BANNER NIGHT

Waiting two hours watching ESPN filler was like 108 years of torture.

Instead of a 6:15 p.m. championship ceremony, it was put off by the Cubs until 8:15 p.m. The team could have done all the opening junk before the rains hit around 7 p.m. but the PR people did not want to repeat the White Sox home opener stinker where the players were introduced and the game was not played.

The banner raising ceremony lasted too long. The temperature dropped 30 degrees from the time the pregame show started until the first pitch was thrown. But for the Cub players, the 45 minutes used to wander around the field and into the center field stands to timidly raise the WS banner was circus animal parade overkill. It looked like they were on an elementary school field trip to a textile mill. And only a few of them got to pull on the cord to actually raise the banner.

Then the cameras followed them through the underbelly of the bleachers, and past the new metal dungeons called the bullpens, and back into the light of the field. This time, Anthony Rizzo emerged holding the championship trophy. From the march to home plate, the players followed his lead, then dispersed when he handed the trophy to Tom Ricketts. Many people may have lost the symbolism of that moment: the players who won the championship were giving it to ownership who will keep it for themselves.

In the constant re-construction of Wrigley Field, the team installed four new flagpoles in center field. In the past, banners flew on the foul pole standards or on top of the upper deck roof. But now there are new flag poles for the banners. The one oddity is that the fourth pole now has the 2016 NL pennant on it (which someone diminishes the other NL championships).  I thought that they would raise the banner on the old center field scoreboard flag pole since this scoreboard is now merely an unused shadow of its former glory. Who needs pennants to tell the standings? Use it to fill the banners on those flag poles. But the team wanted BIG banners and more space to fly in last night's stiff winds.

ESPN announcers stressed for hours that this was the celebration of a championship season for players and fans. True. But it also marks the end of last season's wonderful run, and the beginning of the 2017 title defense. And it also marks the end of innocent traditions of baseball history as the Cathedral of Baseball is now another modern park with all the trappings of commercialism.

The start of another rash of merchandising sales, such as the special gold lettering Cubs home jerseys, were already on sale before the game. The championship banners will be for sale, too. And as Crain's pointed out before the game, the new "Park" construction outside Wrigley is forcing old merchants blocks away from Wrigley Field as the Cubs continue to monopolize the block around the field with its own proprietary and expensive merch centers.

THE WHITE SOX PLAN

For the past week, White Sox management has been reported in disarray on the direction of the team. Will the team sell off parts like Sale, Quintana or Abreu in order to do a complete rebuild of the minor league system? Will Ventura, Hahn or Williams remain part of the management? Will managing partner for the owners, Reinsdorf, even allow a total tear down?

The White Sox just netted $82 million for naming rights for a stadium which the team does not own. There is plenty of extra cash coming into the Sox operations. The question is what to do?

Sox fans look to the North Side and see the Cubs on the verge of a historic World Series run with young talent that is getting better each week. Sox fans envy the Cubs rebuild success. But die hard South Siders can still point to the 2005 WS flag while the Cubs dream is still in hope mode.

But the Sox have done nothing special since their championship season. As everyone is aware, there is no guarantee that any team, no matter how good on paper or how many wins in the regular season, can get a championship or sustain a championship caliber team year to year.

The White Sox front office has stressed this week that this off-season "everyone will be on the same page."  The Sox claim to have a plan. It is an omen that that the Sox just traded catcher Navarro to the Blue Jays for a promising AA left handed relief pitcher?  The White Sox GM Hahn will not say what the team's real direction will be for 2017.

Frustrated sports thinkers believe the Sox have to blow up the team and start from scratch. But that begs another question: do you trust the people currently in charge to rebuild a team?  Granted, the White Sox have been really good at drafting and developing pitching talent. Nine of their top 20 prospects are quality pitchers. It is that the team scouting department cannot draft and develop consistent position players. And management trades and free agent signings have looked good on paper, but in the past two season the team has woefully underperformed their potential.

So what is the real solution for the White Sox woes?

Hire Theo Epstein.

Epstein still does not have a contract extension from the Cubs. Which is highly unusual considering the success the Cubs have had the past two seasons. It appears that Epstein wants to become the ultimate management free agent - - - with a track record to command the most money for a baseball executive and possibly and equity stake in a team.

Epstein has been running the Cubs baseball operations with one hand tied behind his back since the "business side" of the operation is controlled by Crane Kenney and Tom Ricketts. Epstein would prefer to run the entire show.

But in order to do that with the White Sox, Reinsdorf will have to fire Ventura, Hahn and Williams. Reinsdorf is known to be very loyal to his managers. He promoted Williams from GM to President instead of firing him. Can Reinsdorf purge his loyal employees to try to win another championship?

