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View Full Version : Trib says Cubs in violation of MLB debt rules


Vernam
06-03-2011, 01:40 AM
The Mets and Dodgers aren't company a team should want to keep these days. According to the Trib (http://www.chicagotribune.com/sports/baseball/cubs/ct-spt-0603-mlb-cubs-chicago--20110602,0,344709.story), the Cubs have run afoul of MLB's rule that requires teams to have enough resources to pay obligations such as player salaries. The story speculates that the reasons for their heavy debt are related to terms of the team's acquisition by the Ricketts from Zell, as opposed to player contracts. That's cold comfort: Contracts expire, but the terms that Zell got for his overvalued property are forever. Unlike Wrigley Field, which is crumbling with little chance of private or public funds to pay for major repairs.

This is why I appreciate how responsibly the Sox have been run, in comparison. For a long time, there were segments of this country -- including certain baseball teams -- that spent like there was no tomorrow. For the good of the game, I hope this isn't a sign of serious instability ahead.

Vernam

MARTINMVP
06-03-2011, 10:16 AM
The news keeps on getting better and better for this team and owner.

Seriously, it is amazing to see the unraveling at this pace right before our eyes.

doublem23
06-03-2011, 10:20 AM
That Fiscal Responsibility Championship Banner Unveiling is going to be so sweet

Fenway
06-03-2011, 10:47 AM
The news keeps on getting better and better for this team and owner.

Seriously, it is amazing to see the unraveling at this pace right before our eyes.

Cubs were a cash cow for the Trib - no debt

Rickets is bleeding badly - Sam Zell just played him like a sucker from Iowa...

oh wait

asindc
06-03-2011, 10:53 AM
That Fiscal Responsibility Championship Banner Unveiling is going to be so sweet

I wouldn't mock the point being made here so quickly:
http://www.latimes.com/sports/la-sp-0603-baseball-debt-20110603,0,6670746.story

Hitmen77
06-03-2011, 10:57 AM
Cubs were a cash cow for the Trib - no debt

Rickets is bleeding badly - Sam Zell just played him like a sucker from Iowa...

oh wait

Is Rickett's biggest problem the debt from his purchase of the club or is it the money needed to maintain/renovate Wrigley?

As I mentioned in the WTS thread about Ricketts, Rosie really ripped into him yesterday:
http://www.chicagotribune.com/sports/rosenblog/chi-cubs-owner-tom-ricketts-plays-fans-for-stupid-20110602,0,1480359.column

Irishsox1
06-03-2011, 11:10 AM
It was obvious after they won the bid that Rickett's overpaid for the Cubs by approximately $200 million and that they couldn't really afford it.

And to make it worse they are in a 100 year old stadium with no parking, limited luxury boxes a dwindling fan base and anytime you want to fix something, the government steps in and says you can't work on this "historic" building.

This is all MLB's fault. Of all the bidders out there, they went with the highest offer but the one with the weakest financial foundation.

doublem23
06-03-2011, 11:34 AM
I wouldn't mock the point being made here so quickly:
http://www.latimes.com/sports/la-sp-0603-baseball-debt-20110603,0,6670746.story

Nah

Fenway
06-03-2011, 11:38 AM
It was obvious after they won the bid that Rickett's overpaid for the Cubs by approximately $200 million and that they couldn't really afford it.

And to make it worse they are in a 100 year old stadium with no parking, limited luxury boxes a dwindling fan base and anytime you want to fix something, the government steps in and says you can't work on this "historic" building.

This is all MLB's fault. Of all the bidders out there, they went with the highest offer but the one with the weakest financial foundation.

Ricketts first problem was Sam Zell -

Now you all saw the games at Fenway this week - Fenway has so many ads I can't count them all...and most are placed to be seen on TV. Ricketts can't do that. No DiamondVision, the small United and Sears signs don't show up on TV so they are not worth that much. He is stuck with CSN and WGN for a long time....

He can't raise ticket prices any higher....

He is making the McCaskey family look good

cws05champ
06-03-2011, 11:50 AM
To be honest I really don't care how far the Cubs fall, or how much their reputation takes a hit. This has been a long time coming.

g0g0
06-03-2011, 11:50 AM
I'm not surprised by the other 8 teams on that list besides Philly and Detroit.

Red Barchetta
06-03-2011, 12:23 PM
To be honest I really don't care how far the Cubs fall, or how much their reputation takes a hit. This has been a long time coming.

