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respect wrigleyTaking the step that they intimated last week when discussions with the rooftops broke down, the Chicago Cubs have filed for a permit to install the right field advertising sign, according to Greg Hinz. As you may recall, the City has approved the 650-foot, see-through sign in right field, and the Cubs have secured a sponsorship relationship with Budweiser for that sign. So, in that sense, the Cubs are simply doing what was expected.

In other sense, though, this could be the start of a nasty fight with the rooftops, who have already filed suit on a related matter, and could pull the trigger on another legal battle. Throughout the renovation approval process, the rooftops have held the threat of litigation over the Cubs’ head should the team obstruct any of their views with outfield signage. For their part, the Cubs say they need the outfield signage to, in part, generate revenue for the overall renovation.

What happens now? No one outside the walls of the involved parties knows for sure. Maybe the rooftops immediately file suit. Maybe they wait until the sign actually goes up. Maybe this was expected, and nothing changes, and the sides keep on negotiating (Danny Ecker says a meeting is scheduled this week between the rooftops and the Cubs). Maybe the Cubs are trying to grab some leverage? Maybe they’re trying to force the rooftops to act first?

I won’t pretend to know. I can only hope that this is a step in getting things resolved. Somehow.

UPDATE: The rooftops have issued a statement, via spokesman Ryan McLaughlin:

“This is an unfortunate turn of events because our hope was to find a solution to this matter. Rooftop owners believe any blockage of our views violates the contract we have with the owners of the Cubs. We have instructed our legal team to proceed accordingly.”

Now, to be certain, this doesn’t mean the rooftops will immediately sue (though they could). “Proceeding accordingly” could mean many things, including continued negotiating (now framed by legal posturing). Speaking from experience, the lawyers get involved in these matters looooong before a court actually gets involved. If the rooftops do sue (or seek arbitration, if the contract contains a mandatory arbitration provision), I could see this going one of two ways: (1) a protracted legal battle that delays the renovation for a very long time (more than a year would not be out of the question); or (2) a nudge to get everyone to work out a settlement. The good news is that courts really do try very hard to get two sides to settle in a case like this, and it wouldn’t seem like there would be a ton of discovery (which can really slow things down). Hopefully a lawsuit, if it comes, simply pushes the sides to get something done.

I know. I keep saying “hope.” Silly me.

  • Jon

    This may not be all bad… in theory Cubs Lawyers > Rooftop lawyers, then let the crook county judge be the bad guy and see he’ll slap an injunction on this thing making him public enemy #1….

    • JadeBos

      I think it would be fun to see what the rooftops make this year without any signs obstructing the views.

  • scorecardpaul

    Wow, that sign will be one of the most talked about pieces of advertising in the state. The Cubs should charge more for it just because of all of the press it will get.

    • TimBeam

      Good call. Everyone in the Chicagoland area is going to be talking about Budweiser

      • Senor Cub

        “Good call. Everyone in the Chicagoland area is going to be talking about Budweiser”

        I personally prefer a BN sign until everything get’s worked out.

  • smackafilieyo

    Anyone have a link to the contract between the cubs and rooftops?

    • http://www.bleachernation.com Brett

      No. It’s not public information, though Dave Kaplan has a copy and will presumably be discussing it soon (he did on the radio late last week).

    • D-Rock

      Read a great article (forgive me for plugging another Cubs site, Brett) outlining the history of the Rooftops and Cubs relationship. It has a little bit of the agreement in it. Long article, but worth the read for sure. http://www.bleedcubbieblue.com/2014/1/25/5344456/the-rooftops-and-the-cubs-a-history

  • http://bleachernation.com woody

    Brett……
    Can you confirm that one owner in particular isn’t happy because of a Miller beer sign on that building. And that Miller doesn’t want their sign obscurred by a Budweiser sign and that Budweiser doesn’t want a Miller sign in the backround either. I read this in one of the posts yesterday so it seems that revenues for competing signage may be the glitch.

