ricketts-family-wrigley-fieldAs you now well know from last month’s financial piece, among other things, the Ricketts Family has a 95% interest in the Chicago Cubs, and the financial picture for the organization in the long-term is extremely strong. You also know that the price for that 95% interest was about $825 million, and that Forbes recently valued the organization at $1.2 billion.

Add it all up, and you’ve got an investment that’s appreciated like gangbusters over the past few years, and savvy business folks who might want to lock in some of those gains while simultaneously opening up some liquidity for, say, an impending and significant capital project, like the renovation and development of an old ballpark.

Patrick Mooney broke the news that the Ricketts Family are indeed considering selling a non-controlling interest in the Chicago Cubs. It is a fantastic report, and well worth your time to read.

I checked with a Cubs source who confirmed that selling an interest in the Cubs is something under consideration, though he cautioned against making the leap from a cash-raising strategy to a suspicion that a deal with the rooftops, which would allow the cash-needing renovation of Wrigley Field to proceed, was imminent. Just because the Ricketts Family is considering their options for liquidity, I was told, does not necessarily mean a deal is immediately on deck.

With the home opener today, the window to achieve the hoped-for deal with the rooftops by “Opening Day” seems to be slipping away by the hour. Although not meeting that particular (arbitrary) date does not mean yet another construction year will be lost, if something doesn’t happen in the next few weeks, that’s going to become a reasonable question.

As for the sale of a minority interest in the Cubs, let me offer a few thoughts to anyone making any unreasonable leaps:

  • The vast majority of baseball teams have a number of owners with a wide range of equity interests. There is usually “an owner,” who is the face of the club, and usually maintains a controlling (at least 51%) interest, but there can be a number of minority owners who also have a little slice of the pie. In this way, the Ricketts Family has been a little atypical so far, holding 95% of the team.
  • Because what’s under consideration is a minority, non-controlling stake, the impact on the operation of the organization should be pretty much nil. This is essentially like selling stock in a company that doesn’t come with a vote. Yes, I suppose if one buyer paid for 25% of the organization, the Ricketts Family wouldn’t be able to close that deal without promising some involvement in the decision-making process. But I really doubt that’s how this will play out. Instead – and this is just my own instinct – I’d expect there to be multiple buyers taking a small slice each. They get an investment and some perks, but they don’t call any shots. Mooney’s report is consistent with that expectation.
  • No, this doesn’t mean the Ricketts Family “can’t afford” the renovation. That’s actually a humorous fear, given that selling off some of your assets to pay for a project is, like, the definition of “affording” that project. Whether the Ricketts Family sold off shares of TD Ameritrade, or sold off a portion of their Cubs asset, there is no meaningful difference in their ability to “afford” the Wrigley project. Did you think they had $500 million in small bills laying under 10 million mattresses somewhere? This is simply a business decision: the Ricketts Family will need some cash to pay for the renovation, and one option is to sell a portion of one of their family assets that has really risen in value over the past few years.
  • While I reserve the right to change my mind once this all plays out, I’m tentatively pleased to hear that this is one approach being considered to fund the renovation. Given what I’d learned in the process of researching and writing the financial piece, I had some serious reservations about the Cubs using additional debt to finance the renovation project. Although I’d been told that likely wasn’t going to be the case, it’s always nice to see further confirmation, and to know that the Ricketts Family has at least one strong avenue to raise the necessary cash.
  • So, anyone wanna do a Let’s-Buy-a-Share-of-the-Cubs Kickstarter project? If the Ricketts Family sells, say, 30% of the business to three investors, each getting 10%, with a company valuation of $1.5 billion (that Forbes estimate will just be the starting point), we need to raise only $150 million to grab one of those 10% slots!
  • half_full_beer_mug

    I’m down for $20 :)

    • cub4life

      same here

  • ari gold

    It’s apparent the Ricketts are doing this since they have no money.


    • Eternal Pessimist

      Thank’s Ari…really didn’t want to have to wait for Jon to say this.

  • MoneyBoy

    Let me reach into one of my million mattresses and see what I can come up with Brett.

  • OCCubFan

    Based on your research, what are the options for financing the renovation? How would it work?

    • http://www.bleachernation.com Brett

      At this point, selling a portion of the team sounds like the most prudent approach. The Ricketts could also sell some other assets to raise cash, and then maybe take on some shorter term loans that are tied directly to revenues produced by the renovation, itself.

      It’s probably going to be a combination of things, and somewhat complicated – but I’d now bet that the bulk will come from a sale of shares in the team. Unless I hear otherwise, that sounds like the best approach, too.

  • terencemann

    Just as soon as my powerball numbers come in…

  • Jim

    In for 100. Imagine that. BN owning 0.0000001% of the cubs!

    • headscratchin

      Actually, that would be pretty cool if they let individual fans buy in. Although the accounting of 100,000 fans with a $X investment would get to be a real nightmare I’d presume.

      • Jon

        They can do what the Packers do and sell idiot fans pieces of paper that literally mean nothing and have 0 value.

        • PejaO42

          Even my friend who is a massive Packer man (he broke my remote during the Seahawk’s game 2 years ago) thinks Packer stock is the dumbest thing ever. Granted, he is getting his master’s in Econ so…

          • Edwin

            A physicist, a chemist, and an economist are stranded on a desert island. One day a can of soup washes ashore.

