Wednesday, August 13, 2008

Who Goeth A Borrowing Goeth A Sorrowing

The debt-structuring and tax law details of all of this make my head hurt -- dammit Jim, I'm a litigator, not an M&A specialist! -- but the upshot is that the Cubs sale is going to be really freaking complicated for whoever wins the bidding war.

Whether that potential antitrust challenge all the cool kids have been talking about could extend to a challenge of MLB's debt-load rules is an open question, but for practical reasons I think I'd have to side with baseball on this one in that it just can't be good for any new Cubs owner to carry the kind of debt Sam Zell seems to want them to carry.


Chris Heer said...

So much for Mark Cuban's cash-heavy bid having an advantage.

You have to wonder if the buyers themselves might not put up a fuss over this, because they will have costs associated with that borrowing.

Jason said...

I think Cuban's still in the catbird seat (what does that mean, anyways?).

I never worked on an M&A transaction that tried this sorta thing, but perhaps Cuban (and his consortium) could put some amount of cash (20%?) in escrow to help sooth MLB's debt/equity concerns.

But Chris, buyers with that sorta loot WILL fuss over it as anything as high profile and "sexy" as owning the Cubs is worth fussing over. The essence of all major deals is the fussing over the details. No M&A is easy and straightforward. Trying to shoehorn a deal within a complex tax-shelter structure is something that makes the debt guys drool.

Anonymous said...


Love the Star Trek reference.

Pete Toms said...

According to the piece Tribune bought the Cubs in "1981 for $20.5 million." They / Zell are gonna sell it for approx 1$ billion. Anybody wanna gripe about player compensation?