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tom ricketts cubsForbes has published an informative, but unfortunately named (“Chicago Cubs: Baseball’s Next Powerhouse” – that pretty much always winds up biting you years down the road) piece on the Chicago Cubs’ rebuilding efforts, primarily from the business perspective. Check it out when you have some time today, including the video interviews with Cubs Owner and Chairman Tom Ricketts, and President of Baseball Operations Crane Kenney. Each spoke a bit about the baseball plan, and why they still believe in The Plan, which is all well and good.

What really struck me, however, were their comments on the Wrigley Field renovation and development project, as well as on the upcoming TV deal. My thoughts/reactions on some of the more interesting tidbits:

  • Tom Ricketts says the renovation of Wrigley Field, itself, is now estimated to cost upwards of $350 to $375 million. Previous estimates had that figure at $300 million. The investments outside the ballpark – primarily the plaza and the hotel – are expected to be in the $150 to $200 million range.
  • Ricketts says the renovation and external projects are expected to generate $30 to $40 million in incremental revenue, and it will all go to baseball operations (because all of the revenue goes into a pot, pays expenses, and everything that’s left goes to baseball ops – so, any *incremental* revenue necessarily goes right to baseball operations).
  • If and when the Ricketts Family sells a minority interest in the Cubs to generate some cash to help fund the renovation, the chunk sold is expected to be less than 25% of the team, according to Forbes. As expected, then, it’s merely a matter of taking a little off the top when you’ve got an appreciated asset, and converting that little bit into liquid cash.
  • Kenney suggested that the Cubs won’t be getting a huge TV deal until 2019 approaches (which is to say, the Cubs may not be able to ink a deal now with a network to take the WGN games after 2014, and then take the full slate after 2019, but start the big payout now). Not a huge surprise there, but it was always a hope. Still is, I suppose, because Kenney’s not going to tip the hand on that without something to actually announce.
  • Kenney went into a really interesting side discussion about content delivery in the TV market, noting the rapid proliferation of non-cable options for disseminating content, including Apple and Google recently indicating an interest in getting into the live sports delivery market. While it’s a fascinating discussion, and Kenney uses it as the predicate to say it is plausible that the Cubs could have the richest TV deal in the sport after the CSN deal expires in 2019, there are some significant hurdles there, including MLBAM currently controlling (at least that’s my understanding) the web/mobile-based delivery of MLB games. I’m not sure the Cubs could just say, “We’re inking a deal with Google to have our games available to subscribers on YouTube,” because of the competition with MLB.tv … but also because they’d have to pull out of MLB.tv, lest folks just go that route rather than getting the Cubs’ “channel.” I really like that there’s some thought being put into this, though, and maybe it’s yet another wrinkle to the whole TV question – a wrinkle that is slowing down the TV rights deal situation (remember, the WGN portion of the rights are up after this year, and we were expecting a deal to be announced over a month ago).
  • The way Kenney talked about this entire issue sounded like someone who would like to have the ability to market his team’s games, individually, to the non-cable market (i.e. streaming – think CubsFlix). The Cubs, having a large national fanbase, would stand to benefit from that kind of system disproportionately from other MLB teams (they’d be in a group of about five or six teams in that category), and I can understand the allure. I’m not so sure it would be in MLB’s overall best interests, though. This is really something to think about, and I’ll admit, I’ve never really considered it as a near-term possibility, so a lot of this typing is first impression thinking out loud. I suppose the more likely near-term possibility here is that whatever network the Cubs partner with on an RSN (assuming they go that route) will have the right to stream games to subscribers, with the Cubs getting a cut. All of that would have to be negotiated now, and it’s complicated, because no one quite knows what content delivery is going to look like in five years. The Cubs are going to want to protect themselves as much as possible – preserving flexibility.
  • If Forbes is right that, however it shapes up, the Cubs’ deal will fall somewhere between the Phillies’ recent mega deal, and the Dodgers’ recent mega-mega-mega deal (as they have said before), a lot of this is academic, in terms of how it impacts the on-field product. That’s because, even at the Phillies’ level of a deal, when combined with the renovation, the level of incremental revenue we’re talking about being added to the Cubs’ annual pool is going to be plenty to provide the team the ability to spend up to the luxury tax cap (I don’t really need to see them blowing past it annually) and still spend aggressively on the amateur/international side. Everything after that is gravy for someone other than the Cubs’ on-field product. Good for that someone, but it probably doesn’t impact the organization all that much.
  • In other words: just get a mega TV/Internet deal in place – whatever form and rate – and get the renovation underway. Then, suddenly, all is well. Really well.
  • JB88

