blog maverick: Cuban: The Cubs

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.

...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

Much like Ralph Drollinger waiting for his first start…