July 13 (Bloomberg) -- The Chicago Cubs may become the first Major League Baseball team in 39 years to file for bankruptcy as Tribune Co. seeks to sell the franchise after months of negotiations.

Tribune sought Chapter 11 protection in December. It is contemplating a separate filing for the Cubs to expedite the team’s estimated $900 million sale to interested bidders, including Incapital LLC Chairman Tom Ricketts, according to four people familiar with the plan.

A brief Cubs bankruptcy would be a legal maneuver to clear the team from any future liability in the Tribune bankruptcy, according to two of the people familiar with the matter. Sam Zell, chief executive officer of Chicago-based Tribune, pledged the company’s interest in the Cubs as collateral when he negotiated the deal to take the publisher private in 2007, according to one of those people.

“You take it in the front door, and it’s just like you’re getting radiation,” said Michael J. Cramer, a former president of the Texas Rangers who teaches sports business at New York University. “It comes out the other door about a half minute later. It’s clean.”

Richard Levin, a spokesman for Major League Baseball, and Ricketts through a spokesman, Dennis Culloton, both declined to comment. “The company doesn’t comment on any potential transactions,” Gary Weitman, a Tribune spokesman, said in an interview yesterday.

The Cubs weren’t a part of Tribune’s bankruptcy filing. The people familiar with the matter said it remained possible the sale would close without the team filing as well.

Millions of Fans

While Denise Brown, a Tribune spokeswoman, said the company doesn’t disclose the finances of individual units, the club is one of the most popular franchises in baseball. It drew more than 3 million spectators to 95-year-old Wrigley Field in each of the past five seasons.

Sale of the Cubs is subject to approval by Major League Baseball. The move could guarantee that the Cubs are sold free and clear of Tribune’s creditors, Cramer said.

“This would make sense for Major League Baseball,” he said. “They would like to see that asset be stand-alone, very clean, not tied up in other issues.”

People familiar with the negotiations said a Cubs bankruptcy filing would be designed to allow for the fast disposition of the team’s assets. It could be accompanied by a motion to sell the team with an agreed-upon bidder. The entire process could take as little as 20 days, said Gregory A. Cross, the attorney who heads the bankruptcy practice at Washington- based Venable LLP and isn’t involved.

Coyote Ugly

Not all bankruptcy sales move as fast. The National Hockey League’s Phoenix Coyotes filed a Chapter 11 case in May with plans for a quick transaction, only to have it descend into a legal fight about whether the team may be sold and moved without the league’s consent.

While no buyer is likely to try to move the Cubs out of Chicago, a speedy sale would be derailed if a Cubs auction ended with a winner that baseball’s other owners refused to accept, Thomas J. Salerno, the Coyotes’ bankruptcy attorney, said in an interview.

Tribune’s creditors, which are owed $13 billion, would have the right to object because of their claim to the company’s assets. Lawyers for the creditors committee didn’t return phone calls. James Conlan, the lawyer leading Tribune’s bankruptcy, didn’t return phone calls or respond to an e-mail message.

A bankruptcy filing for the 133-year-old team could be the final twist in Tribune’s attempt to sell one of baseball’s trophy properties.

Bankrupt Franchise

The last Major League Baseball bankruptcy occurred in March 1970 when the Seattle Pilots went broke, said Jim Gates, librarian at the National Baseball Hall of Fame and Museum. The Pilots were bailed out by Bud Selig, the current MLB commissioner, and became the Milwaukee Brewers.

Bankruptcy touched another MLB team in 1993, when the Baltimore Orioles were sold for a then-record $173 million in a court auction brought on by owner Eli Jacobs’s personal bankruptcy filing.

A bankruptcy filing by the Cubs wouldn’t indicate that it’s having trouble paying bills, Cross said.

“You do not have to be insolvent to be in bankruptcy,” he said. “All you need is a legitimate business reason.”

Section 363 of the federal bankruptcy code allows a company to sell assets “free and clear” of a lender’s lien and without the creditors’ consent under certain circumstances, he said.

Tribune reported $13 billion in debt and $7.6 billion in assets when it filed for bankruptcy.

Ricketts Deal Possible

Tribune reached a $900 million agreement with the Ricketts family last week for the Cubs and Wrigley Field, a person familiar with the negotiations said at the time.

After predicting a sale as early as January, Zell said in a May 28 interview on Bloomberg Television that the Cubs deal was taking longer than expected because the potential buyer was having trouble raising the money in tight credit markets.

Tribune bought the team in 1981 from the Wrigley family for $20.5 million.

A self-styled “grave dancer” who specializes in distressed companies, Zell, 67, bet on Tribune in the wake of his triumphant exit from the U.S. office market at its peak in February 2007. He sold Equity Office Properties Trust to Blackstone Group LP for $39 billion, including debt, in the largest leveraged buyout at the time, a sale that earned Zell about $900 million.

Ten months later, he made the “mistake” of acquiring Tribune, Zell told Bloomberg Television in April.

A $900 million Cubs purchase by Ricketts would be the highest price paid for a Major League Baseball team, topping John Henry’s $700 million acquisition in 2002 of the Boston Red Sox, Fenway Park and an 80 percent stake in the New England Sports Network.

To contact the reporters on this story: Gadi Dechter in Washington at gdechter@bloomberg.net; Greg Bensinger in New York at gbensinger1@bloomberg.net.

Last Updated: July 13, 2009 00:01 EDT