THE WRIGLEYVILLE WAR
PART FIVE
A Chronicle
66. Committed
67. Tantrum
68. Land Marked
69. Baggage
70. Battle of the Plaza
COMMITTED
April 6, 2013
The Cubs have decided that the slogan for this season will be one word: committed. But committed to what?
It seems that the Ricketts family is committed to changing the Lakeview neighborhood in their own image.
The Ricketts bought the franchise two years ago. They fired carryover general manager Jim Hendry, but kept most of the Tribune's executive staff. The family hired several young guns from the Red Sox organization, who may or may not have been the architects of Boston's long awaited championships. Theo Epstein was committed to rebuilding the organization from the minor league system by loading it with as many prospects as he could gather by international signings, drafts and trades. He generally traded veteran pitchers for quantity of low Class A type prospects. He signed journeymen players and injured pitchers who may turn their careers around by the trading deadline to be exchanged for more prospects. The hope is that the vast number of prospects will yield a full roster of major league talent. This is a small market mentality from a big city ball club.
Last season's management blue print yielded 60-101 season. 101 losses is hard for even die-hard fans to stomach. Epstein continued to state that “this was a process” and that fans needed to be patient. But fans are not so kind when the Cubs are charging the most for ticket plus concession prices in the game. The cubs burned through their season ticket waiting list during this last winter off-season, with very few takers. As of Friday, Opening Day was not sold out.
Before Tom Ricketts bought the club, he told his father that the Cubs were a dream business. “They come to Wrigley even when they lose.” That observation is now tempered by a long recession, high unemployment, people leaving the city and a bad baseball product on the field. The dream is turning into a financial nightmare, as the Cubs took on mostly debt to fund the $845 million purchase (because Zell demanded a certain structure for tax purposes.) The Cubs debt load exceeds current MLB ownership standards (but Commissioner Selig said he was not concerned with the issue.)
Instead of the focus being on building a competitive team immediately through free agency and rookie promotion, Ricketts has been hell-bent on modernizing Wrigley Field. Many tourists will tell you that the reason they come to Wrigley Field is to see the old style, traditional ball park whose features have not changed since the 1930s. It is a living time machine back to the sight lines seen by Babe Ruth, Lou Gehrig, Hack Wilson and Ernie Banks. For some, it may have been a fond memory from their childhood. Purists have called Wrigley Field the cathedral of baseball.
But Ricketts has changed Wrigley Field's charm. The right field “party patio” was a disaster at all levels: it was totally out of character of the outfield; it destroyed the symmetry of the ivy covered walls; it attempted to create a mini-Green Monster of Fenway fame inside Wrigley; and it was not well received by the fans (as evidenced by the fact that the television broadcasts did not show the right field deck during games because it was so out of character, and that those new expensive wall seats were empty.) Ricketts also poured capital into adding more restaurants and beer carts throughout the building's concourses and patron ramps.
Ricketts has also rubbed politicians and the community wrong. First, the Ricketts attempted to get hundreds of millions of dollars in taxpayer money to rehab Wrigley Field. The State of Illinois and city of Chicago are bankrupt. There was no political will to give millions of dollars in state aid to a private business enterprise. (According to Forbes magazine, the Cubs are the most profitable franchise in baseball.) The Ricketts were naive or stupid to think that they could drop a massive public taxpayer assisted project on the laps of the mayor and house speaker and expect that they would roll over and give them the keys to the state treasury. The backlash was swift and harsh. Part of the plan was for the Cubs to keep a large percentage of the amusement tax on the sale of each ticket. Twelve percent of the ticket price was added to each purchase as a tax for the city and county governments. For some warped view, the Cubs owners think that the governments are profiting from their business by such a large tax. But the Cubs don't pay it - - - the fans buying the tickets do. But the Cubs wanted to keep all future increases, like an open ended annuity, instead of raising ticket prices (being the bad guy) the team would get a revenue windfall. This tarnished the purchase press conference words that the Ricketts family bought the team to as a priority win championships and not personally profit from the business.
The idea that other people are making money off the Cubs “product” is not new. The largest battle was fought with the rooftop owners. The Tribune sued the rooftop owners stating that the roofers were stealing their copyrighted material, i.e. Cubs games. The rooftop owners were making money and not paying the Cubs anything in return. Legally, the Tribune had no case. A baseball game, like any other public event, is not copyrightable because there is no creative process in the event itself. A broadcast of the event is different. Copying a broadcast and re-transmitting it is copyright infringement. But the public looking out into a public space at an event is not infringement. The rooftop owners countersued claiming that they had the right to an unobstructed view into Wrigley Field. However, the roofers position was also contrary to the law. Illinois does not recognize any right to “light or air.” One does not have a property right to views outside one's property. So when two sides have legally insufficient claims, nothing good should have happened. But the case was settled in federal court, with the agreement that the rooftop owners would pay the Cubs 17 percent of receipts in exchange for the Cubs not blocking their views. (The Cubs cannot change the features and structure of Wrigley Field because of the city's building ordinances and Wrigley being classified as a landmark structure.) In the end, the Cubs got a license fee that they were not entitled to under the law, the the rooftop owners got a contractual right that they did not have under property laws.