He may not have any choice. The stealing of Epstein from the Cubs would be a PR boom for Sox nation. It would energize the fan base and increase ticket sales. It would be poking a stick in the eye of Cub ownership. Reinsdorf, who is all business, would see the value in hiring Epstein away from his city rival.

But what are the odds that this could happen? With no movement in the Cubs-Epstein contract talks for more than a year, I would say it could be 50-50.  The other big market teams have new management in place (Dodgers, Red Sox).

If the White Sox really want to shake up Chicago baseball this off-season, ownership needs to be bold.

SHOW DOWN

There is a sense of baseball reaching a new golden age with the rise of many exciting new players and teams like the Cubs with championship expectations.

But this new age may have a real problem. The golden goose may get strangled in the players union and owners contract negotiations.

The MLB players union is going to take a hard line tact in the new CBA negotiations.
The current collective bargaining agreement expires 12-1-2016.

The players and agents are ticked off by the current CBA "service time" requirements
for free agency. The Cubs sat Bryant in the minors for 12 days which gave them an
extra year of control. The union wants to drastically change those rules, retroactively.

This CBA is going to get hot under the collar because the owners are starting to realize
that the Dodger billion dollar cable deals are not going to happen in the future.
The owners will press for economic concessions from the players to off-set cable TV
viewer and contract declines.

This could get drawn out and nasty.

The owners have established a series of spending caps for June draft and international signings. This was done to level the playing field for small market teams. The idea that a competitive balance through restricted spending will create a better baseball product throughout the league.

Draftees still get their million dollar bonus money for being first round selections, and teams have found ways to pay second and third rounders more money than slot values. So this part of the agreement may not get tweaked at all. It is the control aspect of the player development years that is at issue. A team can control a high schooler for 6 years and college players for 5 years. If they get to the major league roster, their base salary is $507,000. Not bad for a 20-something young man, but since many of them start their careers with break out seasons, their agents believe that teams are getting bargain basement value from non-arbitration eligible players.

More teams are filling roster spots with young, controllable players because they are cost effective with more upside than veteran free agents. And fans like to gravitate toward home grown rookie talent.

The union could demand that service time concept be eliminated all together. Teams would have a set amount of years to develop and promote a player to the major league roster or the player automatically becomes a free agent. Since most teams have a minor league system of a) rookie ball, b) low Class A, c) high Class A, d) Class AA, and Class AAA, the union could say that 5 years is the maximum amount of control time for any player. Ownership could counter saying that the 5 years would not give the team any return on development investment in a player even if they are promoted each step every year. A team would like 5 years of major league control of a player. But the union would not agree to 10 years of team exclusivity. 

Opt-outs are becoming popular with player and player agents. Perhaps the minor league player could "opt-out" of team control if he is not being promoted or developed by a team, or he is blocked at the major league service after a certain amount of years. The union wants to get its members to the majors as fast as possible in order to earn major league pay (and pay dues). Owners and general managers do not want to "rush" players to the majors. And some veterans may not like the idea of forced promotion of minor league talent because that could affect their standing on a roster or in the free agent market.

The new CBA will be a show down between two factions at the economic cross road of the game.

THE BLUES IN TORONTO

In recent years, the Blue Jays have made some major deals in order to get out of the cellar of the highly competitive AL East. In doing so, the team traded away many of its young, good prospects (for example to the World Series bound Mets).  But the Jays did reach the promise land, the ALCS this year because of those trades.

And some aggressive general managing by Alex Anthopoulos  who had been the Blue Jays' general manager since 2009. He inherited Vernon Wells and his awful contract, as well as a farm system full of future relievers, and eventually turned it all into Toronto's first playoff appearance since 1993. He wasn't the perfect GM, but he eventually did what had to be done to earn that postseason trip, giving up prospects when the team had a clear shot in the present to do something besides flounder in the middle of the division, as recounted by MLBTR.

MLBTR reports that Anthopoulos' aggressive trade syle  did not sit well with the team's new President, Mark Shapiro. There is a report that Shapiro "scolded" Anthopoulos in their lone meeting before his hiring for trading so many top prospects in 2015.

There is a lot to unpack from that scolding. I agree with MLBTR that the idea of Shapiro berating someone on the right way to build a winner may be tops on that list, as Shapiro ran the Indians as their GM from 2001 through 2010, then became Cleveland's President. But Shapiro's  Indians made the playoffs three times in that entire stretch, and while they never finished in last under those two, they did end the season in fourth on five occasions and third in another five. Shapiro's track record is actually worse than Anthopoulos'.

