Obsessive Wrigley Renovation Watch: Ad Value and the Revenue-Sharing Agreement with the Rooftops

1_PROPOSED_MARQUEE_VIEWThe Ricketts Family, by way of spokesperson Dennis Culloton, recently offered some additional reactions to Friday’s rooftop advertising proposal (to which the family essentially said nah), and they make it sound like striking a deal is going to be very, very difficult.

Expressing doubt about the legitimacy of the rooftops’ projections that advertising on the rooftop buildings could generate nearly $20 million annually, Culloton said, per the Sun-Times, “[It's] all about broadcast views …. There’s a lot more shots of the stands and the field than there are wide shots of the neighborhood. Advertisers are going to value that differently. That’s not to say there is no money [for rooftop signs], but it’s going to be less valuable.”

Culloton went on to point out that the rooftops are asking for a 30-year extension of their revenue-sharing agreement with the Cubs, which pays the team 17% of the rooftops’ revenue, and said such an extension would be a “non-starter.” If the agreement is to be extended, Culloton suggested, the Cubs’ cut would have be increased. The current iteration of the agreement is believed to be in place for several more years. Indeed, it looks like the sides agreed to a 20-year deal back in 2004 to resolve some fighting about additional bleachers in Wrigley and screens that would have blocked the rooftops’ views.

Assuming for the sake of argument that the Cubs aren’t actually interested in extending the agreement, and instead simply want to proceed without any kind of rooftop arrangement: what exactly can the Cubs do without breaching their agreement with the rooftops? (That question, itself, assumes that the Cubs aren’t willing to breach the agreement, which they very well may be, if doing so represents an efficient breach.)

Obviously we will probably never have access to the precise language of the private contract, but we can do some surmising based on comments from one of the rooftop owners.

Beth Murphy, owner of Murphy’s Bleachers, said signs inside Wrigley that block the rooftops’ views would violate the “spirit of the settlement” that the parties reached back in 2004, which included landmark protection for the “uninterrupted sweep” of the grandstand and the bleachers.

“Maybe the words could be stronger, but I believe we were not meant to be blocked,” Murphy said, per the Sun-Times.

My take, based on Murphy’s position, is that the agreement between the parties is largely predicated on the landmark protection for the “uninterrupted sweep” of the grandstand and the bleachers. When you start using words like “spirt of the settlement, “maybe the words could be stronger,” and “were not meant to be blocked,” it’s a fair guess that the strict language of the agreement doesn’t make things clear.

If I’m right, the rooftops will have some precedent working against them – back in 2010, the Cubs were permitted to add the large Toyota sign in left field, thanks to the approval of the Landmarks Commission. Of course, that sign didn’t block a rooftop view, so maybe there wasn’t as much of a fight behind the scenes as there would be this time around (politics, and all that).

The Cubs seem very eager to get approval on a signage plan, so this will all probably resolve soon – hopefully amicably. Fighting and lawsuits slow things down, and nobody wants that. But, obviously, the Cubs have to do what they think is best, and, presumably, the rooftops will do the same.

(Disclosure: Some of the rooftops advertise on Bleacher Nation, though it in no way impacts how I’ve been covering this story.)

Brett Taylor is the editor and lead writer at Bleacher Nation, and can also be found as Bleacher Nation on Twitter and on Facebook.

46 responses to “Obsessive Wrigley Renovation Watch: Ad Value and the Revenue-Sharing Agreement with the Rooftops”

  1. CubFan Paul

    I’d block them out completely by adding a second tier of bleachers in left and right field (during the renovation or when the 2004 agreement expires). The new ad revenue and attendace from that would blow that 17% out of the water.

    1. Colocubfan

      Best idea yet in my opinion!

    2. Vulcan

      Great idea!

  2. AP

    As a TA right now, I already spend most of my lecture time talking to the class using legal examples from baseball. Here’s to a lengthy discussion of efficient breach using the Cubs as an example. She already admitted the language could be stronger, now we just need to know who drafted the document and we’ll be well on our way.

  3. hansman1982

    Right now the Cubs hold a lot of power over these groups. Yes they are hamstrung for the next 11 years but the rooftops have to know that if the Cubs get their restrictions lifted they will be out of business the day after it expires.