I agree. Beer and steroid-driven home runs can only fill the seats for so long. Eventually, fans want winning baseball. The circus they have out their currently is as bad as anything from the 70s/closed upper deck era. The power of the Tribune Marketing (including the rebranding of Harry Caray) and the WGN Superstation built them into the darlings of baseball in the 80s/90s, however it's now a brave new world where they will have to spend money in order to compete, not only on players, but also on their ballpark and it sounds like the owner does not have the financial ability to do that. A corporate-named new ballpark may be his only chance. Or "Wrigley Field, Home of the Chicago Cubs sponsored by..."

sunofgold
06-03-2011, 01:17 PM
JR is pretty smart. He sees that Cubs are hurting and don't look to be improving soon. They are second to last in a very mediocre division (could be the weakest division in baseball right now).

JR saw the opportunity to just go for it because he knows that if this White Sox team is just competing for a playoff spot in September that they will get the fans. I think that JR really needs this 2011 team to at least make the playoffs to make his investment worthwhile.

If we don't make the playoffs this year, some of the contracts come off the books like Buehrle and Jackson. And then I don't think that JR will spend that much in 2012. However, make the playoffs and maybe he will spend.

Still opportunity exists to increase loyal and casual fanbase. Wrigley Field is literally falling down and they are just bandaging it right now.

downstairs
06-03-2011, 01:26 PM
Ricketts first problem was Sam Zell -

Now you all saw the games at Fenway this week - Fenway has so many ads I can't count them all...and most are placed to be seen on TV. Ricketts can't do that. No DiamondVision, the small United and Sears signs don't show up on TV so they are not worth that much. He is stuck with CSN and WGN for a long time....

He can't raise ticket prices any higher....

He is making the McCaskey family look good

Exactly. I know people on here bash Fenway Park and Wrigley, but lets face it- they are icons to many more people than those that hate the stadiums. That said, Fenway found a way to get with the times (like it or not) and shove as much advertising into the live game as possible.

No reason Wrigley can't. People will bitch about it for a year then get over it.

Fenway
06-03-2011, 01:34 PM
Exactly. I know people on here bash Fenway Park and Wrigley, but lets face it- they are icons to many more people than those that hate the stadiums. That said, Fenway found a way to get with the times (like it or not) and shove as much advertising into the live game as possible.

No reason Wrigley can't. People will bitch about it for a year then get over it.

Right now they are reasons Wrigley can't

Ivy on the walls

If you get approval for signs over the bleachers the rooftops have to be protected

Nobody knows how much the Red Sox are making - but they can't be hurting if they bought Liverpool.

downstairs
06-03-2011, 01:55 PM
Right now they are reasons Wrigley can't

Ivy on the walls

If you get approval for signs over the bleachers the rooftops have to be protected

Nobody knows how much the Red Sox are making - but they can't be hurting if they bought Liverpool.

Well I mean video strips on the upper deck front walls, some video on the scoreboard (the cutesy manual scores can stay). Also, removing some ivy for ads (they did that for one Under Armor logo, right?)

Also RE: Liverpool... also bought 1/2 of a large NASCAR team.

cws05champ
06-03-2011, 02:04 PM
I agree. Beer and steroid-driven home runs can only fill the seats for so long. Eventually, fans want winning baseball. The circus they have out their currently is as bad as anything from the 70s/closed upper deck era. The power of the Tribune Marketing (including the rebranding of Harry Caray) and the WGN Superstation built them into the darlings of baseball in the 80s/90s, however it's now a brave new world where they will have to spend money in order to compete, not only on players, but also on their ballpark and it sounds like the owner does not have the financial ability to do that. A corporate-named new ballpark may be his only chance. Or "Wrigley Field, Home of the Chicago Cubs sponsored by..."
I don't think that will solve all their issues though...they maybe get $75-$100M over 15-20yr period, which will be tough to get any company in this environment to pony up. And that will only go fix the ballpark and not solve their systemic financial issue with debt service and interest on the debt/loans they took to buy the club and current payroll. I just did not get the Cubs moves this offseason....they say their going to dump a bunch of money into Scouting and development and their farm system. Then they trade 5 players for Garza and sign Pena for $10M, adding $18M in salary. They are caught in between on what direction they want to go.

I think if they threaten a move it will be such a thinly veiled threat that no one would take them seriously. Everyone knows that Wrigley is the draw for the Cubs, and they would piss off the fan base even more. Fans would show up even less and stop traveling to Mesa for ST as well.

Also, I think there might be a few teams that would be willing to fix up Wrigley themselves and move right in (Oakland A's?)...if baseball/ JR would let that happen.

Fenway
06-03-2011, 02:16 PM
Well I mean video strips on the upper deck front walls, some video on the scoreboard (the cutesy manual scores can stay). Also, removing some ivy for ads (they did that for one Under Armor logo, right?)

Also RE: Liverpool... also bought 1/2 of a large NASCAR team.

NESN is the key to what they have done...