You can't just prospect hoard in order to win. The Cubs under Jim Hendry did that and failed because their prized prospects were not that good in the end. Instead of trading prospects at their peak potential for other players or other prospects, the Cubs languished in the middle hoping for free agents to make competitive teams.   Anthopoulos recognized as much when the opportunity to add came this summer -- you want to build with prospects, but they exist to fill holes either by themselves or through trades when they cannot. 

Ownership usually demands a "win now" philosophy. Fans cannot tolerate passive front offices not trying hard to improve their clubs. Anthopoulos was an aggressive general manager who made a lot of player moves, churned rosters in order to find the best 25 man roster. He was willing to make mistakes in order complete this vision. 

It appears his days as Toronto's GM are over. However, he will easily find a job in another organization.

A CRACK IN THE DAM

This is a very curious development in Forbes magazine.

Forbes reports that there is a potential deal in which a South Korean sovereign fund would invest in the Los Angeles Dodgers. The twenty percent investment values the Dodger assets at $3 billion  according to two sources with knowledge of the negotiation said Forbes.

Three years ago Guggenheim Baseball Management bought the Dodgers from the divorcing McCourts. That deal placed a value of $2 billion on the team and Dodger Stadium, and a value of $2.3 billion including 260 acres of surrounding real estate. The current negotiations with the South Korean investors is for about 20% of the team and stadium but does not include the nearby real estate or the regional sports channel created by by the Dodgers and Time Warner.  The deal the Dodgers have with the Dodger network pays the team a total of $8.35 billion over 25 years with the money guaranteed by Time Warner Cable.

The Cubs have also sold a minority stake in the holding company for the Cubs assets, including Wrigley Field and real estate developments.  It was reported the Cubs needed to raise $350 million to complete the real estate projects, including the rehab of Wrigley Field.

But this does show a weakness in the baseball business model. A successful, large positive cash flow business that baseball is touted as does not suddenly have two of its big market teams selling off large chunks of ownership (abet minority stakes) if everything is going great.  There would be no need to find investors.

But in the Dodgers case, their network roll out was a disaster. TW tried to extract too high carriage fees with other California cable and sat-tv systems so 75 percent of the Dodger viewers were without broadcasts last season. Suddenly, the new network cash cow looks like a diseased beast of burden.

Other teams, like the Angels, have huge dead money contracts on their books which have choked this off season's roster rebuilding.  The Mets are still on financial thin ice after the Madoff scandal. Mets owners have tried to sell a minority stake for several years but don't want to give up control.

Former commissioner Bud Selig used to crow about how great and profitable baseball was under his tenure. But that tide may be turning faster than we think.

SELLING OUT

There is more news than just the Joe Maddon hire.

In April, 2014, Sports Business Daily reported the Ricketts family is "exploring the idea of selling minority ownership shares" in the Cubs as a "way to help finance" the $500M Wrigley Field renovation. Patrick Mooney of CSNCHICAGO.com also reported a source said that those shares would be for a "non-controlling interest." The source added that the family "hasn’t made any final decisions yet."

On October 27, 2014 , Sports Business Daily reports the Cubs’ value, as speculated by business trade papers to be around $2 billion, calculates for the team’s "pending" sale of around 20 percent of the club to be around $400 million sources said, with that process expected to finish soon. Galatioto Sports Partners is managing the sale. GSP representatives declined to comment.

Citing an anonymous source, the Sports Business Journal reported that the franchise is worth $2 billion — more than double what the Ricketts family paid in 2009 — and that the sale of part of the team is "expected to finish soon."

Crain’s Chicago Business also wrote that  Chicago Cubs are close to selling a 20 percent stake in the team said to be valued at around $300 million, a Cubs spokesman said.

Ricketts family spokesman Dennis Culloton said nothing "officially" has changed since April, when reports surfaced that Cubs ownership was considering selling a noncontrolling share of the franchise to one or more minority investors to help finance the team's $575 million Wrigley Field renovation and redevelopment plan.

Mr. Culloton did not dispute any element of the SBJ report, which said that New York-based Galatioto Sports Partners is "managing" the minority share sale. The financial advisory company has been a Ricketts family consultant in the past, including for the original $845 million purchase of the team. At the time, Forbes estimated the Cubs to be worth only $700 million.

Bringing in minority investors may be one part of a combination of Ricketts family assets used to finance the stadium renovation, adding to other sources like ad revenue from expanded ballpark signage and federal tax breaks that could come from getting Wrigley Field listed on the National Register of Historic Places.

At the same time, there are reports that the Ricketts are close to buying two rooftop businesses (possibly the ones most affected by the new outfield signs).

What does all mean?

Sam Zell employed a very structured way to sell the Cubs to avoid the Tribune reporting more than $700 million in capital gains. To sell the Chicago Cubs to the Ricketts family,  but not trigger the Chicago Cubs built-in gain, the Tribune pulled a play from its tax play book that it had recently used to sell Newsday to Cablevision Systems, Inc: the  tax structure is referred to as a “leveraged partnership."

