"At the end of the day, boys, you don't tell me how rough the water is, you bring in the ship." – Steve Stone
A Goat Riders Affiliate
Go Cubs!

Wrigley Rooftop Directory
Ryne Sandberg Fan Page
The Cubdom Photo Gallery
The Cubs Prayer
Cubs Calendar
Jim Hendry Page
Cubs Ownership History
Baseball Business Essays
TheCubdom Hall of Cubs


Recent Blog Updates

Editor's Pick:

Goat Riders of the Apocalypse
Bleed Cubbie Blue
Desipio Media Ventures
Hire Jim Essian!
Cub Reporter
Ivy Chat
Cub Town
Ghost of Paul Noce
The Cubdom
Thunder Matt's Saloon
View From the Bleachers
Cubby-Blue
WGN-TV Baseball Blog

Honorable Mention:

A Hundred Next Years
A League of Her Own
Agony and Ivy
Bad News Cubs
Baseball Diamond News
Boys of Spring
Bush League Times
Chicago Cubs Baseball
Chicago Cubs Blog
Chicago Cubs Online
Church of Baseball
Clark & Addison blog
College of Idiots
Cubs f/x
Cubs Hot Stove
Cubs Hub
CubsNet.com
Cubs Obsession
Five Outs to go
Gonfalon Cubs
Kosuke Fukodome
Lollygaggers
Out of Right Field
The Cubs Brickyard
The Other Fifteen
The Ted Lilly Fan Club
Temporary Bleachers
TheCubsfan.com
Wrigleyville23

Newbies:

Cubbie Nation
Holy Cow Bell
Ivy Envy
Towel Drills
Turning Two
Wasting away in Wrigleyville

Soldiering On:

Die-hard Cubs Fun
Fire Dusty Baker
Northside Lounge
Peoria Northsider Report
Yarbage Cub Review

Cubs Sites:

Desipio Boards
North Side Baseball
Cubscast.com
Inside the Ivy
The Heckler
My Wrigleyville

Just Read 'em!

Baseball Analysts
Baseball Musings
Baseball Prospectus
Baseball Think Factory
Hardball Times

Conglomerates

Baseball Toaster
Most Valuable Network
SportsBlog Nation

NL Central

Brew Crew Ball MIL
Bucs Dugout PIT
Crawfish Boxes HOU
Get Up Baby STL
Honest Wagner PIT
Red Hot Mama CIN
Red Reporter CIN
Viva El Birdos STL

NL East

Amazin Avenue NYM
Citizens Blog PHI
Federal Baseball WAS
Fish Stripes FLA
The Good Phight PHI
Sabernomics ATL

NL West

6-4-2 LAD, LAA
AZ Snake Pit AZ
Dodger Thoughts LAD
Ducksnorts SD
Gas Lamp Ball SD
McCovey Chronicles SF
Only Baseball Matters SF
Purple Row COL

AL East

Batters Box TOR
Bronx Banter NYY
Camden Chat BAL
DRays Bay TB
Futility Infielder NYY
Joy of Sox BOS
Over the Monster BOS
Pinstripe Alley NYY
Replacement Level Yankees Weblog NYY

AL Central

Aaron's Baseball Blog MIN
Bless You Boys DET
Let's Go Tribe CLE
Royals Review KC
South Side Sox CHW
Sox Machine CHW
Tiger Blog DET
Twins Geek MIN

AL West

Athletics Nation OAK
Halo's Heaven LAA
Lone Star Ball TEX
Lookout Landing SEA
USS Mariner SEA

Miscellany

Beyond the Boxscore
Minor League Ball

Chicago Sports

Blog-A-Bull
Section 8 Fire
Windy City Gridiron Bears

News Sources

Chicagosports.com
Cubs.com
MLB.com
Sun-Times Cubs
Daily Herald Sports
Daily Southtown Sports
BaseballReference.com

Beyond the Ivy - A Cubs Rooftop Partner

TribCo Files for bankruptcy - Cubs supposedly uneffected

Monday, December 8, 2008

In news that should not have surprised anyone, the Tribune Company filed for bankruptcy today. The filing, a chapter 11 variety, keeps TribCo in business and means that operational changes will be minimal. The goal of the bankruptcy declaration is to force creditors to negotiate with the company and accept less favorable terms on their debt. In many bankruptcies, the debt holders become the new owners and equity holders (prior owners) are forced out. (It is possible that Sam Zell's time at the helm of HMS TribCo is severely limited.)

