Cuban never had a shot with Cubs
January, 6, 2009
With the sale of the Cubs seemingly imminent, Mark Cuban on Tuesday had a long blog post about the process whereby he tried to buy the franchise. After running through reasons for the team's owners to have been thrilled at the prospect, Cuban gets to the heart of things:
In particular, a lot of the "intelligence" that I would be a big time spender seemed to come out of Chicago. The "conventional wisdom" of people that I talked to around the league suggested that Jerry Reinsdorf, the owner of the White Sox was going to be my primary obstacle to getting approval from MLB should I buy the Cubs. Contrary to popular belief, I think I have a good relationship with Jerry. I know I have a good relationship with all the people I deal with at the Bulls. We are probably on the same side of NBA issues [99 percent] of the time. I honestly don't know what if any information was coming from Jerry, or his position on my owning a team. He was very cordial to me and made it clear that he would be happy to talk to me about anything at any time, although we never did get the chance to chat.
My sense of the entire situation was that whoever the new owner of the Cubs would be, it was in the Sox best interest for things to stay business as usual. Published TV ratings and other published measures showed that the Cubs were more popular than the Sox, yet before I even started looking at the Cubs, I knew from my discussions with people in the NBA that the Cubs and Sox were treated as equals in their business dealings. That was great for the Sox, not so good for the Cubs. Im guessing the people in the Sox organization knew, that if I bought the team, particularly at the price point that was being suggested in the papers, there was no way I would just accept parity in future business dealings. I was going to have to try to negotiate the very best deals possible for the Cubs, even if it was at the expense of the White Sox.
Then the credit crisis hit and hit hard.
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. Cash was and is king. Distressed investment opportunities were rolling in the door that could make me multiples of what any sports team could. I could not see any scenario where the Cubs were worth anywhere near the numbers that had been discussed in the media. There is one publicly owned team, the Atlanta Braves, that are owned by Liberty Capital. The market cap of ALL of Liberty Capital net of cash and debt got as low as $250mm dollars, and today trades for about $500mm dollars, and they own far more than just the Braves.
So there was the issue of valuation. There was also the issue of the economy. It was impossible to predict the full impact of these tough times on any sports team. That uncertainty created two issues. The first of course was valuation. How much would I be willing to pay for the team? I wasn't sure. More important to me was the cash flow. If the economy had a significant impact on future revenues, it would also impact how much I could invest in players. The absolute last position i wanted to be in was paying so much for the team, that if revenues fell off, I couldnt play to win.
So when it came down to it, I did what I thought was the only smart thing to do. I asked for an extension. I knew that if they got the money they wanted for the team, well my bid was not going to be high enough anyway. If they didnt, or the other bidders couldnt come up with their money, they would come back to me.
I'm still waiting.