04-24-2009, 05:24 PM
<!--quoteo(post=32875:date=Apr 24 2009, 03:50 PM:name=BT)-->QUOTE (BT @ Apr 24 2009, 03:50 PM) <{POST_SNAPBACK}><!--quotec--><!--quoteo(post=32633:date=Apr 23 2009, 03:43 PM:name=cherp)--><div class='quotetop'>QUOTE (cherp @ Apr 23 2009, 03:43 PM) <{POST_SNAPBACK}><!--quotec--><!--quoteo(post=32280:date=Apr 22 2009, 12:52 PM:name=BT)--><div class='quotetop'>QUOTE (BT @ Apr 22 2009, 12:52 PM) <{POST_SNAPBACK}><!--quotec--><!--quoteo(post=32276:date=Apr 22 2009, 12:32 PM:name=Andy)--><div class='quotetop'>QUOTE (Andy @ Apr 22 2009, 12:32 PM) <{POST_SNAPBACK}><!--quotec-->Ricketts offers to share Cubs
<!--quoteo--><div class='quotetop'>QUOTE <!--quotec-->Tom Ricketts is offering private investors a stake in the Chicago Cubs as he works to finance a $900-million acquisition of the team by his family.
Crain's has learned that Mr. Ricketts — scion of the TD Ameritrade Inc. fortune — is trying to raise $100 million or more through the sale of preferred stock to wealthy individuals. Money raised from investors would reduce the amount the Ricketts family would have to borrow from banks to finance the Cubs deal.
The preferred shares would represent an ownership interest in the team but confer no voting privileges or other rights of control. Investors would be entitled to a 6.5% dividend on their shares, according to people familiar with the terms.
They also would get front-row seats at Wrigley Field, opportunities to hobnob with players and a place on an "advisory board" that would meet regularly to discuss the team's future. After 15 years, they'd get their original investment back without sharing in any appreciation in the value of the franchise over that period.
People close to the Ricketts group say Mr. Ricketts hopes to find five to 10 investors willing to put up $25 million apiece. Advisers are preparing an offering document outlining the investment terms. Mr. Ricketts has made only preliminary contacts with prospective investors, none of whom has agreed to invest. Through a spokesman, Mr. Ricketts declines to comment.
Likely prospects include the well-heeled Chicagoans who submitted bids or expressed interest in owning the Cubs when Tribune Co. put the team on the block two years ago after billionaire real estate investor Sam Zell inked a deal to take control of the struggling media company.<!--QuoteEnd--><!--QuoteEEnd-->
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So essentially you would get a 6.5 percent return on 25 million dollars for 15 years, then get your 25 mil back? And for that, you get front row seats and are able to hobnob? That doesn't sound like a great investment to me.
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How many investments are out there where you could guarantee a 6.5% rate of return and have no risk of your principle?
If you trust Ricketts creditworthyness and that this thing won't fall apart and the franchise not be able to afford to make those payments (in which case I could see it convert to an equity stake) it probably isn't the worst thing in the world for someone with an extra $25mil, and a desire to "own the Cubs" while getting a decent return on their investment to consider.
You could clearly do better, but if you look at my 401K, you can clearly do worse.
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Right now, of course it's a good deal. It would have been a horseshit deal in the 90's and probably part of the 2000's. It may be a horseshit deal in 2010. Right now, as bad as things are, I could get probably over 3.5 percent by just buying a CD.
If interest rates stay historically low, you are right, it would be a good investment. I don't know if you want to tie up 25 million dollars for 15 years betting on that though.
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There aren't many investment grade bond or other fixed income type investments, either now or historically that yield over 5%. I think it's a good deal as long as Ricketts doesn't overleverage the purchase and saddle the team with a lot of debt. So, I think it's a pretty good deal, and it isn't as if you couldn't sell the preferred shares to someone else at some point if the maturity seems a bit lengthy. If interest rates adjust, then obviously the share price would adjust as well, but it should always reflect an above average fixed income return.
<!--quoteo--><div class='quotetop'>QUOTE <!--quotec-->Tom Ricketts is offering private investors a stake in the Chicago Cubs as he works to finance a $900-million acquisition of the team by his family.
Crain's has learned that Mr. Ricketts — scion of the TD Ameritrade Inc. fortune — is trying to raise $100 million or more through the sale of preferred stock to wealthy individuals. Money raised from investors would reduce the amount the Ricketts family would have to borrow from banks to finance the Cubs deal.
The preferred shares would represent an ownership interest in the team but confer no voting privileges or other rights of control. Investors would be entitled to a 6.5% dividend on their shares, according to people familiar with the terms.
They also would get front-row seats at Wrigley Field, opportunities to hobnob with players and a place on an "advisory board" that would meet regularly to discuss the team's future. After 15 years, they'd get their original investment back without sharing in any appreciation in the value of the franchise over that period.
People close to the Ricketts group say Mr. Ricketts hopes to find five to 10 investors willing to put up $25 million apiece. Advisers are preparing an offering document outlining the investment terms. Mr. Ricketts has made only preliminary contacts with prospective investors, none of whom has agreed to invest. Through a spokesman, Mr. Ricketts declines to comment.
Likely prospects include the well-heeled Chicagoans who submitted bids or expressed interest in owning the Cubs when Tribune Co. put the team on the block two years ago after billionaire real estate investor Sam Zell inked a deal to take control of the struggling media company.<!--QuoteEnd--><!--QuoteEEnd-->
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So essentially you would get a 6.5 percent return on 25 million dollars for 15 years, then get your 25 mil back? And for that, you get front row seats and are able to hobnob? That doesn't sound like a great investment to me.
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How many investments are out there where you could guarantee a 6.5% rate of return and have no risk of your principle?
If you trust Ricketts creditworthyness and that this thing won't fall apart and the franchise not be able to afford to make those payments (in which case I could see it convert to an equity stake) it probably isn't the worst thing in the world for someone with an extra $25mil, and a desire to "own the Cubs" while getting a decent return on their investment to consider.
You could clearly do better, but if you look at my 401K, you can clearly do worse.
<!--QuoteEnd--></div><!--QuoteEEnd-->
Right now, of course it's a good deal. It would have been a horseshit deal in the 90's and probably part of the 2000's. It may be a horseshit deal in 2010. Right now, as bad as things are, I could get probably over 3.5 percent by just buying a CD.
If interest rates stay historically low, you are right, it would be a good investment. I don't know if you want to tie up 25 million dollars for 15 years betting on that though.
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There aren't many investment grade bond or other fixed income type investments, either now or historically that yield over 5%. I think it's a good deal as long as Ricketts doesn't overleverage the purchase and saddle the team with a lot of debt. So, I think it's a pretty good deal, and it isn't as if you couldn't sell the preferred shares to someone else at some point if the maturity seems a bit lengthy. If interest rates adjust, then obviously the share price would adjust as well, but it should always reflect an above average fixed income return.