When I wear my Cubs’ cap these days, somebody always stops me and says: “Aren’t the Cubs going bankrupt?”
The short answer is: No!
My Cubbies may be perpetual losers, but the franchise is a money machine. Like the Red Sox, the Cubs sell out almost all of their tickets before the season begins. The franchise rakes in megabucks from its deal with WGN-TV, a national superstation. Cubs paraphernalia brings in another pile of loot.
Don’t believe all those media stories you read about the Cubs’ supposed bankruptcy. Long ago, I worked for a big time corporate law firm, so I understand some (but not all) of the workings of corporate bankruptcy. Here’s the scoop:
The Tribune Company owns the Cubs. They are in the process of selling the Cubs to Thomas Ricketts, CEO of Incapital LLC, a Chicago investment bank, and a director of TD Ameritrade Holding Corporation, for about $850 million.
It is the Tribune that is awash in red ink. Newspapers are dying all across the country. Their ad revenues have tanked as the internet has triumphed. Some would say that the reflexive PC liberalism of newspapers has also been a part of their downfall. I don’t know about that.
The Tribune is selling the Cubs in a desperate attempt to stay afloat. That $850 million will buy them some time. Here’s where the bankruptcy comes in. The Tribune is dumping all of its debt into the sale of the Cubs. Dumping that debt will probably relieve the Tribune of another $500 million in liabilities.
Why would a successful investment banker plow $850 million into a franchise leaking red ink? Thomas Ricketts is no fool. Sports franchises are great investments for the super rich. Why? Because Congress has long granted them favored tax status, and because states and cities lavish public money and tax breaks on them. At this moment, the Cubs are lobbying the Illinois state legislature to pony up a sizeable percentage of the money for a complete rebuilding of Wrigley Field. Don’t be surprised if the politicians comply.
So, the Cubs may not know how to win a World Series, but they do how to make money. Don’t feel sorry for the Cubs. The franchise is minting money. And, no, the Cubs aren’t really going bankrupt.
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