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respect wrigley[The third of four Convention-related info dumps coming today. Previously, I discussed the financial question and the broadcast rights question.]

It was one year ago at the Cubs Convention that the Cubs unveiled plans to renovate Wrigley Field with private funds. It was greeted with awe, cheers, and anticipation.

… and then nothing happened for a year.

I’m being a little glib, of course, because a great deal did happen, at least with respect to the lengthy, sometimes ridiculous, political process. The Cubs have all of the permissions they need to start the renovation, they’ve got some of the sponsors that will come out of the renovation lined up, and they are ready and eager to get started.

But why haven’t they started yet?

  • “I think you know why,” President of Business Operations Crane Kenney remarked after a similar setup during a presentation at the outset of the business panel. In a changed tone from months past, the Cubs are quite clearly painting the rooftop businesses as the primary hold up in the entire Wrigley Field renovation. Calling them a “$20 million drag” on Cubs business operations, Kenney laid out what needs to happen with the rooftops before the Cubs can start work: rooftop capacity limits must be enforced, there must be restrictions on “ambush advertising” (i.e., the Cubs want to control advertising around the park, not the rooftops), the Cubs must have certainty that they can do what they want with the bleachers/signage after the rooftop contract is up (2023), and the Cubs want the rooftops to drop their threat of a lawsuit that could delay everything.
  • That explanation is why the Ricketts Family doesn’t want to start writing checks for the full renovation before they know they’ll be able to generate revenue (essentially, to cover those checks) with the outfield signage. From a business perspective, this makes sense. But if the player facilities or crumbling concrete are so important to the future of the organization, why wouldn’t the Ricketts Family be willing to go out of pocket to start those projects, even if the outfield signage is imperiled by the threat of a rooftop lawsuit?
  • Well, for the first time, we got a clear answer from the Cubs, per General Counsel Mike Lufrano: the method by which the rooftops would legally challenge the outfield signage (the only part of the renovation with which they take issue) would actually challenge the zoning of the entire project. In other words, the Cubs really can’t start the rest of the renovation, because if things come to blows legally with the rooftops, the Cubs could have already done work that is subsequently determined to be unlawful. Can you imagine that disaster?
  • Dovetailing with that point, Kenney told the media after the panel, per Jon Greenberg, that the contract with the rooftops – the agreement by which the rooftops get to sell tickets for views into Wrigley Field in exchange for 17% of their revenues – is not what is preventing the Cubs from putting up signs. The only thing that ever prevented signage, according to Kenney, was the landmark status of the bleachers, which has now been changed. So why not go ahead and throw up the signs? Well, because I’m guessing the rooftops, in addition to challenging the zoning of the entire project, would argue that the Landmarks Commission did not act lawfully in altering the landmark status of the bleachers to allow signage. So, if the rooftops sued the Cubs, they’d be suing the City of Chicago, too. Knowing this, and knowing how extraordinarily unlikely such a suit would be to succeed, I now believe that some kind of agreement will be worked out with the rooftops. The pressure that must be raining down from the City at this point has to be extreme.
  • In his own remarks about the rooftop situation, owner and chairman Tom Ricketts analogized the rooftops to a neighbor peering through your window as you watch Showtime, which you’ve paid to subscribe to. More than that, the neighbor is selling tickets to watch through your window, and, when you try to close the blinds, the city tells you to open them. Now, in that analogy, you’re getting 17% of those ticket prices from the neighbor, but the point largely remains, particularly if the Cubs can’t do whatever they want after the rooftop contract is up.
  • To be sure, Ricketts did mention at times that he likes the rooftop owners personally, they have good conversations, and there are positives about the rooftops from an atmospheric perspective.
  • Multiple references were made at the ownership panel and the business panel to good conversations over the past couple of weeks with the rooftops (some of which included the City, as well), so maybe there really is something on the way soon.
  • The good news is that, despite all of the political wrangling and rooftop fighting, the fans might not be too much worse off when it comes to timeline of the renovation. Both Tom Ricketts and Crane Kenney mentioned the possibility of getting the renovation done in four years, as opposed to the originally-projected five years. So, the end date may not have changed, despite the “lost” year. That’s great news. It could end up costing the Ricketts Family a little more money, though.
  • Kenney added, flatly, that the left field video board (the JumboTron) “will” be added in 2015.
  • To that point, Kenney said something interesting: when going through the standard spiel about the Ricketts Family agreed to renovation Wrigley and develop the surrounding area without any public dollars, Kenney added a small clause that I haven’t heard anyone else utter publicly before. Kenney said that the Ricketts Family agreed to finance the $500 million project “using family assets.” It’s such a small clause, but it could have so much meaning. Is the message here designed to pre-empt concerns about the financing of the renovation, given the already-prevalent debt concerns? I, myself, have wondered for some time whether the intent was to finance the project with more debt (attributable to the Cubs organization? the Ricketts Family, personally?), and, if so, how was that going to impact the financial state of the club? Is Kenney saying that the Ricketts Family will actually be paying out of pocket for the renovation and development? I won’t read more into Kenney’s statement than is there – the word “using” is fungible, as is the word “assets” (because, hell, that could include the Cubs organization, itself) – but I did think it worth highlighting.
  • jadebuddha

