I take issue with the one-sided nature of Bruce Levine's report. He did not challenge Tom Ricketts statements to season ticket holders.
Levine stated Ricketts' comment were notable because owners and players have key financial discussions looming as they negotiate a return-to-play framework for a 2020 season that has been suspended due to the coronavirus pandemic. Owners have proposed a plan that includes 50-50 revenue sharing, which the union has pushed back against, saying that it's a form of a salary cap.
Some players have expressed the belief that they should be compensated on a full pro-rated basis because they're the ones taking the health risk, as Rays ace Blake Snell said recently. Beyond that, another argument is that it's unfair for owners to "privatize the the gains and socialize the losses," as powerful agent Scott Boras said. The union hasn't officially commented on its stance.
Under the system of paying players fully pro-rated money, the losses would be too significant in the owners' eyes. MLB owners stand to lose an estimated $4 billion if no baseball is played in 2020, MLB commissioner said on CNN on Thursday.
"This has been a total shutdown of Major League Baseball," Ricketts said. "Unlike the NBA or NHL who had played 80 percent of their seasons, we have played zero. We have to look at how economics will affect the rest of the season. If we are looking at games with no fans, then we do have a real challenge. For the Cubs, about 70 percent of the (gross) revenues come in on the day of games. It comes in through selling tickets, concessions and the ballpark experience (such as parking and merchandise). The other 30 percent comes in through media -- whether it's on Marquee Sports Network, our local media partners and our share of the national media revenues.
"So ultimately, what we are looking at if we can get players into the ballparks is playing a partial season without fans. We are looking at 30 percent of our economics cut in half, so the fact is we must dig deep to find a financial model that works -- the players must feel fairly compensated and ownership doesn't continue to absorb the kind of losses we have so far this season. We are all working diligently toward that. At some point, there will be more discussions. You will hear a lot about it and read a lot about it. It must come down to finding a solution that works for everyone."
Ricketts emphasized players safety is the top priority for the league and owners.
"Every week, the owners have met to talk about how to get baseball back on the field," he said. "We have currently talked about getting back into our home ballparks for this season. That would be without fans. The league has worked very diligently to put into place the most extensive set of protocols, medical safeguards that are out there anywhere. We would be limiting access to the players, limiting access to the number of people in the park. With a strong testing regiment and various other protocols, we can create the safest working environment possible for our players if they are able to come back this summer. We do not have a 100% answer or all clear, but we think the league has created a safe working environment for players to come back to the ballparks. That is very good."
The news report only soft peddles an owner who is not telling a complete truth by trying to gain sympathy over his greedy players. Ricketts is snake oil selling his season ticket holders WHO ALREADY GAVE HIM THEIR MONEY. But Ricketts is hiding in his figures.
As I have reported since the Zell sale, Ricketts family has divided up various parts of "the old Cubs" into separate legal entities: the Cubs as a baseball franchise, Wrigley Field as a real estate owner, the parking lots as a different LLC, the triangle parcel as a separate corporation, and the hotel block as a separate entity. In other words, the Cubs have been stripped of any outside revenue generating properties.
The Cubs team is merely a TENANT at Wrigley Field. It does not share ANY of the revenue from parking, the plaza, or the real estate development income.
When Ricketts says that 70% of Cubs income comes directly from fans (when the league average is only 30%) it is a three card monte financial statement illusion. He is not counting the RENT the Cubs pay to the Ricketts, or all the Wrigleyville income/outside ball park concessions and alcohol sales. The Cubs were stripped down of any outside income sources so the money could flow directly into Ricketts bank accounts.
As for the other 30% income: Marquee Network (a bust), local radio (on a station friendly low revenue deal because Kenney screwed up local rights years ago), and the national TV contract share (which is less than other clubs because Chicago is a large market city). When he says half of the media money is gone, he is saying that Marquee has generated nothing compared to his old Comcast partnership.
Ricketts's turned the Cubs baseball operation, if it is 70 percent dependent on the gate for income, into a struggling, small market model.
Claiming the Cubs are in dire straights in the coronavirus panic is a FALSE NARRATIVE because Ricketts brought this financial house of cards down on himself. Three restaurants in his buildings have closed in less than 18 months of operation. His big $$$$$ Cubs network is a disaster. Even his local radio partner stopped replaying classic games (when the station has no live content!) He is not selling merchandise; he is not selling alcohol by the barge load; he is not a very good businessman.
