

Finally, how does a potential sale change Hendry's job this off-season.

Let's see how many pages of posts it will take to get answers out of you.

No to the sale.
but if it does come to pass, I would bet Pat Ryan is first in line.

I find it hard to believe you have a wife, you sound like a little college pussy.
So from this round of questions I assume you are conceding you aren't an investment banker and you have no real inside info or contacts.

In case you don't realize, no one responds to you other than me and I'm done. Bye.

I'll stick with my original post (the Oprah/Tom Cruise thing was a joke for those that keep bringing it up - lighten up the New Venture Strategy class that's broken out in this thread) and say the Cubs go to a single owner or group of 2 or 3 looking to be an "ego" owner.

The investor group you describe is looking to turn a profit obviously moreso than own. So they may want to do all the things you describe, raise prices, cut costs, concerts, "away nights", novelty uniforms, etc. But, the Cubs are not an undervalued business - the type that would be attractive for this.

As you point out, they sell out so the only way to raise revenues is through price increases as you also point out. But the Cubs already have the 2nd highest prices in MLB. Cubs fans are loyal but even they would balk at new ownership coming in and cutting payroll while raising ticket prices. Not good PR to cut quality and raise prices.

Harley Davidson owners are loyal but they wouldn't go for someone coming in and saying, "Hey we're going to jack prices a little while we use some less durable materials."

Raising prices is risky as it doesn't take much of an attendance decrease to offset any gain once you figure in lost concession and merchandise revenue.

It would be great to do more concerts and "away nights" but there are strict regulations on that. I believe the agreement was to allow 1 concert every 2 years. And if they cannot do Cubs home games on Fri/Sat night, I doubt "away nights" will be allowed.

The profit that has been generated the past few years will be expected to continue and figured into the purchase price. If you want to say that is thanks to MacPhail, fine, but it better continue if you are leveraging. I don't think the Cubs are a good target for a "quick fix" turnaround and profit taking. They are built to generate solid cash flow from steady ownership and maintaining the experience they are selling. If you start tweaking that experience (corporate sponsorship, etc.) you start to risk the golden goose. Add to that the regulation from the neighborhood for changes and it suddenly is not as attractive for a group to start making changes.

So what you are left with is a team that is near its maximum attendance levels that has been well marketed being sold at a price commensurate to this. I don't know who would be interested, but I'm sure no one would know since that type of buyer would not make their interest known until the last possible minute so as not to tip his/her hand.

We'll see what happens.

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https://twitter.com/DrKenCast

Actually Ryan is a good guess.

Three things.

1) Ryan is a part owner of the Bears and is waiting for Viginia to "move on" so he can buy them. Or, at least, make a play for them.

2) He is the chairman of the 2016 Chicago Olympic Bid which is an incredibility demanding job. Ask Uberroth or Romney

3) He is 70 years old and slowing down, that is why he retired from Aon.

Well dumb shit, it's not a guess. Go try to impress the freshman, you're a phony.

Ah, but new ownership would have a couple of big plays.

TV and Radio rights are too low as WGN is their parents. New independent deals would bring in more money.

They could buily a new stadium where Wrigley is now. Play in the cell for a year while its being built. The Yankees played a year in Shea in the 1970s when the stadium was being remodeled.

A new stadium could seat more (say 45,000) and have a scoreboard. Remember that annoying little billboard behind home plate generates $5 million a year (61k/game). A jumbo-tron could do much more.

Don't discount the money all the gimmicks could bring in. Could be near $10 million if done right.

Yes the cubs are max-ed out in attendance. But that make their revnues stable. You can make money with a 96 season loss, like this year. Stable revnues attract investor groups.

Unless you think that their attendance slumps to near 2 million next year. Probably not as the Lou Pinella show will keep things interesting.

What about John Rogers? He;s the other name I've been hearing as well.

Hmm...if only there were some sort of Cubs forum where this topic could properly reside...

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I am completely and utterly burned out by this discussion. I second Killer V's nomination that this be moved en masse to the Chicago Cubs section.

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