Why We May Help Pay for Tribune to Unload the Cubs
By Deals Allan Sloan
Tuesday, September 22, 2009
The Chicago Cubs aren’t going to win anything this year despite having one of baseball’s largest payrolls. But their bankrupt owner, Sam Zell’s Tribune Co., may be about to hit a home run — at your expense.
Zell, whose tax dodging is a frequent topic of mine, is trying to unload the team in a deal that would divert almost $300 million from taxpayers to the creditors of Tribune, the nation’s second-biggest newspaper company.
. . . Zell, who took over Tribune in late 2007 and put it into bankruptcy protection a year later, turned out to be too clever for his own good — or his creditors’ good. He obsessed over sheltering Tribune’s post-buyout profits but buried the company in so much debt — $13 billion, just as the newspaper business fell off a cliff — that there were no profits to shelter.
. . . Zell’s nonsale sale of the Cubs, which would work like this.
The Ricketts family, founders of Ameritrade (now TD Ameritrade), would put $150 million of cash into a partnership that would also borrow up to $698 million. Tribune would put the Cubs, Wrigley Field and related assets into the partnership.
. . . similar to the 2008 deal in which Zell unloaded 97.14 percent of the Long Island newspaper Newsday onto Cablevision Systems, walking off with $650 million in cash. “This is somewhat less egregious, but it’s still egregious,” said Willens, whose views are followed closely on Wall Street and in Washington.
Aside from the disclaimer that I am a lifelong Cubs-sufferer, Zell’s manipulation of the rules of ‘business’ and ‘taxes’ is precisely why American-style capitalism no longer works.
Zell overpaid for Tribune Company, but he did it with the employee’s money, via the pension fund. Then he proceeded to ruin the Los Angeles Times, the Chicago Tribune, it’s many and associated media outlets, along with the hapless Cubs. Following that, he bankrupted the whole works and, with $600 million of his own money in it, plans to take the $8+ billion loss off his taxable income from other stuff that he owns.
Smart business, some would say. But when you bring no value to the table, wreck lives, professions and the machinery that supports those lives and professions, you ought not to be able to walk away from all that destruction with a profit.
Zell walked away.
Unless the IRS sees otherwise, it will be at an enormous profit.