http://sports.espn.go.com/chicago/ml...e=MLBHeadlines
The Chicago Cubs baseball team filed for Chapter 11 bankruptcy protection Monday, a step that will allow its corporate parent to sell the team in an $845 million deal.
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http://sports.espn.go.com/chicago/ml...e=MLBHeadlines
The Chicago Cubs baseball team filed for Chapter 11 bankruptcy protection Monday, a step that will allow its corporate parent to sell the team in an $845 million deal.
It's all part of Sam Zell's weasel deal to sell off properties while avoiding capital gains taxes and Tribune creditors. When the sale of the Cubs was announced last month, it was announced that he (Tribune) was selling 95% of the team, stadium and sports network to the new owners. That sounded very familiar, so I did a little digging, and found he is using a similar deal structure as when he sold Newsday to Cablevision.
Rather than an outright sale, they form a new corporation, jointly owned by Tribune and the new owners, and that corporation issues bonds to fund the purchase. Since the money comes from the proceeds of this bond sale, Zell claims the sale does not trigger capital gains tax obligations. In addition, since Tribune was taken private under an ESOP plan two years ago, avoiding corporate taxes, he could not sell off pieces of the organization for 10 years without facing tax implications. By using this "third party" structure, he (and his tax attorneys) claim he can sell Newsday and the Cubs without taxes due on the sale. The IRS has looked at the Newsday sale, and will probably take a close look at the Cubs deal as well, given the size of the deal and Zell's continued bragging about how is avoiding taxes.
When Tribune entered Chapter 11 late last year, the Cubs were not part of that filing, however, with a sale pending, the Cubs entered Chapter 11 as well so that the new owners will not be liable for any of the outstanding debts that might follow from Tribune.