But the Ricketts must not like the Tribune's deal. The Cubs want to break it. Ricketts now states that the family will invest $500 million to rehab Wrigley and redevelop the McDonald's block across the street (with a boutique hotel, retail and office building.) In exchange, the Ricketts wants all Wrigley Field restrictions terminated so they “can run their business as they choose.” Well, every business in Chicago must comply with zoning, building and health rules and regulations. Ricketts pushed for a broad exemption because they own the Cubs.
The neighborhood was aghast at the scope the Cubs wanted: more night games, more events, more traffic, more noise. Neighbors realized that a hotel is a 24/7 operation. It creates new traffic, new garbage and new security issues. Neighbors are also realizing that the Cubs want Wrigley Field to become a 12 month entertainment venue which creates the summer stresses and problems a year-round concern. As one fireman stationed at the fire house behind the left field bleachers recently said, he has never heard so much abuse from drunken fans on a daily basis in his entire life.
The Cubs refused to share their visionary plans with the community. It is unclear whether the full scope of the development is even shared with the local alderman, Tunney, or the city planners. It was reported that the Cubs want to build a 6,000 square foot jumbotron in left field. That is three times the size of the current scoreboard. It is massive; 60 feet by 100 feet. That is a six story object that would surely block the rooftop owners views of the field. In addition, the Cubs want to add a large signage board in right field. It seems that the Ricketts want to enclose the outfield with advertising signage. In exchange for this claustrophobic design, the Cubs believe they can generate $25 million in new advertising revenue per season.
Many people believe that the Cubs, as business, have a right to maximize their revenues. However, most people believe they must do it within the confines of the current regulations and contractual obligations. It was floated that the Ricketts interpretation of the rooftop settlement is drastically different than what was reported in the media. The Cubs are saying that the settlement agreement only provides that the Cubs share in rooftop revenues. It states nothing about the Cubs not getting city permission to change the outfield walls or block views. For if a rooftop owner goes out of business, the Cubs get 17 percent of zero revenues. There is a principle in all contracts: good faith and fair dealing. The rooftop owners are livid that the Cubs are dull dozing their plans without discussing them with the area business people. Only Alderman Tunney has been part of some of the discussions with the city.
Tunney is a key player. He represents the ward in which Wrigley Field is located. The rooftop owners and neighbors are key campaign contributors and his voters. Under the political reality of city government, an alderman in Chicago has one powerful, almost feudal right: approval of any zoning and building development in their ward. The rest of the city council will defer to that local alderman's wishes. This is how Walmart was kept out of the city for so long. Tunney is not going to shoot himself in the foot and ire his contributors and voting bloc. He has wanted to maintain the status quo obligations of the parties. The Cubs want to push their agenda, neighbors be damned.
Even those fans who want the Cubs to win don't want the Cubs to destroy their traditions for the sake of revenue enhancement. If one looks objectively at all the new capital improvements, none of them has any direct benefit to the baseball team. The new concourses, new restaurants, new party decks, new luxury boxes are all new revenue generators for the Ricketts. The new field configuration (with a removal home dugout) is to create a real football size field for Northwestern college games and soccer events. Neither of those help the Cubs (and if Soldier Field turf issues is an example, it will hinder Cubs ability to perform on a torn up turf). The traditionalists now say that if the Ricketts want to spend all that money to squeeze in more stuff into the small Wrigley footprint, the Ricketts should just leave Wrigley and go build a new modern facility in the suburbs.
The mayor of Rosemont has offered the Cubs a 25 acre site next to O'Hare Airport. Price: free. The Cubs would own the property and all of its parking facilities. The Cubs could build whatever kind of stadium they want (multipurpose, baseball, doomed, etc.) and keep all the revenue. It is doubtful that the Cubs want to move out of Wrigley, since Wrigley Field itself is a better draw than the team. But the Ricketts view Wrigley as an underused, underperforming asset. Ricketts wants Wrigley Field to be an entertainment complex, a venue like the Allstate Arena and a draw like a Disney theme park. Ricketts wants the facility to be open 365 days a year generating money for the family. In essence, the Cubs are going to be merely one tenant in a multipurpose venue. This entertainment complex idea is the real dream of Ricketts.
The Ricketts want to extract every single dime for anyone coming to Wrigley Field. They are the biggest business in the area. As such, they want to control the pie. If they have to bully their way through the city bureaucracy, they will do so. The Ricketts are not in the business of making friends but making money.
This latest battle between ownership and the surrounding community is going to get nasty, quick. Reports have the mayor ready to sign off on a deal to allow major concessions to the Ricketts redevelopment with no real input or discussion from the neighborhood associations. Doing back room deals in the dark is a dangerous business, especially when the neighbors healthy, safety, welfare, property and business values are at stake. In fact, no one has really discussed the nuclear outcome of this dispute.
