The Inside Story Of How The Ricketts Family Schemed And Feuded Their Way To Owning The Chicago Cubs

On October 27, 2009, the Ricketts family officially purchased a 95 percent ownership stake in the Chicago Cubs from the Tribune Company, bringing an end to a long, arduous, and complex sale process. Now, thanks to a cache of emails and documents obtained by Deadspin, more details from that process can be revealed than ever before, providing an unprecedented insider’s view of an MLB team sale.

The Cubs were officially put up for sale shortly after billionaire Sam Zell purchased the team’s parent company, the Tribune Co., in April 2007. Zell took control through a leveraged buyout—a technique that allows the buyer to borrow heavily in order to make a purchase and then saddle the existing company being purchased with the resulting debt—worth $8.2 billion, leaving the Tribune with $13 billion in total debt. Once the purchase was complete, Zell went about completing the second step of the leveraged buyout playbook: stripping the acquired company down to the studs and selling off whatever assets still hold value. Thus, the Cubs were suddenly for sale.

The documents and emails below come from the inbox of Joe Ricketts, founder of TD Ameritrade and billionaire patriarch of the Ricketts family. Though his son Tom led the family’s efforts throughout the sale process, the emails reveal that Joe, whose wealth bankrolled a significant portion of the purchase, kept close watch on the negotiations and was looped in on major decisions. Scores of conference-call notes, financial analyses, bid presentations, and other documents and updates related to the sale found their way into Joe’s inbox.

The Ricketts family were one of the first bidders to pursue the Cubs, and by the summer of 2008 Joe Ricketts was regularly receiving updates about “Project North Side,” which is what the family codenamed their quest for the team.

These emails depict the purchase process as a herculean task, spanning years and requiring the efforts of an ever-expanding cast of lawyers, consultants, and bankers. They reveal new details about the tax-dodging particulars of the sale and a near deal-wrecking amount of late-stage animosity between the Ricketts and the Tribune, and provide further insight into the exploding value of MLB franchises, and how that explosion has changed what it means to own and root for a baseball team.

Additionally, they reveal a fair amount of intra-family squabbling, much of it genuinely tense. This is revealing not just for the broad insight it gives into the workings of one of America’s foremost political families—one that happens to operate like a business—but more narrowly for how it shows the would-be owners of one of America’s most famous sports franchises jockeying to use the purchase to burnish their own personal brands. Teams are businesses; they are also mechanisms the rich and powerful use to project their images and stroke their egos.

The earliest emails come from July 2008, right when the Ricketts’ pursuit of the Cubs started to kick into high gear, and run through the entire process of the sale. Excerpts of the most interesting correspondences and documents found within them are laid out below, in chronological order. The full version of every document referenced is linked to for readers to examine. This is the inside story how the Cubs were purchased by the Ricketts family, from beginning to end.

Joe Ricketts received an email from an attorney at Foley & Lardner, the law firm the family hired to help shepherd a deal for the Cubs, explaining one of the key components of the Tribune’s sale proposal: the company’s desire to dodge hundreds of millions of dollars in taxes:

Attached to that email was a document titled “outline of tax issues,” which explained exactly how Zell and the Tribune planned to sell the Cubs without having to pay any taxes on the revenue produced by the transaction.

Zell’s plan to pull a fast one on the IRS began with his purchase of the Tribune, when he reclassified the company as an S corporation, a complicated accounting trick that involved altering the Tribune’s shareholder structure to make it exempt from federal income taxes. Selling the Cubs presented a problem, though, because any such sale that took place within 10 years of the S election would expose the Tribune to paying gains taxes. But, as the tax issues memo explained, Zell had another idea for how to solve the problem of paying taxes:

What’s being described here is a leveraged partnership. Under this plan, the Tribune wouldn’t technically sell the Cubs to the Ricketts, but would instead partner with them to form a new limited liability corporation which would own the Cubs and in which the Ricketts would have a controlling stake. Then, the LLC would load itself down with as much debt as possible and funnel the borrowed cash to the Tribune. The Tribune would get cash-rich but remain in debt without ever actually technically selling the Cubs, and the Ricketts would get control of the Cubs without ever actually buying them from the Tribune. Only when the partnership was safely clear of the 10-year window would the Tribune officially sell its remaining stake in the Cubs to the Ricketts.

