NEWSLETTER
Earlier this year, we learned that the Ricketts Family was looking to sell off a minority stake in the Chicago Cubs, which the family purchased in 2009, together with Wrigley Field and a 25% share in CSN Chicago.* The price at the time was right around $845 million, though recent valuations suggested the team was worth at least twice that amount, and perhaps even more.
*(Technically, the family entered into a partnership with the Tribune Company, in which they received 95% of the team, and the Tribune retained the other 5%.)
Thus, as folks sometimes do with investments that have appreciated dramatically – especially when there’s a huge capital expenditure on the way (aka the Wrigley Field renovation and development project) – the Ricketts Family decided to explore selling some of the Cubs in a process that is apparently coming close to a conclusion.
Sports Business Journal reports that a deal to sell about 20% of the team could close soon, and the valuation involved in in excess of $2 billion. That’s close to what the Dodgers were sold for a little over two years ago, and, with a lucrative TV contract on the way, plus the generally-expected improvement of the team, you can see why the Cubs’ franchise would be so pricey right now.
The proceeds of that sale could go to helping fund the Wrigley renovation, and also, let’s be honest, captures for the Ricketts Family some of the value in their appreciated asset without giving up any kind of control. (If you’ve got any ideas about what selling a portion of the team means for the Cubs, the renovation, or the Ricketts Family, I strongly suggest you read this before going too far.)
To the extent this does help fund the renovation, by the way, then it is effectively the Ricketts Family using the appreciation in the Cubs’ value – rather than, for example, direct Cubs revenues – to pay for the renovation. They are, quite literally, reinvesting money from the value of the Cubs right back into the Cubs’ facilities. I’m guessing that’s good business for the Ricketts Family in the long run, but it’s also a good thing for the Cubs’ organization from a financial perspective.
At 20% of $2 billion (and the valuation could actually be higher), the Ricketts family could be bringing in more than $400 million in the transaction. The price tag for the 1060 Project is expected to be right around $575 million, inclusive of the external developments. The new minority owner would presumably be expected to contribute to whatever project of which they were now a partial owner.
Oh, and don’t forget about those rumors about the Ricketts Family buying some of the rooftops. This could all, of course, be connected.
