Chicago Cubs Sale Raises Big Questions for Future Bidders
Chicago Cubs pitcher Carlos Zambrano wanted to reach a multiyear deal before opening day. He's still doesn't have a contract, and could be waiting much longer than he envisioned now that the team is for sale.
Zambrano, who was believed to be close to an $80 million contract, has gone from a Cy Young candidate a year ago to a 5-4 pitcher who gives up more than five runs per game. His struggles raise the question of whether he's preoccupied about his deal being put on hold by the team's sale.
"It's just mechanics," Zambrano said. "It has nothing to do with the contract."
That makes him one of the few people who isn't wondering what will happen when one of the most fabled franchises in sports is sold.
Tribune Co., which owns the team, announced in April that it was selling itself for $8.2 billion to Chicago real estate mogul Sam Zell, who made the deal contingent on shedding non-core assets. That means the Cubs will go on the auction block at the end of the season -- a decision Tribune chairman and CEO Dennis FitzSimons conceded was difficult but one that "really makes sense for our shareholders."
A who's who of deep-pocketed buyers is expected to vie for the Cubs and possibly for Wrigley Field, the beloved home of the perennial losers. University of Oregon business professor Dennis Howard, who has written books on the business of sports, said he thinks the bidding will start at $600 million.
"If you have two viable parties competing, it will drive the price right through the roof," he said.
Forbes magazine recently valued the Cubs at $592 million -- fifth-highest in baseball behind the Yankees ($1.2 billion), the New York Mets ($736 million), the Boston Red Sox ($724 million) and the Los Angeles Dodgers ($632 million).
Some of those mentioned as potential bidders for the Cubs include Dallas Mavericks owner Mark Cuban and Chicago native Jerry Colangelo, the CEO of the Phoenix Suns who once ran the Arizona Diamondbacks.
"It depends what's for sale. There's nothing to speculate on until they put it up for sale," Cuban said earlier this year. "It's not out there yet."
Big Players, Big Contracts
The price tag for a new owner will include some big player salaries, including an eight-year, $136 million deal for Alfonso Soriano that is the fifth-largest in baseball history and heavily backloaded. Soriano is scheduled to make $18 million in each of the final five years of the deal that runs through 2014.
Zambrano, who signed a one-year, $12.4 million deal during spring training, can be a free agent after the season. He has said he prefers to stay with the Cubs.
Sports economist Andrew Zimbalist of Smith College said signing Zambrano before the sale could actually raise the value of the Cubs.
"If they sign him to a long-term deal and people think he's going to stay healthy and it's a good contract for the Cubs, then it won't hurt the team," he said.
The Red Sox spent $103 million for Daisuke Matsuzaka -- $51.11 million for the rights to negotiate and then $52 million over six years, Zimbalist said, an example of how a player with a big contract can increase a team's value in the long run.
"If he stays healthy, he's probably going to be worth more than that," Zimbalist said. "So does signing him lower the value of the Red Sox? Probably not. The same thing with Zambrano."
How the sale will affect the team's ability to pursue free agents and acquire debt after this season isn't clear. After the Tribune sale was announced, Cubs management said it was confident the team will be able to pursue a player at the July trade deadline.
"As far as the rest of the season, I've been assured the Tribune is going to run the ball club, and if we are in the race we are going to be allowed to do some things if we need to," said general manager Jim Hendry, the architect of an offseason overhaul that committed $300 million to present and future salaries.
Wrigley Part of the Deal?
Whether Wrigley Field will be sold with the Cubs or separately is unknown. The neighborhood park with its ivy-covered walls is as much part of Cubs tradition as any player in the team's history.
Donald Levin, the owner of the successful Chicago Wolves minor league hockey team, ticked off the questions surrounding the ballpark.
"Do you own the field? Do you have to be out in case they renovate? Where are you going to play? What happens to all the income?" said Levin, who is expected to make a bid for the Cubs. "These are more important evaluation questions than the contracts."
Howard, the Oregon business professor, said an owner typically wants to control the venue where their team plays.
"If you are paying that kind of money you want to be able to claim and control all income streams it will throw off," he said.
Howard also said a 2004 federal law gives the owners of pro sports teams a big tax break and that makes the teams more valuable.
"Somebody like Mark Cuban is not in it for tax benefits," he said. "But the tax benefits are real and significant. ... They now get to take the entire enchilada and write it off."
New Cubs manager Lou Piniella has enough to worry about with a team that has been under .500 for most of the season.
"That's not any of my business," Piniella said. "My business is to manage a baseball team and help this team win baseball games. Outside of that, whatever happens is going to happen."
The Red Sox franchise, whose Fenway Park is the only stadium in the majors older than Wrigley Field, was sold in 2002. In the third season under the new owners, they won their first World Series in almost a century.
Cubs fans can only hope a sale brings the same kind of luck. They haven't won the championship since 1908.