    I miss the good ol’ days where it was just people living across the streets as opposed to greedy businesses making money off of another business’ product and threatening to sue if their sightlines are obstructed.

  • http://becomehealthier.com drcub1908

    Brett
    Did you see Kaplans tweet last night from the link to chicago now regarding a deal with the main rooftop? Being the miller lite building?
    Seems like all is worked out or very close

  • http://becomehealthier.com drcub1908
  • JB88

    If the challenge is to the zoning of the entire project, then I see almost zero chance of the Rooftops being successful. I understand mitigating risk, but, most likely, this is the Cubs utilizing their biggest bargaining chip—withholding renovation, period—to extract these promises from the rooftops. It is good negotiating and, unsurprisingly, if there is one group less popular with Cubs fans than the Rickettses these days, it is probably still the rooftops.

  • Ryan W

    Crane Kenney also made an interesting comment in the informal one-on-one with fans afterward the business operations. He indicated that another reason that they have not begun construction is that once they spend any money, they lose nearly all of their leverage, especially with the City. If they spend $50 million on the players facilities (I just made that number up), then it could be claimed “Well you have already spend $50 million dollars…”

    • http://www.bleachernation.com Brett

      Definitely true as well.

  • fortyonenorth

    I don’t want to read too much into Ricketts’s analogy, but I found it interested that he said, “…when you try to close the blinds, the city tells you to open them.” Couched this way, it implies the city doesn’t want to see the rooftops disappear as a commercial enterprise.

    • JB88

      I agree that it probably isn’t worth reading too much into that statement. That comment could be related to a number of things: (1) rooftop owners are powerful people and the city doesn’t like to piss off powerful people; (2) the City recognizes that an agreement does exist between the Cubs and the rooftops and the City isn’t going to allow the Cubs to unilaterally shut out the rooftops during the course of that agreement; (3) the City could be defined in any number of ways (i.e., the Landmark Commission; Alderman Tunney; the Mayor; etc.); or (4) unimagined other reasons.

      Given all the varying explanations for that comment, it probably is best off filing away to see if further context is provided at a later date.

    • itzscott

      >> it implies the city doesn’t want to see the rooftops disappear as a commercial enterprise. <<

      Why would they?

      Wrigley has a finite number of seats in which the city can draw tax revenues from. The rooftops essentially expand that potential tax base from which the city can draw revenue by expanding the number of "seats".

      Everything comes down to money.

  • Diehardthefirst

    Before the Rooftop agreement did the Cubs object to the surrounding establishments charging 75% less for food and beer? I mean how far can Cubs go in dictating what private business owners can do? The City bldg inspector can declare viewing from rooftops unsafe and shut then down. Or does Landmark status extend to views too in which case they have an aligned interest with Cubs.

    • Scotti

      “Before the Rooftop agreement did the Cubs object to the surrounding establishments charging 75% less for food and beer?”

      Were the surrounding bars peering over the Cubs outfield walls and selling seats without the rights to the games? They did/do have the game playing in their establishments but, like any other sports bars, they PAY for that.

      Peering into Wrigley, then complaining about threats to cover the OF fences, then using language in the Landmark Agreement (language that was intended to prevent a roof being placed on Wrigley NOT signage)… That’s a tad different than some theoretical squeeze on neighborhood bars.

  • Jason P

    Great stuff, Brett.

  • Ill see you at Sluggers.

    The rooftops and the Cubs both know that the view from the rooftops will be obstructed. This is obvious, no matter how far back the Cubs decide to move signage, the jumbotron, etc. So yes, I think this is one long, dragged out process that will come down to the $$$.

  • http://www.thegraphicedge.com cutshot

    Why wouldn’t the Cubs just buy the properties and solve the problem going forward. Then they not only control the properties, but they also keep all of the revenue.

    • Ron Swansons Mustache

      In order to purchase something, someone has to be willing to sell it. They did touch on this at the convention and communicated that not all owners are amenable to selling at this time.

