EXCLUSIVE: A look inside the Cubs' rooftop contract

EXCLUSIVE: A look inside the Cubs' rooftop contract
January 27, 2014, 4:15 pm
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A rendering of what Wrigley Field could look like when the renovation project is completed. (Courtesy of Chicago Cubs)

With all of the discussion regarding the Wrigley Field renovation plan and the Chicago Cubs' ongoing battle with the rooftops, one thing has never been publicly discussed — the actual wording of the contract between the Cubs and the rooftops because no one has publicly acknowledged what that contract says.

In a CSN exclusive I have obtained a copy of the contract, I have had lawyers review the contract and I have the exact wording used in the deal.

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You can make your own judgements about who is in the right, who is in the wrong and who might win a potential litigation, but one thing is for sure: This contract — signed in January of 2004 and at the time provided the Chicago Cubs with a new and significant revenue stream — has become a major nightmare for a team looking to jumpstart its business plan.

If it ends up in a legal proceeding, I believe the Cubs would win, but it won't be easy. It will be expensive and there is no sure thing. That's why I still feel a settlement is the best solution for both sides and I believe one will eventually happen sooner or later. Now, I am not a lawyer (although I did get accepted to law school way back when and my late father was a very successful attorney), but my opinion was sealed after talking with multiple attorneys who have reviewed parts of the contract at my request.

The agreement, which is dated Jan. 27, 2004 runs until Dec. 31, 2023 and says a number of very interesting things above and beyond giving the rooftops the right to run their businesses. Among them includes a provision that says that the following:

6.6 The Cubs shall not erect windscreens or other barriers to obstruct the views of the Rooftops, provided however that temporary items such as banners, flags and decorations for special occasions, shall not be considered as having been erected to obstruct views of the Rooftops. Any expansion of Wrigley Field approved by governmental authorities shall not be a violation of this agreement, including this section.

7.3 From time to time during each season, the Cubs shall authorize WGN-TV or other Cubs broadcasting partners to identify a phone number where fans can call to reserve Rooftop seating.

7.4 The Rooftops shall have the right to inform the public that they are endorsed by the Cubs.

7.5 The Cubs Director of Marketing shall meet with the Rooftops before the start of each Major League Baseball season to discuss opportunities for joint marketing.

7.6 The Cubs shall include a discussion about the Rooftops on their tour of Wrigley Field and shall include stories positive about the Rooftops in The Vine Line.

7.7 Each of the Rooftops may display broadcasts of Cubs games to patrons at its facility, including displaying such broadcasts on multiple television sets, without any infringement of any copyright owned by the Cubs or its assignees.

The fact that the Rooftops were showing the game broadcasts on multiple televisions became an issue and one of the things that spurred both sides to agree on this deal back in 2004.

Now, looking at some of the above clauses in the contract, we find some very interesting things.

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First, it appears to me that the Cubs were giving the rooftops an avenue to run their businesses in exchange for a significant amount of revenue, which was a new stream for the franchise.

Section 6.6, the main point of contention between the two sides, can be interpreted in different ways. I spoke with a noted attorney who reviewed the entire agreement for me. Here is what he said about this section of the contract:

"The last line of 6.6 is the one that an arbitrator might have to decide," he told me. "And let's be clear that unless both sides agree, the contract does not provide an avenue for a lawsuit in the typical sense of the word. Instead, it sends both parties before an arbitration panel. The arbitration process will keep everything in the litigation confidential, as opposed to a federal lawsuit, which becomes part of the public record.

"Now, in looking at 6.6, the question that will have to be decided is whether or not the word 'expansion' will apply to a sign or Jumbotron. Looking at the wording of the contract, any expansion of Wrigley Field approved by governmental authorities shall not be a violation of this agreement, including this section. Is a sign in right field or a Jumbotron in left field an expansion of Wrigley Field? Or is an expansion of Wrigley Field something that would have to include seating or making the ballpark bigger? This is no slam dunk win for the Cubs, although I think they would ultimately prevail, but I would say the same about the rooftops."

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Now, with the Cubs looking to expand the outfield walls, the case can clearly be made that the project is an expansion of the ballpark rather than just putting in a Jumbotron and an outfield sign. Will an arbitration panel see it that way? That remains to be seen, but by building out the walls, the Cubs have clearly made a case that by the terms of the contract, they can proceed with their renovation plans with governmental approval.

Other observations that I have after reading and re-reading the entire contract multiple times includes the amount of promotional exposure the Cubs are supposed to provide the rooftops.

Consider that for a moment.

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The very people that you are battling against so fervently are the same people that you are supposed to promote when the season begins? That is unbelievable. Sources have confirmed to me that those marketing meetings have not been taking place for the past several years and that there is no joint marketing going on between the two sides.