    Dream a little dream with me …

    • http://www.bleachernation.com Brett

      Somewhere beyond the sea
      Somewhere waiting for me
      My TV deal stands on golden sands
      And watches the bucks that come rollin’

      • Blake Z

        A little Bobby Darin (and Cubs baseball) makes my day a lot better.

  • Jon

    2019 sounds like the magic date. So until then, sit back, relax and strap it down for five more years of losing.

    • YourResidentJag

      1990s in Cubbieland….redux.

    • Brocktoon

      At least the Ricketts family will have made a lot of money when all is said and done.

      • Medicos

        BROCKTOON: Mr Wonderful, one of wealthier cast members of “THE SHARK TANK” tv show recently stated, “If after four years your “business” isn’t making a profit, it’s no longer a business, it’s a “hobby.” Even after three years of averaging a 66 WIN-96 LOSS record, the Ricketts family members are still making a whole lot of $$$ and,sadly for us die hard fans, even if the Cubs never become competitive during the HOYSTEIN regime they’ll be making even higher profits in the future. They are in a no lose situation.

      • BenRoethig

        the one making the money here is Sam zell

        • Medicos

          BENROETHIG: Obviously Cub fans don’t any positive thoughts about Sam Zell. But if what you stated about Zell continuing to still make profits from the Rickett’s owned Cubs, he’s obviously one hell of a businessman.

        • Brocktoon

          No, Zell is the one dodging a big tax hit. Zell spun off the Cubs so quickly, he didn’t come away with nearly the windfall that Ricketts will just by waiting out a bad TV deal. (Caveat applies regarding the unlikely situation that cable as we know it will implode and the Cubs are left with nothing.)

    • Brocktoon

      Frivolity, but the 1940s are the only decade where the Cubs posted losing seasons in each of the first 5 years. Of course ’45 turned out alright, but I’m…less than optimistic of history repeating itself.

      • DarthHater

        We just need to start a World War that will decimate competitive balance in the league and everything will be as great as in ’45…

        • ChrisFChi

          Simple enough.

          • http://fullcount1544.blogspot.com FullCountTommy

            Well with the whole Ukraine situation…..

      • Medicos

        BROCKTOON; Good news the next homestand is honoring the decade of the 1930s when the Cubs won three NL pennants: 1932—1935—1938. Obviously lost all 3 World Series.

  • dmartini

    It would be interesting if “CubsFlix” became a reality and had video content available from the DSL, VSL, and Minors. Combining the MiLB and MLB.tv experience.

    • Brocktoon

      The market for that content is so small that I’m not sure it would even be worth it.

  • Karl Groucho

    “Chicago Cubs: Baseball’s Next Powerhouse”

    Please please please don’t be:

    [img]http://www.anabolicfitness.net/images/sportsillust.jpg[/img]

  • MightyBear

    The only way I would see them blowing past the cap is if there were 1 or 2 players that they believe would put them over the top. O/w there’s no reason to.

  • Hawk1943

    Do you feel there is any basis that the Cubs have kept the MLB team from improving like the minors to aid in their bargaining with the rooftop owners?

    • http://www.bleachernation.com Brett

      No. The Cubs stand to lose a whole lot more than the rooftops by fielding a crappy product.