At no point in the tax-issues memo or in any of the Project North Side-related emails that hit Joe Ricketts’ inbox does anyone express any concerns that the Tribune’s scheme was immoral and legally dubious. The memo does mention that the IRS might take issue with the leveraged partnership, but only to assure the Ricketts that they would not be in danger of an audit, and that the Tribune would like to be indemnified should the Ricketts do anything that triggered a gains tax on the new partnership:

This is the same sale structure Zell used when he flipped Newsday, another distressed asset in the Tribune’s portfolio, to Cablevision in 2008, as The New York Times reported in 2013. Neither sale sat well with the U.S. government, and in 2016 the Tribune agreed to pay a $270 million fine to the IRS in connection with the Newsday sale. The government is currently pursuing legal action against the Tribune, seeking a similar fine in relation to its sale of the Cubs. The case is currently set for trial on Oct. 28, 2019.

A spokesman sent along the following statement on behalf of the Ricketts family in response to questions about their willingness to go along with the Tribune’s tax-dodging plan:

Sam Zell declined to comment on this story. When asked about the tax-avoiding benefits of the leveraged partnership structure and the IRS’s case against the company, the Tribune referred to comments made in its latest 10-K filing:

In January 2019, the Tribune finally sold their remaining five percent stake in the Chicago Cubs to the Ricketts family.

In addition to helping the Tribune avoid taxes, the Ricketts had to start thinking about how they were going to finance their purchase of the Cubs, which came with an initial price tag nearing $1 billion. The Ricketts were going to have to borrow money—a lot of money—in order to make a competitive bid, so Foley & Lardner was dispatched to take a look at MLB’s rules to determine just how much debt the Ricketts could get away with carrying.

MLB teams must comply with the league’s debt service rules, which under the current CBA state that a team cannot carry debt that exceeds eight times its earnings before interest, taxes, depreciation, and amortization (EBITDA). The rules were a little more forgiving back in 2008—the limit was 10 times EBITDA—and a memo prepared by Foley & Lardner, called “MLB rules,” estimated that the Cubs could carry a debt of up to $349 million in 2009 without running afoul of them. The memo expressed bigger concerns, though, about how the Tribune’s tax-avoiding sale structure might complicate things to the point that MLB wouldn’t approve the sale.

According to the memo, the Tribune’s proposal could potentially cause problems not just because the initial deal would require the team to carry a lot of debt, but because attempts to service that debt might expose the Tribune to tax liability and thus trigger the indemnification clause that would place that liability on the Ricketts. Going by the memo’s analysis, this would put the Ricketts in a paradoxical position: needing to pay down their debt in order to avoid violating MLB rules, but needing to avoid doing so in order to avoid triggering a tax payment. This was described as a seemingly existential threat to the Ricketts’ chances of acquiring the team:

This was more worrying than was necessary. MLB teams—including the Los Angeles Dodgers, New York Mets, Philadelphia Phillies, and Washington Nationals— regularly exceed MLB’s debt limit, and though the penalties for doing so are defined by the CBA, the enforcement of the rules is almost entirely at the discretion of the commissioner. As later documents make clear, the Ricketts were able to acquire the Cubs while carrying much more than $349 million in debt.

Even though it would ultimately prove unimportant, the debt issue remained a headache for those working on Project North Side. Notes from a conference call that included Tom, Pete, and Laura Ricketts and a handful of attorneys and financial advisors reveal that the proposed debt structures provided to them by JPMorgan and other banks went far beyond MLB’s limits.

Nevertheless, the Ricketts drove ahead, and the next step was to get an in-depth analysis of just how much the Cubs were actually worth. The family dispatched Galatioto Sports Partners (GSP), a company that consults on pro sports transactions, to prepare an investment analysis. The resulting report, which is 102 pages long, was sent around to the family.