He wants "a solution that works" for everybody, but he is really whining about his own potential crushing financial losses. The 50-50 revenue share works for a delusional Ricketts because no fans in the stands means at 70 percent pay cut for players. If the media income is down by half or more, that means another 15 percent pay cut for the players.
The outside the ball club revenue has to have taken a major hit as Chicago shut down bars and most of the restaurants. Without Cub games, there is no influx of tourists and fans to his Wrigleyville properties. Closed businesses are going to fall behind on rental payments or go out of business. The Ricketts created their own overdeveloped real estate bubble which burst when the season was suspended by the pandemic.
Showing posts with label revenue. Show all posts
Showing posts with label revenue. Show all posts
May 17, 2020
May 12, 2020
SHOW US THE MONEY
The salvage show that is the 2020 baseball non-season continues to get strange.
MLB owners had been steadfast against revenue sharing (frequent in other sports). But since the 2020 season now seems to be getting shorter and shorter (if at all), owners have gone back to the union with another re-start proposal.
Prior to his proposal, the union had agreed to a $170 million player fund if the season was canceled. It was a way to settle any litigation over payment of guaranteed contracts, etc. In addition, the plan was to prorate existing player contracts over the number of games actually played in 2020.
But the roadblock to even this negotiated solution is the crippling effect of the shutdown. Individual states have different stay-at-home orders. Science cannot keep up with virus explanations or mathematical models of the contagion. Baseball has no revenue. The golden goose, broadcast TV, has gone sterile as advertising has dried up with most businesses closed or doing poorly.
The owners now want to change the plan to share 48 percent of the "revenue" with the players once the season starts. It is a significant change to the existing baseball payroll structure; a nullification of existing 2020 contract obligations. There is always been multiple account ledgers in baseball. Most teams now consider baseball "revenue" as only what the team pulls in from local TV rights, ticket sales (approx. 30 percent) and concessions. Owners believed that national TV rights, MLB.com and the development of alternative venue sources outside the ball park do not count.
Even if both sides could agree on what counts as "revenue," the owners must have determined that it will be exceptionally low. If you have no revenue, you share zero. If you receive only a fraction of the past revenue, then the players would only get a fraction of a fraction.
National broadcasters have had cable subscriber losses and huge ad revenue declines. There is no time frame for advertisers to return to baseball. Networks will demand concessions due to revenue losses. Owners have had their accountants flip their calculators around to find that prorated 2020 contracts with no significant revenue means massive losses to the owners. It would be better not to open the season.
We know that there are several clubs that were in a financial mess before the virus crisis. The Mets have been a mess for a long time. It is so bad that a vanity couple, A-Rod and J-Lo and their investors, quickly passed at buying the Mets because the financials were so bad. Playing a season could tip one or more clubs into bankruptcy, something that MLB fears the most since it would lose control over who would join their elite ownership club.
The union had stated that it already has a revised 2020 agreement in place with the owners. The union does not have to change its position. It is the owners who are scrambling to find a way to make a profit (and lessen operating expenses - - - salaries, travel costs, etc.).
The Illinois governor has hinted that the "peak" of infections may last through June 15. That means Illinois will remain in lock-down for another month. That would push the Cubs and White Sox back to a late July season start, if at all.An 80 game schedule turns into 65 games. The longer the wait, the closer it is to a point of no return.
It is assumed that there a pent up demand from fans for baseball's return. But I am not so sure. People have been living without "live" sports for two months. They have found other things to occupy their time, including parents who are working from home AND trying to teach their children homework lessons since virtual classrooms are nearly non-existent in elementary schools. Steaming services have been doing well, but there has been a reported peak in new subscribers and a slow down in viewers. Cabin fever has turned into media burnout.
Even if baseball returns, there is no guarantee that fans will jump on board. There is no guarantee that fans will come back to the ball parks. There is no guarantee that TV ratings will be anything close to respectable numbers. The great unknown is harsh. The epidemic is going to gut the middle class; mom and pop businesses that have been closed may never re-open. People want to go back to work, but cannot. People are confused, angry and in choking debt. A surge a bankruptcies will happen. People will not have the disposable income (the shock of the value of their retirement account balances).
It is still a 50-50 chance that this year there will be any professional baseball.
MLB owners had been steadfast against revenue sharing (frequent in other sports). But since the 2020 season now seems to be getting shorter and shorter (if at all), owners have gone back to the union with another re-start proposal.