    • blublud

      I would assume that competing signs on separate structures, own by separate entities would have bearing on each other. The Cubs have nothing to do with The rooftops advertising and the rooftops have nothing to do with the Cubs advertising.

      • blublud

        That should be would not have bearing

    • brickhouse

      The Miller sign will come down as part of the rootop agreement – I believe it can stay up this season and has to come down for 2015.

  • mrcub1958

    Let’s go. Time to play hard ball. Better than petty meetings.

  • Funn Dave

    Um. Why would they not have applied for a permit long ago?

  • Funn Dave

    Also Brett I finally broke down and got Twitter. Just to follow Ghostface Killah. Although I did follow you and it turned out to be helpful, because I found out about this news right away. Goddammit.

    • http://www.bleachernation.com Brett

      Neener, neener, neener.

  • mr. mac

    ” I can only hope that this is a step in getting things resolved. Somehow.” – you and all the rest of us, sir.

  • http://www.w2wn.net Cerambam

    Remember the rooftop proposal to have signs on their buildings? I wonder if there was a missed opportunity to advertise on their buildings (no doubt at a smaller revenue than in-stadium signage) plus increasing the 17% profit transfer from the rooftops to the cubs to help subsidize the loss.

    Surely, there would have to be a healthy increase in that sharing rate, but it seems that would not put the rooftops out of business, increase cubs revenues, start advertising earlier (cubs missing out on a season of advertising at all is a lot of missed money) and would allow the renovation to start.

    Just an observation and food for thought.

    • Edwin

      I thought that the drop in value was enough that it was basically a non-starter for the Cubs.

      • http://www.w2wn.net Cerambam

        I think the drop in value was associated with the signage. My point is what if they supplement that drop in value with an increase from 17% of rooftop revenue to 30%, 40%, 50% etc? Obviously this is just speculative and number guessing work, but it didn’t hear anything if this nature come up. My guess is the rooftops did not want to renegotiate up from 17% thinking they’ll win the suit, but idk if that was the right call for them.

        • Pat

          I doubt the rooftops could survive the percentage being raised. Remember that it’s 17% of gross, not net.

  • smackafilieyo

    Why don’t they just raise the rooftops above the new signage level? Give it another story so to say?

    • D-Rock

      Who will pay for this? Rooftops would not agree to this unless Cubs paid for all of it, I suspect.

      • smackafilieyo

        Just add it into the $500 million budget…haha, advertisement is paying for it.

  • TommyK

    I think the rooftops are trying to leverage this into an extension of the agreement. I’ve been trying to figure out how partially blocking the views of a small number of rooftops could be holding up a $500 million project. How much revenue could we possibly be talking about? Then the Cubs’ cryptic comments about making sure they can do what they want when the contract expires got me thinking. I bet the rooftop owners are saying they won’t agree to anything unless the Cubs agree to extend the contract, even if the Cubs offer more money than any projected revenue loss would suggest. They aren’t really worried about blocked views. They’re worried about being put out of business in 9 years. The Cubs are unwilling to extend the contract because they plan to completely block the views when the contract ends. That’s the only explaination I can think of for why this hasn’t gotten done.

  • SFCCubFan

    Brett
    If the rooftop owners decide to file suit, is it possible for the FO to file injunction for the cost that will incur for the year wait on starting of the project to include lost revenue on the signs delay? I have been thinking about this, every time i see any piece you put up.

  • Cubsin

    Why on earth would the Cubs want to give those pirates an extension?

  • mosconml

    Brett, I don’t know if your experience as a lawyer would help here, but I’m guessing so —

    If the rooftops do indeed sue, what sort of timing can we expect for a resolution, either through a settlement or the court process? What would that mean for the signage and construction?

  • Blackhawks1963

    Time to stop being the punching bag and time to take the fight to these rat bastard rooftop owners and “special interests.” The Ricketts need to engage the best corporate attorneys in the land and bury these SOBs in a crush of legal expenses, etc.