There is a provision in the city ordinances that the mayor, city council and alderman cannot stop. It provides that the voters in each city precinct have the right to vote their precinct dry. No alcohol sales. Wrigley Field sits in a precinct that is bounded to the north and east by Murphy's, the rooftop buildings and residential homes, the people most impacted by any Wrigley redevelopment. In theory, the neighbors could vote this precinct dry, ending all beer and liquor sales within Wrigley Field. That would be a crippling blow to the Ricketts business plan. It would send a real message of where the community clout really resides in the neighborhood. Such a vote would not have any effect on the bars across the street on Clark Street. Such are the laws of unintended consequences. One action can lead to a serious of more adverse counteractions.
But the ownership of the Cubs is committed in forcing their plans upon the community. It will rev up their PR machines to spin the need to raise revenue in order to field a competitive team in the future. The carrot is the elusive championship. But it is mere speculation. Nothing in the last two seasons has shown that the new front office knows how to judge talent, develop talent, or field a .500 baseball club. The Cubs may be committed to change, but change creates consequences. It may alienate old season ticket holders who view tradition over a fast buck. It may alienate new fans since the family atmosphere of Wrigley Field is being taken over by more profitable beer party patios. There appears to be no middle ground on this battlefield. There are dramatic changes in the wind, and none have a direct bearing on the Cubs baseball season that is upon us.
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TANTRUM
May 5, 2013
Tom Ricketts has finally uttered the M-word: move. In finally announcing the Cubs redevelopment plan to the public, he said that unless he gets all the new revenue streams (i.e. signage) then the team would have to look to other options, including moving out of Wrigley Field. Of course most people believed that this was just another P.R. bluff since Wrigley Field is the only thing drawing fans to Cubs games. But this shot across the bow of the community and city shows how the delays and the state of the baseball team have begun to squeeze the finances of the Ricketts.
Instead of negotiating down the purchase price with the Tribune in order to off-set the costs of Wrigley's rehabilitation, Ricketts took the Zell demands hook, line and sinker. The hook was the ability to own a historic franchise. The line was that no matter how bad the team was, the Cubs were a cash machine. But the sinker is swallowing Zell's massive debt requirement as part of the deal. The Cubs still are choking on more than $600 million worth of purchase debt (which is above the league debt to equity ratios). Actual patrons in the ball park plummeted in the second half of last season. If people do not come to Wrigley to watch games, the Cubs lose more than just ticket value but the high price from concession sales. But Ricketts took an extremely one-sided Seller deal in order to become the Cubs owner.
And since then, the rose garden has turned into a thorny landmine field. The plight of the Cubs can be shown by one simple truth: the Cubs failed to make the first installment tax payment on Wrigley Field when it was due on March 1, 2013. Who does not pay their tax bill on time? It would indicate that cash flow may be an issue with the team. We also know that season ticket sales have dropped from last season; the Cubs burned through their waiting list to find new season ticket buyers but that led to little success. So despite no payroll checks to issue and all season ticket cash in the bank, the Cubs could not pay their tax bill.
The Cubs have been adding expenses during the off-season which can suck down bank balances. Ricketts has had to hire architects and experts to make renderings of his grand plan to change Clark and Addison into Ricketts Times Square. He has had to spend more money on lawyers to comb through the rooftop owners agreement in an attempt to find a loophole. So it is not hard to believe that this cash machine is leaking red ink.
Ricketts has been trying to control the information and media on this story. His PR department has gotten most of the local writers and media outlets on his side. The argument that as a businessman, he should have a right to do anything with his property. It is a great conceptual truth in the 1890s. But today, municipal police powers control all aspects of property ownership in the city. Ricketts is not immune from dealing with plan commissions, zoning regulations, landmark ordinances and building code requirements. Part of the renovation is a bone to the media: a newer press box and interview room to make their jobs easier.
So the media did not challenge Ricketts when he said that his plan was a good compromise with the neighborhood when the neighbors had no say in the plan's development. This is not negotiated plan; it is Ricketts wish list of improvements. The media may not understand the implications of the redevelopment (since Ricketts continues to say it is to restore or save Wrigley Field, but in reality it is a huge two block hotel-retail complex being stuffed into a dense residential neighborhood). The extensive outside the ball park use request is buried in the stories by the controversial new scoreboard inside Wrigley.
The Cubs rendering shows a new LED scoreboard in RF field corner, a 6,000 square foot electronic scoreboard in LF, a new LED scoreboard in CF and a 1,000 square foot ad sign in RF. The new LF scoreboard is three times the size of the old iconic and landmarked manual CF scoreboard. The new electronic scoreboard would make the manual scoreboard obsolete. What was not mentioned clearly during Ricketts road show interviews was that this new LF scoreboard has two new lighting sections. Ricketts denied that any of these signage improvements would hinder the rooftop views, but clearly he is wrong. He never discussed the matter with the businesses that pay him more than $4 million per year for peace and an unobstructed view. One local media adverting executive said that in his view the new interior signage could generate another $5 million for the Cubs. So what is the motivation to go to war over landmark and neighbor issues for just a million dollars?