The report’s main conclusion was unsurprising: The Cubs represented a bulletproof investment opportunity, and were thus worth spending over $1 billion to acquire. GSP made their case with various tables and charts, each one demonstrating that the Cubs were all but immune to suffering the consequences of external and internal economic fluctuations. Here’s one showing the sharp increase in franchise values occurring independent of the stock market:

Here’s one showing that, no matter how high ticket prices rise or how much the team sucks, Cubs fans will just keep forking over their money and showing up to games:

One of the more interesting pages in the report sees GSP trying to explain exactly why sports franchise values had begun growing so dramatically, as a way of explaining why it was reasonable to borrow massive sums of money from banks in order to purchase one. Sure, ticket prices increased steadily and broadcast rights got much more expensive, but those factors alone couldn’t explain how the aggregate franchise value doubled from 2000 to 2008. GSP’s way of answering this question was to say that, well, sports franchises are just special:

The Ricketts found GSP’s report convincing, and on the day of the deadline for opening bids, they sent their initial purchase proposal to the Tribune. At that point, the Ricketts were willing to pay between $950 million and $1.15 billion for the team:

The bid also made it clear that the Ricketts were happy to go along with the Tribune’s shady tax-dodging scheme:

Two days after sending their opening bid, Laura Ricketts, an Obama and Hillary Clinton donor who is the former chairwoman of an LGBTQ Super Pac known as LPAC, sent an email to her father and her brothers Pete (current Republican Governor of Nebraska), Tom (current chairman of the Chicago Cubs), and Todd (current RNC finance chairman), raising for the first time an issue would become an ongoing source of tension within the family: the fact that Tom was enjoying most of the media spotlight.

Tom responded diplomatically:

The family received word that they would be moving on to the second round of bidding, and that their team would have access to an “electronic data room” in which they would be able to find all the documents they’d need to complete the due diligence portion of the transaction. Tom shared the news via email, and revealed that private equity mogul John Canning Jr., who at one point was seen as the favorite to land the team, had not made it out of the first round:

The family started thinking seriously about how they were going to finance their purchase. The first step in that process was getting yet another presentation from GSP. This was called the “Debt Primer Presentation,” and it explained, in great detail, how and why the family should take on hundreds of millions of dollars of debt in order to buy the team.

The report starts with a brief history lesson explaining how big banks and lenders got involved in sports acquisitions. This slide explains that as the values of sports franchises grew, so did the need of purchasers to seek financing from brawnier financial institutions. But the big banks were hesitant at first, and for good reason: despite franchise values rising, actual cash flows remained relatively static, ostensibly making it difficult for teams to service their debt:

At some point, however, the big banks caught on to something than any longtime sports fan could have told them: Owning a sports franchise, and thus financing the purchase of a sports franchise, is one of the most lucrative scams in America:

It’s clarifying, perhaps, to see that the list of things that makes the ownership and financing of sports franchises so attractive includes so many items that would also be found on a list of things that make being a sports fan such a drag. What this slide describes is the complete insulation of owners from any real consequences. It doesn’t matter if the team is run horribly and no cash is coming in, because they can just cut payroll; the value of a franchise is never going to truly bottom out because leagues are legal monopolies; a bad owner can always just sell his inevitably value-enhanced team for a huge windfall; and even if things get really dicey, the league itself will always be there to provide a bailout, as it did with the Expos—never mind that doing so allowed Jeff Loria to complete his utter destruction of Montreal’s franchise with enough money left over to buy the Florida Marlins and fuck over yet another fanbase. The banks’ conclusion is clear: If even Jeff Loria can run an MLB team into the ground and still come out in the black, why wouldn’t we loan literally any schlub $400 million to buy a team?

This is perhaps a good time to zoom out and consider MLB’s recently frozen free-agent market. There has been no shortage of analysis seeking to explain why baseball experienced a second straight winter in which basically no free agent, whether solid veteran or generational young superstar, had more than one or two teams making competitive offers for their services. There’s no silver explanatory bullet to be found, but things like a poorly negotiated CBA, an increased focus on analytics, more shameless commitments to tanking, and what can charitably be called “soft collusion” all combine to frost the market even while league-wide revenues soar. There’s another factor that should be added to that list, as some wise people have pointed out: the fact that so many baseball teams are swimming in debt.

Ted Lerner purchased the Nationals for $450 million in 2006, and the “Debt Primer Presentation” GSP sent to the Ricketts includes the details of that sale as a case study for how a highly leveraged purchase can work. Lerner took on the maximum amount of debt—$360 million—in order to purchase the team. Jim Crane bought the Houston Astros for $615 million in 2011, reportedly by taking on $300 million in debt; the Dodgers ownership group assumed $412 million in debt when they purchased the team in 2012; the new Marlins owners needed $300 million in financing from JPMorgan in order to purchase the team in 2018. And these are just the financing numbers that have been publicly reported.

