RICKETTS IRE

The Sun-Times picked up on a Deadspin story about "stolen emails" which
stated that the Ricketts family was upset with Mayor Emanuel who did not
give them $200 million for their private, outside Wrigley real estate development.

The Cubs spokesman did not deny the details of the story, per se.

Deadspin went through the email trail in its story.

In 2013, when the Ricketts had not yet broken ground on their renovations to Wrigley, disagreements with the mayor on public funds for the family projects appeared to have inspired at least some of the family to consider abandoning the project—or moving the Cubs to a friendlier location, possibly in the suburbs, where Mayor Emanuel would not be so dismissive of the family's huge investment in the city.


It was reported at the time that the Ricketts were looking to build a new stadium in Rosemont, next to O'Hare, but those plans fizzled because of the infrastructure costs and site plan did not allow outside development. (Rosemont squeezed in a minor league park instead.)


In the few years after the Ricketts Family Trust purchased the Cubs, they repeatedly sought to use taxpayer money and subsidies to fund the development of Wrigley and its surrounding areas: They first wanted $200 million to develop the Triangle Building near Wrigley Field, sought the use of local amusement tax funds that might otherwise be spent on public services, and attempted to use a hefty federal subsidy to pay for renovations of the historic field. Though the negotiations, Mayor Emanuel remained unimpressed: “I will not put my money in their field so they can take their money, and invest around the field, and get a greater economic value,” the mayor said in 2012. “If it’s important, they should invest there.” 


The angst over Emanuel’s public position apparently lasted even after the Ricketts family offered to put $300 million of their own money into the field, as well as an additional $200 million into surrounding businesses. Having received a final proposal for the Ricketts investment in the Cubs, the mayor said:

When I first started this discussion, the Cubs wanted $200 million in taxpayer dollars. I said no. Then they said we’d like $150 million, and I said no. Then they asked whether they could have $100 million in taxpayer subsidies, and I said no. Then they asked about $55 million in taxpayer subsidies. I said no. The good news is, after 15 months they heard the word ‘No.’”

Todd Ricketts, a prominent Republican fundraiser and the current finance chariman of the Republican National committee, forwarded the story to his father and siblings, writing:

I think we should contemplate moving, or at least recognize that we are maybe not the right organization to own the Cubs.

In a later email, he added:

I just hate the thought of Tom having to grovel to this guy to put money into a building we already own.

Patriarch Joe Ricketts, a prominent conservative, replied:

Yes Todd, it makes me sad, it hurts my feelings to see Tom treated this way. He is way superior to the Mayor in every way.

I have been brought up to deplore the type of value system adopted by the Mayor of Chicago. This is stating it mildly.

Though Tom Ricketts is the chairman and public face of the trust that purchased the Cubs, ownership is split between Joe Ricketts’s children, including Todd. The Ricketts sons did not responded to a request for comment on these emails. 


No public funds were spent on upgrading Wrigley Field, and the Ricketts grudgingly paid for the $575 million, five-year renovations that will conclude this winter. But with changes and cost overruns, the investment was closer to $750 million (a figure Theo Epstein stated during one of his post season press meetings).


This report confirms the mentality of the Ricketts clan as it is "business first, community second if at all" philosophy. They should have been happy that the mayor rode Alderman Tunney to agree to allow the Ricketts to "overzone" and over build the land around Wrigley Field. A lot of neighborhood businesses closed because of this massive redevelopment. Neighbors are still not happy with the result.


And neither is the Ricketts clan. People were not spending all their savings on $11 beers at the 12 new alcohol venues Tom put in their paths on the way to the gates. There has to be a large revenue shortfall from the projections made in their original business plan. (As a side note, prior to the purchase, Tom Ricketts convinced his father that the Cubs were a cash machine. Even when the Cubs were lovable losers, the ball park was filled with people spending money.)


