
Worth of a Business Week(ly)? $1.00 U.S. to take it off McGraw-Hill's hands - HoneyAndSilicon
http://www.ft.com/cms/s/0/bd68cdc6-6fdc-11de-b835-00144feabdc0.html?nclick_check=1
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lionhearted
Is there a print link so we don't have to register?

Random stab at why this might be the case:

If a company has really nasty books and more liabilities than assets, someone
who can assume all those can get it almost for free. I'll give a baseball
analogy for illustrative purposes (the business of sports is a really
interesting place to analyze business because it's a closed system - every win
comes at the expense of another team, and it's a zero sum game. So it's far
more ruthless than other forms of business). Baseball:

Currently, baseball teams are hurting in this economy. Many teams signed
overpriced player contracts during the boom, and now they're in trouble. One
such team with some bad deals who aren't really in contention for the playoffs
is the Toronto Blue Jays. They play in the same division as the New York
Yankees and Boston Red Sox, so they've got a very hard time of competing.
Their team is just nowhere near good enough.

So right now, they're thinking of trading some of their good, expensive, older
players for younger, cheaper players who still have to grow and improve to
really be good. Since they're not going anywhere right now, they'd save money
and be better in the future. A team with more resources who wants to win now
could think it gets them over the top.

Toronto's got one of the top 5 pitches in baseball: Roy Halladay. He's really
amazing. He's due about 8 million dollars this year, 15 million next year, and
then he's a free agent - gone from Toronto. Toronto won't contend this year or
next year, so if they can save that $23 million and get a few young, good
players for him, they'd love to trade him.

They've also got some really bad deals. The worst is Vernon Wells, who is due
$102 million from 2010 to 2014. They signed his deal after the best year of
his career, and he promptly got hit with an injury. He plays bad defense now,
and is a mediocre hitter. His deal is arguably the worst in baseball. He's not
worth even half of what he's going to be paid over the next five years.

For a team to trade for Halladay alone, they'd have to pay a hell of a lot.
You'd be looking at trading 4-6 good young prospects, that a team would have
for 6 years at short money. You'd expect 2-3 of them to become regular players
for very cheap, and maybe one star out of the deal. All for 1.5 years of
Halladay. (But he is that good - trading for him greatly increases the chance
of a team winning the championship)

But if a team was willing to take Vernon Wells' terrible deal with Halladay,
they might only have to give up 1 good prospect and another so-so prospect.
Toronto might even kick in $20 million into the deal to offset some of Wells'
bloated salary.

The lesson? You can get good assets (Halladay) at a huge, huge discount if you
take toxic liabilities (Wells' contract) with them. Toronto's got a couple
other bad deals too - if a team was willing to take two bad deals plus
Halladay, they wouldn't have to send very much back at all. If a team or
company thinks it can get a bit more valuable out of the liabilities and
potential problems, or get more out of the assets than the current owner, you
can really get a steal in a deal like this. But it really is a risky
proposition.