This is not to say that these leveraged teams don’t have enough cash to service their debts and be active in the free-agent market, but it does provide them with yet another excuse not to. You don’t even need hard collusion to whittle Bryce Harper and Manny Machado’s prospects down to one or two offers, just enough excuses in the pot—analytics, the luxury tax, the success of tanking teams, Albert Pujols—that any owner, at any time, can grab onto in order to convince himself that he can’t spend any more money on player payroll. The very structure of how these teams are purchased conveniently gives owners a pretty good built-in excuse.

The “Debt Primer Presentation” gives us a more detailed look at how the Ricketts were starting to make plans for financing their purchase:

The plan laid out in this slide, based on conversations with JPMorgan, would have the Ricketts taking on $750 million in debt in order to pay a $1.13 billion purchase price. One thing to note is that this plan would shift the majority of the debt from the team itself to a holding company, thus allowing the Ricketts a much better shot at satisfying MLB’s debt service rules. This is a technique that other teams have used in order to skirt MLB’s debt rules.

In the following days, the Ricketts’ efforts to acquire the Cubs kicked into full gear. Emails in Joe’s inbox indicate that Tom Ricketts and Alfred Levitt, the president and general counsel of TD Ameritrade’s holding company, were hard at work with GSP to create a financial model for the franchise, that an architectural firm was hired to analyze Wrigley Field as part of the due diligence process, and that Deloitte was hired to provide audit and tax review services. The family also retained former Arizona Diamondbacks president Rich Dozer to serve as a consultant.

The Project North Side team held another conference call, the notes from which were circulated afterwards. A portion of the call was dedicated to recapping a meeting that Tom and Joe Ricketts had with Boston Red Sox management, in which they apparently discussed how much money can be made off stadium renovations and how they might team up to make MLB more hospitable to super-rich teams:

The call also recapped a conversation Tom had with Crane Kenney, then the Cubs’ president of business operations, in which they discussed the possibility of renegotiating the team’s broadcast deal with WGN (which was then owned by the Tribune Media), holding more concerts and events at the stadium, and Zell’s interest in going with the highest bidder:

The family received a benchmarking analysis from GSP, which used information about the Cubs obtained from the secure data room, along with various financial assumptions, to paint a picture of the team’s current and projected finances. The analysis presented three projections: a base case, an upside case, and a downside case.

Even the downside case, which is the most pessimistic projection, still comes with a 4.3 percent internal rate of return (IRR), a metric that estimates the profitability of an investment. (High IRR is good, low IRR is bad.) All three of these cases also assume a $1.1 billion purchase price and $700 million in financing; the actual price tag for the team ended up being $845 million, which required just $450 million in financing. Each case also projected a steady increase in player costs, but the Cubs’ player payroll actually took a few dips in the years after the Ricketts took over the team. The upside and base cases also project the team to have a solid chunk of levered operating cash flow—the amount of cash a company has left over after meeting all of its financial obligations—by 2018.

It’s not surprising to see that the Cubs, a storied franchise with consistently great attendance and a dedicated fanbase, profiled as a good investment, but the analysis also assumed that the Ricketts would pursue certain value-creation opportunities, such as stadium renovations and instituting a PSL program, a practice popularized by NFL teams which requires fans to pay a fee just for the opportunity to purchase season tickets. The analysis in the base case attributed 8-9 percent of the total overall value of the team to potential net revenue produced by these opportunities. The analysis suggested specific stadium renovations that could be taken on, each of which came with a strong projected IRR:

This table shows projected annual net revenues produced by these improvements rising above $50 million in both the base case and upside case.

It’s hard to say if the team ultimately reached these particular benchmarks; they have yet to get around to creating a PSL program, but continue substantial renovations at Wrigley Field that began in 2014. What these numbers do show, though, is that the ongoing stadium renovations were a core part of the Ricketts’ business plan even before they purchased the team. They are also yet another example of how the consequences of MLB’s exploding franchise values trickle down to the fans. If some rich people want to spend a bunch of money they don’t have on a baseball team, they’re going to have to subsidize their decision with some new revenue streams. Sometimes that means creating PSLs or raising ticket prices or slashing payroll, sometimes it means turning a once-charming stadium into a place where rich people can pay a premium price to sit in a padded seat and enjoy the carving station in a charmless room bearing a name like the Bud Light Cold Hard Hardball Club.