In executing the leveraged partnership structure, a new limited liability company – Newco -- taxed as a partnership was formed, to which the Tribune contributed the Chicago Cubs and its associated business for a five-percent interest and the Ricketts family contributed $150 million in cash for a 95 percent interest. The Ricketts family had certain call rights and the right of first refusal with respect to the membership interest owned by the Tribune and the Tribune has certain rights to put the membership interest to Ricketts family. In addition, Newco borrowed $698.75 million and the Tribune guaranteed the repayment of the principal and interest of the loan. From the funds provided by the debt and the equity financing, a special distribution of $740 million was made to the Tribune.

Accountants said to avoid the triggering of the built in gain with respect to the Chicago Cubs assets, the planning employed by the Tribune depended upon avoiding the disguised rules. Under IRS Section 707(a)(2)(B), where there are related transfers of property or money to a partnership and transfers of property or money by the partnership to the partner and when viewed together these transfers are characterized as a sale or exchange, then such transfers will be treated as a sale or exchange. Under Reg. Section 1.707-3(c)(1), if within a two year period, a partner transfers property to a partnership and the partnership transfers money or other consideration to the partner, the transactions are presumed to be a sales of the property to the partnership unless the facts and circumstances clearly establish otherwise. Reg. section 1.707-5(b)(1) provides that, for purposes of Reg. Section 1.707-3(c), if a partner transfers property to a partnership and the partnership incurs a liability and all or portion of the proceeds of that liability are allocable under Reg. Section 1.163-8T to a transfer of money to the partner made within 90 days of incurring the liability, the transfer of money to the partner is taken into account only to the extent that the amount of money transferred exceeds the partner’s allocable share of the liability. Thus, if the partner’s allocable share of the liability equals or exceeds the amount of debt financed money conveyed to that partner within 90 days of incurring the debt, no amount of the money is treated as the proceeds of a disguised sale by the transferring partner. The guarantee of the debt from which the proceeds distributed to the Tribune came created a risk of loss in the Tribune so that the debt was allocated to the Tribune under Section 752. The guarantee of the liability by the Tribune provided it with an increased basis and allowed it to receive the special distribution of cash without any gain recognition.

The key to the success of the leveraged partnership technique is the guarantee of Newco’s debt. However, the I.R.S. could challenge the leveraged partnership technique on the grounds that:

1. The guarantee should not be respected;
2. The anti-abuse provisions of Reg. 1.701-2(a) should apply and
3. The transaction should be recast in accordance with its substance as a sale.

There were reports during the bankruptcy proceedings that there were inquiries in regard to many Tribune accounting techniques.

The Ricketts agreed to be hogtied by massive debt and ownership lock up rules in order for the bankrupt Tribune Company to avoid capital gains. Walking on egg shells is still the prospect that the "minority sale" of Ricketts interest in the Cubs could trigger an IRS audit. This may be why the ownership structure has had to be kept in the status quo; and why the Ricketts cannot make contributions to the partnership because the Tribune would have to put in its 5%.

Beyond the tax implications of a minority sale, there is a structural element most people do not realize. Most people assume that the Cubs own the team, Wrigley Field, and the surrounding parking lots. But that is not true. As stated in the building commission proposals, the Cubs only own the team. Wrigley Field is owned by another legal entity. The Cubs are merely a tenant at Wrigley Field. The parking lots are owned by a different legal entity. So what is Ricketts really going to sell to minority investors? Just part of the team? Or associated stakes in the various other companies surrounding but legally distinct, from the franchise?

And selling a minority stake in the Cubs is not giving the Cubs team the money. Any proceeds from Ricketts selling their shares goes to the Ricketts, personally. So reports that this money is going to be used as capital to rebuild the Cubs or sign free agents is incorrect. Such a sale does not change the Cubs finances one bit. The Ricketts could use this new found cash to help pay for their new hotel complex investment, or to acquire the rooftop buildings. But again, that real estate development has nothing to do with the business operations of the Cubs.

The Cubs continue to appear to be a cash flow poor franchise. The loan covenants and restrictions caused by the Zell deal still haunt the club. Attendance revenue is still the key barometer to team spending, and that continues to go down. The lack of a local TV deal will also squeeze the gross revenue number in 2015, and may cause the bank some concern. 

But it does start to give owners some return on their leveraged investment, or the very least, paying back Daddy Ricketts for his money put into the purchase.

THE BUCK STOPS

Roger Goodell has 44 million reasons to scrap together plausible denial in his handling of the Ray Rice domestic abuse scandal. Goodell's compensation package for being NFL Commissioner is $44 million per year.  That is almost double a star major league pitching ace's annual salary.