    • http://bleachernation.com woody

      It seems absurd to me that ownership would sacrifice millions of dollars in revenue over a multi-year time span to intentionally drive down attendance in order to hurt the bottom line of the rooftop owners. Add that to all of the other wacko conspiracy theories out there. It seems to me that Ricketts is learning the ins and outs of running a major sports franchise in Chicago and has miscalculated a number of things pertaining to the renovation project. So it sounds to me like literally nothing is going to happen now untill the minority shares are sold. Translation: Tom is broke.

      • Edwin

        “Translation: Tom is broke.”

        Not at all.

  • http://bleachernation.com woody

    I don’t get it? If they can’t sign a TV deal untill 2019 then what happens to the games that WGN has been broadcasting? Who is going to fill the void between the WGN and CSN contracts?

    • Patrick W.

      That’s the question. They can’t sign a comprehensive deal (all of the games) because of that split deal they have now. The CSN contract runs to 2019. The WGN contract is up at the end of this year. They need to fill the WGN games with either WGN or somebody else, through 2019. Then they can do all the games with one outlet.

      • YourResidentJag

        CSN +++ I guess and local NBC affiliate.

      • YourResidentJag

        I wish NBCSN would telecast regional games though, like FoxSports 1.

      • Brocktoon

        I’m a little worried that we still have no deal announced for these games or the radio.

        • Edwin

          I like how the article starts out with a comparison to the Rangers, and talks about how the Rangers did a great job getting rid of old expensive players like Mark Teixera (making $9MM age 27), Adrian Gonzalez (age 24, making $300K, went on to be a stud) and Chris Young (age 26, making $400K, had decent years in 2006 and 2007 with the Padres).

          Also, that “bad” rangers team from 2005-2008 won 79, 80, 75, and 79 games. Obviosuly losing teams, but nowhere close to what the Cubs have been in recent years.

          • Edwin

            Oops, this was supposed to be a stand alone, not a reply.

          • Brocktoon

            It’s ok though, they traded aging, costly vets Gonzalez and Young for the cheap youthfulness of Akionri Otuska. (34, making 1.75M)

            When Forbes talks about actual sports rather than the business behind them, they consistently embarrass themselves.

            • Edwin

              It’s one of the most lazy comparisons I’ve seen lately.

              • Brocktoon

                They looked for

                Part A: Team with lower payroll who didn’t make playoffs
                Part B: ???
                Part C: Team has higher payroll now and does make playoffs.

                Fill in part B with whatever it is the Cubs are supposedly doing.

          • http://www.bleachernation.com Brett

            I very much ignored that part of the piece. I mostly just wanted to hear what the actual people had to say.

            • Edwin

              True. The actual stuff about what the Cubs are doing, and what they could become is interesting.

  • TommyK

    At this point I’ll believe the renovation will happen when I see work being done. Otherwise I assume Ricketts is using the promise of it to delay a full scale fan revolt. If they don’t plan on fielding a competitive team until 2019, screw them.

  • Zoolander

    Ricketts and his team are once again minimizing our expectations for any renovations and new tv deal to happen any time soon, which means the additional revenues won’t be coming in any time soon…which means no real money will be spent of top-tier free agents any time soon which would improve this sorry team…which would therefore help it be a competitive team. Waiting another 5 years for the team and Wrigley Field to be awesome is hard for me to accept.

  • http://bleachernation.com woody

    We are having a Wizard of Oz type moment here. Toto has just pulledback the curtain and there is Sam Zell counting his stacks of money. Revealed are the countless propaganda tools that have been employed to barage us with prospect porn and dreams of a grand feast with lots of cookies. Meanwhile it seems that there will be no TV contract untill 2019 and as the price of labor and materials continues to rise, the costs of the renovations continue to increase. Sit back and watch as another year passes with no renovations and a 100 loss team. Meanwhile they try to sell watered down stock to the tune of one quarter of the value of the team. As Shark tries to pitch his way out of Chicago, even the rats are contemplating jumping ship.

    • Zoolander

      Dear Cubs organization…don’t promise a customer (fan) what you can’t deliver.

