Home -> Law Blog Directory -> Media & Entertainment Law Blogs -> Sports Biz

Media & Entertainment Law

: Sports Biz

What Are the Cubs Worth?

By Mark

As we all know, the Tribune Company has put the Cubs up for sale. New owner Sam Zell has said that he would like to sell the Cubs and Wrigley Field in separate transactions as he believes that would maximize the return to the company. You can quibble with his logic, but he is a buyout king and a billionaire, and I'm not, so I'll defer to him on this one. Besides, he owns the company, so he gets to set the rules.

Portfolio did a "back of the envelope" calculation which valued the team at about $600 million, figuring on 2.5 times revenue and about 20% premium for a contender. Add a little bonus for trophy value and that's where you get to. Now, my guess is the real number is substantially higher since there is likely to be a bidding war. Plus, what is a little unclear is what assets will be included in the sale. Specifically, will the Cubs' 25% interest in Comcast Sportsnet Chicago be sold with the team? That would likely add another 20% or so to the number.

If the Wrigley sale is not separated from the team, as it shouldn't be in my opinion, then the price for the whole package is likely to reach closer to $800 -900million. It's difficult to project what Wrigley is worth because you just don't know what a new owner will do to monetize the stadium. Will a new owner go forward with Zell's idea to sell the naming rights? What improvements will a new owner make to the stadium and will that mean new revenue streams?

Interestingly, Portfolio's calculation was not that far removed from Forbes' most recent valuation of the Cubs, which was $592 million. Of course, that means that Portfolio, has to be several hundred million dollars too low, because no team has sold within several hundred million of Forbes' valuation in years. It's sort of like your home and the local tax assessor - you know that your house is worth tens of thousands more than the assessed value and it will sell for more, but you keep the assessment low for your tax bill.

All this speculation is fun, but it would be nice if the Tribune Company and baseball would get on with it already and get the sale moving. I sure would like to see Mark Cuban as the owner of the Cubs already. I think he and Sam Zell would hit off but I just don't see Selig letting that happen.

Full post as published by Sports Biz on March 18, 2008 (boomark / email).