Tribune sells the Cubs for $900 million - but is it too late for Zell?

You don't hear too many good pieces of news coming out of Tribune Co. these days, but here's one: The bankrupt media conglomerate has finally reached a long-overdue deal to sell the Chicago Cubs. The sale, reportedly at a price of around $900 million, will help Tribune pay down some of the towering debt load it's been staggering under since real estate mogul Sam Zell took the company private in December 2007.

The buyer, the Ricketts family, has been close to a deal since January, when it came out on top of a three-way bidding war for the Cubs, Wrigley Fields and a 25 percent stake in Comcast SportsNet Chicago. (The other bidders were Hersh Klaff, a Chicago real-estate baron, and private equity millionaire Marc Utay.) But the two sides had trouble agreeing on the value of the team's broadcast rights, leading Tribune to solicit a second bid from Utay before finally coming to terms with the Rickettses, whose patriarch, J. Joseph Ricketts, founded TD Ameritrade.
Zell is famous for structuring his deals in such a way as to pay a minimum of capital-gains tax, and this case is no different. Technically, the entity buying the Cubs is a newly-created partnership of the Ricketts family and Tribune, which will own five percent of it. That formulation will allow Tribune to avoid a huge tax hit, even though it may create complications in attaining approval from the deal from Major League Baseball.

Completion of the Cubs deal may improve the survival odds of Zell, who last month was reported to be in danger of losing control of Tribune Co. as part of its Chapter 11 reorganization. An analysis published over the weekend suggested that the conglomerate's profit margin has fallen precipitously in the past 18 months, from 19 percent in the first half of 2008 to 8 percent this year.
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