Sam Zell is considering a lineup change

Fri 19 Jun 2009 04:06

Tribune Co., led by Zell, is no longer negotiating only with the Ricketts family on a deal for the Chicago Cubs. Sources confirmed Thursday that the parent of the Chicago Tribune recently has entered into separate discussions with a group led by New York investor and former Chicagoan Marc Utay, whose earlier bid was trumped by the Rickettses.

Discussions with the Ricketts family are ongoing, Tribune Co. spokesman Gary Weitman said. But sources said the two sides have not been able to come to an agreement on the team’s broadcast rights, which Tribune Co. owns through its WGN subsidiaries and 25 percent stake in Comcast SportsNet Chicago, a regional cable sports network. In addition to ticket and concession sales at Wrigley Field, the broadcast contracts are a major source of revenue for the team.

Weitman said the media company is “assessing other alternatives” but would neither confirm nor deny that it is talking again with the Utay group.

“Our goal, and responsibility, is to pursue a transaction that is in the best interest of the company,” he said. “We won’t comment on specifics of any potential transaction.”

The fact that Tribune Co. hasn’t been able to close a deal five months after narrowing a field of 10 bidders to one is partly a reflection of harder economic times that have harmed the value of all sports franchises. Two years ago when Tribune Co. put the team, Wrigley Field and Comcast SportsNet up for sale, some thought the package might fetch more than $1 billion. Now, the Ricketts family has considered lowering its winning bid of $900 million, sources have said.

In fact, Hersch Klaff, a Chicago real estate investor who was one of the finalists in the auction, said Thursday that he is no longer interested.

“It’s a different world now,” he said. “This deal was priced for a different time.”

The re-emergence of the Utay group is not entirely unexpected. Zell, Tribune Co.’s chairman and chief executive, raised some doubt last month about closing a deal with the Ricketts family that many thought was a sure thing.

“If the Ricketts deal doesn’t get done, I’m sure there will be other ones,” Zell told Bloomberg News.

Tribune Co. officials also expressed their dissatisfaction with the Ricketts negotiations to Major League Baseball officials more than a month ago, a baseball source said, and informed them that they might talk to others.

“I think it likely that Zell is trying to use the threat to push Ricketts to the finish line, with the possible bonus that Utay comes up with something,” the source said.

Other sources confirmed that Tribune Co. is within its contractual rights to talk to other bidders besides the Ricketts family.

Utay appears to be serious in his renewed pursuit of the Cubs. He has been trying to raise money in the last few weeks, said a source familiar with the matter.

A second source added, “Both parties are aggressively moving toward a complete bid.”

Utay, who declined to comment, is the managing partner of a New York private-equity firm. He grew up in Glenview and attended New Trier West High School. Reuters first reported Utay’s re-emergence in the Cubs sale.

Utay’s group also includes another private-equity investor, Leo Hindery, who has baseball ties. Hindery once ran YES Network, the New York Yankees’ TV channel. He declined to comment.

Utay’s group was one of three finalists in the Cubs auction, but his bid fell short because it did not include as much upfront cash as the Rickettses’ offer, sources said. The Ricketts family’s bid promised roughly 50 percent in equity and the rest financed with debt. The disagreement over the broadcast contracts amounts to an estimated $50 million difference in the value of the family’s offer, sources said.

The family has raised cash by selling some of its shares in TD Ameritrade Holding Corp., an Omaha-based online brokerage started by J. Joe Ricketts. One of his sons, Tom Ricketts, a Wilmette investment banker, is leading the family’s pursuit of the Cubs.

The family also has finalized lending agreements with four banks this week, a source close to the family said. Dennis Culloton, a spokesman for the Ricketts family, said that “things are moving very positively” with Tribune Co. He declined to comment on the Utay group’s involvement.

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