    1. CubFan Paul

      I wonder if the Cubs have termination language in the contract in case of a renovation…

  4. Blublud

    She basicly gave the Cubs the go ahead to block them out. Apparently there is no language in the contract that states that the Cubs can’t block them out. The language is probably in an agreement with the landmark committee in which the rooftop owners banked on would be there forever. If the Cubs and the landmark committee come to some kind of an agreement, then the rooftop owners have absolutely no jurisdiction in the matter. Their only argue then becomes what they would lose in the revenue sharing contract that they already have in Place. I believe, as brett called it, a sufficient breach, would then be in the best interest of the Cubs. This would mean that the rooftop thieves, as they should be referred to, can go bye bye forever.

  5. Rice Cube

    For those of you who are architects or whatever…if they put a Jumbotron up in LF where the Toyota sign is, how much of the rooftop views would be obstructed?

    The “efficient breach” idea was something I was thinking of as well. If the Cubs just said “screw you guys” and did whatever they wanted, they would probably have to pay some fines and settlements but the ad revenue would likely do much more than break even with respect to those losses.

    1. hansman1982

      Then you have the issue of pissing off the neighborhood, which could have a much bigger impact than ad revenue, just to make it even, hopefully.

      My money is on the Cubs paying the rooftops a boatload of money to make them go away and an easing of night game/concert restrictions.

      1. DarthHater

        Seems to me that the rooftop properties are very valuable and the Cubs are in a better position than anyone else to make the highest and best use of that value. So the economically efficient solution should be for the Cubs to buy the properties from the current owners, perhaps retaining them as junior partners in order to sweeten the deal.

  6. itzscott

    I’m wondering how many more broadcast views the Toyota sign gets as opposed to the projected number of broadcast views electronic signs on the Waveland Ave buildings, maybe another 50 feet further away, would get. There have been signs on some of the Sheffield Ave. buildings (Torco for years and now Budweiser) for some time.

    It could be that the Cubs are merely squeezing the rooftop owners for a bigger share of the pie since they cannot put signage on the ivy covered outfield walls unless the Cubs are planning on billboards on the circumfrence of the outside walls of Wrigley

  7. truthhurts

    I’m sure Brett has adressed this (I missed it), but why exactly did the Cubs negotiate with the rooftop owners in the first place? I mean, common sense seems to say they were stealing the Cubs’ product.

    1. JB88

      I believe it was to negotiate up the amount of night games at Wrigley and also to expand the bleachers.

    2. bucknerforhall

      They got additional 1700 bleacher seats
      were supposed to build the Triangle building but never did

    3. Tom A.

      Yes, they were always stealing the Cubs product, but they had the Cubs over the barrel as they had the City and others backing a limit to night games and this whole landmark scam. And, nobody can ever convince me that they don’t know they are stealing because of the opportunity presented by old fashion Chicago politics. Shame on them and what they respresent — nothing by rotten politics to justify stealing an entertainment product that the rest of us must pay to see.

      With time, things have changed and the City is now supportive of the Cubs and what it means to add 1,200 + jobs and refurbish Wrigley Field. Yes, the rooftop owners still are stealing views into the stadium, but they must have learned to feel good as thiefs because they pass alond 17 cents out of every dollar. That is what most thiefs with any kind of conscience do — justify their bad behavior. Now that the Cubs are getting improved public sentiment and are willing to pay for things on their own without public money, the whole scam of Wrigley being a landmark should be addressed. It is a private facility and no longer a public financed facility (such a where the White ox play).

      As a Cubs fan and City of Chicago resident, I don’t want to lose the Cubs to the suburbs and appreciate what a refurbishment of Wrigley Field would mean to the City. I do not care about the rooftop seating at all, as it adds absolutely nothing to my experience. I only hope these relatively few thiefs don’t ruin it for everyone.

      1. Pat

        They aren’t stealing anything. Those buildings are more expensive than others in the neighborhood because they have a view into Wrigley Field. They payed more for access to that view. Not stealing. Now, you can make a good argument that they do not have an inherent right to the view and I would agree with you (current contract not withstanding). But they aren’t stealing anything.