Part of the Ricketts tirade is that he believes that anyone making money off the Cubs is stealing money from him. Yes, he owns the team but he does not own the patrons who go to neighborhood bars to eat and drink before the games instead of instead the park. He does not own the patrons who buy souvenirs outside the park. But Ricketts looks at the full rooftops and then notices his empty luxury skyboxes and he gets mad. That is the crux for the reason to block views - - - he wants to rope back in the rooftop patrons for his suites. Conveniently, the renovation plans include more upper deck suites.
But outside the park is where community groups will feel the pain of the development burdens. The Cubs want to take the sidewalk and parking lane of Waveland Avenue in order to build the LF scoreboard. This means another bleacher renovation (last time added more seats). Squeezing down the public portion of a public street for a private enterprise does affect residents on the daily basis. Further, Ricketts wants to control the other outfield street, Sheffield, as his private party zone for all weekend events. That idea cannot sit well with other neighborhood businesses since the Cubs are trying to steer their patrons into Cubs controlled booths on Sheffield.
The plans also have the corners of Wrigley being developed with permanent restaurant-bar facilities which means there really will be no public sidewalk around the park, except for the new triangle plaza. A plaza, which contains several monstrous obelisks that are electronic advertising boards. Ricketts plans is to put 41,000 square feet of advertising in one block between Wrigley and his new hotel-retail complex across the street. That is more than two stories of advertising surface in one city block. And since all this signage is electric, people in the neighborhood may believe they now live on the surface of the sun. Ricketts denies that he is trying to make the neighborhood into a gaudy Times Square, but the devil is in the vague details.
He also claimed that the hotel across the street would be seven stories tall. Except his own architectural plans show it is 91 feet tall (that is nine commercial stories). Besides a hotel, Ricketts plans to put in McDonald's, a health club and retail space. Most of the uses on this secondary block will be open 24/7, which will add to traffic, noise and pollution to the adjoining neighbors.
Several rooftop owners vow to fight for the 11 years left on their deal. Ricketts does not know how anyone can stop him. It is a naive remark. From all reports, the federal court settlement on which the rooftop deal was created is clear that the Cubs cannot obstruct the rooftop businesses. Ricketts admitted that he has a contingency fund in case of litigation. This means that he would be willing to breach the contract and pay damages than to have the rooftops continue on for the next 11 seasons. One can only assume that the Cubs want to drive the rooftop patrons back inside Wrigley Field at all costs. What would be the damage potential for lost revenue for these rooftop businesses? It could be $200 million.
Which is ironic since Ricketts keeps saying that the redevelopment project will cost his family $500 million. Two hundred million for outside park improvements and three hundred million for Wrigley. Except those numbers have not been verified, and appear inflated on purpose. The Cook County Assessor shows that the fair market value of Wrigley Field in its current condition is worth $32 million. Ricketts claims that he is going to spend $300 million to modernize but “make it look old.” Now, what homeowner, landlord or business person would spend almost ten times the value of your building just to rehab it? One would be insane to spend more than the property's current worth.
Outside, the new hotel complex at $300/sq foot would cost approximately $126 million to build so Ricketts cost estimate of $200 million is high. One could wonder if the additional overrun is to pay off litigation expenses and potential damage claims.
Ricketts claims his family is spending its own money to make these projects happen, except that may only be part of the story. It is most likely that the Cubs will borrow money to do these projects. The additional debt is at historic low interest rates. All the revenue generated by the Ricketts family enterprises in Lakeview will have to go towards payment of the old and new debt service. The debt service has had an affect on the baseball operations since team president Theo Epstein said that his budget was tapped out. The Cubs payroll has declined in the past three years and it will continue to fall as debt amount rises. When the owners say that these improvements will build a winning team, that is misstatement. Nothing in this plan earmarks set amount of money toward improving the baseball product. Ricketts and Epstein won't answer questions on if and when these new revenue dollars will spring into action to acquire top talent in free agency. The bottom line is that the development project debt service will trump the baseball budget for at least a decade.
The problem is that the public and media view the story as one about the fate of the Cubs. But the real story is the fate of the Ricketts family fortunes. Painted into a debt corner by Zell, Ricketts has bought the old saying “you need to spend money to make money.” The family needs Wrigley Field to generate money during the current off-season so that is why the plan includes more concerts, more sporting events, more facility tours, more permanent bar-restaurants on the properties.
Another problem facing Ricketts is the attitude that the sky is falling and the city needs to act right away of he will seek other options. The public is not stupid sheep. The public has been told that the Cubs local radio-TV broadcast rights with WGN expire in 2014. Again, since Ricketts did not renegotiate those low ball terms when he bought the franchise from the Cubs, everyone expects a financial windfall in license fees. So the idea that the Cubs are tapped out from finding more money by conventional means is wrong. The public also knows that the Cubs want a multibillion Dodger network deal when the current Comcast cable deal expires in 2019. The public knows the Cubs are sitting on a media gold mine but won't mine those hundreds of millions of dollars in revenue until after the entire neighborhood is re-created in the Ricketts image.