    Time for scorched earth strategy on the part of the Ricketts family.

    • D-Rock

      Tell us how you really feel…

    • smackafilieyo

      +1….preach it, haha

    • sleepy

      Couldn’t agree more. No more Mr nice guy. The rooftops want to play hardball? Ok then, let’s play!

  • http://bleachernation.com woody

    I envision Clark the cub as a new action super hero kicking rooftop owners and crooked politicians asses by night and cuddling young children by day. Who needs corporate lawyers.

  • mr. mac

    I was reading about this on the Tribune website and the first commenter wrote this gem:
    “What is the point of the “Wrigley Field” sign, if not to poke a sharp stick in the eyes of the rooftop owners? It provides no income. It informs no one about where they are, unless someone has somehow gotten into the ballpark by mistake. (Oh, gee, I’m at Wrigley Field and I wanted to get off the train at US Cellular Field. Darn it all.) It’s hard to sympathize with Ricketts when he acts like such a schmuck, even considering the other schmucks he’s up against.”

    He is from St. Louis.

    • D-Rock

      Wow. What a moron. That moron from St. Louis obviously doesn’t know the Cubs will use different brand names for that sign? Unbelievable.

      • DarthHater

        In his defense, the Tribune website did say: “Insert idiotic comment here.”

  • http://kempfintl.com pfk

    Bret,
    Just wondering….have the Cubs considered building the Jumbotron on either or both sides of the scoreboard? This wouldn’t block any views as there are no rooftops with seats in that area. Why must it be above the left field bleachers? And why must the smaller sign in right have to be just above the bleachers? Perhaps its a matter of cost of construction? If so, I’m sure the cost of lost revenue is far greater than the cost of placing the signs up near the scoreboard. Just curious to know if those locations have been considered and, if so, why they were rejected.

  • JB88

    If I were setting this up to file a TRO, I would send a cease and desist letter first, with a very tight timeline to respond.

    Seeing as how I haven’t seen this contract but having a general sense of how these sorts of documents are generally written, I would be very surprised if the rooftop owners even have standing to sue at this point. My guess is that they will either file when the Cubs actually start to erect the sign or immediately before it. Simply applying for the permit alone probably isn’t enough to trigger a potential breach by the Cubs.

    • JulioZuleta

      Good point about the standing. We can speculate that the sign will hurt ticket sales for the blocked rooftops, but until a court sees that it actually does, it might be hard to get passed that hurdle. Also, I don’t see how the entire rooftop owners association would have standing, unless they have some sort of weird profit sharing/pooling agreement. You could make the argument that only the blocked rooftop(s), if anyone, would have standing. Plus, if ticket sales go down among all the rooftops (they will, due the a bad on-field product and bad PR), you could make the argument that the losses are not traceable to the signs. Who knows.

      • JB88

        I actually think that such a case would be very hard to get a TRO on. I think proving a likelihood of success on the merits would be tough and I think proving that money damages wouldn’t remedy the loss would be even harder.

        If I were the rooftop owners’ counsel, though, rather than focus on lost revenue for ticket sales, I would focus on lost value of the property. Particularly, I would say that the building’s blocked by the signs would be devalued and would injure the value of the remaining buildings based on the comps the devalued building would bring. Loss of property value and goodwill of the business would be recognizable losses, harder to quantify, and usually protectible through a TRO.

        • JB88

          In fact, writing that out, I wouldn’t be surprised if the Cubs offered to pay the rooftops off for lost revenue and the rooftops balked because the cost isn’t the lost revenue paid to the Cubs, it is the devaluation of their buildings.

          • JulioZuleta

            Bottom line, the deal has a set expiration date. 10 years from now. It would seem to me that it’s in the best interest of the rooftop owners to make a deal that protects their long term viability/interests. Obviously the Cubs won’t be extending the deal or entering any other deals that will similarly handcuff them into the future. It’s really going to hurt the rooftops’ leverage that everyone knows there is a finite period of time remaining on their businesses.