The issue of Tom being portrayed as the face of the family came up again, with Laura sending an agitated email to the family pointing out that Tom was the subject of a flattering article in Crain’s Chicago Business:

Joe chimed in a few hours later in support of his daughter:

Tom then responded, perhaps a little defensively:

Laura got the last word, though:

The Ricketts and other members of Project North Side flew to Chicago to have a few important meetings with representatives from the Cubs and the Tribune so that the Ricketts could gather as much information as they could about the Cubs’ financial situation and the two sides could dive more heavily into the due diligence process. The trip consisted of two full days of meetings attended by an army of lawyers and consultants. The day before the trip, a 46-page agenda was sent around to attendees.

The first day consisted of multiple meetings attended by only members of Project North Side, the purpose of which seemed to be updates about where they were in the sale process and figuring out what information they still needed from the Cubs and Tribune at the next day’s meeting:

The next day saw the Project North Side team at one long meeting with Cubs and Tribune executives at Wrigley Field. The agenda for that day’s session listed 15 topics of conversation covering everything from the importance of the Cubs’ stake in CSN Chicago (the agenda says that stake represented 15-20 percent of the team’s total value) to revenue sharing and the structure of a potential deal.

Following the meetings in Chicago, Levitt sent an email to Joe Ricketts giving him a rundown of the action items that had come out of the meetings. Most are banal, but one raises the possibility of doing some digging into a rival bidder:

Levitt is referencing Marc Utay, who is currently the managing partner at Clarion Capitol and who at the time had interest in buying the Cubs. Levitt seems to be suggesting that Joe talk to Lee Einbinder, then a banker at Lehman Brothers, to try to pump him for information about Utay. The next day, Levitt and Joe had a brief email exchange in which they, apparently based on a conversation with Einbinder, decided that Utay wasn’t much of a threat.

The Ricketts family began to discuss how they might begin exerting some control over the media coverage of their bid for the Cubs. Previous correspondence between the family remembers reveals that they were annoyed at being portrayed as a bidding group from Omaha rather than a group with strong ties to Chicago.

The family got word that the Chicago Tribune was working on a feature about their pursuit of the Cubs, and so the VP of Res Publica, the family’s PR firm, sent around an email outlining potential talking points that surrogates of the family could feed the paper:

Pete and Joe both replied to the email affirmatively, but Laura was unable to hide her disdain for the last bullet point, which suggested highlighting Tom’s role as a point person:

Joe Ricketts received an email from a friend seeing if he like to come over to watch a Nebraska football game. When he responded to say that he couldn’t come, he blew off some steam about how arduous the Cubs’ sale process had been:

Tom sent an email to the family with a link to a Fox Business interview with Dallas Mavericks owner Mark Cuban, who at the time was the Ricketts’ biggest competition for the Cubs. Tom was not pleased by the interview:

Laura responded:

After having received word from the Tribune that November 26 would be the deadline for the second round of bids, GSP sent the Ricketts an adjusted bid proposal in which they argued that the Cubs could actually be acquired for a discount from the inherent value of the franchise based on factors including a decrease in ticket price growth projections and a delay in a naming rights deal and various stadium renovations. GSP updated their base and downside cases to include more pessimistic projections, and came to the conclusion that the team could be had for a bid in the range of $800 million:

GSP also put together more specific projections for the deal’s capital structure, which would involve the Ricketts borrowing around $650 million and contributing around $200 million of equity raised from selling shares in TD Ameritrade, which were owned by the family’s Education Trust:

This proposed structure greatly increased GSP’s projected internal rate of return in both the base and downside cases.

GSP also provided a helpful graphic laying out the proposed structure of the leveraged partnership, which now included an additional “loan” coming from Joe Ricketts’s wife, Marlene, funneled through yet another LLC:

Tom Ricketts recently claimed that his father is “not involved with the operation of the Chicago Cubs in any way,” in an effort to distance himself and the team from racist emails that Splinter found in Joe’s inbox. Perhaps it’s true that Joe is not involved with the Cubs on a daily decision-making level, but the transaction structure laid out in the above slides show that he is unequivocally a co-owner of the team. The money coming from the Education Trust—which accounts for all of the equity put into the sale—and from Marlene Ricketts came first from selling off shares in TD Ameritrade, the company Joe founded. That’s his money, through and through, and thus there is no extracting the Chicago Cubs from Joe’s orbit.