The bean counters and marketing people probably had over-valued the revenue from the projects and team performance. The high density, lower than expected revenue bump has to have the Ricketts hard this year. That is why Theo was grousing about how the Ricketts spent $750 million on new construction and that he has no money to spend on players. (Or as some have speculated, that Epstein overspent and borrowed from future payroll budgets to field the 2018 team). The Ricketts are also upset that the city won't allow them to do whatever they want (unlimited night concerts inside and outside Wrigley Field) to make their place a 365 day theme park.


The Ricketts have an entitlement complex . . . being rich means what you say should be followed like the golden rule. They hate following rules enacted by inferior people (politicians). There should be no road blocks in the path of making money.


Well, that is not how over-regulated America works in the 21st Century. Tom Ricketts must have been naive to think that his vision that the Cubs were a modern day gold mine; an ATM machine printing profits. Baseball economics, lower fan interest, declining sports ratings are severe negative trends that were on the table before the redevelopment process. Ricketts wrote some big checks that he may not be able to cash without spending down his daddy's inheritance.


So, even after a celebrated championship, ownership is starting to finger blame on others. The mayor, who is not running for re-election because of the negative crime news and imploding pension deficits, is an easy target. The family is also moving to try to unseat the local alderman who they perceive is a continuing thorn in their side. The family may have to do a double take if MLB signed away its baseball streaming rights to Fox in its new national TV deal extension. It is clear that the Cubs will not get in 2020 a multi-billion Dodger Network deal.  Cable operators are not going to fall into that trap.


The Ricketts spent a large chunk of the family fortune on their Wrigleyville real estate ventures. The realization that their return on investment has evaporated would send chills down their spines especially when they continue to read about how other billionaires have extracted huge windfalls from cities to build them state-of-the-art sports complexes.

A WAR OF WORDS

Last weekend, the Cubs marketing director was on ESPN radio talking about the continuing dispute among the neighbors and the Wrigley Field proposed new signage. The Cubs seem frustrated by the rooftop owners demands and how angry the other side has gotten in the past few weeks. The Cubs are trying to play "good neighbor" and want to win at Wrigley, but it seems the team or ownership does not want to be handcuffed in the process. The Cubs spokesman repeated the team line that the city has approved the additions, that the agreement does not prohibit Wrigley Field expansion with new signs, and that there is no remedy after 8 years if a rooftop is blocked by any expansion.

However, the rooftop owners spokesman countered those arguments, claiming that if one reads the "entire agreement" the rooftop owners believe their views cannot be blocked, period. The neighbors claim that they have offered compromise solutions, such as moving the signage outside the park, but the Cubs are totally against it. The businesses claim that their livelihood is at stake; that they poured millions of dollars into their businesses on the basis of the twenty year agreement. They want the Cubs to live up to their contract obligations, or buy them out.

The Cubs had been winning the public relations sentiment, especially after the team leaked only a few key paragraphs to David Kaplan. But other lawyers and fans have commented that without reviewing the whole document, no one can make a real conclusion on who is right in the agreement dispute, especially considering that the 8 year view blockage damage provision may have been directly related to the proposed bleacher expansion project which had not been approved by the city when the agreement was signed by the parties.

Also, one has to take with a grain of salt the "good neighbor" comments by the Cubs. The Cubs are desperate for new revenue resources. The owners have purposely tried to ratchet up the competition with the neighboring businesses by the Cubs offering more beer vendors, beer patios, new bars and restaurants inside Wrigley and more party decks. And the construction outside the ball park will create even more competition for the same Cub fan dollars.

The idea that the Ricketts will not spend one dime until they get their way on this issue seems petty or an excuse because the financing is not present to work for their massive real estate developments. The mild threat that the team could leave Wrigley Field may get more play if litigation drags on. The Cubs have whined about the fact that 27 other baseball teams have gotten public financing for their new stadiums. But they don't tell you that those are publicly owned venues; Wrigley is not. And other business consultants will say that the Cubs would be better off spending $500 million and build a new stadium in the suburbs, like at Arlington Park, and keep all the revenue resources to itself.

