The 'unsustainable' Cubs: Ricketts takes aim at Wrigley, TV deals

The 'unsustainable' Cubs: Ricketts takes aim at Wrigley, TV deals
February 17, 2013, 10:15 pm
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MESA, Ariz. – Tom Ricketts reported to Fitch Park on Sunday morning in his standard uniform – white Cubs dress shirt with the sleeves rolled up and tan pants.

The chairman addressed players and staffers in a conference room – “it was real Knute Rockne stuff” – before the first full-squad workout. Once he emerged from the closed-door meeting, he spoke with reporters for almost 15 minutes, facing a few softballs, but no gee-whiz questions about how cool it must be to own the team.       

Since his family finalized the $845 million purchase from Tribune Co. in October 2009 – which included a stake in Comcast SportsNet Chicago – the Cubs have never been above .500, except for a few days in April 2011.   

After hiring Theo Epstein and giving him the keys to the kingdom as president of baseball operations, two battles could help define Ricketts and his family’s legacy: Wrigley Field renovation and television deals.      

Because right now Ricketts says that the win-one-for-the-Tower spending is “unsustainable” in this light. While his family has promised that every dollar made would go back into the team, this season the Cubs are projected to have a mid-market payroll around $110 million.

This is not a full accounting, only a snapshot. According to the USA TODAY salary database, the Cubs payroll has gone this way from 2007 – the beginning of Alfonso Soriano’s megadeal – through 2011: $100 million, $118 million, $135 million, $146 million, $125 million.   

“You’re kind of comparing it to the Tribune payrolls of the last couple years,” Ricketts said, “which from our standpoint and from the team’s standpoint were just unsustainable. But what I can say is that it’s a closed system. Every dollar does stay in the baseball organization.

“That’s why it’s so important when we have these discussions about how you improve the field, to make sure that you’re really representing – I’m representing Theo – but I’m also representing the fans in terms of trying to make sure that we get the financial resources of the team to be as large as they can be.”

Ricketts said the Cubs aren’t expecting to add extra night games or more advertising signage this season as part of their proposal. Otherwise, he offered non-updates on their talks with the mayor’s office and rooftop owners. Still, game-changers are on the horizon, which will put president of business operations Crane Kenney back in the spotlight.  

Major League Baseball’s new national television contracts are close to kicking in, which should mean about an extra $25 million per team beginning in 2014. That’s one way to sustain growth.

The Cubs are also expected to opt out of their local WGN deal – which gave Tribune a perceived hometown discount – after the 2014 season.

The Cubs have an iconic brand – just ask them.

But a SportsBusiness Journal study of MLB’s local television ratings on regional sports networks found the Cubs to be among the bottom five teams last season, with an average Nielsen rating of 1.76, which amounted to nearly a 22-percent decrease from the year before.  

The Cubs will have to determine whether they’re willing to give up their national footprint, all those advertisements that have made Wrigley Field the state’s third-largest tourist destination in their estimation.     

The network will have to decide if it’s willing to shutter the superstation by passing on the Cubs. Scan some of the shows on WGN America’s website and you’ll see programming like “Matlock” and “Walker, Texas Ranger.”

“I would just say that we have a great partnership with WGN,” Ricketts said. “We have fans all over the country that watch WGN. And that’s a factor. As we start to kind of really dig in and start thinking about what the future of our media rights look like, that’ll be a factor, certainly.”

Fox – which recently made plays in the nation’s two largest markets – could try to take aim at Chicago. News Corp. acquired a 49 percent equity stake in the YES Network last November in a deal involving the New York Yankees worth almost $2 billion.

Time Warner Cable recently beat out Fox and committed some $8 billion to partner with the Los Angeles Dodgers in a deal that may be viewed as a tipping point. Fox Sports 1 could launch as a national network this summer.

“Obviously, local media rights have been increasing in value,” Ricketts said. “Hopefully, at some point, we will be able to get more value for our media rights. But it’s something that’s just playing out over time.”

The Cubs will have to hope that the bubble doesn’t burst. Ricketts declined to say when a Cubs network could even become viable. The Cubs are locked into their cable home on CSN through the 2019 season.

“We’re still in the early stages, so we really don’t have all the options laid out,” Ricketts said. “We’re not sure what’s next. It’s just time to start the discussion.”

Even if stadiums are becoming something like television studios in the age of exploding broadcast rights, you still need to sell tickets.

For the first time since 2003, the Cubs didn’t draw three million fans to Wrigley Field, and they shouldn’t expect a huge bounce off a 101-loss season.  

“Like I’ve always said, I think for us the key is just putting a compelling team on the field,” Ricketts said. “Obviously, we need to put the best team we can on the field. And when we win, the fans are there.

“We have a great fan base…the best fan base. And we have to give them the best product on the field. And once we start showing some of that on the field, the seats will all be full again.”

No doubt, there will be a bandwagon effect again on the North Side. But the most entertainment might be found inside City Hall and the corporate boardrooms as the two biggest storylines around this team play out in 2013. That’s where you should keep score.