Ricketts is not used to dealing with push-back. He will soon be getting negative comments from the neighbors, landmark leaders, rooftop owners, community groups and possibly the league on franchise debt issues. Further, the roar is growing from actual Cub fans who have had their fill of bad baseball product on the field. The average Cub fan does not care about the worries of a billionaire family business squabble. They only care when the Cubs will field a competitive team.
LAND MARKED
JULY 14, 2013
After many hours of testimony, the Chicago Landmarks Commission decided that Wrigley Field is not really a landmark by its decision to allow large video billboard and outfield signs.
The Cubs received a slight reduction in the 6,000 sq ft video scoreboard and the 1,000 sq ft see-through sign over the objection of the rooftop owners, neighbors, preservationists and the ward alderman. The Cubs also received a massive 45,000 sq. ft additional advertising signage outside the ball park.
For those who believe that all this new signage is in preservation of the iconic look of Wrigley Field from the 1920s is wrong. There were no electronic video boards in the outfields of major league baseball in the 1920s. The concept that the new video boards are needed to “preserve” the old ball park is an illogical twist to really say “to pay for” decades of deferred capital and maintenance expenses.
The Ricketts massive redevelopment plan must go before the city council for final approval. If other alderman defer to the Lakeview alderman's objections to the nature and scope of the plans, then the Cubs could still lose. But it appears the mayor is silently on board. However, the rooftop owners who have a contract for unobstructed views may sue to enforce the last ten years of their contract.
If approved, Wrigley Field will no longer be Wrigley Field. It will be turned into Rickettsland, a year-round entertainment venue for concerts, corporate outings, meetings, soccer, football, bars and restaurants. Baseball will become a minor footnote in the overall plan for the area. Lost in the discussions of the Wrigley Field improvements is the oversized, full block commercial-hotel-retail center that Ricketts wants to build across the street. The five story complex takes up the entire block. It will include a 75 room hotel, a McDonald's, a health club, and retail stores. Not really discussed is the massive impact that a hotel has on traffic, parking, noise and garbage in the neighborhood. This full block redevelopment is more out of character than adding advertising signs inside Wrigley Field.
Ricketts needs all the new advertising revenue as an income stream (as non-baseball related income) to borrow more money to finance these large construction projects. Without the prospective rental income from tenants in the commercial block, it is hard to imagine how the Ricketts will obtain loans to pay for the construction. When Ricketts bought the Cubs, he took on mostly debt to pay for the purchase. The baseball revenues are declining in lockstep with the declining performance of the Cubs. The vision is to have an entire two city block area generating revenue for the family 365 days/year. That is why Ricketts wants to expand the Wrigley Field footprint to add more bar and restaurant space (to stay open on non-game days). He wants to capture every dollar he can from every Wrigleyville visitor.
And this is what this land planning issue is all about: business.
BAGGAGE
May 26, 2014
In a hissy-fit, Cubs ownership laid down the gauntlet to go to war. Tom Ricketts, citing his inability to get the rooftop owners to change their revenue sharing deal which runs through 2023, has decided to abandon last year's controversial Wrigley development plans and re-submit a new one with “everything he wants.”
Objective observers remarked last year that Ricketts got everything he wanted from the city. He got two large signs in the bleachers; he got an overzoned development to be built across the street approved without any real review; and he got a Times Square ugly advertising plaza and more commercial (sports bar) space.
Now, Ricketts wants to expand the stadium even more . . . than taking parts of public streets for free. He wants more seats and now seven (7) outfield signs. He is in the middle of promoting Wrigley Field an iconic landmark in order to sell “birthday” tickets in 2014 while at the same time proposing to destroy the baseball cathedral charm of the ball park. The only reason people still come to Wrigley Field is that is a throw back in baseball history, a Field of Dreams from past generations. Instead of restoring the facility, Ricketts wants to impose his revenue vision for his property.
Ricketts is quickly becoming the worst owner in Chicago sports history. He overpaid for the Cubs and Wrigley Field assets. He did not get a credit for the deferred repairs that the Tribune failed to do (which were pegged at $200-500 million in “public funds” snafu). He did not get concessions from the Tribune on their internal local broadcast contracts which Ricketts now, four years in his tenure, finds untenable. (He can only get new deals synched in 2020) He sold his father on the myth that the Cubs would draw 3 million fans every year, even if they lose. He was wrong; the Cubs lost thousands of season ticket holders as the team's futility is hitting rock bottom. By the team's own internal metrics, the Cubs project to lose at least $37.5 million in attendance revenue (a major dependent portion of the Cubs baseball budget according to President Theo Epstein.)
All the Zell baggage of the Tribune sale were known to Ricketts and his advisors (who include business operations lead Crane Kenney, a former Trib executive). The problem is that Ricketts was told by his father that if he bought the team, it would have to be self-sufficient. No additional capital would be put into the deal (which mirrors the Zell deal as well since the Tribune owns 5 percent with restrictive covenants that makes it impossible for the team to add capital or new debt.) As a result, Ricketts finds himself cash squeezed and unable to execute his grand plans. He has dramatically cut payroll after his first year of ownership. He is able to borrow more money to renovate Wrigley. He needs new revenue from advertising signage to improve cash flow.
