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Tribune filing could aid Cubs sale

A sale of the Chicago Cubs outside the bankruptcy process could help Tribune reap a higher price for the team and Wrigley Field. A sale of the Chicago Cubs outside the bankruptcy process could help Tribune reap a higher price for the team and Wrigley Field. (Charles Rex Arbogast/Associated Press)
Associated Press / December 10, 2008
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NEW YORK - By keeping the storied Chicago Cubs baseball team and Wrigley Field out of its bankruptcy filing, Tribune Co. gains the freedom to run the team without having to constantly consult with a judge - and to continue soliciting bids for the Cubs and the stadium that could net $1 billion.

A sale outside of the bankruptcy process could help Tribune reap a higher price for the Cubs and ivy-walled Wrigley, analysts said, which could ultimately benefit the creditors who were put on hold by Tribune's Chapter 11 filing Monday. Still, it's not clear whether Tribune's more than 1,000 creditors would agree to leave such a prized asset outside the bankruptcy court's control.

Several of Tribune's biggest lenders, including Merrill Lynch Capital Corp. and hedge fund Highland Capital, declined to comment on the Cubs.

Tribune's first hearing in bankruptcy court is scheduled for this morning in Delaware.

Operating outside the bankruptcy means the Cubs won't need to hold a bankruptcy auction, a more cumbersome process because of the checks and balances that Chapter 11 protection requires. Including the Cubs in the filing could hamper the team's ability to pursue expensive free agents, manage its farm system, and quickly make deals without going to a bankruptcy judge for approval.

Tribune Co. said on Opening Day 2007 that, besides accepting a buyout offer from real estate mogul Sam Zell, it was selling the Cubs and Wrigley Field. Since then, Tribune has moved slowly in soliciting bids and considering the potential buyers.

By June of this year, there were still nine approved bidders on the list, and in August, Zell said the field had been narrowed to five. At least three would-be buyers have submitted second-round bids to Tribune, and a Cubs senior vice president, Crane Kenney, said last week that he expects the franchise to be sold by spring training, which begins in February.

Tribune Co. entered bankruptcy Monday, burdened by $13 billion debt. The newspaper company has 20,000 employees and owns large daily newspapers such as the Los Angeles Times, Chicago Tribune, The Hartford (Conn.) Courant, and the Orlando (Fla.) Sentinel, cable channels and 23 TV stations.

On Monday, the Cubs said the bankruptcy of its parent would change very little.

Even so, Standard & Poor's analyst Emile Courtney said yesterday Tribune would need to get bankruptcy court approval to finalize a deal.

Lisa Hill Fenning, a former judge who now is a bankruptcy attorney at Dewey & LeBoeuf LLP, said sales of sports teams are complicated because leagues and owners need to approve the winning bidder. As a result, she believes creditors will let Tribune leave the Cubs outside the bankruptcy case because selling it out of court is simpler and likely to be smoother for potential bidders. (Groups that have bid for the Cubs declined to comment yesterday.)

At Tribune's bankruptcy hearing, the company will ask the court to give it permission to continue paying employees, vendors, and insurance premiums.

While the sale of the Cubs might proceed without much hindrance, the bankruptcy has a more immediate effect on Tribune employees.

Zell's buyout turned employees into the nominal owners of the company, through an employee stock ownership program that is designed to gradually gain equity in Tribune over time. That prospect is clouded now.

Further, Tribune said Monday that it would halt severance payments to recently laid-off employees, as well as deferred compensation and other payments to former workers.

Essentially, ex-employees have to get in line with other creditors.

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