It is all about money. The Cubs want to skim off a greater share of any fan spending in Wrigleyville. The neighboring businesses want to keep the status quo so they will not be run over by the redevelopment projects. In the end, everyone loses; the team has been horrible, fans are not coming to the park and spending their money. In typical Cub fashion, that was probably met to be: misery loves company.

LAWSUITS: BATTER UP!

The Cubs have applied for a city permit to construct a 650 square foot advertising sign (with a beer sponsor name) as represented in this Cubs press release graphic.  When a mock up was shown to rooftop owners last year, it confirmed to them that their views into Wrigley Field would be obstructed by the new sign.

The Cubs and the rooftop businesses are in the middle of a 20 year peace agreement in which the Cubs were given 17 percent of the rooftop revenue in exchange for the Cubs not putting up anything that would obstruct the rooftop views. Ricketts assumed this agreement when his family bought the Cubs from the Tribune.

The Cubs have been wanting to kill off the rooftop businesses because executives believe that the rooftops are taking away revenue that rightfully belongs to the team. The Cubs keep squawking to the media that the rooftop owners need to compromise so the team can start their $500 million rehab/real estate development projects. However, the rooftop owners don't have to do anything - - - they have a contract with the Cubs. It is the Cubs who unilateral want to change the terms. And besides, the real estate development projects, including capital improvements in the clubhouses, has nothing to do with added outfield signage. The Cubs are trying to get the city to push back at the rooftop owners. It probably will not work.

For the rooftop owners know the Cubs will not renew their agreement when it ends in 2023. So in order to recoup their investment, the rooftop businesses need to maintain the status quo. Any obstructions would dramatically kill their sales. And perhaps, that is the whole point of the Cubs pushing the new signage. It may be because fielding a bad team for three years has not driven away business from the rooftops. Or, perhaps, the Cubs plan to take away that business segment by building their own RF party deck has been a failure. 

In a statement reacting to the news that the  Cubs applied for a sign permit the rooftop owners released a statement saying that they will sue.

“Rooftop owners believe a blockage of our views violates the contract we have with the owners of the Cubs,” said Ryan McLaughlin, spokesman for the Wrigleyville Rooftops Association. “We have instructed our legal team to proceed accordingly.”

The statement adds only that the Cubs' move was “an unfortunate turn of events because our hope was to find a solution to this matter.”


The Cubs defense to any legal action to enforce the settlement contract appears weak. The Cubs are planning to say that the city approved the new signs, so the team should be able to do it. The team cites a paragraph in the agreement that states that an expansion of the ball park is not a breach. But all contracts have the concept of "good faith" and "fair dealing" incorporated into the performance of them. How an advertising sign could be considered an "expansion" but not a barrier is a tough sell. In addition, the city was not a party to the settlement agreement. Constitutionally, the city cannot take away any contract or property rights of the rooftop business owners without public condemnation and paying fair market value for those rights. However, there is no public purpose here since the Cubs are a private business and the signage in question serves no public purpose. The Cubs could also fall back to say so what we're in breach, we will go ahead and pay damages. But since the unique character of the contract, the rooftop owners could seek an injunction to prevent the new signage as damages could be inadequate if the default destroys their businesses. What is at stake is approximately $200 million in gross revenue left in the 10 years remaining on the deal. It is highly doubtful the Ricketts will write a check for $100 million plus to buy themselves out of the rooftop deal.

When the Ricketts bought the Cubs from the Tribune, they were aware of a few critical dates.

2014: when the Cubs could open the WGN TV and radio deal.
2020: when the Cubs exclusive cable deal expires.
2023: when the Cubs rooftop deal expires.

If these three revenue areas are key for the Ricketts rebuilding projects, as eluded to during the Cub convention, then it is possible that nothing could happen for another 10 years.