Through the same spokesman, the Ricketts family sent this statement in response to questions about Joe Ricketts bankrolling the purchase of the Cubs and his involvement with the team:

The Ricketts heeded GSP’s advice, submitting a definitive bid proposal to the Tribune in which they ascribed an $800 million value to the Cubs franchise and its associated assets. This proposal came with a complicated wrinkle, though, which the Ricketts claimed could raise the final price tag to $925 million.

The Ricketts proposed paying $786,250,000 for a 95 percent stake in the Cubs upfront, and granting the Tribune preferred membership interest in the new LLC the Ricketts and Tribune would be creating in their leveraged partnership. This preferred interest membership would provide the Tribune with annual cash payouts, contingent on certain factors, that could reach a total value of approximately $125 million.

The proposal also detailed the Ricketts’ debt financing plan. The “individual lender” mentioned in the last paragraph below is almost certainly Marlene Ricketts, who at that point was being relied on to provide a $135 million loan:

Levitt sent Joe a Wall Street Journal article full of handwringing about how owning a major sports franchise may no longer be a lucrative venture, citing the Tribune’s bankruptcy, the New York Times selling its stake in the Red Sox, and the financial woes of the Wilpon family, which owns the New York Mets, as evidence. Levitt wanted to assure Joe that such developments hadn’t scared lenders away from the Cubs deal in an effort to urge caution about any attempts to increase their bid—which was lower than two other remaining bidders—and to float an idea about how they might be able to squeeze more money out of the Tribune by renegotiating the Cubs’ deal with WGN:

Joe didn’t seem to be too worried about the family’s bid, but did ask for more explanation of the WGN angle:

Levitt explained:

Levitt provided more suggestions for how the Ricketts could improve their bid, and floated the idea of tapping into yet another one of the family’s trust funds, which had $28 million in it:

Joe made it clear that the Dynasty Trust was off limits:

Mark Cuban officially dropped out of the bidding war. He explained his decision in a lengthy post on his personal blog, citing the team’s astronomically high valuation and the declining credit market.

The Ricketts decided to make a revised bid to try and increase their chances at securing the Cubs. GSP prepared a three-page document outlining the family’s new bid.

The Ricketts decided to do away with the preferred membership interest component and replace it with more cash upfront. This new bid would bring the full value of the Cubs to $851 million, and would have the Ricketts contribute an additional $27.5 million in upfront debt financing expenses.

The new proposal wasn’t just about ceding more money to the Tribune, though. The Ricketts also went ahead with Levitt’s plan to squeeze more money out of the Tribune through a renegotiated broadcast deal between the Cubs and WGN that would include higher rights fees and free advertising spots:

Tom reached out to Nils Larsen, a Tribune exec working on the sale, to get an update on the company’s decision-making timeline. Nils sent back a somewhat ominous response, which Tom forwarded to the rest of the family, referencing “greater movement” from other bidders:

Laura seemed slightly concerned in her reply:

Six days later, all worries were put to rest. Tom emailed the rest of the family to let them know that their bid had been selected, which meant that the family could move into an exclusive negotiating period with the Tribune:

Laura’s issues with Tom getting all the publicity finally came to a head. She sent an email to the family expressing her annoyance:

Joe responded almost immediately, but only to Laura:

Perhaps realizing that he had meant to send the previous message to Tom and the rest of the family, he sent another email to the whole group:

Pete tried to calm things down:

Laura suggested that the family instruct their surrogates to stop talking to the press:

Tom clarified that the latest round of media coverage did not come from his surrogate:

Laura started to get even more annoyed:

The fight over press coverage resumed when Todd sent an email to Joe and Pete recapping a conference call the rest of the family had taken part in. The call went poorly, and left Todd thinking that maybe buying the Cubs wasn’t such a great idea after all:

It’s hard to say where the conversation went from there. Whatever offline discussions between the family may have occurred did lead to one conclusion, though: The family needed a new public relations firm. A few days later Joe sent an email to Levitt saying that he was “not satisfied with Res Publica” and would like to find a new PR firm once the deal for the Cubs was closed.

