Commentary

Canning considered favorite to land Cubs

Originally Published: September 21, 2007
By John Helyar | ESPN.com

On the field, the Chicago Cubs are in a hot race for the National League Central Division title. In the boardroom, it's quite the opposite. The contest to buy the Cubs seems all but over, even before it's officially started.

Chicago-based private-equity mogul John Canning Jr. is the prohibitive favorite. It's not just that he's put together a group of local establishment tycoons that readily can amass the $1 billion it might take to buy the franchise, Wrigley Field and 25 percent of Comcast SportsNet Chicago from the Tribune Company.

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Others have the money and the urge to own the Cubs, including Dallas Mavericks owner Mark Cuban and Chicago bond dealer Thomas Ricketts. There might be a half-dozen qualified groups in all -- if the Tribune Company ever gets around to opening the bidding.

But Canning is hard-wired into the establishment of Major League Baseball, which must approve new ownership. The chairman of Madison Dearborn Partners is a friend and business associate of commissioner Bud Selig. He owned a piece of the Milwaukee Brewers when the Seligs ran the team and still has an 11-percent stake under the new majority owner, Mark Attanasio.

Another member of the group, Andrew McKenna, also has connections. Now chairman of McDonald's Corp., he was chairman of the Cubs in the early 1980s.

What's more, Allen and Company, the investment banking firm that represented Selig's ownership group in selling the Brewers, is representing Canning's group now. Its partner on the case is Steve Greenberg, the former deputy commissioner of MLB.

Canning is the very model of the kind of owner Selig has sought to install when teams change hands, particularly baseball's flagship franchises. The commissioner wants no renegades who will break ranks on labor matters or break the bank on player salaries. (The damage might already have been done in the case of the latter, with the Cubs' $100 million payroll.)

Selig, of course, can't keep sellers from fielding every bona-fide offer. But MLB's approval process overhangs all ownership transactions. It tilts the outcome of the bidding to favor those who can be expected to do the commissioner's bidding.

In 2001, Boston Red Sox CEO John Harrington -- a close ally of Selig -- sold the team to an insider-heavy group led by then-Florida Marlins owner John Henry -- even though its $700 million bid was $90 million shy of the top one. Massachusetts Attorney General Thomas Reilly threatened to stop the sale, calling it a "bag job."

The group, which also included former San Diego Padres owner Tom Werner and former Orioles and Padres exec Larry Lucchino, mollified Reilly by donating $30 million to charity. Then the sale went through.

During the Washington Nationals' auction last year, MLB seemed less intent on fetching top dollar -- though $450 million wasn't peanuts -- than on having the right sort of owner in the nation's capital. That turned out to be real-estate developer Ted Lerner, who got the inside track by bringing former Braves president Stan Kasten into his group.

"It's just totally incestuous," says a source close to the bidding process. "I've done deals in the NFL and the NHL and there's never a question -- the highest bidder is almost always the winner. But Major League Baseball, that's just another story."

Rich Levin, MLB's chief spokesman, denies the field is tilted or that Canning is a lock to own the Cubs.

"There is no inside track," he says.

Selig might not have quite as much control over the Cubs' disposition as he has in some other cases. MLB actually owned the Nationals, for instance, after taking the team over when it was failing in Montreal.

If Canning's group isn't the high bidder -- or plausibly close to it -- MLB might have a tougher time finessing him into the ownership lodge than it did Henry. The Tribune Company has a fiduciary duty to its shareholders to sell the Cubs to the highest bidder. And Sam Zell, the real-estate mogul who's buying the rest of the Tribune Company, has a high interest in getting top dollar, too. He's counting on that cash to lower the debt on his $8.2 billion acquisition.

Zell doesn't particularly care about MLB's ownership preferences -- even though he does own a sliver of the White Sox -- and he's a tougher foe than Thomas Reilly. He could take MLB to court to challenge its approval powers. Maybe he couldn't win -- that's the beauty of having an antitrust exemption -- but he could make this a drawn-out mess for baseball.

This process already has been drawn out, moving at Daryle Ward speed. The Tribune Company announced on Opening Day that the Cubs were on the block and should be sold by year-end. But its investment banker, JPMorgan Chase, still hasn't given the team's financials to prospective bidders. One possible reason for the delay: The Tribune Company reportedly now is considering selling the Cubs and Wrigley Field separately

Whatever the case, the pace has frustrated all of the groups. An adviser to one figures that even if JPMorgan Chase delivered the so-called "book" this week, it could be tough completing a sale before next Opening Day.

A Tribune Company spokesman says the Cubs' divestiture "hopefully" will be completed by the end of the year. And the Cubs also hopefully will win their first World Series in 99 years.

Canning has been moving forward cannily during the hiatus. Over the summer, he folded several potential rival bidders, including prominent Chicago restaurateurs Larry Levy and Richard Melman, into his group. That's only added to the aura of invulnerability and inevitability attached to his run at Chicago's trophy sports property.

John Helyar is a senior writer for ESPN.com and ESPN The Magazine. He previously covered the business of sports for The Wall Street Journal and Fortune magazine and is the author of "Lords of the Realm: The Real History of Baseball."

John Helyar

Sports Business
John Helyar is a senior writer for ESPN.com and ESPN The Magazine. He previously covered the business of sports for The Wall Street Journal and Fortune magazine and is the author of "Lords of the Realm: The Real History of Baseball."