      • jammin502

        The upside tp waiting until 2019 is the rate of technology. Think of the teams that have great tv contracts now that might not look so good in 2019. Consider tech giants like Google and Apple and imagine the possibilities… Ever get pissed because the camera is showing the pitch from behind the catcher? What if you could pick what camera to watch? Or split screen multiple camera views at once? Don’t like Len and JD? What if you had choices as to who calls the game in your broadcast? I can only imagine where we could be in 5 years!

  • BillyD1004

    New Slogan “Chicago Cubs Baseball, Minor league Baseball at Major League prices”!!! Worst owner of my lifetime, tired of his fabricated timelines!! I spend a lot of money on this team and am about to boycott. Not fair as I love sitting in this great ballpark, but it is time to make a stand!!

    • Greenroom

      Shouldn’t you be more concerned with what is going to happen to Cloud City?

      • TonyP

        LMAO

    • DarthHater

      This place is full of apologists for current ownership. So, you really should boycott here, too.

  • Ivy Walls

    Their national audience is only there if indifference does not invade the base. Sure once there is a reason for a band wagon things go off the charts, but that is not what a ten or twenty year deal is based on.

    So trade for GONZO, he is available but might mean trading Samardzija and Lake and another interesting prospect for an exchange of another prospect.

  • 5412

    Hi,

    BRETT, please chime in on this.

    Two things. At 74 years of age, 2019 ain’t gonna cut it with me or a lot of fans who are much younger. The product on the field needs to improve much sooner than then.

    Second, Brett this is where I need your help. Steinbrenner bought back his TV rights from WPIX to package them for a better deal. Was anything even mentioned about the Cubs doing that? They could buy back the rights from Comcast then bid out the whole package and see what happens……or run the numbers on a bid for the full package and then see if it was worth it to buy back their rights.

    Screwing around for five more years will being revolution and a vacant ball park.

    regards,
    5412

    • Brocktoon

      There has never been any public discussion of buying out the final 5 years of the CSN deal. It’s extremely valuable to CSN, and the cost would be far out of Ricketts league.

      The only way I could see to adjust the current CSN deal would be to give them a discounted rate for the 2019+ games now in order to get more money from ’15-’19

      • 5412

        Hi,

        If Steinbrenner can buy out WPIX, Ricketts can buy out CSN – if he wants to. They would structure the new deal with enough upfront money to make it possible.

        regards,
        5412

        • Brocktoon

          Steinbrenner had no debt, a lot more money at his disposal/that he was willing to spend, and a contract valued for way less to buy out.

      • aaronb

        Ricketts owns 20% of CSN.

        You’d think he could use that as some level of leverage to opt out of the current deal?

  • Blackhawks1963

    The wheels have come off. I remain a huge supporter of the Theo Epstein plan, but it is painfully clear that the ownership financial mess is going to take years to fix. This has really become a never ending nightmare. Something has to give. The anger or the apathy of the fans is on every street corner.

    It might be time for the Ricketts to wave the white flag and sell. My growing concern is that Theo Epstein is going to abruptly quit soon. What happens then?

    • cubsfan08

      Wait, what!?!?!?!

  • Tim

    let us push aside the facts that mlb owns the media rights, could the cubs have their own network similar to what WWE just launched? a cubs channel that wasn’t actually on TV?

  • SenorGato

    Saw this a few weeks ago on YES and offered my comments then. This interview was one of the more optimistic ones, and I left with a very positive outlook. Kenney, IMO anyway, killed it.

    • SenorGato

      Will read the Forbes piece eventually.

  • Rebuilding

    I still don’t see what moves the needle with the rooftop owners. They really hold all of the cards. The Cubs have obviously had a team of lawyers look through the contract and are sufficiently scared that they would lose the case. The other option is to pay them off – but the price they must be asking is one the Cubs haven’t been willing to pay. So now what? Doesn’t that contract run through like 2023 (could be wrong)? I just don’t see a next step for the foreseeable future

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