But most importantly, he needs someone else to blame for his current baggage.
The easy target is the rooftop owners, who make money off “his” product. However, the Tribune sued the rooftop owners in a convoluted suit which led to a revenue sharing settlement where the Cubs receive 17 percent of the rooftop gross revenue. But the rooftops are not sold out like the old days because a) the economy tanked; b) the Cubs team is horribly bad and c) Ricketts has tried to undermine their businesses from the beginning. Rickett's RF party deck was a clear shot at putting a rooftop party inside the ball park (which has not done well because it is too expensive). Open luxury boxes are also aggressively advertised for group sales.
Ricketts wants Wrigley Field to be his own entertainment complex, Ricketts World, which operates 365 days a year with sports, concerts and other events. The Cubs are now deemed merely a tenant (as a separate legal entity to all the other development properties, including Wrigley Field). As such, the owners are pushing the boundaries of competition against neighborhood businesses, especially the bars, who don't get the same city breaks as the Ricketts have demanded in the past. Ricketts wants to increase the traffic to Clark and Addison, but he wants to take for himself all the patron dollars.
Fans are slowly coming around to the moving target that is Tom Ricketts vision of the Cubs and Wrigley Field. And most are not happy with it. Fans are concerned about their team - - - the players, the record and the playoff chase. In the past three seasons, the fans have been in an abusive relationship with their team: paying premium prices for a bad minor league team. They have been told to continue to pay for crap because they will get more satisfaction when the team turns around in 2016, 2017, 2020 or never. Some season ticket holders finally realized that they can bank their $10,000 cost and invest the money in the stock market, CDs or a retirement fund and have a healthy nest egg by the time the Cubs are good enough to have a secondary ticket market for playoff tix. Cub fans were not stupid, just too loyal for too long. They would still support their team if the players were trying, hustling, doing their best and improving their game. However, fans see today that the baseball executives are not even trying anymore to improve the club. The culture of losing is a cancer that will take down the core prospects currently on the team. Fans now realize they don't have to put up with an inferior product. For the first time in the past three generations, fans speak of the Cubs as being “unwatchable.”
Ricketts has opted out of the radio contract at the end of this season, with the eye on extracting more money for the rights. However, ratings are way down. WGN states that it is losing money on the broadcasts as it is. And radio experts state that it is difficult to find a comparable alternative station willing to pay more in the Chicago market. In the end, Ricketts move may lose him revenue in a new short term deal to 2019. The Cubs are tied to their local cable deal through 2019. So the team is not going to get the Dodgers billion dollar team network money until 2020. And Epstein told reporters that the Cubs won't be in a position to be free agent players until new TV deal is in place. In essence, the promised short term rebuilding plan is now almost a decade away. And by that time, with the changes in the cable TV industry losing subscribers and the Dodgers unable to extract carriage fees from other cable operators, there may be no broadcast revenue bonanza in 2020.
Fans also gave Epstein the benefit of the doubt. He said he had a plan, “a process,” to build a championship team. He lifted the Boston curse with two championships. But that was a different era, and he had a blank check book to overwrite his mistakes. In Chicago, Epstein has no money to spend on the best free agents. He has played the sign and trade routine with rehabbing or marginal starting pitchers to get more prospects. He trades for more prospects. He overspends on the international free agent market on teenagers hoping to find one potential star. Fans are coming around to the position that Epstein and his staff may not know what they are doing: if they cannot field a competitive team now, why do you believe they can build a competitive team with raw prospects? Statistically, only six (6) percent of prospects make it to the major leagues. The Cubs plan is to defy the odds and stock an entire team with their own prospects. It is highly unlikely because there is no guarantee for success. As one sportswriter commented, there can be only two outcomes on the prospect-only rebuild: unbelievable success or total failure.
The latter comes more into play after the news that Epstein has hired 41-year-old PED user Manny Ramirez as a player-coach for the Iowa Cubs. Why on Earth would anyone hire a person with so much personal baggage; a suspended steroid user and clubhouse diva to help polish and train the club's best prospects! Ramirez has no coaching experience to boot. Is this hire just another press release distraction away from the poor major league team? Or are the Cubs baseball executives out of their minds?
The final straw that breaks the Cubs fans backs will be when the Cubs trade away their Number One and Number Two starting pitchers by the trade deadline. Jeff Samardzija may never win another game for the Cubs since the team fails to give him any run support. He has played his way out of Chicago. Jason Hammel was another pitcher signed on a one year deal to flip to a contender at the deadline. With the Cubs system barren of any quality pitching prospects who are major league ready, why would any team trade their two best starting pitchers? Hammel will hit the free agent market at the end of the season, but Samardzija has two years of team control left. But the Shark does not want to sign with the Cubs. He wants to play for a winning team. And that losing culture is what will nullify the prospect of signing future free agents when the Cubs get any money to spend.