            • Jon

              The problem is, Ten years of revenues is still a ton of $$$ to them. And what happens after the deal, sure the Cubs can put up signs to their hearts content, but not all views would be blocked and those buildings would still have a ton of valuedue to their proximity to Wrigley Field. The only thing that would bury them would be a Cubs move, a card the CUbs refuse to play.

              • JulioZuleta

                The value of those building as businesses versus the value of those buildings due primarily to their prime location is gigantic. Also, figure the value of 10 years of revenues, minus legal fees, minus the difference in market value of those properties. Obviously I don’t know what those numbers look like, but there’s certainly going to be some pressure on the rooftops.

              • hansman

                Last I saw it figured, there was around $21M gross revenue for ALL of the rooftops, annually.

                That is $210 – $35M (payout to the Cubs) – $136.5M (ROUGH estimate of expenses) = $3.8M annual profit split across ALL of the rooftops.

                If the Cubs drag out the legal process for a couple years, that would get eaten alive by attorney fees.

                The Cubs played nice, now they are saying “Sue us and we will ruin you, buy your rooftops for pennies on the dollar in bankruptcy court and have our way with them”.

          • D.G.Lang

            I believe that I read somewhere that the rooftop owners in some cases still have a mortgage on their property. Some those mortgages would be for the purchase of the property itself with or without the rooftops while in other cases it would be the extra cost of building the rooftops.

            Most states have a non-recourse mortgages which makes the only recovery from the borrower the property itself. While the buildings themselves under the original mortgages for only the property would be covered by the non-recourse status any new mortgages for the rooftops construction when obtained for that construction alone might not be covered by those laws and therefore the lenders could pursue the borrowers for recovery of more than the original mortgage building.

            In other words those borrowers who financed the construction of the rooftops separately from the original mortgage and not using those properties as collateral may be subject to the lenders seizing any other property they own as well as any savings or retirement accounts.

            I think that makes for a very good reason for them to fight to protect themselves.

            • DarthHater

              Still might make more sense to sell their mortgaged properties to Ricketts now, rather than to spend a ton of money on legal fees in a losing battle, then lose, get foreclosed anyway, go into bankruptcy, and watch Ricketts buy the properties on the cheap.

        • Wilburthefirst

          “… focus on lost value of the property …”

          Not an attorney and didn’t stay in a Holiday Inn Express last night, but seems like this line of attack would be severely limited and difficult to substantiate. As Brett and others have pointed out the agreement itself has a termination date that turns that portion of the buildings’ value associated with the rooftop operation into a declining asset that goes to zero in ten years.

          Interesting situation if nothing else,

          Seems like the Cubs are not only burdened by the legacy of the Sam Zell financing, but also the corporate indifference/lack of foresight on both the roof top contract and television deals. The Cubs will over time free themselves of all these burdens, but they are currently being forced to be a major market team that must operate like a small market team without the compensation draft pick or revenue sharing benefits the small market teams get.

  • Corey C

    Screw it. Block them all out.

    If they wanna play hardball, we’ll play hardball.

    Once they bitch about no views, than we ask for 50% of their profits.

  • JulioZuleta

    I just hope the Cubs are better at designing their signs than Beth Murphy.

    • mjhurdle

      Ha! i see what you did there :)

  • itzscott

    Just wondering what the worst case financial award could be if the Cubs got it socked to them by a judge (after appeal) and if the Cub lawyers calculated such a number which could possibly used as an end point to negotiate upward toward as a basis for monetary settlement?

    • JB88

      The worst case probably isn’t a financial award, but rather a permanent injunction preventing the Cubs from putting up any sign in the outfield that obstructs the views.

      Given that the Sun-Times recently reported that the amount the Cubs receive from the collective rooftops is about $2.5M per year (I believe that was collective, not per building), you are looking at some figure discounted from present value of $22.5M.

