3/03/2005 10:39:00 AM by Rob

Wow, I just didn't realize, I guess


I have always maintained that the Cubs were just a wee drop-in-the-bucket for a media conglomerate like the Tribune, but they'd like you to think otherwise:


Sosa deal puts dent in Tribune earnings
Cost of trade to hit 1st-quarter results

By James P. Miller
Tribune staff reporter
Published March 3, 2005


It's only spring training, but former Cub Sammy Sosa has already shown that he's an "impact player"--at least when it comes to the first-quarter profits of Cubs owner Tribune Co.

As sports-page readers know by now, the Cubs were so eager to send Sammy packing that they agreed over the winter to pay in the neighborhood of $16 million just to get out of the final year of the outfielder's contract.

The Cubs' parent company would presumably like to put the Sosa trade behind it.

But it can't. At least not until it releases its first-quarter earnings.

It turns out that the company has been put in the unusual position of having to publicly spell out, in its financial results for the period ending March 31, the multimillion-dollar cost of pushing Sosa out the clubhouse door.

"As you know, Sammy Sosa is now a Baltimore Oriole," Tribune Chairman, President and Chief Executive Dennis FitzSimons told a media-industry investment conference this week, in the company's first public discussion of the Sosa trade's financial effect.

"While this trade will not impact our full-year results," he said, "there is a timing impact."

Because the timing of the trade caused Tribune to "accelerate" the payment of Sosa's salary, FitzSimons said, the company's first-quarter net income will be reduced by nearly 3 cents per share--which works out to something over $9 million on an after-tax basis.

FitzSimons' disclosure Monday sent a chuckle rippling through the crowd of institutional investors, a number of whom were amused to learn that a major corporation's financial results could be skewed by the sudden departure of a baseball player.

"I hear some laughter out there," FitzSimons said mildly. "Sammy wasn't cheap."

The nation's investors primarily know Tribune Co. as a Chicago-based media holding concern with more than a score of TV stations and a chain of newspapers that includes such major-league dailies as the Chicago Tribune and Los Angeles Times.

But Tribune has also owned the Cubs since 1981, when it acquired the team from the Wrigley family for $20.5 million.

And historically, baseball has been very good to the company's bottom line: Fans either buy tickets from Tribune's Cubs subsidiary to watch games at Wrigley Field, or they listen to the team on a Tribune-owned Chicago radio station, or they watch them on a Tribune-owned Chicago TV station.

But rarely has the financial impact of a ballplayer-management dispute been enough to cause a publicly traded company to fine-tune its earnings guidance.

Here's how the Sosa saga entered the world of finance.

Over the winter, the Cubs decided that their aging and controversy-plagued superstar had to go. But there was a problem: Under a $72 million multiyear contract, Sosa was still owed $25 million by the Cubs.

If the team that acquired Sosa didn't agree to absorb that financial obligation, the Cubs would be stuck with the tab. So in order to clinch a deal with the Orioles, the Cubs stepped up the plate, financially speaking, by agreeing to pay $16.15 million.

Under that agreement, the Cubs will pay $8.15 million of Sosa's $17 million Baltimore salary this year. They also made about $8 million in severance-related payments to Sosa including a bonus payment for agreeing to the trade.

When asked about the Sosa affair's dent to the company's profits, a Tribune spokesman emphasized that while the first-quarter results will be hurt by the payout, the hit will be largely offset in the company's second and third quarters.

That's because the company has always been legally bound to pay Sosa under his old contract. Normally, those millions of dollars in big-ticket labor costs would have been accounted for during the baseball season, when Tribune normally records the cost of the Cubs' salaries. The trade with the Orioles pushed those costs into the first quarter--and into public view.

When asked to comment further on the first-quarter charge, Tribune officials said they couldn't discuss specifics of the Sosa trade's financial impact until the company files its 10-K annual report with the Securities and Exchange Commission on Friday.


Hmm-hmm. OK, for Frank and the rest of you who want me to just DROP IT about SamMe Sosa:

Look, I love what Hendry has done, I think the team is really, really close to what I want it to be, and I am waiting with baited (blood bait, precisely) breath for Opening Day. I am just AMAZED at to what lengths the Trib will go to discredit a man who made them JILLIONS of American Dollars with his steroids and his homers. You'd think maybe there would be a little Gratitude?

Naaaah, not in Big Bizness.

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