In response to questions about intra-family tension during the sale process, the Ricketts family sent the following statement through a spokesman:

The Ricketts family had to start filling their coffers with the necessary cash to fund their purchase of the Cubs. Levitt sent an email to Joe letting him know that they were about to go through with the planned sale of the TD Ameritrade shares owned by Marlene and the family’s Education Trust:

Levitt followed up to make it clear that the Ricketts now had plenty of cash to fund the equity portion of the Cubs sale:

The Ricketts planned a family meeting to discuss their long-term financial planning, and the agenda for the meeting carved out an hour-long block for them to discuss “Cubs Media Issues” with Lee Hausner, whose business is advising wealthy families on how to stay wealthy and better communicate with each other. After looking over the agenda, Laura, apparently still smarting over the PR issues, asked Joe if more of the meeting could be dedicated to talking about the intra-family tension over the Cubs sale:

Joe was was receptive to the suggestion, but also made sure to remind Laura just how much the guest economist was costing him:

Levitt sent an email to the group working on the Cubs deal with a brief update on various issues, including MLB’s stance on the huge amount of debt the Ricketts needed to take on in order to complete the purchase:

All the fretting over MLB’s debt service rule that the family’s lawyers did back in July 2008 was apparently unfounded.

The family finally got an update from Tom about how negotiations with the Tribune were going:

After more than a month of additional negotiations, the Ricketts sent over their first term sheet to Nils Larsen at the Tribune. Tom forwarded his email to Nils to the rest of the family to let them know that the deal was near the finish line:

The term sheet saw the Ricketts knocking the price down from their revised bid in January. The final offer put a headline value of $820 million on the Cubs, and planned for the family to finance the purchase with $450 million of debt:

The term sheet also tweaked the details of the WGN deal that were proposed in January. Instead of asking for a $5 million aggregate rights fee increase and a team opt-out in 2014, the Ricketts asked for a $5.5 million aggregate increase and an opt-out that, if exercised, would give WGN the ability to renew the deal for five years at a “fair market value” or a rate equal to 70 percent of the rights fees paid to the club by CSN. The sheet came with a table outlining how much more money the Cubs stood to make if the opt-out was exercised:

The term sheet also included two other proposals that would go on to become contested issues. The first was a stipulation that the working capital target for the newly formed partnership owning the team would be $26.5 million, and the second was that the Ricketts would not be required to pick up Crane Kenney’s contract:

The working capital target is often a source of tension in big acquisition deals. In accounting terms, working capital is a company’s current assets minus its liabilities, but during an acquisition it becomes something of a moving target. The seller and buyer need to agree on a working capital target—essentially how much cash the seller will leave the buyer once the sale is completed—and the seller can adjust that number up and down by juggling various assets and liabilities before the sale in ways that affect the company’s future cash flows. The Ricketts explained how they landed on their $26.5 million in a footnote, which came along with a warning that any reduction in the target would have to come with a reduction in the headline value of the bid:

Tom Ricketts and Nils Larsen had a phone call to discuss the term sheet that the family had sent over the previous day. Tom circulated his notes from the call to the rest of the family, and they indicated that Larsen was not pleased by the precipitous drop in the club’s valuation:

On May 16, the Tribune sent the Ricketts a new term sheet that raised the headline value of the franchise back to $876,300,000. The Ricketts considered this, and two weeks later they circulated among the family a redlined version of the Tribune’s term sheet to be considered as a potential response.

The redlined term sheet had the Ricketts accepting the increased bid value:

But the family sought concessions elsewhere in the agreement. One thing they wanted to do was sweeten the terms of WGN agreement by removing WGN’s ability to opt out of the deal and raising the price of the team’s opt-out rights fees from 70 percent of the price of the team’s deal with CSN to 80 percent:

They also wanted to bring back a term that had been in their revised bid from January 9, which would have required WGN to provide a set amount of free advertising air time to the Cubs:

After another few weeks without an update on the negotiations, the family finally received an email from Tom laying out where things stood. At this point, the family was able to secure a team opt-out rights fee worth 75 percent of the CSN rights fee, but wasn’t able to get WGN to provide free advertising for the club. The email also hinted that there could still be future disagreements over the working capital target on the horizon:

Shit started to hit the fan. The Ricketts sent a revised term sheet to the Tribune on June 20, and a week later they received a redlined sheet in response. They did not like the response. Levitt sent the following email to the family:

Joe responded, calling the the Tribune the “most foolish and irresponsible negotiators” he had ever witnessed:

Looking at the redlined term sheet, it’s easy to pick out some of the Tribune’s responses that got the family so riled up. The Ricketts had been willing to forgo the free advertising spots on WGN in exchange for a higher working capital target, and their term sheet explicitly stated that one was a trade for the other. The Tribune put a big red line through that, and in response proposed a much lower, and shifting, working capital target:

Further down, the Tribune’s response also reinstated the requirement that the Ricketts pick up Crane Kenney’s contract:

The Ricketts had also added an item to the term sheet that would have restored their exclusive negotiating window with the Tribune, which had been granted in January but had since expired. This was a big ask by the Ricketts, because Marc Utay, the private equity mogul who Joe and Levitt had previously deemed not to be a threat, had re-entered the bidding process and was pushing hard to acquire the team. The Tribune’s response indicated that they were not interested in re-establishing exclusive negotiations:

Tom later sent an email of his own to family, expressing his own dissatisfaction and his response to Nils Larsen:

Joe suggested that maybe it was time to walk away from the deal altogether:

The Ricketts whipped up yet another term sheet to send to the Tribune, and Tom sent an email to the family updating them on where things stood:

“Avails” is shorthand for the free WGN advertising slots that the family had initially asked for—Tom is saying that he agreed to trade those away for a reduction in purchase price and a better working capital target.

The Ricketts’ July 1 deadline came and went, but negotiations continued. Joe received an email from Levitt explaining that the Tribune and the family had yet again failed to come to an agreement, and theorized that the company was sandbagging in order to buy time for Utay to increase his bid. Levitt suggested the family respond by making a tactical move of their own: complaining to JPMorgan CEO Jamie Dimon:

It’s unclear if Joe ever had a conversation with Dimon; neither Joe nor Levitt responded to a question about whether this planned conversation ever happened. But just hours after Levitt made his suggestion, negotiations were suddenly progressing again, according to an email from Tom to the family:

Just two days, later a deal was reached, and Levitt sent along the good news:

The final, executed term sheet had the Ricketts and Tribune settling on a headline value of $844,740,000, to be funded by $450 million in debt:

The Ricketts did not ultimately get any free advertising spots from WGN, and did agree to to pick up Crane Kenney’s employment contract. They did get a more favorable working capital target, though, and the opt-out clause that would allow them to renegotiate their rights fees with WGN. The Cubs did eventually take advantage of the opt-out, and signed a new five-year deal with WGN in 2015 to broadcast 45 games per season. That same year, the Cubs signed a five-year agreement to broadcast 25 games per season on ABC 7. The rest of the games would continue being broadcast on the NBC Sports Chicago (formerly CSN), the regional sports network in which the team owned a 25 percent stake along with the Bulls, Blackhawks, and White Sox. All of those deals are set to expire in 2019, and the Cubs are currently trying to create their own television station, reportedly in partnership with right-wing media company Sinclair Broadcasting.

Tom sent an email to Joe letting him know that he was still locked away trying to finalize the purchase with the Tribune’s lawyers, and that he needed some extra money from mom and dad:

Tom sent an email letting everyone know that the family had received MLB approval to become the next owners of the Cubs:

The Chicago Cubs filed for Chapter 11 bankruptcy, a move designed to ensure that team would not be beholden to any of the Tribune’s creditors after the sale to the Ricketts.

Levitt sent an email to Joe and others who had worked on the deal letting them know that the judge presiding over the Tribune’s bankruptcy approved the Ricketts’ bid:

The Ricketts officially completed their purchase and gained a 95 percent controlling stake in the Chicago Cubs. They would go on to purchase the final 5 percent stake from the Tribune on January 25, 2019, after the closure of the 10-year window in which the Ricketts had to maintain a leveraged partnership with the Tribune for tax-dodging purposes.

Tom sent an email to the rest of the family, telling them about an idea he had to create a memento for the Cubs deal:

Joe was interested:

Rich people are weird.