Goodell is now the target of social and political quivers. Pro sports in America has taken over as the largest institutions in conjunction, perhaps, with the rise of entertainment technology and more leisure time due to underemployment in various traditional work sectors. Entertainment is escapism. When real world issues collide with an entertainment game, things can get complicated quickly.

Goodell muffled the punt, and is being called for unsportsmanlike conduct. He may get ejected from his own game.

The world was revolted by the release of the elevator tape which showed a brutal act of domestic violence. The question is whether Goodell, who as judge and jury of all player behavior in his league, saw this tape prior to giving Rice only a two game suspension. If so, he was an idiot and liar because he said this week he never saw the tape until recently. The AP story states the police gave the NFL a copy of the tape three months ago, and has a voice mail confirmation from the league office of its receipt and viewing. The public backlash is getting intense. NY Post headline rewrites the NFL as standing for "National Football Liars."

Major sports are all about public image because major corporations do not want associate themselves with negative public perception. There still is a guilt by association in brand marketing.

Goodell has lashed severe penalties in his 8 year tenure as commissioner. He whacked the New Orleans Saints and coach Sean Payton for Bountygate. In that scandal, he stated that "ignorance is no defense" to the team's explanation of the events.

The growing problem with all professional sports is that the commissioners are seizing too much authority over teams, players under the cover of some kind of "institutional control." To protect the game, he must police the game. Now, this goes beyond in-game infractions to outside criminal behavior and moral indiscretions. A prime example of this was the NCAA penalties against Penn St. for criminal child abuse at the school. Many people, including the governor, deplored the interference and sanctions against Penn St. which is beyond the charter of the NCAA. Recently, the NCAA backed off some of the sanctions but the matter is still in litigation.

Now, many employers have moral clauses in the employee contracts. But football, baseball, basketball, hockey all have collective bargaining agreements which should take care of player disciplinary actions. However, the union has been silent in the Rice case. Commissioners are using the old baseball "best interests of the game" as an inherit power to do whatever they want to preserve the status of the sport and their iron fist control over it. But many people really believe it should be the team, not the league, that should take action against one of its employees for bad behavior which is disruptive to the team.

Also, there is a large percentage of people who believe that in criminal matters, the team and league should just defer to punishment and judgments of the court system against its players. But in the Rice case, Rice skated because he made a quick deal for a diversion program so the charges will go away without a conviction. Prosecutors made that decision after seeing the evidence, including the tapes, so it hard to imagine that Baltimore citizens won't be upset with their local authorities.

Since Goodell is employed by the NFL owners, they will have to make the ultimate decision on Goodell's fate. As more and more negative press, possible pending Congressional investigations, and now an expensive external investigation, the Rice scandal continues to grow. Owners do not like to be in the negative spot light. It is bad for business. It is bad for their reputation. And they don't want to be ambushed by reporters asking embarrassing questions.

In Goodell's case, he lived by his sword, and that same sword may take himself down.

ROAD THOUGHTS

During a long weekend road trip, I heard a lot of sports radio conversation. Some of the talk reaffirmed many points that I have been making for years in regard to the Cubs. A recap of some of the interesting points I heard while cruising down the interstates:

1. The Cubs continue to propagate the myth that bad teams have a better chance to draft good players.

This point got the strongest reaction from the hosts who made it. The Red Sox, Yankees, Rays, and Cardinals all have had very good drafts for the past decade while selecting well after the Cubs. The real bottom line is that teams drafting in the middle to late rounds are drafting BETTER TALENT. The Cubs need to draft better talent not tank seasons to get high draft picks.

I agree that scouting is fundamentally important to have a consistent and viable farm system. However, that is only one part of the equation. The organization still needs to train and develop the draft picks into major league players. The Cubs have had a woeful track record on developing their own players.

2. People are beginning to question whether ownership knows what it is doing.

The off-the-cuff admission by Crane Kenney that Tom Ricketts gave Kenney a 5 year extension several months ago is still a headline head scratcher. What has Kenney done to deserve such a reward? He is the face of the bungled rehab of Wrigley Field. He is part of the team that put together the Zell Tribune restrictions that allegedly has handcuffed the team financially with high debt and poor broadcast contracts.

I said from the beginning that Ricketts failed to due his own proper due diligence. He did not bring on board his own independent baseball and financial people to review the Zell proposals and the real financial shape of the franchise. As a result, Ricketts overpaid for a franchise by more than $350 million, and carried on with the same failed management group. That does not show confidence or business savvy to run a baseball team.