For a long time, we have speculated that the Cubs have been operating as a small market team because the Cubs do not have the financial position. The Cubs started off with a $140 million payroll and $745 million in debt. The team has pared down the payroll to $80 million but the debt service continues to drain operating funds. The Cubs cannot find traditional lending sources so that is why Ricketts first went to city for public funds to build his Ricketts World. But the city and state are bankrupt. Billionaire corporate welfare programs are a hard sell to taxpayers who are getting squeezed by government pension shortfalls and huge budget deficits.
The biggest piece of baggage that is sinking the franchise is club ownership. The Ricketts family got suckered into overpaying for a team and high maintenance facility. It got cornered with a high debt transaction. The only options were to increase revenue or cut costs. It is easier to do the latter. But in a contrary move, Ricketts has almost doubled the administration staff of the team, and spend millions on blueprints and architectural plans which he refuses to put into motion. Some believe that the re-working of the plans is a cover because he has no money to start full construction. And the city's approvals normally require action within a year or it expires. People realize now that Ricketts could have done the clubhouse and concourse renovations to Wrigley since they have nothing to do with the rooftop issues. But he did not. He claims he won't do anything until everything he wants is approved without litigation.
But last week, Ricketts knew down the litigation card on his own. He has thrown himself back under the bad PR bus. He has thrown himself back to square one with the city, neighborhood and the fan base. He wants to start over and ask for more revenue streams (probably based on rapidly declining revenue projections of the Cubs). Too bad for Cub fans that the Tribune sale could not be started over, with a new owner.
BATTLE OF THE PLAZA
June 19, 2016
The Chicago Cubs are on a historic run. After years of planned futility, the team is in first place in the NL Central. It has young hitters playing well and a veteran pitching staff that is dominating the league. All should be well at Clark and Addison.
But a very contentious battle has spilled out into the streets of Lakeview. It may be the last battle between the neighborhood businesses and the Ricketts family. And potentially the most bloody.
Ricketts now wants to have the triangle portion of the property turned into a 365-day-per-year outdoor beer garden. The area could hold up to 4,000 patrons. Ricketts wants to be able to sell liquor like a normal bar, with midnight plus closing times.
The neighborhood and local alderman were shocked by the plan. Ricketts claimed he had “a deal” with the city in 2003 to have this plaza party space. But in 2003, the proposed ordinance never made it to the city council.
So, Tom Ricketts ramped up his public relations battle with Wrigleyville Ald. Tom Tunney by giving a presentation to the Lakeview Chamber of Commerce in which he argued the team should have more flexibility with the ongoing improvements it is making to the 102-year-old ballpark. He claimed the Cubs are spending $750 million to upgrade Wrigley Field and the surrounding area. He claims the team's fans are delighted with the enhancements made to date. And he claims that the Ricketts family is doing it all “with no tax breaks, no nothing.” And stretching his logic further, Ricketts believes the Cubs should be allowed to sell alcohol on a new plaza envisioned for outside Wrigley Field without having the sales restricted to certain game-day hours and only to ticket-holders, as Tunney has proposed.
“We're a 100 percent privately financed stadium asking for the ability to generate economic activity to offset some the costs of saving a historic landmark. This is a substantial, remarkable and large private investment for the city of Chicago," Ricketts was quoted in a Chicago Tribune article on the meeting.
The Ricketts proposal would have created a new “sports plaza designation" in city code, allowing the team to sell beer and wine on the plaza until 11 p.m. on weekdays and midnight on weekends, with no game-day restrictions. But since there is no type of license currently available, Ricketts vendor filed for an outdoor patio license.
Tunney responded by filing his own ordinance that would create a “sports plaza designation,” but allow only beer and wine sales limited to the same hours as inside the ballpark, typically until the end of the seventh inning. The alderman's proposal also would restrict game-day access to the plaza to those who have tickets.
However, Ricketts said the plaza is “more than just a beer garden,” with many community events that “generate no revenue,” such as a winter ice rink, farmers markets, yoga classes and movie nights. On game days, Ricketts said the team would set up inflatable attractions for children and allow for alcohol sales and sponsor displays, such as vehicles from Toyota.
Ricketts argument in a nutshell is this:
We have spent $750 million (which is probably more than $200 million over budget) to improve the neighborhood so we should be entitled to do anything we want on our properties. And since Ricketts has made such a substantial investment, he is entitled to recover his costs.
Except the world and government does not work that way.
First, Ricketts is wrong to say his developments have cost the taxpayers nothing. The city gave away city owned property (sidewalks and streets) to the Cubs to expand the Wrigley foot print. Those properties would have cost a normal developer millions of dollars. Second, the city paid for the improvements to the infrastructure surrounding Wrigley Field.
It took years for people to realize that Ricketts is a modern day robber baron. He believes that anything associated with the Cubs - - - bars, t-shirts, programs, restaurants, entertainment, views - - - all belong to him. Anyone “making a dime off the Cubs” should be punished and put out of business. Any Cub fan walking through Lakeview should pay Ricketts and not any local bar or restaurant.