    • MoneyBoy

      Cutshot… I’m pretty sure this is correct. When the Tribune Company bought the Cubs, they could have purchased ALL the buildings on both Waveland and Sheffield for something in the range of 1 million dollars.

      What Ron Swansons Mustache said also makes sense.

      • Scotti

        When the Trib bought the Cubs, there was one guy up there with a Weber grill making diner and a couple kids sneaking beers. The Trib would have had to have been clairvoyant.

  • chitownbeast

    i may be wrong but wasn’t that genius crane kennedy the bafoon who worked that stupid agreement with the rooftops and that even dumber tv deal

    • ruby2626

      The major flaw in the tv deal is apparently there is no out clause if market conditions change. Wonder what it would take to buy the remaining Comcast years out?

      The entire idea of having rooftops is flawed. How many rooftop tickets are sold where the Cubs get 17% versus the people actually going to the game whereas the team gets 100%. Maybe it’s a good idea if every game is sold out but with attendance in a freefall it’s a losing proposition.

      • Scotti

        “The major flaw in the tv deal is apparently there is no out clause if market conditions change.”

        And there won’t be any out clauses in any Dodger-sized deals for the Cubs, either. The reason it makes sense for media corporations to commit billions to teams like the Cubs and Dodgers is the long-term commitments.

  • TommyK

    This is the new owners’ biggest screw up. Instead of announcing the renovation, they should done what the Red Sox did a few years back and announced they were leaving Wrigley. Then everyone would be falling all over themselves to get them to stay. Instead everyone is falling over themselves to take advantage of the situation.

    • http://becomehealthier.com drcub1908

      When did the Red Sox threaten to leave Wrigley???

      Just kidding, I see your point..and probably correct on that…

      • TommyK

        The key is they didn’t just threaten to leave Fenway, they announced that they were leaving as if it were a done deal. I remember it being reported that a certain season would be the last one at Fenway.

  • Scotti

    I don’t recall any big deal about the Sox leaving Fenway. There may have been a threat but the Red Sox relationship with their city and neighborhood is drastically different than that of the Cubs and Chicago/Wrigley. Boston has always been in favor of improving Fenway–Ricketts can’t even get everyone to agree that he’ll spend his own damn money–big difference. Regardless, the Cubs would have needed a suburban partner (at least one) offering big public monies and when the Ricketts bought the Cubs there was zero apatite for public monies of any size.

    Later in the process Ricketts was able to get Rosemont to offer a location for free and Rahm started to work in earnest. The threat is still out there. If the Cubs can’t sell their product the way they want to sell their product they won’t invest in Wrigley or Chicago (and will ultimately move). The mayor went from being an arbiter to pushing to get this done–he took the threat seriously.

    My take on this is that, had Ricketts made a big threat early, he would have had a big push BACK. Now, when he threatens, fans know the guy has done everything he possibly can to stay at Wrigley. When he threatened to leave last year, there was zero fan push back and the mayor jumped on board. Ricketts seems to be making the best of a bad situation.

    (FWIW, this situation is also different from the White Sox using a distant Florida city–the Cubs would be getting the hopes up of many suburbanite fans and then dashing them. The Cubs draw 1/3 from the city, 1/3 from the burbs and 1/3 from “out of town.” I think Ricketts has handled this very appropriately).

    • 1060Ivy

      Believe that the mayor realized that decreased tax revenue already associated with Wrigley and the Cubs – and the prospects of that trend continuing long term – as a more realistic threat than the Cubs outright leaving Wrigley Field/Chicago. Many have never taken Ricketts gestures to leaving Wrigley seriously.

      Regarding your view of Ricketts handling the situation appropriately. Everyone gets to have an opinion.

      As Brett and others have noted the renovation of Wrigley and TV deals are the 2 most significant revenue opportunities for the organization. Both situations should have been clear in the sales agreement with Zell/Tribune which was signed back in 2009. It’s 2014 and a number of matters are as undefined as 2009. Maybe a smarter owner might have negotiated a few of these points either within the context of the transfer of ownership or perhaps earlier than season 4 of ownership.

      • Scotti

        Regarding your view that the mayor realized that decreased tax revenue already associated with Wrigley and the Cubs – and the prospects of that trend continuing long term – as a more realistic threat than the Cubs outright leaving Wrigley Field/Chicago…

        The mayor isn’t stupid. Decreased tax revenue from the Cubs didn’t just happen one day–it’s been gradual. The mayor did a 180 after the Rosemont proposal and Ricketts public comments about leaving if the Cubs can’t run their business. Before that his office was of little (scratch that) no help.