3. The split between the baseball operations and the "business side" of the equation is a growing canyon.

It really never made much sense to have the baseball operations severed from the "business" operations. Ricketts bought a baseball franchise - - - its business is to run a profitable and winning major league team. For example, the White Sox have one management team reviewing and setting policy for the team. The business of the Cubs is baseball not the growing "side" projects that Ricketts has kicked around Clark and Addison since he bought the team.

Some commentators wonder if Theo Epstein knew what he was getting himself into; he has not come out and said it, but it appears that the baseball team has to "wait" for the business side to "get up to speed" before the Cubs can actually function as a major league contender. Epstein knew or should have known what he was getting into; he may not care because he got his contract and a built-in excuse if things fail: the interference by Ricketts and Kenney.

4. The numbers do not add up.

When Ricketts purchased the franchise, the Cubs had a high payroll and high attendance at Wrigley (3.3 million paid gate).  However, this season is tracking at a low payroll and much lower attendance levels (approx. 2.3 million). In less than five years, the new ownership has sliced 1 million in attendance.

Now, the team the last three years has been barely watchable. You can't sell 100 loss teams as being fun entertainment. So true to the tourism board's statements, it is possible that the majority of people still attending games at Wrigley are not there just to see the Cubs but to experience the "unique" ball yard.

Wrigley Field is the only major league park that has not been transformed into a electronic arcade. It has the same look and feel for the past 8 decades: a manual scoreboard, ivy covered brick walls, a green park in the middle of a residential neighborhood. It is those features that draw tourists to the park; to show their children what baseball was like when they were young and their (grand) parents took them to a game.

So, Ricketts is adamant that he now needs 7 large outfield signs in order to field a competitive team. It is projected that at most, the new park signage could bring in $30 million in revenue per season. But, since the team has already lost 1 million visitors at $70 per patron spending, the new outdoor advertising revenue does not come close to off-setting the lost attendance of $70 million.

Further, of the remaining 2.3 million, there will be a good portion of baseball purists who will no longer feel that Wrigley is Wrigley if all the new video scoreboards and signage is put up. It will ruin the atmosphere, architecture and pristine baseball viewing experience. Even if those baseball purists number 500,000, that means the new revenue enhancements will not off-set the loss of $35 million in future attendance losses from this segment of the fan base.

It was said that it makes more sense to add $10 to every ticket than put in the new signage. You get about the same new revenue increases without destroying the landmarked historic nature of Wrigley Field.   But ownership is hell bent now on dramatically changing Wrigley Field.

5. Wrigley Field is the priority, not the Cubs.

All of the resources and energy of the "business side" of the Cubs has been directed toward non-baseball things: the new buildings and party plaza outside Wrigley; the new Wrigley Field construction plans and ad signs; the new commercial hotel-gym-parking complex across the street. The business managers want to increase night events, concerts, tours, corporate outings and movie nights. Wrigley Field is being transformed from baseball park into a multipurpose entertainment venue like the Rosemont Horizon or Sears Center.

And all this ancillary revenue has nothing to do with the Cubs getting better ball players or winning more games. The Cubs are merely a tenant at Wrigley Field. The non-baseball revenue will go into a different Ricketts bank account.  People are beginning to realize that all the talk about revenue enhancement has nothing to do with the baseball operations. They are not tied together. That is why the payrolls continue to drop, and veterans traded for cheaper prospects. That is why Epstein is cornered with the one thing he can control (and must succeed in order to win): establish an unprecedented stream of home grown impact talent from the minor league system.

OUT TO PASTURE

The Dodgers put broadcast legend Vin Scully out to pasture. No, Vin is still doing Dodger games, but most of his fans cannot listen to him.

When the new Dodger ownership partnered up with Time Warner Cable to launch the new Dodger channel, the team got more than $8 billion in licensing fees. Meanwhile, the channel got stuck in neutral. The new channel wanted to extract $4 or more per subscriber per month from every cable and sat-tv operator in Southern California. That is premium ESPN carriage charges.

DirectTV and other cable systems balked at the fee structure. So, the Dodgers have basically blacked themselves out of their own local market. Only 3 in 10 Dodger fans can get Dodger games this season. It is quite the broadcast boondoggle.

But someone should have seen it coming.

Cable bills have skyrocketed in the last decade, mostly due to the increased costs in carrying sports and specialty channels. As a result of higher bills and a soft economy, more and more subscribers have cut the cable cord and dropped service. Many youngsters are now using their mobile devices as their entertainment platform of choice, so the cable industry is losing a key, long term demographic.

Just because a team has a product it thinks is a valuable commodity, you may not be able to sell it or distribute it.

So when the Cubs are counting on their new cable channel in 2020, and the expected revenue windfall, that can only be described as mere speculation. There may not be cable as we know it in 2020. It may be an a la carte subscription service which means expensive sports channel fees will evaporate. The market may have moved on to total mobility. Or baseball itself may be on the viewership decline. Or television advertising, the driving force behind big money deals, may also have bitten the bust.