Prior to his proposal, the union had agreed to a $170 million player fund if the season was canceled. It was a way to settle any litigation over payment of guaranteed contracts, etc. In addition, the plan was to prorate existing player contracts over the number of games actually played in 2020.
But the roadblock to even this negotiated solution is the crippling effect of the shutdown. Individual states have different stay-at-home orders. Science cannot keep up with virus explanations or mathematical models of the contagion. Baseball has no revenue. The golden goose, broadcast TV, has gone sterile as advertising has dried up with most businesses closed or doing poorly.
The owners now want to change the plan to share 48 percent of the "revenue" with the players once the season starts. It is a significant change to the existing baseball payroll structure; a nullification of existing 2020 contract obligations. There is always been multiple account ledgers in baseball. Most teams now consider baseball "revenue" as only what the team pulls in from local TV rights, ticket sales (approx. 30 percent) and concessions. Owners believed that national TV rights, MLB.com and the development of alternative venue sources outside the ball park do not count.
Even if both sides could agree on what counts as "revenue," the owners must have determined that it will be exceptionally low. If you have no revenue, you share zero. If you receive only a fraction of the past revenue, then the players would only get a fraction of a fraction.
National broadcasters have had cable subscriber losses and huge ad revenue declines. There is no time frame for advertisers to return to baseball. Networks will demand concessions due to revenue losses. Owners have had their accountants flip their calculators around to find that prorated 2020 contracts with no significant revenue means massive losses to the owners. It would be better not to open the season.
We know that there are several clubs that were in a financial mess before the virus crisis. The Mets have been a mess for a long time. It is so bad that a vanity couple, A-Rod and J-Lo and their investors, quickly passed at buying the Mets because the financials were so bad. Playing a season could tip one or more clubs into bankruptcy, something that MLB fears the most since it would lose control over who would join their elite ownership club.
The union had stated that it already has a revised 2020 agreement in place with the owners. The union does not have to change its position. It is the owners who are scrambling to find a way to make a profit (and lessen operating expenses - - - salaries, travel costs, etc.).
The Illinois governor has hinted that the "peak" of infections may last through June 15. That means Illinois will remain in lock-down for another month. That would push the Cubs and White Sox back to a late July season start, if at all.An 80 game schedule turns into 65 games. The longer the wait, the closer it is to a point of no return.
It is assumed that there a pent up demand from fans for baseball's return. But I am not so sure. People have been living without "live" sports for two months. They have found other things to occupy their time, including parents who are working from home AND trying to teach their children homework lessons since virtual classrooms are nearly non-existent in elementary schools. Steaming services have been doing well, but there has been a reported peak in new subscribers and a slow down in viewers. Cabin fever has turned into media burnout.
Even if baseball returns, there is no guarantee that fans will jump on board. There is no guarantee that fans will come back to the ball parks. There is no guarantee that TV ratings will be anything close to respectable numbers. The great unknown is harsh. The epidemic is going to gut the middle class; mom and pop businesses that have been closed may never re-open. People want to go back to work, but cannot. People are confused, angry and in choking debt. A surge a bankruptcies will happen. People will not have the disposable income (the shock of the value of their retirement account balances).
It is still a 50-50 chance that this year there will be any professional baseball.
April 8, 2020
QUARANTINED
The "leak" that MLB was kicking around the idea of playing all the 2020 season in a quarantined bubble in Arizona had many people wondering if it is even possible.
The idea is to have all 30 teams live and play in Arizona. No long distant travel. Half of the leagues have spring training facilities in Arizona.
All the teams would be quarantined in their hotels. There would be no fans at any games. The players would be shuttled to parks and hotels.
It is like the players would be inmates in professional baseball jail.
If the idea takes root, a late May early June start was mentioned in reports. That would mean baseball could be the first professional sport to return to action. It would also mean that players would be isolated from the public and their families for 4 months or more.
The reason is simple: medical experts believe there will be no vaccine for COVID-19 for at least a year. Then whether it is effective treatment is uncertain as the virus will continue to mutate.
The players want to play. The players do not get paid if they do not play. The players want to get paid.
The owners want to play games. The owners do not get any revenue without games. The owners want to get paid.
Even if this is a feasible solution, the human cost could be great. For example, will a veteran baseball player who has already made his multi-millions want to stay away from his family during a pandemic? Maybe not.