Ricketts pushed new video boards that blocked most of the rooftop owners, causing their businesses to fail. Ricketts built party patios behind those scoreboards to compete with the remaining rooftops. As a result, a twisted ruling that the Cubs renovations were allowed under the bad settlement agreement resulted with most of the rooftops closing or selling out to the Ricketts. It was a classic Old West trope of a cattle baron running the small sheep herders out of the valley.
People forget that all these improvements have nothing to do with the Cubs baseball team. Wrigley Field, the plaza, and the improvements across the street are not owned by the Cubs but by different Ricketts family companies. It is Ricketts, not the Cubs, who wants to profit from this redevelopment.
And like with the rooftops, Ricketts is gunning to wipe out the local neighborhood bars and restaurants with his overblown plaza idea. Everyone is forgetting the the plaza is going to be anchored by a 100,000 square foot building which is set to house many more bars and restaurants. Ricketts hotel and commercial complex across the street is going to have more bars and restaurants. No one is asking why there is any need for beer and wine sales in the open plaza with all these normal liquor establishments will soon come on line.
The real cringeworthy aspect of this plaza debate is the fact that if Ricketts gets his way, he would have the largest bar in the city that does not have any walls. The noise of 4,000 patrons, the amplified music of a stage, and the problem of people mingling on to main cross streets in the middle of the night is a health and safety nightmare. But if Ricketts can corral people who would have gone to the Cubby Bear or some other nearby tavern, that is one less dollar being spent in a competitor's venue. A Ricketts stranglehold on both pre- and post- Cubs games entertainment and alcohol sales will drive many local businesses into closure.
Alderman Tunney is aware of this fact. “Everyone would like to do the sky's the limit with their private property. [But] there's a role for government - - - and that's my role,” Tunney told the Chicago Sun-Times. He realizes that the Ricketts planned additional 100,000 square feet of new food and beverage space is already a lot for the area to handle. “We have a construction site. We've got public safety. WeÕve got to absorb the development we've already approved before we would give away the store,” he said.
The city has a duty to protect the health and safety of all its citizens. Ricketts has been bulldozing special treatment for years because the city's economy is soft and major construction projects have slowed down.
But there is a legal precedent that should stop this entire battle in its tracks. Earlier this year, the 7th Circult Court of Appeals for the Northern District of Illinois made a ruling which on the surface was a victory for the Cubs. A man was selling his own Cub fan magazine outside of Wrigley Field. He would make four issues a season, and sell them to patrons going into the ball park. The Cubs objected to any third party selling around Wrigley Field. So the publisher was sued for violating the city's Peddler's Ordinance. This local law requires any street seller to get an expensive license and permission to sell their items on city sidewalks. The publisher, an individual, said he could not afford to spend the hundreds of dollars on individual peddler licenses for his independent contractors to hawk his papers around the ball park. It would cost too much money - - - he'd be out of business.
Which is exactly what the Cubs want.
On appeal, the case had a twist. The court sidetracked the man's First Amendment argument that he had a right of free speech to sell his magazine on public property (which is fundamentally true.) The court also said that the Peddler's Ordinance could be burdensome on a small business operator in this case. But the court found a way around these tough questions by looking at another city ordinance. There is a local law which states for health and safety reasons, no one is allowed to sell anything on the sideways around Wrigley Field. The purpose of the law is to keep the flow of patrons in and out of Wrigley from spilling off the curb and into traffic. Constrictions on sidewalk movement by Sellers stopping people could cause crowd crush or injury in confined quarters. So the court found that there was a legitimate public health and safety law which forbids the publisher from selling his magazine outside Wrigley Field. Cubs win! Cubs win!
However, the Court concluded that this health and safety law applies to EVERYONE, including the Cubs who have employees outside hawking peanuts and programs. The Cubs said the law applies only to public streets and not the concrete that the Ricketts own around the park. The Court said no, the law applies to the entire area in the Wrigley Field block. The publisher appears free to go across the street and sell his magazine. The Cubs should not be allowed to sell anything on the walkways around Wrigley Field.
Which is a real problem if the law will be enforced in the future. The expansion of the Captain Morgan Club outside of the gate in the sidewalk area would appear to be a violation of the local safety ordinance. The Ricketts proposal to sell beer and wine in the plaza would appear to be a violation of the local safety ordinance.
Now, it could be argued that a plaza liquor license or beer garden permit would supersede the safety ordinance but that would be an admission by the city that it is permitting an unsafe activity and putting people in harm's way. Exceptions to the rule (especially given to the rich and powerful) tend to violate the old, fundamental concept of equal protection. All laws should apply equally to everyone. Ricketts continues to press for laws and rulings that only benefit himself.
Ricketts wants to have a year round plaza because his vision is to have a mini-Orlando around Wrigley Field - - his own Disneyland that he controls with an iron fist. But the neighborhood has to fight this last battle to the end because for many, their personal livelihood is at stake.
RETURN TO THE WRIGLEYVILLE WAR -- PART ONE
GO TO WRIGLEYVILLE WAR - - PART TWO
GO TO WRIGLEYVILLE WAR - - - PART THREE
GO TO WRIGLEYVILLE WAR - - - PART FOUR
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