NEWSLETTER
Dave Kaplan has dropped a significant report on the ongoing talks between the Ricketts Family, the Chicago Cubs, and the rooftop owners, and you’re going to want to go read it.
As you recall, the situation is complicated. Your bare bones background: The Cubs and rooftops have a revenue-sharing agreement that the rooftops argue prohibits the erection of outfield signage that might block their views. The Cubs disagree, and, a reading of the contract suggests the Cubs have the better of the argument. This year, the City of Chicago and the Landmarks Commission approved the comprehensive Wrigley Field renovation and development plan, which includes seven outfield signs that are to be put in place by Opening Day 2015. Subsequently, some of the rooftops sued the City and the Commission – not the Cubs – seeking to have that approval nullified. In the meantime, the Cubs have proceeded with the renovation in earnest, including the teardown of the outfield walls, which will be rebuilt in such a way as to support the new outfield signage.
As all of that has been happening, we haven’t heard much in the way of an update on the Cubs/Ricketts/rooftops negotiations, if there were any ongoing, about what’s going to happen to their relationship. Indeed, once the Cubs threw down the gauntlet and said they were going to proceed with the renovation and that was that, we’ve heard absolutely nothing from either side on the situation. It’s been months.
That strongly suggested there were negotiations going on behind the scenes, and Kaplan’s report indicates that’s the case. In short, Kaplan reports that the Ricketts Family is in the advanced stages of negotiations with several rooftops, which could result in the family purchasing those rooftop buildings and businesses. And it could happen by Opening Day. Read Kaplan’s piece for more, because this is important, interesting stuff.
What has changed? Well, I can’t say it for certain, but I’ve previously speculated that the City’s approval of seven outfield signs – rather than just two – put the Cubs in a very strong negotiating position with respect to the rooftops that would be blocked by the signage. And, in their lawsuit against the City, some of the rooftops allege that’s exactly what happened: the Cubs got their approval for signs, and came to the rooftops with offers to buy, using the possible blockage as leverage to bring down the price.
Some questions would persist, even after some of the rooftops were purchased: what about the other rooftops? what happens to the lawsuit? is there still a chance that the other rooftops sue the Cubs directly? what is the relationship between the purchased rooftops and the Cubs? will those revenues be considered Cubs revenues? will that even matter, given the scope of the Wrigleyville development and theoretical money flowing (i.e., wherever the source, there will be plenty for Cubs baseball operations)?
Setting those questions aside, however, if the Ricketts Family is able to purchase some of the rooftops (they already have an interest in at least one of the rooftop buildings), a number of positive things likely flow from that. For one thing, the likelihood of a damaging lawsuit tied to the renovation – and the risk of a shutdown – probably drops dramatically.
For another thing, the Cubs would suddenly have options with respect to the outfield signs: they could move some of them, or lose some of them, depending on what is better for the ballpark and for the total revenue picture (sign revenue versus rooftop revenue).
For yet another thing, buying rooftops allows the Cubs to expand the Wrigley Field footprint without actually expanding Wrigley Field. The rooftop seating could more formally be incorporated into “Cubs” seating, and the space within the rooftop buildings could be used for other Cubs purposes – retail space? Official Cubs bars? Cubs museums? And so on.
For still another thing, having an official affiliation between a large number of the rooftops and the Cubs could create an even more integrated experience around the park. Obviously that’s what the Cubs are shooting for with the plaza to the west, but utilizing the rooftops, the Cubs could expand that to the north and east.
And for one last thing, it would solve – at least for some of the rooftops – the lingering issue of what’s going to happen long-term with the rooftops, and what happens when the current revenue-sharing agreement expires in 2024. That’s been a thorn for the Cubs in these negotiations, and, if they buy enough of the rooftops, there would no longer be any concern that, at that point, the Cubs can do whatever they want with their ballpark (well, subject to City and neighborhood restrictions).
All in all, purchasing the rooftops has always felt like the best outcome for all involved, even if it was a lot more easily said than done. I’m told that, when negotiations about possible purchases started several years ago, the original prices sought by the rooftops, combined, was comparable to the price tag for the entire Wrigley renovation. That’s an enormous and borderline unreasonable cost (though you can understand why the rooftops would shoot high), and it makes you wonder if the Ricketts Family slow-played this side of things just right. With the downward pressure applied on rooftop revenues by a recession, by poor play by the Cubs, and by public ire, it feels like the signage approval may have been the tipping point to get a more reasonable price point in the conversation.
This is a huge story for the Cubs, the Ricketts, the renovation, and the rooftops, so I look forward to learning more in the coming months.