What happens when the first isolated player comes down with the virus? Is the whole team shut down? What about the hotel workers and team staff? Are they also isolated? The problem with any quarantine is that there will always be some outside contact. Vendors have to supply the hotel. Teams come and go on buses. The locker room is being used by three teams a day. Players will not be in hazmat suits 24/7.
What happens when a player gets injured? Are teams going to start the isolation with their full 40 man rosters? So teams will be paying players not on the active 26 man rosters? If a player gets injured, he will have to leave confinement to get treatment. He may not be allowed back into the quarantine area because he could have possibly exposed in the outside world. Does the 15 day disabled list turn into a 30 day (15 off and 15 in self-isolation)?
Owners project that 30 percent of their revenue is from fan attendance. If there are no fans, will the players take a 30 percent pay cut? The players are upset with service time issues. A pay cut on top of that would be hard to take.
Arizona summers are hot. Surface of the sun hot. If you have 30 teams trying to play 15 games a day, where will they play? There is only one domed stadium in Phoenix. Night games at spring training facilities? West coast time night games may not cut it for East Coast television broadcasts.
Will MLB force feed new rule changes under the guise of unique circumstances? For example, the runner at second to start the 10th inning. Or not having any extra inning games (allowing ties). Or having a 10 run slaughter rule after 5 innings.
MLB is thinking of ways to salvage its season. But as the days and weeks drag on in shuttered businesses, work at home environments and daily death tolls reported on newscasts, people may slowly lose interest in rebooting any professional sports season.
The idea is to have all 30 teams live and play in Arizona. No long distant travel. Half of the leagues have spring training facilities in Arizona.
All the teams would be quarantined in their hotels. There would be no fans at any games. The players would be shuttled to parks and hotels.
It is like the players would be inmates in professional baseball jail.
If the idea takes root, a late May early June start was mentioned in reports. That would mean baseball could be the first professional sport to return to action. It would also mean that players would be isolated from the public and their families for 4 months or more.
The reason is simple: medical experts believe there will be no vaccine for COVID-19 for at least a year. Then whether it is effective treatment is uncertain as the virus will continue to mutate.
The players want to play. The players do not get paid if they do not play. The players want to get paid.
The owners want to play games. The owners do not get any revenue without games. The owners want to get paid.
Even if this is a feasible solution, the human cost could be great. For example, will a veteran baseball player who has already made his multi-millions want to stay away from his family during a pandemic? Maybe not.
What happens when the first isolated player comes down with the virus? Is the whole team shut down? What about the hotel workers and team staff? Are they also isolated? The problem with any quarantine is that there will always be some outside contact. Vendors have to supply the hotel. Teams come and go on buses. The locker room is being used by three teams a day. Players will not be in hazmat suits 24/7.
What happens when a player gets injured? Are teams going to start the isolation with their full 40 man rosters? So teams will be paying players not on the active 26 man rosters? If a player gets injured, he will have to leave confinement to get treatment. He may not be allowed back into the quarantine area because he could have possibly exposed in the outside world. Does the 15 day disabled list turn into a 30 day (15 off and 15 in self-isolation)?
Owners project that 30 percent of their revenue is from fan attendance. If there are no fans, will the players take a 30 percent pay cut? The players are upset with service time issues. A pay cut on top of that would be hard to take.
Arizona summers are hot. Surface of the sun hot. If you have 30 teams trying to play 15 games a day, where will they play? There is only one domed stadium in Phoenix. Night games at spring training facilities? West coast time night games may not cut it for East Coast television broadcasts.
Will MLB force feed new rule changes under the guise of unique circumstances? For example, the runner at second to start the 10th inning. Or not having any extra inning games (allowing ties). Or having a 10 run slaughter rule after 5 innings.
MLB is thinking of ways to salvage its season. But as the days and weeks drag on in shuttered businesses, work at home environments and daily death tolls reported on newscasts, people may slowly lose interest in rebooting any professional sports season.
March 17, 2020
BAD IDEAS
A writer at NBC sports has decided that whenever baseball returns in 2020, it should hold a March Madness bracket tournament instead of a shortened season.
This is what happens when sports talkers and writers have no sports to talk or write about.
His idea is a seeded tournament with the two pennant winners having a first round bye. Each round would be a 9 game series. Teams would move their way along to a World Series tandem.
The problem with this idea: it is crazy bad.
Owners will not want half their teams total 2020 revenue end with 9 games (or 4 home games at most). The players cannot pad their stats for the next contract if games played is only 9 in 2020.