Ricketts has to say to the city, we DON'T need $$$ from you but you have to let us make changes without red tape. Start a rumor that you are looking at maybe Arlington Park or whatever....SCARE the bar owners in Wrigleyville and they will start calling the city...

miker
06-03-2011, 02:23 PM
You mean just selling the "Wrigley Field experience" isn't doing it for them anymore? :o:

WhiteSox5187
06-03-2011, 04:27 PM
NESN is the key to what they have done...

Ricketts has to say to the city, we DON'T need $$$ from you but you have to let us make changes without red tape. Start a rumor that you are looking at maybe Arlington Park or whatever....SCARE the bar owners in Wrigleyville and they will start calling the city...

I think the problem is that bar owners and the city blatantly KNOW that is what Ricketts is doing. When you are threatening to move the team or whatever, moving has to be a viable option, for the Cubs moving makes no sense whatsoever. They do not have any leverage when it comes to bargaining.

Frater Perdurabo
06-03-2011, 04:33 PM
Ricketts has one viable course of action in today's economic environment. He needs to slash payroll and have the Cubs take their lumps on the field for the next 5 years.

He needs to invest in the scouting and player development operation, work on paying off the team's debts, and find a way to finance a reconstruction of his park upgrade plan. There simply isn't money left over for a high payroll for the next 5-10 years.

canOcorn
06-03-2011, 07:03 PM
The report is a total sham. They're suggesting that the Flubs have $2.5B+ of debt. The team is well below $500M financed and that would suggest that they must be well below $50M in annual revenue, which we all know is impossible.

doublem23
06-03-2011, 07:13 PM
The report is a total sham. They're suggesting that the Flubs have $2.5B+ of debt. The team is well below $500M financed and that would suggest that they must be well below $50M in annual revenue, which we all know is impossible.

I'm going to guess that your math is incorrect and Major League Baseball's front office report to its owners is legitimate.

canOcorn
06-03-2011, 07:33 PM
I'm going to guess that your math is incorrect and Major League Baseball's front office report to its owners is legitimate.

You might want to suggest that those reporting on the report have their facts mixed up because it's a fact the Cubs most certainly do not have a debt to revenue ratio of 10/1.

doublem23
06-03-2011, 08:07 PM
You might want to suggest that those reporting on the report have their facts mixed up because it's a fact the Cubs most certainly do not have a debt to revenue ratio of 10/1.

Actually, they apparently do.

Source: http://www.chicagotribune.com/sports/baseball/cubs/ct-spt-0603-mlb-cubs-chicago--20110602,0,344709.story

canOcorn
06-03-2011, 08:31 PM
Actually, they apparently do.

Source: http://www.chicagotribune.com/sports/baseball/cubs/ct-spt-0603-mlb-cubs-chicago--20110602,0,344709.story

Much like I suspected. The earlier reports of a 10/1 debt to revenue ratio rule were incorrect. It's a debt to EBITDA ratio, not a debt to revenue ratio.

tebman
06-03-2011, 09:10 PM
Is Rickett's biggest problem the debt from his purchase of the club or is it the money needed to maintain/renovate Wrigley?

I don't know what the real numbers are, but when he paid that enormous price for the team the first thing I wondered was how he was going to pay to fix the ballpark.

Wrigley Field is a nearly 100-year-old building, and while parts of it have been rebuilt over the years there are fundamental concerns about how much longer it can go and still be safe. The upper deck's falling concrete is a symptom of larger problems in the structure. Fenway posted a while back about the architect who designed the Fenway Park renovation consulting for the Cubs: her first recommendation was to replace the upper deck and the Cubs responded by sending her home.

It's going to cost many tens of millions to fix that place and I really wonder if Ricketts has the cash to do it.

Hitmen77
06-03-2011, 10:37 PM
Selig says he sees no trouble with Cubs' debt structure:

http://www.chicagotribune.com/sports/baseball/cubs/ct-spt-0604-cubs-mlb-debt-service--20110603,0,4411352.story

Vernam
06-03-2011, 10:41 PM
I don't know what the real numbers are, but when he paid that enormous price for the team the first thing I wondered was how he was going to pay to fix the ballpark.One of the sports talk guys this morning was saying the Cubs need to start their own cable channel. (My initial thought was: If that gets Kaplan off CSN, I'm all for it.) But seriously, while that might be a smart move, they're so undercapitalized that they'd have to get a deep-pocketed media partner. Which brings us back to what made the franchise so valuable in the first place: its media "synergy" back in the Trib's hey day, when that company could make up its own version of reality about the team, and the stock market was on its side. Wow, that seems like a long time ago.

Ricketts paid top dollar for damaged goods. He shelled out for possibly the most expensive fantasy camp experience in the history of sports fans.