      • JB88

        Sorry, it was actually Crane’s that had that figure: http://www.chicagobusiness.com/article/20140122/BLOGS02/140129918

        “In fact, the rooftops have a well-known revenue-sharing deal with the team that pays the Cubs about $2.5 million a year, the suit says.”

        • itzscott

          I think both parties would agree that a permanent injunction (if that’s even an option) isn’t in anyone’s interest and that monetary compensation would serve both sides.

          • Jon

            (provided it doesn’t entice the Cubs to move) a permanent injunction, to me, is indeed in the rooftops best interest.

          • JB88

            Actually, a permanent injunction would be in the rooftops’ best interests. It protects their assets for the next 10 years, insures that they have unobstructed views, and preserves the value of the buildings during that time. It is also hugely beneficial from a negotiating standpoint. Win that injunction and they have the Cubs in a barrel. Lose that injunction, though, and the Cubs basically put them out of business.

            It is bet the business litigation. Very high stakes, but with potentially huge returns.

            That said, because of the high degree of risk for both the Cubs and the rooftops, I think the parties are going to have to find some sort of compromise. I just hope that compromise is the Cubs tearing up the 17% commission and being able to erect the signs without delay.

            • itzscott

              >> It protects their assets for the next 10 years <<

              However, if you could get paid in advance an anticipated amount without having to pay for the expenses of running the rooftop biz, that money would be more valuable up front than spread out over time.

              Additionally, the time frame of the current agreement is finite….. meaning the value of that property as a result of rooftop income decreases as expiration gets closer, which would give the rooftops the advantage of time to seek prospective buyers for sales of the property.

              • Wilburthefirst

                It does buy them more time, but the residual value likely falls each year on, I would think, an accelerating discount. In other words a new owner would not purchase in year eight or nine of an expiring calculating a full value for the one or two years left in the agreement. At least I wouldn’t. I’d figure the seller was over a barrel and I’d want a discount to take the property of the sellers hands as I would have to scrap the rooftop arrangement and reconfigure the building.

  • smackafilieyo

    Just should just tell the judge they were “drunk, drugged” when they signed the contract…haha, that’s grounds for terminating a contact or voiding, right?

    • smackafilieyo

      *cubs should just

    • JulioZuleta

      Obviously I know you’re messing around but generally no, being drunk is not grounds for voiding a contract, especially once you’ve performed your end of the deal for a period of time.

      • blublud

        Actually, I believe it is. I know if a person marries while drunk, there is ground for enullment.

        A person must have whats called the “capacity to contract.” If a person is intoxicated any other way other than 100% voluntarily, they do not have the capacity to contract. Meaning if you can prove a person got you drunk to manipulate you into signing a contract, illegally spiked your drink, lied about what they were serving you or laced you with anything illegal, it can be throw out in court. A voluntarily drunk person could also win in court, but their fight would be much harder.

        Considering Ricketts didn’t sign this contract, he would have a hard proving it. :)

  • ChrisFChi

    “seek arbitration, if the contract contains a mandatory arbitration provision”

    I believe Dave Kaplan said there is a clause in the contract the other day
    (he claimed to have the contract in his hands on his radio show)

    Due to me working and not having the link saved on my phone I cannot verify this.(maybe someone with free time can look into it?)

  • aaronb

    I still can’t believe that Cubs are in such a pointless pissing contest. How many rooftops are going to be effected by this signage?

    Why can’t the Cubs buy those couple of rooftops out?

    There is revenue to be had by the Cubs from the rooftoppers. This just reeks of spiteful nose/face surgery.

    • Jon

      Can’t buy what someone doesn’t want to sell.

      • aaronb

        Possible that those folks don’t want to sell, but I have my doubts?

        Why would someone go forward with the impending legal fees and lack of long term viability if the Ricketts actually had a solid market bid on the property?