Fans would not be happy with a "one and done" series.
The local television revenue would be zero since local broadcasters would be screwed over.
The owners will demand that no matter how many available dates, they will play 100, 75 or even 50 to crown pennant winners.
The lack of spring training is going to take a real bad toll on pitchers. The new (and stupid) three batter pitcher rule is going to cause more injuries, even in a short season. Bullpen arms are not based on full innings' workload. One relief pitcher throws an inning, he is usually not available for a couple of days.
2020 is going to have many issues but fundamentally changing the schedule is nonsense.
This is what happens when sports talkers and writers have no sports to talk or write about.
His idea is a seeded tournament with the two pennant winners having a first round bye. Each round would be a 9 game series. Teams would move their way along to a World Series tandem.
The problem with this idea: it is crazy bad.
Owners will not want half their teams total 2020 revenue end with 9 games (or 4 home games at most). The players cannot pad their stats for the next contract if games played is only 9 in 2020.
Fans would not be happy with a "one and done" series.
The local television revenue would be zero since local broadcasters would be screwed over.
The owners will demand that no matter how many available dates, they will play 100, 75 or even 50 to crown pennant winners.
The lack of spring training is going to take a real bad toll on pitchers. The new (and stupid) three batter pitcher rule is going to cause more injuries, even in a short season. Bullpen arms are not based on full innings' workload. One relief pitcher throws an inning, he is usually not available for a couple of days.
2020 is going to have many issues but fundamentally changing the schedule is nonsense.
February 13, 2020
JUST STOP
MLB executives have too much time on their collective hands.
While the fan base shrinks, MLB is trying to "juice" up the product with a reality show concept for the playoffs.
First, reality shows suck. Second, if your business model is based off of CHEATERS then just film the Astros 24/7. Third, MLB continues to offend their loyal followers with stupid ideas. Just stop.
The idea of adding four more wild cards to the playoffs is NOT for the benefit of the fans. No, it is merely a new source of revenue to the owners. It does not enhance the fan experience if you expect playoff fans to sit through snow delays in mid-November.
The dilution of the sacred 162 game schedule is at stake. The record book is hollow ground. The best baseball teams are the ones who grind out the most victories. They should be rewarded for their efforts. They should not have to sit around for a week while additional .500 wild card teams play a best of whatever game series.
The stupid idea that higher wild card seeds can "pick" their opponent in a televised circus should be DOA. Who is going to watch that half-hour train wreck when every GM will pick the opponent with the worst record. Why have fan wrath or job insecurity if you "pick" the best opponent.
Also, in the current division system, three division champs automatically make the playoffs. That means teams with "better" records could miss out of the playoffs. Fans want to see the "best" teams in the playoffs. Either realignment or a smaller playoff system would be a better answer to the current proposal.
Divisions may be used only for scheduling purposes. The top four winning records in each league will be seeded for a best of 7 series opener to a best of 7 series pennant championship. The sudden death wild card round still puts less emphasis on "team" accomplishment for the entire season. Would you rather see two 100 win teams duke it out for 7 games instead of a couple of dogs trying to best 2 wins out of three series?
One major criticism is that the season is too long. Well, it can be shortened by mandating that every Sunday contest be a family doubleheader. Not one of those "split" contests, but an old fashion day at the park. Owners hate the idea of losing a full "gate" but with the outrageous concession prices they can easily make up the difference. But the other problem is that teams have out priced their target market: young families and children. It is too expensive to go to a game. That should be addressed before ownership tries to force feed another round of unneeded playoffs.
While the fan base shrinks, MLB is trying to "juice" up the product with a reality show concept for the playoffs.
First, reality shows suck. Second, if your business model is based off of CHEATERS then just film the Astros 24/7. Third, MLB continues to offend their loyal followers with stupid ideas. Just stop.
The idea of adding four more wild cards to the playoffs is NOT for the benefit of the fans. No, it is merely a new source of revenue to the owners. It does not enhance the fan experience if you expect playoff fans to sit through snow delays in mid-November.
The dilution of the sacred 162 game schedule is at stake. The record book is hollow ground. The best baseball teams are the ones who grind out the most victories. They should be rewarded for their efforts. They should not have to sit around for a week while additional .500 wild card teams play a best of whatever game series.
The stupid idea that higher wild card seeds can "pick" their opponent in a televised circus should be DOA. Who is going to watch that half-hour train wreck when every GM will pick the opponent with the worst record. Why have fan wrath or job insecurity if you "pick" the best opponent.