  8. joey

    If you keep the marquee out front, the scoreboard in center, the ivy on the walls in the outfield, green seats and, most importantly, the sightlines and distance from the seats to the field, it does not matter what else they do to Wrigley Field. I came around from being a defender of the past to believing it should be totally renovated. The neighborhood makes the stadium great, and I’m not talking about the rooftops. People will come around to this line of thinking just as much as they came around to the idea of lights 25 years ago. It’s inevitable – they should start rebuilding now.

  9. Darwin Fred

    Isn’t it possible also that they are using the current plan as a tactic to push Emmanuel on the public funding theory. It seems like they should get what they want either way, but Emmanuel and his ” They finally seem to understand “NO”” quote may be a bit premature.

    I think that it will probably go down with some variation of the current plan because otherwise, the Cubs can say that they need to be able to put up signs or if the rooftop owners continue to complain, they make the rooftop owners out to be the bad guys… Something like, “Look, we’ve tried to do this without public money, but the alderman and the rooftop owners aren’t willing to bend, so either we need the capability of doing things our way or we need public money. If not, then so sorry, we have to move” or something along those lines.

    To me, this is a chess game being played by the Cubs with several more moves to be made before checkmate it declared. The problem is, the Cubs didn’t realize that they were playing chess until recently. They thought that they were playing tic-tac-toe.

  10. cubzforlife

    For the team to have plans, contractors and all the other stuff in place to start building in the offseason they can’t delay much longer. If they start with new clubhouses and batting tunnels these are big jobs and the field will have to be rebuilt. Going to be tough to be ready for opening day 2014. I hope global warming continues as far as Chicago winters are effected.

  11. Internet Random

    Obviously we will probably never have access to the precise language of the private contract . . . .

    Fun fact: If you wanna sue to enforce a written contract in Illinois state courts, you have to attach the contract to your complaint… or otherwise reproduce the contents verbatim.

  12. John

    On the face of it there seems to be two obstacles in the way of the Cubs efforts to renovate Wrigley Field. The first one is their contract with the Rooftop Association. The second one is the Landmark commission.

    The contract with the rooftop association is assumed by many to be clear-cut – the Cubs won’t block their views and the rooftop owners will send 17% of their revenues to the Cubs each season (this reportedly amounts to about $3.5 million each year). However Jesse Rogers suggested that may not be the case at all. On twitter he said that the contract is “apparently a little convoluted. [I]f for the good of community that creates jobs, etc. there is a grey area.”

    Later he reported that “rooftop owners are worried that provision won’t be upheld if challenged by the Cubs under the idea that the Cubs are doing a civic good for the neighborhood with their rehab project which would bring jobs — both temporary and permanent — to the area.”

    Basically there is language in the contract that states if the Cubs perform work on Wrigley and the community benefits from that work, then the Cubs don’t have to adjust that 17% downward. Essentially the rooftop owners would lose out in that situation and they know it. This is why you are seeing the quotes from Mrs. Murphy that sound so desperate.

    Basically the rooftops owners will have to convince people that ads over the outfield will violate the landmark statutes, and that adding them won’t benefit the community at large. If the argument was solely about ads in the outfield then I could see them winning. But of course the ads lead to a new revenue stream and that leads to the Cubs spending $300 million over 5 years to fix up a major attraction. You could make a case that the rehab work won’t benefit the community directly, but it’d be close. Of course if the Cubs get the green light to proceed with their plans then the Ricketts will dump another $200 million into the hotel across the street. Converting a McDonald’s into a McDonald’s,175 hotel rooms, and about 200 or more permanent jobs (in addition to the thousands of construction jobs) certainly absolutely benefits the community more than the $20 mil the rooftops bring in annually. It’s a slam dunk case and the rooftops owners all know it. There is no way that there relative tiny little parasitic business will be allowed to stand in the way of a half billion dollar construction project.

    The rooftops last hope will be the landmarks commission and we know how that game is played in Chicago (look at the recent decisions regarding Prentice). If the Mayor wants Wrigley to be altered then the commission will ease up on the signage requests. There is already a precedent for this with the Toyota sign.

    It’s going to be harder for the Cubs to get more night games, concerts, and Friday afternoon contests but I expect that they’ll build some more community fields someplace and get this done too.

