Cuban’s Cubs ownership: not so crazy

Cuban’s Cubs ownership: not so crazy
By Mike Colias and Ann Saphir
Chicago Business
Published: July 27, 2008

In the extra-inning saga that is the Chicago Cubs sale, Mark Cuban has been cast in the part of the feared slugger left sulking on the bench.

Pundits predicted Major League Baseball club owners would never allow the bombastic billionaire into their exclusive club. But Tribune Co. CEO Sam Zell seems determined to get Mr. Cuban in the lineup as he vies to get more than $1 billion for the storied franchise. And observers are no longer so quick to count out Mr. Cuban — especially after Mr. Zell’s decision last week to rebuff the initial bid of the perceived front-runner, Madison Dearborn Partners LLC Chairman John Canning.

“Cuban’s the lead guy now,” says one bidder.

It’s in Mr. Zell’s interest to prop up Mr. Cuban’s viability with the league if for no other reason than to force other bidders to maximize their offers for the team. Should his final offer prove to be an outsized, ego-driven bid — a possibility that has other bidding groups wringing their hands — it could leave the 29 team owners hard-pressed to turn down the brash owner of the Dallas Mavericks NBA franchise. Some media reports peg his offer at $1.3 billion, highest among remaining bidders.

“If he’s got a bid that’s a couple hundred million more than the next person, it’s hard to see how (the owners) go back to the Tribune and say, ‘We just don’t like the guy,’ ” says a Major League Baseball source.

The prospect of a big offer from Mr. Cuban is tantalizing to Mr. Zell, a fellow billionaire who, like Mr. Cuban, eschews neckties and loves to play the outsider.

Mr. Zell showed little regard for Chicago’s business establishment with his swift snub of Mr. Canning’s group. But pitching Mr. Cuban would test Mr. Zell’s sales skills with powerful league owners who are as accustomed to getting their way as Mr. Zell is to getting his.

The lobbying already has begun.

“There have been ongoing conversations with the league and there’s reason to believe that, as long as the structure of the transaction is sound, he would be a viable and acceptable candidate,” says a person involved in the sale.

Mr. Cuban, who turns 50 on Thursday, is among six bidders who made the first cut last week in Tribune’s auction of the Cubs and Wrigley Field, a person from one bidding group says. All remaining bids top $1 billion, this person says. Tribune also has bids to buy Wrigley separately.

WHO GETS TO SEE THE CUBS’ FINANCES?

Others cleared to get a closer look at the Cubs’ finances include Thomas Ricketts, who runs a Chicago bondtrading business and whose family founded Ameritrade; Sports Acquisition Holding Corp., a publicly traded company formed this year expressly to buy a sports team and whose board includes Hank Aaron and Jack Kemp; and Michael Tokarz, chairman of Purchase, N.Y.-based investment fund MVC Capital Inc. Tribune’s investment bankers urged Mr. Tokarz to team up with Sports Acquisition to make a single bid. Real estate exec Hersch Klaff and investor Leo Hindery also made the cut, a published report says.

Cubs Chairman Crane Kenney declines to comment on the bidding process. Messrs. Cuban and Canning also decline to comment.

Major League Baseball owners can be a fickle lot. In 2002, the Boston Red Sox sold to the third-highest bidder for $700 million (still an MLB record) in a deal critics claim was orchestrated by the league. The highest bid was $790 million. In 1980, league owners shot down real estate developer Eddie DeBartolo’s bid for the White Sox under pressure from then-MLB Commissioner Bowie Kuhn, clearing the way for current owner Jerry Reinsdorf. (Mr. Reinsdorf, who also owns the Bulls, voted against Mr. Cuban joining the ranks of NBA owners.)

But owners voting on any bidder Tribune offers up would have reason to look beyond personality. A big bid would instantly bump up the values of all pro baseball teams.

“The Cubs bid certainly can raise the value of the other franchises dramatically,” says Maury Brown, president of Portland, Ore.-based Business of Sports Network. He says Mr. Cuban has a chance to get approved, although “Canning fits the mold much better in terms of the league’s culture.”

Mr. Canning, who still could jump back in by upping his bid, had been viewed as a favorite ever since Mr. Zell signaled his intent more than a year ago to sell the Cubs. He is part owner of the Milwaukee Brewers and a friend of Major League Baseball Commissioner Bud Selig’s. His bidding group is a who’s who of Chicago’s business elite, including former Aon Corp. Chairman Patrick Ryan and McDonald’s Corp. Chairman Andrew McKenna.

COURTSIDE RANTS

In contrast, Mr. Cuban is best-known for his courtside rants against referees and opposing players. The NBA has fined him more than $1 million for infractions ranging from critical entries on his blog to running onto the court to break up a fight. He was fined $500,000 for saying of an NBA official: “I wouldn’t hire him to manage a Dairy Queen.” In a public relations stunt, Mr. Cuban later spent several hours serving Blizzards to throngs of fans at a Dairy Queen in Coppell, Texas.

Mr. Cuban, who made his fortune as a dot-com entrepreneur, has virtually no Chicago ties. A Pittsburgh native who attended Indiana University, he now lives in Dallas. If he emerges with the top bid, Mr. Zell probably will urge team owners to overlook the volatile personality in light of Mr. Cuban’s success in Dallas and popularity among fans and players.

“I’m gonna pull out all the stops” to buy the Cubs, Mr. Cuban said in a radio interview in June.

Since paying $280 million for the team in 2000, Mr. Cuban has “turned the Mavs around from league laughingstock to one of the NBA’s premier franchises,” Forbes magazine said last year. It pegs the team’s 2007 value at $461 million and Mr. Cuban’s personal wealth at $2.6 billion.

In 2006, he inked a promotion with American Airlines to hand out 20,000 free round-trip airline tickets for fan appreciation day. The Maverick’s locker rooms are the NBA’s poshest: Each player’s locker is equipped with the equivalent of a home-theater system.

His success in Dallas “will help lure Major League Baseball to say, ‘You’ve done a great job with the Mavericks and we think you’ll do a great job with the Cubs,’ ” says Michael Rapkoch, president of Sports Value Consulting LLC in Dallas, who is not involved in the sale.

“I would put my money on Cuban,” he says. “I think if he wants it, he will get it.”

©2008 by Crain Communications Inc.

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