After selling Broadcast.com to Yahoo, just before the dot.com crash, he had the sense to "collar" his Yahoo stock to protect against a falling Yahoo stock price. In many ways, given the billions it meant to him, it was a no brainer move, yet he did it, and there are many more former "rich on paper dot-com" people that now wish they had followed Cuban's lead.
Cuban today has a fascinating blog post about his efforts to buy the Chicago Cubs. It really provides insight into his thinking.
It would be fun to see Cuban as owner of a major league baseball team. And, Mark, don't be afraid to pay up a bit. A sports team is a great inflation hedge. Sports tickets and advertising fees are very easy prices to raise. It's likely to payoff for you much better than T-bills or wherever you have your cash sitting. But, if you are going to borrow money from the banks, there is no better time to lock in rates--and you are absolutely correct in wanting to go long term with any financing you want to do. If the banks won't go long term, call the person that structured the Yahoo collar for you, he should be able to turn a short term borrowing into a synthetic long term borrowing. If he can't figure it out, email me. I'll get it done for you.
Cuban : "With the credit market on the fritz, the other option was to add investors and just pay cash. However, if we were going to pay cash, I was not going to bid anywhere near 1 Billion dollars for the assets. Once the credit crisis hit, the value of cash went through the roof. It was not just a matter of how much the Cubs were worth, it was also a matter of how much more money I could earn with that cash. Cash was and is king. Distressed investment opportunities were rolling in the door that could make me multiples of what any sports team could. I could not see any scenario where the Cubs were worth anywhere near the numbers that had been discussed in the media. "
ReplyDeleteTHAT is why this is another Great Depression and not some kind of recession and recovery scenario. Cuban isn't unique, he is a bellweather for what is happening everywhere.
How do you have a recovery when there are no buyers (for anything) ?
kochevnik