There was a discussion last night on CSN Sports Live program. It was frustrating to watch the segment because the sports reporters on the panel failed to grasp the basic framework of business transactions and the reality of municipal zoning laws throughout the state of Illinois.
David Kaplan started off enraged that the neighborhood businesses
are holding up the Cubs renovation plans for no reason,
which is costing the Cubs baseball team revenue and ability
to compete. The theme was the neighbors were the bad actors
in this situation. It was only at the end of the rant segment that
he did acknowledge the rooftop owners have a legally binding
contract which preserves their current views.
The Cubs keep telling the media that they are working on a deal
with the rooftop owners so the team can go forward with its
new ballpark signage. But no one fails to realize that the Cubs
already have a deal with the rooftop owners - - - it is the Cubs
who unilaterally want to change it, to the detriment of the rooftop
businesses.
None of the panelists appeared to grasp the legal realities.
Apparently, none of them has ever tried to get a zoning variation
from the city council where they live. They have never had to
deal with city planners or alderman who want to meddle in a businesses'
owners plans because they have the veto over it. It happens all the time,
everywhere in the city and suburbs. In fact, the Cubs have been granted
fantastic free reign in their development objectives, including taking
large amounts of city streets and sidewalks for free.
But the biggest gaffe in the whole discussion was so obvious:
the rooftop issue of the jumbotron and OF sign has NOTHING TO DO
with Ricketts grand real estate development projects outside of Wrigley,
including the Triangle and McDonald's block. The rooftops have
nothing to do with the proposed internal improvements
inside Wrigley like new restrooms, new clubhouse, new weight room, etc.
Ricketts could have starting digging those projects last year.
The real question in all the blame on the neighborhood is WHY has
Ricketts decided NOT to go forward with those non-OF signage issues?
Because the cost of construction is going to go UP the longer you delay,
one would want to begin work on construction projects as soon as possible.
The Cubs said they had a piece meal five year plan in place. But they
now refuse to go forward without everything Ricketts wants locked down.
No one has pressed the Cubs on why that HAS to happen.
And if the whole scheme depends upon the advertising revenue of a
jumbotron and beer sign - - - then why isn't anyone asking Ricketts
about that? Have the Cubs run out of money for capital improvements?
Sportswriters have zero business experience so they don't know the
nuances of the business side of the team. But they can at least ask
the important questions instead of parroting Ricketts' silly tantrum speeches.
If you are upset that the reconstruction has stalled, it is all Ricketts fault.
He overpaid for the team by at least $300 million.
I wrote many articles at the time of the sale, I said that Ricketts was an idiot for
not negotiating basic elements of the deal. If you buy a house and a home inspection
shows the roof is shot, the buyer goes back to the Seller for a repair credit of $15,000
to fix the roof as a condition of purchase. In Ricketts case, there had been media stories
for months that Zell was looking for public financing of $300 million to FIX Wrigley Field.
So, he should have demanded a massive repair credit off the purchase price from Zell; a final purchase price which was $250 million higher than the next bidder.
Ricketts now complains about the WGN radio and TV deals not providing him with enough licensing fees. He could have told the Tribune, which owns those properties, that those deals would have to be re-written in order for the sale to go through since they were controlled by the seller. Ricketts could have demanded a fair market valuation of the broadcast rights fees. But Ricketts took them "as is."
Ricketts bent over and took what Zell shoved down his brain hole.
$745 million in debt, which takes more than $38 million a year in interest payments alone, to pay down. Loan covenants which restrict how the team can use its collateral/revenue.
A stadium which needs $100 plus million in repairs, but apparently has no lines of credit available to finance it. He bought a LANDMARK building with massive amounts of legal restrictions.
He bought a business that has a binding contract with the rooftop owners that goes through 2023.
There are growing rumors that the Cubs are not in the best of fiscal shape. We know that since the sale, the Cubs have been on the MLB watch list because its debt ratio is above the league standards. The purchase price was based upon top revenue figures of 3.3 million attendance, which has now fallen to 2.6 million with a rash of non-renewals by season ticket holders. (That is an estimated loss of $31.8 million in gate revenue alone). He can wave his arms and magically turn back the clock to re-write the bad deal. He is stuck with a local radio and TV market today which is highly depressed, especially when the Cubs ratings have fallen dramatically the last 3 years. He may not get the current license fees if the Cubs move to another station. The split cable-TV deals cannot synch up until after 2019, so he cannot leverage the team into his own regional Dodger network.
Ricketts made a bad business deal.
Ricketts has no one to blame but himself.
Ricketts purchased surrounding property to put together his own bar-heavy theme park, but
now is land rich but cash poor so he can't start any project without new revenue resources.
So he is looking for someone else to blame for his current folly. And many sports reporters have bought this sad tale of woe from Ricketts because they don't understand how the Cubs got into its current situation.