            The three professionals have no way to open the can. So they put their brains to the problem. The physicist says “We could drop it from the top of that tree over there until it breaks open.” And the chemist says “We could build a fire and sit the can in the flames until it bursts open.” The economist says “Let’s assume we have a can opener.”

      • Edwin

        It wouldn’t be that bad. Fans wouldn’t get voting rights, so they wouldn’t need to worry about that. It probably wouldn’t be too different than what Green Bay does with their football team.

      • http://www.bleachernation.com Brett

        And even at 100,000 buyers, it would still be $3,000 apiece to get to $300 million in raised money.

        • MaxM1908

          I’d put in $3,000 in a heartbeat. Especially if they allowed for the transferability of shares and offered dividends. I wouldn’t need a vote, but I’d consider it a solid investment given the future of the team.

        • Darth Ivy

          $3000 for a ring when/if they win the world series? Where do I send my check?

          • Jon

            To a price in Nigeria

            • Jon


  • ame1908

    Count me in for 3 mattresses-worth.

  • terencemann

    I miss the days when you could pick up a few shares of Tribune Co. stock and then tell people you were a “minority owner” of the Cubs.

  • Edwin

    Tanaka starts for the Yankees tonight. I’m excited to see that.

  • Edwin

    “we need to raise only $150 million to grab one of those 10% slots!”

    That’s gonna take one hell of a blogathon.

  • jh03

    BN buying a share is this years’ blog-a-thon! Let’s do this.

  • PejaO42

    Maybe this will quiet the people who think the Ricketts are cheap. Showing they are willing to give up a stake in their ownership speaks to how committed they are to getting this thing done

  • itzscott

    A 5% share of something valued at $1.2 billion is $60 million.

    The Cubs can do a lot with $60 million….

    Expand the scope of the plan (probably not)
    Buy out all the rooftop buildings at the asking price
    Pay down some debt (probably not)
    Player acquisitions (probably not)

    Doubtful the Ricketts would not put that money to use somewhere.

    • CubFan Paul

      “Doubtful the Ricketts would not put that money to use somewhere”

      Because all the extra revenue that has came in since they bought the team are visibly being used.

  • Cizzle

    Rovell’s article on ESPN said they have already “begun to talk to high net worth individuals with the goal of raising capital through as few investors as possible”. Could you swap make the inference that they aren’t so much looking for capital as looking for people with high influence; That they are fed up with it being “Ricketts v. the World” and they want some power punchers in their corner? Perhaps someone with influence over Chicago politics, or perhaps someone who has influence over the Rooftops (or their sources of capital).
    That’s what I would do: Give a small amount of stock to people that can help get your project finished and make them stakeholders in the future of the project.

  • chifords2000

    Why not go on Shark Tank? Maybe Cuban’s still interested…..

  • http://BN Sacko

    I don’t think that selling a minority interest indicates Ricketts not having any money as these things happen alot as stated above. It just may help the renovations get on it’s way with more ez sooner then latter.
    And I do think that the Rickett’s are truly trying to work out a deal w/ the Rooftops mostly to avoid bad feelings from a lot of peoples perspectives and yes avoiding the law suit. If indeed there would be a lawsuit it appears the Rickett’s would win almost slam dunk. For them to consider putting up the Sign’s knowing they would win. Those earnings would have to or at least a good portion go towards the lawsuit. However for that type of revenue to get going sooner the signs have to up. I don’t think the lawsuit can be avoided anyway. So I say put them up.

  • BenRoethig

    I wonder if they could sell about 30-40% of the business to the fans in non-voting share to the fans without it becoming a public company.

  • Camiata2

    Time to start cutting grass and smashing pots. I need more rupees.

  • shlenny

    I say go the Packer route. Sell $100 shares with the fans, and provide dividends each year.

    • ssckelley

      That would be awesome, I would purchase at least 1 share if the Cubs did that. It would not be for investment purposes, something neat to show people.

    • Jon

      um, Packer stock provides no dividends. It might as well be a piece of toilet paper.

    • MikeD

      I’m with you. Being a longtime Wisconsin resident I would love this approach. People in Wisconsin love when the Packers do this and it always raises tons of money.

    • Brocktoon
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  • Cubbie in NC

    Brett Let me be Mr. glass is half full here.

    Could this be considered as revenue? If it was then couldn’t the Cubs be using this to allow them to stay within MLB restrictions debt wise and be able to potentially spend more on the MLB club? It could be a short term creative way around the rules for spending.

  • fossilhippie

    Thinking out loud – Considering the skyrocketing cost of sport franchises, I wonder if there could be more potential profit in the minority share vs rooftop profits ? If so, sell the partnership to the roofies and they may go for an even larger sign and scoreboard.

  • cubfanincardinalland

    No offense, but what flipping renovation? Time for Tommy to shit or get off the lid.

  • Diehardthefirst

    Heh heh – 3 months ago I suggested new money was needed eg Mark Cuban – problem is the 5% elephant in the room followed by the IRS pooper scooper

  • N.J. Riv

    Read an article on Forbes that Warren Buffett is interested in being a minority share holder.Thoughts?

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