Sam Zell’s Nightmare Continues

The Tribune Company could be heading for bankruptcy:

The Tribune Company, which is in danger of falling below the cash flow required under its bonds, is trying to negotiate new terms with its creditors and has hired advisers for a possible bankruptcy filing, according to people briefed on the matter . . .

. . . Tribune has been trying to sell the Chicago Cubs baseball team; the team’s stadium, Wrigley Field; and the company’s share in a regional cable sports network. Such a deal, which could bring the company more than $1 billion, has been a crucial part of its strategy since last year.

I’m guessing Jim Hendry knew this, which would explain the decision to not go after Peavy. After all, if they had done the deal and then filed for Chapter 11, a bankruptcy trustee would have to take possession of Josh Vitters, who would be legally classified as a preference, after which he would be divided up and distributed to the Trib’s creditors in proportion to the outstanding debts each is owed.

Nasty business, bankruptcy.

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Comments

  1. Jason @ IIATMS said...

    I wonder what recourse, if any, Zell & Co. have with the fact that MLB can restrict new owners.  What if Cuban (and his consortium) were in fact the high bidders and the MLB frat boys insisted on keeping them out? 

    That’s rough…

  2. Craig Calcaterra said...

    Well, I’m guessing Cuban is off the table now given his SEC troubles either because (a) he doesn’t want in anymore; or (b) because now MLB appears to have a legitimate, non-anti-competitive reason to keep him out.  Sure, if Cuban and Zell were still interested in doing a deal, Cuban was still high-bidder, and they were being thwarted by MLB they could sue, but I think such a beast would pretty much be DOA.

  3. Jason @ IIATMS said...

    That’s NOW.  But rewind 2 months.  What if he was the highest bid?  And for giggles, let’s also assume that his SEC issue didn’t happen.

    Would they be able to sue and WIN?

  4. Craig Calcaterra said...

    Take away the SEC and assume that Cuban was high bidder, yes, I think there would be a righteous suit if Zell wanted to advance it.  The anti-trust exemption has already once been interpreted to not cover franchise sales (Piazza v. MLB re: the sale of the Giants in 1992), and I think that if someone wanted to challenge the validity of MLB and the owners approving or disapproving of would-be bidders they would be successful.  I wrote about this a bit at the old site:

    http://shysterball.blogspot.com/2008/05/dont-count-cuban-out.html

  5. Pete Toms said...

    I think there is something similar happening with the Nashville Predators.  One of the minority parnters has gone bust and there is legal wrangling ( if I understand it correctly ) about whether the trustee will sell the shares to the highest bidder or if the remaining partners can steer the shares to their preferred party.  It gets a lot of press here because the RIM guy, Balsille, keeps trying to buy a team and Bettman doesn’t want him to own one ( at least if his intent is to move it to Canada ).

  6. Craig Calcaterra said...

    Pete—I’m a hockey idiot (I go to one Blue Jackets game a year when my brother visits, and otherwise I pay no attention).  Question: where would a team being moved to Canada go?  I would assume Tornoto could support more teams than just the Leafs, but are there territories and stuff?  Where is it suspected that the Preds would go?

  7. Rob said...

    One would think that if the Tribune files for bankruptcy, that would be a nightmare scenario for MLB.  What bankruptcy judge is going to put up with any interference from the other baseball owners when it comes time for a court-ordered sale of the Cubs?

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