The Dodgers have reached a stalemate with the cable companies. Neither side wants to give an inch. So, a majority of fans who thought getting rid of Frank McCourt as owner would have been a godsend for the franchise are getting bitten. The new owners did spend money like the Yankees, but now don't have the long term cable partnerships to sustain it. And the fans who want to watch the expensive superstars in the home white and blue, are left out in the cold. Bitter and angry. And missing Vin.

FANS

By its very definition, "fans" is a personal opinion on one's own state of something or someone. Early in this Cubs season, the fan community has started to snark at each other on what it is to be a Cub fan. It is hard to debate conflicting religious tenets, but even for those who believe baseball is their personal savior, one must respect each other's views.

However, there are various aspects of being a baseball and a Cubs fan.

First, you may be just a fan of the game itself. You don't have a rooting interest in any one team or any one player. You watch a baseball contest for its purity. You just want to see a well played but exciting game.

Or, you may be a fan of the team like the Cubs. You may have been indoctrinated as a fan at an early age when a parent or grandparent took you to your first contest at Wrigley Field. You may have marveled at the miracle of a vast green park inside some brick walls of an old building in a tired city residential neighborhood. The game was faster, the players bigger and plays more exciting than the sandlot games back home. Your parent would have told you about the players, what to look for, and the history of the game and the team. And once you liked baseball as a sport, it is easier to follow it by following "your" team.

There are various levels of devotion. A fan may like the players on the team, but dislike their manager. Fans may like the team and the manager, but dislike or mistrust management. Or, the fans may have outright contempt for ownership like many Yankee fans had during the George Steinbrenner era or when Charlie Finley owned the Oakland A's. Then, there were some fans who liked their owner better than the team itself, such as many years when Bill Veeck owned the White Sox. Then, there were times when the fans did not like the players on their team such as when late in the Dusty Baker days, his players started to assault the respected team broadcasters. A fan can oscillate between the various plus and minuses of the entire organizational spectrum. Some fans may hold a grudge against management for not hiring a guy like Ryne Sandberg to manager their club. Some fans may hold a grudge against a manager for benching their favorite player. Some fans may head slap themselves after each odd managerial decision that cost the team a victory.

And of course there will be fans who will remain die-hard fans through the good, the bad and the ugly.

The 2014 Cubs bring out a range of emotions in the fandom. For some, the Cubs continue to be their beautiful baseball mistress who is having a serious bout of projectile vomiting. She will get over it some day. Some believe that that the team makeover is trying to put make-up on an old 500 pound sow.  It won't work. Some find dark humor in the badness of team play. The players can find work if keystone comedies ever make a come back. Others think that this is a long incubation process that will work in the near future. The same was said in the original Jurassic Park movie. That turned out well, if you were a meat eating dinosaur. A few think the Ricketts are way over their heads; they don't know how to run a baseball team let alone a business in the city. The new ownership may set back the franchise like P.K. Wrigley did - - - extending the non-championship for several more generations. The current roster may be filled with nice guys, but nice guys in life most often finish last. And who is to blame for that?  A little bit for everyone associated with the team, including the fans.

If the fans view their baseball team as a civic icon, then the fans should demand better of their players and ownership. If owners truly believe in winning (and not the mere marketing words to sell expensive tickets), then owners should demand better accountability from their employees, from management to the players. It seems obvious that all three elements of the baseball pyramid want the same thing: to win. Owners, managers, players and fans all want to win the World Series.  In Chicago, we know how nice that accomplishment feels when the White Sox won in 2005 (going a remarkable 11-1 in the playoffs).

So it not really fair to tell a fan he is not "supportive" enough of the current Cubs. Likewise, it is not unfair to say that the current Cubs have not earned the trust and money of loyal patrons. The sniping between Cub fans at the early stage of this season does not seem productive; it is just another in a long line of distractions which gets us from the true issue confronting everyone: winning games.

In order to keep one's sanity this year,  you may be just a fan of the game itself. You don't have a vested interest in the Cubs or its players.  You watch a baseball games for the good plays, the bad plays, the comedy of errors and the occasional win.  At the very least, you may just want to see a well played game played by some team on the field. Or something unusual like Monday's game in Denver where the Reds and Rockies hit 10 home runs in 6 innings before the game was suspended due to bad weather. If you don't find some alternative pleasure from just rooting for the Cubs to win, you may end up wasting another summer.

FOR SALE BY OWNERS

On the eve of Opening Day, several local media outlets reported that the Ricketts family may be looking for minority shareholders for the Cubs.

