That there is one of those thought experiment questions, rather than the kind that I can actually answer.
On the heels of another disappointing season, which saw attendance fall to its lowest level since 2003, it would be easy to wonder whether the $850+ million the Ricketts Family paid for the Cubs (and Wrigley Field, and 25% of CSN Chicago) in 2009 looks like an oopsie on the purchase price. But, on the other hand, with the Los Angeles Dodgers selling for more than $2 billion, the San Diego Padres selling for $800 million, and television contracts exploding, it starts to look like the Ricketts’ purchase price was a bargain.
So which is it? Are the Cubs now worth a great deal more than they were just a few years ago? Or has their value merely held steady?
Last week, sports law attorney Adam Klein was on Chicago Tribune Live discussing those very questions. His thoughts on the subject were interesting, and he was confident that the Cubs’ value is higher today than it was in 2009.
“[The Ricketts family] would get more today if [they] sold [the Cubs],” Klein said, per CSN Chicago. “Number one, don’t downplay the emotional part of it. There’s other people who would come along, they’d see what he paid, they’d want to get it – [the family is] not going to accept less than [they] paid for it – how much more [they'd pay], I don’t know.
“But take into account several things: number one, all boats benefit from a rising tide – the Dodger deal, the Padre deal, the Texas Rangers deal – all deals that were done since then, all at levels above what [Ricketts] paid or at levels relative to the size of the market would indicate what he’s got is worth more.
“Number two, you’re buying into the league. The league itself has done quite well and you’re buying into the growth strategy including its internet strategy and MLB TV, you get your fractional piece of that as being an owner. Martket size, big market teams, don’t come along very often. That’s part of the reason the Dodgers, even the Rangers, went for what they went for. And this is a big market, you can’t downplay that. And people will pay an amount that’s [on par] with the size of the market – more sponsors, more fans.”
Klein went on to discuss the local TV rights, which will be coming up in 2014 on WGN, but not until 2019 on CSN Chicago. There will be huge money there at some point.
The valuation question, to me, is interesting not only in a ‘House Hunters’ kind of way (it’s just interesting to know how much the Cubs are worth, and how much their value is changing), but also in terms of the pressures on ownership. I’ve made no secret that I very much like the Ricketts family (the kids, in particular) as the collective owner of the Chicago Cubs. They are fans who are dedicated to seeing a winner, and putting revenues right back into the organization. But if the Cubs suddenly doubled or tripled in value in just a few years? Might the Ricketts family – who made their bones in the securities industry, after all – see a bubble that they can’t resist exploiting? How can you turn down making a billion dollars in three or four years?
Well, even if the Cubs suddenly are worth $1.5 or $2 billion, I actually could see the Ricketts resisting the urge to cash in. Sure, it might be a bubble that will pop, and the value will crash back down to something closer to what they paid for the team, but professional sports franchise ownership is rarely about making money. The uber rich buy these teams because they are trophies. They are really expensive feathers to put in really expensive caps. It’s the dream that we all would have if we had that kind of money: if I could buy the Cubs, I would, and I would never, ever sell them for anything.
I hope the Ricketts family continues to feel that way, however valuable the Cubs become (and, if the Cubs have a good decade on the field, the value could explode even higher come 2020). We saw with the Tribune Company what can happen when the profits of the enterprise and the bottom line value of the franchise are the primary motivators in what gets put on the field.