        “As Brett and others have noted the renovation of Wrigley and TV deals are the 2 most significant revenue opportunities for the organization. Both situations should have been clear in the sales agreement with Zell/Tribune which was signed back in 2009. It’s 2014 and a number of matters are as undefined as 2009. Maybe a smarter owner might have negotiated a few of these points either within the context of the transfer of ownership or perhaps earlier than season 4 of ownership.”

        Uh, no. You don’t have, as part of the sales agreement with a company that has driven a business into the ground, stipulations that THEY make corrections. They have messed it up enough. You simply pay them for what it is worth and then you, the guy who has a plan to fix it, get on with fixing it. If you have the other guy do the work he will cut corners and make matters worse. The Trib was a slumlord from just about day one. Zell was a slumlord on steroids.

        Re. WGN: After the original sales price was agreed to ($900M), Zell THEN signed the current WGN deals (undercutting the price in his favor as owner of WGN). Ricketts then called the deal off and renegotiated the sale for $55M less ($845M).

        Re. The Comcast Contract: Not a damn thing Ricketts, or Zell, could do about that.

        Re. The City of Chicago’s long term relationship with the Chicago Cubs. A) No stipulation in any contract could do anything there. B) Four years is a blip on a radar screen in terms of this relationship. Half of Ricketts’ ownership was under Daley who A) felt enmity toward the Trib (and vise versa) and the Cubs B) was severely weakened as mayor (in large part by the Trib) and could do little to see anything done for the Cubs even if he wanted (again, he didn’t). In truth, Daley took joy whenever he could screw the Cubs over.

        And, oh yeah, something about a steep recession and a long, putrid recovery…

        Again, four years is short term. The Ricketts are in this for the long haul. Could they have made deals by now? Yes. Would they have been in the best interest of the fans, team and family? No.

        • brainiac

          i like this historical information, but let’s be serious here. the “long haul” means an entire generation of students completing high school AND college without the owners putting effort into the team. this is a terrible situation for productivity, morale, and legacy. a “blip” only refers to the business model, not the actual team.

          • Scotti

            The blip refers to the relationship between the Cubs and the City which has been half a century in the making (Daley’s father was elected in the mid 50’s). Turning that around, regardless of whether it’s for the team or owners, takes time. Terrible situation or not, you don’t move a big ship like you move a cutter (and this mess represents a very large ship).

            At issue is who put the Cubs into this situation (Trib, Daley family, the neighborhood, the rooftops, the bars, Tunney and even Cub fans are complicit) and who is committed to getting them out (Ricketts and hopefully a sort of Cub fan nouveau). No other owner could make it happen faster–that’s just fantasy.

  • cubfanincardinalland

    Really great to see the Cubs clarify that the contract with the rooftops does not preclude them from putting up signage that may obstruct views. I was told this last year and believe I mentioned it on this board.
    The contract was never set up to give the rooftops unobstructed views, as though the people were buying tickets to the ball game. It was meant as giving panoramic views into the stadium, and the atmosphere of being there. The rooftops have morphed this into selling tickets to the ball game, sales that in recent years have directly taken revenue away from the team.

  • cubfanincardinalland

    By the way Brett, as someone down here in Southern Illinois and can’t get to the convention, thank you very much for your quality reporting and updates.

  • Cubsleeram

    Seconded.

    • Cubsleeram

      In reply to Cubsfanincardsland. The internetz hard.

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  • CubFan Paul

    “using family assets”

    Very interesting. Maybe we’ll find out more when the renovation actually starts.

  • Diehardthefirst

    I wish renovations would include mobile canopies over bleachers and exposed grandstands and box seats to protect against those games played in the rain and also heaters under the seats for April May and September games which are half the games for Pete’s sake !!

    • DarthHater

      For that matter, why should the kiddies be the only ones who get a mascot? How about “Addison, the Sexy She-Bear” to fulfill the dreams of grown-up fans? :-P

      • mjhurdle

        [img]http://s9.postimg.org/yucujpvv3/im_sexy_and_i_know_it_bear.jpg[/img]

        • mjhurdle

          well, there’s Addison. But im not sure how many dreams she will be fulfilling…
          :)

          • DarthHater

            Okay, I wanted to see a bigger version of that pic, so I was about to Google “sexy bear.” Then I remembered that would be a really bad idea, since I am still at work. :-P

            • mjhurdle

              ya, i already made that mistake. among many of the NSFW images, i found this and ran.

              • DarthHater

                I still think that’s a he-bear. Here’s more what I had in mind:

                [img]http://farm4.staticflickr.com/3740/12078795543_7a444fa7b0_n.jpg[/img]

                • mjhurdle

                  that is a better bear

                  • DarthHater

                    I feel an incurable illness coming on. Please visit my bedside, Addison!

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