While the news of Tribune's filing is not good for Cubs fans, their is a silver lining. Arguing that the team is a separate (healthy) business, TribCo excluded the club and the stadium from the filing. In a charmed world, this means the sale of the club would continue unimpeded... but a glance at the headlines this year indicates 2008 does not lend itself to the description: 'charmed world.'

The first hiccup in the sale process is likely to focus on the portion of Comcast SportsNet that was originally intended to be sold along with the club. (Without inside information, I'm not sure the following is true, but I can speculate.) The three bids that have been filed most likely included a purchase of the ComCast channel. However, the ComCast channel is included in the bankruptcy filing, so the bids received Dec. 1 are likely invalid, or in need of substantial modification. There are (at least) two scenarios in play here.

Scenario 1: The club and ballpark ("the two assets") are sold without ComCast. Either the bankruptcy judge allows the decision not to include the two assets in the bankruptcy filing to stand (possible), or the Creditors don't petition the judge to force Tribune to include the two assets in the bankruptcy filing (unlikely). Regardless, if the two assets escape the bankruptcy filing, the sale would proceed along the same timeline as planned, with the only modification being that the bidders reduce their bid by the amount of value they had previously assigned to the ComCast share.

Scenario 2: The interested parties still plan on selling the club, the ballpark, and ComCast together. If this is the case, the sale process would be delayed at by at least a few months because when an asset is subject to bankruptcy, the creditors may object to a sale if they feel that it is not valued properly. In this case, not only do the other MLB owners have a say in the sale, but so do the Tribune creditors and the bankruptcy judge.

In another related note, I can easily see MLB's antitrust exemption coming under close scrutiny because of this filing. I am predicting right now that creditors will object to today's filing. TribCo will be forced to include the club and ballpark as part of their assets in an amended filing. The sale of all three assets will then be subject to creditor approval, judicial approval, and MLB owners approval. If the MLB owners were to reject the highest bidder, the probability of the antitrust exemption being challenged by the creditors would be nearly 100% in my estimation.

Of further interest, let us also remember that the antitrust exemption is not so much an affirmative exemption as a refusal by federal courts to take jurisdiction in matters related to Major League Baseball. The exemption was established and upheld when the Supreme Court laughably decided that MLB did not participate in 'interstate commerce' and thus was not subject to federal antitrust laws. The Supreme Court indicated that Congress had the power to pass legislation and revoke this exemption, but Congress never has. However, the legal reasoning behind the case was severely flawed and the Federal courts now operate under a much broader interpretation of interstate commerce. (Counterpoint, TribCo apparently filed in Delaware state court, but its certainly possible that creditors will push for a change of venue to a federal appeals court, thus settling the jurisdiction hurdle to challenge the antitrust exemption.)

What then are my conclusions?

No one is happy tonight.
• Sam Zell might be relieved that he's likely done at the Trib, but I believe he's lost over a billion personally.
• Tribune Company employees who are fortunate enough to still be employed may have their entire Employee Stock Ownership Program wiped out (if my understanding of TribCo's capital structure is correct.)
• Cubs bidders are probably upset because this will delay the sale of the team.
• Cubs fans are upset because this will delay the sale of the team.
• Cubs management should be upset because the club will be included in the bankruptcy before long and budgets will be slashed accordingly.
• Bud Selig and the MLB owners are upset because there's now another viable avenue to attack the antitrust exemption, plus they're really going to be pissed that one of their club members is going to be in bankruptcy court.
• Don Fehr and the players union are uneasy because in the nightmare situation, the club is included in the bankruptcy filing and all of the players' contracts could possibly be declared null and void.

Byron Clarke is a CPA with no detailed knowledge of bankruptcy laws, legal jurisdictions, or the Tribune Company's specific situation. He is, however, a baseball hobbyist who finds the business of baseball thoroughly interesting and has generally followed baseball business proceedings in the media. Everything above was pure speculation. If you want to read an actual piece of journalism about the bankruptcy filing, check out the NYTimes.

Posted by Byron at December 8, 2008 10:43 PM | Bookmark and Share | BallHype: hype it up!
Subscribe to The Cubdom - get emails with the latest Cubs info and pictures

This post has been tagged:

1 Comment

Hey Byron, your blog is one of the best! Will you read mine and see what you think!

Leave a comment


AddThis Feed Button

Get The Cubdom email updates


Search

Google
Web
TheCubdom.com

eXTReMe Tracker
Since Mar 18, 2004

Recent Entries


Monthly Archives



Cubs Sale Articles

© 2004 – 2013 Cubdom LLC
legal - about thecubdom.com - site index