  • MikeyEsq

    Brett: I see a massive amount of discovery in a case like this, primarily expert discovery on the financial side. Contract damages, if it is found the contract is breached, is set to put the wronged party in the position they would have been if the contract hadn’t been breached. To figure that out, you’re going to have to get forensic accountants and a whole bunch of other numbers guys to determine the difference in the value of what the rooftop owners would have expected to earn if they weren’t blocked (which is a huge guess based upon a assload of factors no one knows ) from the actual projected (again, estimated) rooftop return through the length of the contract. Plus real estate guys to estimate the reduced property values of the rooftops. I figure that’s going to require at a least a year’s amount of time just to get that done. If this went to trial I’d be shocked if it was over in less than 1.5-2 years.

  • mdavis

    there’s one thing that keeps playing in my mind, and its if the cubs are now going ahead with this, and i’m confident they have quite a solid legal team, they must feel they won’t lose in this. and i think its going to come down to interpretation of the wording.

    if it says something like “not block thee views” then they can point to it and say, well, its a see through sign. i’m sure its not that simple, but i feel like that’s what it may come down to. interpretation.

  • Diehardthefirst

    Ricketts should be sued for stupidity- enuf said

    • DarthHater

      Come on, man, you’re just angling for a court appointment as Special Master of Stupidity.

    • Wilburthefirst

      Can’t agree with that statement …

      I don’t think stupidity is the issue here at all. I would argue that ignorance off all the facts on our part as fans is a big culprit. That we don’t know the details is likely the biggest issue here.

      No one on the outside has in my mind really defined (nor really could define) the financial drag the Zell financing and Tribune bumbling of both the Rooftop contract and TV deals have put on ownership to work out from under. That drag would be there for any owner. Call the Ricketts cheap if you want. Call them naive or overly patient in their trying to work with the City/rooftop owners. Call them calculating and too long term on their business plan (i.e., willing to write off five or more seasons to get the MLB team and finances in order), but stupid I totally disagree.

  • Cizzle

    How does Crane Kenney still have a job?

    • Brocktoon

      You know roughly 0% of his job responsibilities right?

    • blublud

      Since Crane Kenney is currently employed, how about you tell us why he doesn’t deserve to have a job.

  • Diehardthefirst

    All that’s missing is IRS moving ahead and then Brett won’t have enuf hrs in day to keep up- cant wait for the fun to start

    • http://www.michigangoat.blogspot.com MichiganGoat

      You will never stop beating this horse will you?

      • TWC

        He’s taking a page from the Blackhawks playbook: if you say it over and over and over again it’s BOUND to come true.

        • http://www.michigangoat.blogspot.com MichiganGoat

          Except Blackbawks placed a bet on the favorite and kept repeating as if it was secret long shot, die hard just makes stuff up and connects dots that never existed… his is more fun.

      • Diehardthefirst

        There are enuf dead horses around here to make every Big Mac in the world — oops, another dirty little secret ?

    • http://www.bleachernation.com Brett

      The IRS *is* moving ahead.

      • Diehardthefirst

        Nice teaser- short of stating publicly there is no culpability this ought to be interesting

      • D.G.Lang

        Some people think that the IRS can only go against Szell while others wonder if the Cubs could possibly be sued as an accomplice either before or after the fact.

        If the IRS feels that they can go after the Ricketts as a partner to the fraud that Szell Allegedly committed then I would expect them to pursue all of the Rickets involved and impose the greatest fines possible.

        I believe that I read somewhere that the Rickets can not be sued for the sale and/or their part in it but I don’t know if that is absolutely true.

        • Scotti

          The IRS is basing their decision on the fact that a SALE was transacted (instead of the partnership that Zell claimed). As such, Zell owes taxes (especially capital gains taxes). Since the IRS finds that Zell sold the Cubs, HE is responsible for any taxes on such a sale. If there really was a partnership the Ricketts could be, in theory, culpable but, in that case, the IRS would not have any claims to taxes since partnerships and not sales transactions existed (in either the Cubs or the Newsday cases).

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