Another very important part of the contract is Section 6.2 which could be an integral part of any potential litigation:

6.2 If the Cubs expand the Wrigley Field bleacher seating and such expansion so impairs the view from any rooftop into Wrigley Field such that the Rooftop's business is no longer viable even if it were to increase its available seating to the maximum height permitted by law, and if such bleacher expansion is completed within eight years from the Effective Date (1/27/2004), then if such Rooftop elects to cease operations before the beginning of the next baseball season following completion of such expansion, the Cubs shall reimburse that Rooftop for 50% of the royalties paid by that Rooftop to the Cubs during the time between the Effective Date and the date of expansion of the Wrigley Field bleachers. The Cubs shall pay such reimbursement to the Rooftop within 30 days of receiving notice from the Rooftop it is no longer viable and has ceased operations. Any Rooftop receiving payment from the Cubs pursuant to this provision shall cease operations for the remainder of the term and shall not seek or accept any compensation or benefit related to activity on a Rooftop on a day of a game.

The legal opinions on this clause look at the eight-year period that the Cubs are liable for potentially having to refund royalties and believe the Cubs could possibly win on an arbitrator's opinion of this section of the contract. Are the Cubs only liable for damages during the eight-year period that the agreement states? Or are they liable for the entire 20 years of the contract? It certainly seems that the Cubs have a solid chance to have an arbitration panel agree with them that the eight-year period (which expired on Jan. 27, 2012) was the only time in the contract that the Chicago Cubs were on the hook for a financial penalty or a return of royalties.

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Finally, to wrap up everything that we have discussed and analyzed in this agreement, I turned back to one of the attorneys who I had review the contract and here is what he said:

"I can see this case from both sides of the argument. The Rooftops feel they signed a contract to run their businesses without having their views obstructed in any way for a period of 20 years from Jan. 27, 2004 through Dec. 31, 2023 and that they have paid the Chicago Cubs a significant amount of money for that right. Now, they feel the Cubs want to violate that contract because a significant renovation to the entire Wrigley Field campus threatens to impede their views and their ability to earn a living.

"From the Cubs perspective, they believe that they have lived up to the contract and that the written agreement says that with governmental approval, any expansion of Wrigley Field shall NOT be a violation of this agreement. The Cubs also believe the eight-year period for returning royalties has expired, which means there is no avenue for damages. The Rooftops would proceed at their own risk, so to speak. The Cubs also have been careful to phrase everything that they have done to the park over the past several years as an expansion rather than as a renovation or remodeling of the park and the surrounding area.

"So, if the case goes to court and ends up in front of an arbitration panel, it could and most likely will hinge on the interpretation of the word 'expansion.' Is adding a Jumbotron, another outfield sign and moving the walls to limit the blockage to the Rooftops an expansion or is it simply a phrase being used to try to allow a Jumbotron and more outfield signage? This one could be tied up in court for a while and I think it is probably going to go the Cubs' way, but it is not a slam dunk. The fact though, that City Hall and Mayor Emanuel wants this to happen and that the Cubs will be bringing more jobs and more taxes into the City of Chicago (which desperately needs the revenue) leads me to believe both sides will be highly motivated and encouraged to settle this before it gets caught up in a lengthy court case that will cost millions of dollars for both sides in legal fees and will keep the Cubs from starting their renovation project. And, just to be clear, I understand why the Cubs don't want to start parts of the project without total approval. Should they begin digging and the case drags on, they will have no leverage at all to reach a settlement."

Finally, in doing significant research on this dispute, I was able to read the following public document which is the result of a City Council of Chicago meeting and subsequent vote on July 24, 2013 which passed 49-0 by the Chicago City Council:

"Specifically, but without limitation, Applicant shall have the right to expand the Wrigley Field bleachers to install (i) a new video board in left field, which may include an LED sign, a neon illuminated sign above it and two light towers to assist in outfield lighting; and (ii) a neon sign in right field, which signage has been approved by the Commission on Chicago Landmarks and, in addition to being part of the bleacher expansion, and along with all other signage contemplated by this Planned Development, is integral to the expansion and renovation of Wrigley Field and the development and redevelopment of the Property as contemplated herein.”

Thus, the argument can be made that the City of Chicago has granted the Cubs a permit to expand the bleachers, to add signage, lights, etc. and they have called it an expansion. Further, the economic protection period of eight years has lapsed.

The Cubs' position in the rooftop agreement appears to be as follows: The Rooftops pay the Cubs 17 percent for 20 years with no guarantees their views won’t change. The Cubs feel they offered economic protection for the first eight years, which lapsed Jan. 27, 2012. The Rooftops depended on the City never approving a change to the landmark ordinance or approval of a subsequent bleacher expansion. Both of those approvals came in July 2013.

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Again, I go back to the lawyer that I had review the contract and this City Council document:

"After looking at the wording that the Cubs have used consistently and that the City Council of Chicago also used and approved by a 49-0 vote, I believe it strengthens the Cubs' position against the Rooftops in a potential lawsuit," he added. "Again, no one can predict what an arbitration panel could decide, but it certainly seems the Cubs have done all they could do to demonstrate and prove that the entirety of the project — which includes a Jumbotron and signage — is indeed an expansion. If that is what it is and it ends up in front of an arbitration panel and they agree, then that will remove the roadblock standing in the way of the entire Wrigley renovation project."