NEWSLETTER
Today, Mark Cuban put together a thoughtful and
insightful blog post about his efforts to buy the Chicago Cubs. I
know that I was one of the thousands of Cubs fans who desperately
hoped that not only would Cuban win the bidding, but that he would
also gain approval from the stodgy old network of fuddy duds that is
MLB ownership.
During the entire process I thought I had a very strong
chance of being able to buy the team. I thought I could offer a
competitive price. I thought I had the experience to come in and
improve the business so that I could continue to invest in the product
on the field without having to squeeze every nickel from Cubs fans. I
also thought I could win over Major League Baseball. All told, I
thought my experience in owning a team and most importantly, my
commitment to always trying to win, would give me an important
advantage.
Ultimately, the credit crisis – and not the SEC insider trading
allegations – brought Mark Cuban’s bid to a close.
Then the credit crisis hit and hit hard.
All of the sudden, what seemed like a sane business decision, didnt
seem so sane any longer. In particular, the financial participations I
had been discussing with my bankers were for shorter term loans. Just
refinance at the end of the term. Its what everyone is doing. Except
that it no longer seemed like a safe bet that I could refinance in a
few years. I didnt want to be caught with a Sumner Redstone margin
call, and for better or worse, the banks were getting worried about
staying in business and the idea of matching the asset to the term
wasnt something they were ready to do, unless of course they could
convince 30 other banks to do the same thing. I thought about writing
to Congress to get a bailout…just kidding.With the credit market on the fritz, the other option was to add
investors and just pay cash. However, if we were going to pay cash, I
was not going to bid anywhere near 1 Billion dollars for the assets.
Once the credit crisis hit, the value of cash went through the roof.
It was not just a matter of how much the Cubs were worth, it was also
a matter of how much more money I could earn with that
cash.
Cuban also offered insight into how he would have run the Cubs; some
of which runs counter to the popular thought:
On the flipside, my dedication to winning could also make
my job of getting approval with MLB baseball much harder. Some people
thought it meant that I would spend on players like I did in my early
days with the Mavericks. Back before I learned that sometimes GMs put
keeping their jobs ahead of trying to win championships. But thats
another story for another time. I had no intentions of trying to
outspend the Yankees or Red Sox. There was no reason to. I didnt have
to beat either of those teams unless I made it to the World Series.
The only teams I had to be better than were those in the National
League, and more importantly, those in my division. There were no big
spending rivals close to home, so the AL East could spend themselves
silly. My plans were to spend to win, not to spend for spending’s
sake. IMHO, the money I could save being in the 2nd tier of payroll
could be invested in scouting and development.
All in all, it’s a great – if long – read. Some comments about White
Sox (and Bulls) owner Jerry Reinsdorf in there, as well.