    As for the suggestions that the Cubs just buy out the rooftop owners – one building just sold over the weekend for $4.8 million. There are 17 operating rooftops but in reality there are about 25 “lots” that could be used (some rooftops span 2 or even 3 of the typical “lot” sizes). So they Cubs would be looking at spending between $80 and $120 million just to acquire the properties across the street. Obviously that is never going to happen when they can just convince a few guys on the landmark commission to give them the green light.

  13. MichiganGoat

    What if we put rooftops that seat 80K in the burbs we could build a giant jumbotron next to them and then more fans could watch the game. ;)

    REVENUE AND THEN WE COULD SIGN ALL THE PLAYERS!

  14. Josh C.

    Has anyone given any thought to the fact that placing ad signs and jumbotrons in an old and historic baseball stadium is not that big a deal. A few years ago i went to Fenway for the first time, could not have given a rats ass about that big old Budwieser sing or the big ole Cumberland or John Hancock signs, i dont think anyone even notices the Under Armour ads on the ivy wall doors anymore. I love Wrigely Field, but two things i dont care about are if and what big ass signs they put up, and even care less about what the rooftop owners think. I mean really, what would happen if the cubs move out of town. Buy a ticket like everyone else!!! Sorry that i got a little off topic on this one but Jeez, shut up about it already!!!!

  15. cjdubbya

    Apparently some of the rooftop owners are meeting with the Cubs today at Wrigley…stay tuned?

    http://www.chicagobusiness.com/article/20130128/BLOGS02/130129783/cubs-rooftop-owners-meeting-to-seek-possible-deal

    1. Mick

      5:45 p.m. update: The meeting now is done, after running a good two and a half hours. I’m told that both sides agreed that there is pressure for a deal, agreed to do some more research on a few items, and agreed to communicate again, possibly in person later this week.

  16. cubfanincardinalland

    I mentioned the other day, that I heard the Cubs had a pretty good out on the contract. You can really see it in the rooftops actions, they are flailing in the water at this point. Panic city.
    I have a hard time getting this concept that the Chicago Cubs are a “neighborhood business”, like the mom and pop store down the street. Revenue derived from the neighborhood residents is a drop in the bucket overall.

  17. John S.

    I remember being a kid watching the game and seeing a handful of people sitting on one or two roofs watching the game and thinking how cool it would be to live in one of those buildings no matter how bad the Cubs sucked. And did they suck … It had a certain charm. Now it’s a big business where stealing the Cubs product has been legitimized as described by a couple of posts above. The truth is that most of those buildings themselves are eyesores with those monstrous bleacher decks built on them, far worse than any advertising in the outfield would look.

  18. Saving grace

    I live in the Boston area.. Fenway park and the Red Sox were made to take down the giant coke bottles and are limited on how much signage they can have.
    The ball park maintains it’s historical appeal inside and out.
    Also if you look at photos of the past Fenway was covered in signage so it is a historically accurate piece of its history.they often bring that up in the debates of signage here.
    With the ivory and brick signage doesn’t fit as well.The Cubs need to be more considerate of that

  19. Obsessive Wrigley Renovation Watch: Cubs Meet with Rooftop Owners for Over Two Hours Today | Bleacher Nation | Chicago Cubs News, Rumors, and Commentary

    [...] lining the outfield at Wrigley Field reaching a compromise on outfield advertising signage looked pretty bleak this weekend and into this morning. The Cubs are trying to raise revenue to pay for the renovation of Wrigley Field, and one of the [...]

  20. Bob

    It is time to let the business be a business. Let them play games when they want, let them have concerts when they want, and let them remodel the park when they want. It’s their stadium, not the rooftops, not the city of Chicgo, not the landmarks status. This is just ubsurd to think that people are telling them how to do anything with their business. I am a Cubs fan, but if they don’t get to do what they want with their building , then knock it down, and build somewhere else, like the suburbs. Then they can have all the night games they want, have concerts when they want, and have football games when they want. This is ridiculous, that everyone dictates to them what they do. Before I bought the club, I would have had all this worked out, but Ricketts didn’t. Bad mistake, but this can be resolved. Just let them do what they want.

  21. Wrigley Neighbors

    The Landmark Commission was a success but we have more work to do. Find out how you can help at http://www.wrigleyfield.com