This may be considered another crack in the foundation of Ricketts' ownership.

The SunTimes noted that the Ricketts family is exploring opening the Cubs ownership to minority shareholders to help finance the long-sought renovation and expansion of Wrigley Field.

The SunTimes story said the Ricketts would offer the shares in a team that Forbes values at $1.2 billion.

If the deal goes through, the Cubs would be seeking a small number of high net-worth shareholders. The shares would come out of the Ricketts’ 95-percent ownership of the Cubs. 

But shareholders would not be offered a vote at the table. “There would be no change in control,” the source said.

“The Rickets family is looking at a number of financial options to be prepared to finance expanding and preserving Wrigley in the event that there is a project to move forward with,” said Ricketts family spokesman Dennis Culloton, who noted that going forward with any financing plan depends on a positive conclusion to ongoing negotiations with rooftop owners concerning expansion plans.

“[The Ricketts] may wind up just writing a check themselves, but this may be another way to generate new capital,” the source said. “The long term goal is to get this project moving forward so the Cubs can generate new resources for the baseball operation.”

There are many problems with the story.

First, when Sam Zell and Tribune sold the Cubs it was under strict guidelines in order to create a "tax free" transaction so the Tribune would not have massive capital gain to report. (The IRS is currently reviewing the transaction to see if taxes are owed on the sale.) The Tribune bought the Cubs in 1981 for $30 million, and the sale was for $845 million. $815 million could be subject to capital gain taxes.

Second, most of the sale price was used by leveraged debt. Under normal commercial loan covenants, ownership cannot change during the term of the financing agreement. In addition, in order to preserve the fiction of the transaction being a partnership and not a sale, Zell's plan mandated that the Tribune maintain a 5% ownership interest in the team and Wrigley Field.

Third, the Cubs and their spokespeople continually lump everything under one banner, "the Cubs" in discussing the renovations, the team, the park, etc. But as the Ricketts zoning petition indicated, a separate legal entity owns the ball club, Wrigley Field, the parking and the new commercial properties outside the park. So if the Ricketts are really trying to sell shares in the "team," it would run afoul of the Zell ownership rules.

Fourth, even if the Ricketts can sell part of their 95% of the team, those current shares have voting and equity rights. The media reports indicate that the Ricketts are thinking about selling "non-voting shares" to raise capital for the renovation. A new share classification of ownership could violate the Zell covenants, and possibly run afoul of Major League Baseball ownership rules, where the other owners must approve any transfers of ownership interests.

Fifth, adding another classification of shares as a means of disguising new "loans" to the Cubs would run afoul with Major League Baseball equity to debt ratios, for which the Cubs are currently not meeting that standard. The idea of using shares to raise capital is common in most normal corporations to fund operations or expansion of goods or services. When a company issues another round of newly issued shares, it dilutes the current equity of existing shareholders as a result. 

Sixth, if the Ricketts are looking to get around current loan covenants, the MLB debt regulations and current commercial loan market, it means that the Cubs and the Ricketts cannot borrow from banks or financial institutions. One could state in that event the team has tapped out is borrowing, so it is seeking alternative means, through "qualified investors." But sophisticated investors are not going to be lured with a shiny certificate that says "You own 1000 non-equity and non-voting shares of the Cubs." They will want a return on the investment and a say in management to protect their investment.

Seventh, if the Ricketts are actually going to sell shares from their 95% of the team, those sale proceeds would not go back to the team but straight into the personal bank accounts of the Ricketts family. This does not raise capital for Wrigley Field renovation. The option noted in the article that the Ricketts could write the check for the renovation themselves seems to contradict the Day One mandate from patriarch Joe Ricketts who said the family would not add any more money to the Cubs; it had to be self-sufficient business.  When an investor wants to start to take profits or retained earnings from their business, one way to do so is to sell a portion of their stake to new people. Perhaps, the Ricketts denials that they have not been taking operating profits from the Cubs are true (because the team has none to meet future expenditures), so the only way to get money out of the team is to sell shares. In most cases, this is probably the last thing an owner would want to do because it adds another layer of complication to running the business, new outsiders with differing views and requirements on how to make money off the Cubs.

The Cubs and Wrigley Field have been milked dry. This season of new promotions and the "Party at the Park" year round celebration is not going to be the big revenue spike that management is hoping for because the team (and attendance) will continue to be poor.

Even though when Ricketts bought the club and said they would be in it "for the long haul," every prudent investor needs to have an exit strategy. The Ricketts selling shares of the Cubs could be the first round of a divestiture of the team. Clearly, the Ricketts expectation of owning an iconic major league baseball franchise was slammed down by the reality of Chicago politics, poor neighborhood relations, poor regional economics and a one-sided purchase agreement that ties their financial options.