Back to the article . . . If several of the game's supposedly elite franchises are on something close to life support, Selig ought to be very concerned. This could be big when the CBA comes up.

Vernam

Fenway
06-03-2011, 10:50 PM
Selig says he sees no trouble with Cubs' debt structure:

http://www.chicagotribune.com/sports/baseball/cubs/ct-spt-0604-cubs-mlb-debt-service--20110603,0,4411352.story

Selig should start worrying about empty seats just about everywhere

Bos, Phi, SF, LAA, Tex, StL OK - NYY well the 1200 seats are empty -

I think MLB has maxxed tix as far as they can...

The explosion since 1990 HAS TO END
.

canOcorn
06-03-2011, 11:12 PM
Selig should start worrying about empty seats just about everywhere

Bos, Phi, SF, LAA, Tex, StL OK - NYY well the 1200 seats are empty -

I think MLB has maxxed tix as far as they can...

The explosion since 1990 HAS TO END
.

Teams are actually making more money by fans watching on TV, rather than coming to the game. Broadcasting rights are going insane. And I know that you know this........

Viva Medias B's
06-03-2011, 11:13 PM
Commissioner Selig evidently sees no problem (http://www.chicagotribune.com/sports/baseball/cubs/ct-spt-0604-cubs-mlb-debt-service--20110603,0,4411352.story) with the Cubs' debt issues in spite of them being on that list.

Frater Perdurabo
06-03-2011, 11:22 PM
Commissioner Selig evidently sees no problem (http://www.chicagotribune.com/sports/baseball/cubs/ct-spt-0604-cubs-mlb-debt-service--20110603,0,4411352.story) with the Cubs' debt issues in spite of them being on that list.

Selig is not going to come out and say anything to the effect of being alarmed or concerned about any team's financial woes.

WSox597
06-04-2011, 08:50 AM
Imagine the Trib printing this story, say, three or four years ago.

Didn't think so. The worm has definitely turned.

Dan H
06-04-2011, 09:22 AM
Ricketts has one viable course of action in today's economic environment. He needs to slash payroll and have the Cubs take their lumps on the field for the next 5 years.

He needs to invest in the scouting and player development operation, work on paying off the team's debts, and find a way to finance a reconstruction of his park upgrade plan. There simply isn't money left over for a high payroll for the next 5-10 years.

The problem is I don't know if Tom has 5 years.

In a recent game, Digger Phelps got up to sing during the seventh inning stretch. The crowd was dead. He tried to stir them by saying the team wasn't dead that day, they were only down 9-0. This lukewarm reception to the ongoing tradition is somewhat symbolic. You can only drink so much beer and go the rooftops so many times. The Cub losing has went on for too long. Many Cub fans have finally lost patience. The bubble is bursting over there.

roylestillman
06-04-2011, 09:29 AM
Imagine the Trib printing this story, say, three or four years ago.

Didn't think so. The worm has definitely turned.

What's more interesting was that it was a story broken by their sister paper the L.A. Times, which one could argue, has a grudge match with its parent company since they were bought by them. That poorly timed purchase plus Zell's poorly timed purchase is what led to the Tribune having to unload the Cubs. The proverbial worm is doing cartwheels.

Fenway
06-04-2011, 09:41 AM
The problem is I don't know if Tom has 5 years.

In a recent game, Digger Phelps got up to sing during the seventh inning stretch. The crowd was dead. He tried to stir them by saying the team wasn't dead that day, they were only down 9-0. This lukewarm reception to the ongoing tradition is somewhat symbolic. You can only drink so much beer and go the rooftops so many times. The Cub losing has went on for too long. Many Cub fans have finally lost patience. The bubble is bursting over there.

My hunch is the Blackhawks winning was the last straw for the Cubs fans...

The major price hike in tickets....bad baseball and whatever...

In someways noshows are worse than unbought seats as it shows people are no longer just content on going.

Fenway
06-04-2011, 09:49 AM
Teams are actually making more money by fans watching on TV, rather than coming to the game. Broadcasting rights are going insane. And I know that you know this........

Red Sox ticket sales covers their payroll so fannies in the seats are important.

I do know when Charles Dolan was trying to buy the Red Sox the Globe asked him his plans for Fenway and he said - It is a wonderful TV studio

vinny
06-04-2011, 09:08 PM
With all that debt, don't look for many big free agent signings:

http://www.suntimes.com/5763413-417/cubs-debt-situation-figures-to-affect-free-agent-plans.html

Side note: What kind of journalist uses the phrase "pissing match" in their copy?

sunofgold
06-07-2011, 12:15 AM
Their team isn't playing well. I could see them being the only sixth place team this year. I could see them with the worst record in the major leagues by the end of the year. Minnesota is improving and Houston could catch them.