Wednesday, August 13, 2008

Cuban & The Cubs

Internet Billionaire & Dallas Mavericks owner, Mark Cuban, who writes a great blog incidentally, has been positioning himself to buy the Chicago Cubs baseball team. He has been a terrific owner in the NBA, turning around the Mavericks, but doesn't do well with authority and is so rich, he doesn't worry about the fines. Still, he made his billions in new media and presumably has big plans for the Cubs and MLB in general. This will be a monster deal, for something in the neighborhood of $1.4B. Cubs fans like my buddy Walton, are besides themselves. The Cubs are going to be big time and no one in the national league will be able to stop them.

So what's the issue? Well Peter Gammons mentions in this column (which may require a subscription) the conventional wisdom that MLB Commissioner Bud Selig will rig the bidding process and make sure his friend, John Canning of Madison Dearborn, wins the bid. I definitely thought that would happen. However, as I think about it now, I think Cuban has a real shot because of the dynamics at play with the Cubs parent company.

Last year, Sam Zell, a huge power broker did an LBO of the Tribune Company, which owns a bunch of papers and the Cubs, among other things. Well, the newspaper business isn't so great these days, and Zell leveraged the deal (tons of debt) like crazy, so there is very little margin of error for the whole company. Zell must absolutely maximize the Cubs sale, or he may be forced to take the Tribune Company into bankruptcy because the newspaper business alone can't support all the debt.

Zell is so powerful, that I think he can go over Selig's head to people like Congressman and Senators, who might decide to play hardball with MLB's anti-trust exemption, or maybe bring up the steroid controversy again, or maybe the ugliness with scouts taking kickbacks to sign Latin American players (also covered in Gammons article). Baseball has a lot of buried bodies, and if Zell doesn't think he is maximizing his greatest asset at the Tribune Company because of Selig's backroom politics, he's going to make some noise. How fitting the wave of technology that made Cuban a billionaire, is now squeezing the newspapers so badly, that it will actually help him achieve yet another life goal, to own the Cubs.