Ricketts Family Purchases the Final 5% of the Chicago Cubs from the Tribune Company

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Ricketts Family Purchases the Final 5% of the Chicago Cubs from the Tribune Company

Chicago Cubs

Many moons ago, I dug into the complicated transaction that lay beneath the Ricketts Family’s purchase of the Chicago Cubs in 2009. Strictly speaking, the purchase was not so much a purchase, and instead involved the creation of a partnership between an entity formed (and owned by) the Ricketts Family and the former owner of the Cubs, the Tribune Company. That partnership, which resulted in 5% of the Cubs being retained by the Tribune, was a very specific kind of partnership that required the team to be purchased using a whole lot of debt, which would save the Tribune – then led by Sam Zell – a whole lot of capital gains taxes.

That partnership was designed to last at least 10 years, which means that the Ricketts Family could not own the team totally and completely outright (100% of the team and debt-free) until 2019 at the earliest.

And, hey, what do you know? The Tribune just sold its 5% stake to the Ricketts Family.

From the official release: “Tribune Media Company (NYSE: TRCO) and the Chicago Cubs today announced that Chicago Entertainment Ventures, LLC, the Cubs’ parent company, has completed the purchase of Tribune’s remaining five percent membership interests in Chicago Entertainment Ventures, LLC. The transaction occurred pursuant to the exercise of a purchase right under the parties’ agreements and concludes Tribune’s ownership interest in the Cubs and their affiliates.”

The Ricketts Family had already long functioned as the owner of the Cubs, so there will be no change in actual management from this sale, outside of the one board seat that had previously been retained by the Tribune. The Ricketts children were the other board members, though, so that seat didn’t exactly drive any swing votes.

You’ll also note that this sale was already long contemplated by the parties, and indeed was the exercise of some kind of option likely already baked into the original purchase. That is to say, I’m not sure the 5% cost the Ricketts Family the market rate 5% of a $2.5 billion team. That would have been upwards of $125 million, and would certainly raise questions about the inability/unwillingness to spend aggressively this offseason. I totally understand that folks will go there, but I’m not so sure there’s a connection.

That said, I’d imagine there is at least a tangential connection to the Cubs’ coming TV deal. President Crane Kenney did allude to news coming later in the month that would open up the door for the Cubs to make a TV announcement, and maybe this is that. But, again, I expect that this purchase has long been planned and the timing has long been known, so I doubt it was functionally holding up a TV deal. Instead, it may just be a matter of timing – get this deal buttoned up and then the TV deal can be finalized and announced. (Or, they are simply totally unrelated.)

I’ll have some more thoughts on this after I reflect on the implications and dig back in on the original transaction. I do know that there were certain additional spending restrictions that were tied to the leveraged partnership structure (remember those old spending restriction do-hickeys?), so there are some angles to this that require some pondering.

In the meantime, there’s your late Friday news: the Ricketts Family owns the whole thing.

Author: Brett Taylor

Brett Taylor is the Editor and Lead Cubs Writer at Bleacher Nation, and you can find him on Twitter at @BleacherNation and @Brett_A_Taylor.