Mark Cuban has finally let loose on all things Chicago Cubs. You should go to his blog and read this entry.

As long suspected, the financial crises has made this sale at the dollars Sam Zell wants nearly impossible. Cuban on the financing:

The hardest part was going to be the financial deal.  I never thought it conceivable that it would be hard to spend a billion dollars on a sports team. In this case it was.  Add me to the list of people who never want to participate in this type of sales process again.  I tried every trick I knew to try to get them to commit to me. It reminded me of when I was 16 and selling magazines door to door “Do you mean to tell me Mrs Doe, that when you tell your husband that you spent 75 cents per day on the education and enjoyment of your family, he is going to get mad ? Of course not, he will be proud and excited for you and your family”.   You name the trial close, I went for it. But I couldnt close them.

Then the credit crisis hit and hit hard.

All of the sudden, what seemed like a sane business decision, didnt seem so sane any longer. In particular, the financial participations I had been discussing with my bankers were for shorter term loans. Just refinance at the end of the term. Its what everyone is doing. Except that it no longer seemed like a safe bet that I could refinance in a few years. I didnt want to be caught with a Sumner Redstone margin call, and for better or worse, the banks were getting worried about staying in business and the idea of matching the asset to the term wasnt something they were ready to do, unless of course they could convince 30 other banks to do the same thing.  I thought about writing to Congress to get a bailout…just kidding.

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

Cuban says the team is not worth $1 billion. This guy has looked at the books and considered everything to try and buy this club. At the end of the day $1 billion is a pipe dream for Zell.

I wonder if we have a connection between this morning’s story that the Cubs may be pulled off the market and Cuban’s blog post that he has asked for an extension. The timing is certainly interesting.