Also, in the current division system, three division champs automatically make the playoffs. That means teams with "better" records could miss out of the playoffs. Fans want to see the "best" teams in the playoffs. Either realignment or a smaller playoff system would be a better answer to the current proposal.
Divisions may be used only for scheduling purposes. The top four winning records in each league will be seeded for a best of 7 series opener to a best of 7 series pennant championship. The sudden death wild card round still puts less emphasis on "team" accomplishment for the entire season. Would you rather see two 100 win teams duke it out for 7 games instead of a couple of dogs trying to best 2 wins out of three series?
One major criticism is that the season is too long. Well, it can be shortened by mandating that every Sunday contest be a family doubleheader. Not one of those "split" contests, but an old fashion day at the park. Owners hate the idea of losing a full "gate" but with the outrageous concession prices they can easily make up the difference. But the other problem is that teams have out priced their target market: young families and children. It is too expensive to go to a game. That should be addressed before ownership tries to force feed another round of unneeded playoffs.
December 19, 2018
RICKETTS IRE
The Sun-Times picked up on a Deadspin story about "stolen emails" which
stated that the Ricketts family was upset with Mayor Emanuel who did not
give them $200 million for their private, outside Wrigley real estate development.
The Cubs spokesman did not deny the details of the story, per se. Deadspin went through the email trail in its story.
In 2013, when the Ricketts had not yet broken ground on their renovations to Wrigley, disagreements with the mayor on public funds for the family projects appeared to have inspired at least some of the family to consider abandoning the project—or moving the Cubs to a friendlier location, possibly in the suburbs, where Mayor Emanuel would not be so dismissive of the family's huge investment in the city.
It was reported at the time that the Ricketts were looking to build a new stadium in Rosemont, next to O'Hare, but those plans fizzled because of the infrastructure costs and site plan did not allow outside development. (Rosemont squeezed in a minor league park instead.)
In the few years after the Ricketts Family Trust purchased the Cubs, they repeatedly sought to use taxpayer money and subsidies to fund the development of Wrigley and its surrounding areas: They first wanted $200 million to develop the Triangle Building near Wrigley Field, sought the use of local amusement tax funds that might otherwise be spent on public services, and attempted to use a hefty federal subsidy to pay for renovations of the historic field. Though the negotiations, Mayor Emanuel remained unimpressed: “I will not put my money in their field so they can take their money, and invest around the field, and get a greater economic value,” the mayor said in 2012. “If it’s important, they should invest there.”
The angst over Emanuel’s public position apparently lasted even after the Ricketts family offered to put $300 million of their own money into the field, as well as an additional $200 million into surrounding businesses. Having received a final proposal for the Ricketts investment in the Cubs, the mayor said:
When I first started this discussion, the Cubs wanted $200 million in taxpayer dollars. I said no. Then they said we’d like $150 million, and I said no. Then they asked whether they could have $100 million in taxpayer subsidies, and I said no. Then they asked about $55 million in taxpayer subsidies. I said no. The good news is, after 15 months they heard the word ‘No.’”
Todd Ricketts, a prominent Republican fundraiser and the current finance chariman of the Republican National committee, forwarded the story to his father and siblings, writing:
I think we should contemplate moving, or at least recognize that we are maybe not the right organization to own the Cubs.
In a later email, he added:
I just hate the thought of Tom having to grovel to this guy to put money into a building we already own.
Patriarch Joe Ricketts, a prominent conservative, replied:
Yes Todd, it makes me sad, it hurts my feelings to see Tom treated this way. He is way superior to the Mayor in every way.
I have been brought up to deplore the type of value system adopted by the Mayor of Chicago. This is stating it mildly.
Though Tom Ricketts is the chairman and public face of the trust that purchased the Cubs, ownership is split between Joe Ricketts’s children, including Todd. The Ricketts sons did not responded to a request for comment on these emails.
No public funds were spent on upgrading Wrigley Field, and the Ricketts grudgingly paid for the $575 million, five-year renovations that will conclude this winter. But with changes and cost overruns, the investment was closer to $750 million (a figure Theo Epstein stated during one of his post season press meetings).
This report confirms the mentality of the Ricketts clan as it is "business first, community second if at all" philosophy. They should have been happy that the mayor rode Alderman Tunney to agree to allow the Ricketts to "overzone" and over build the land around Wrigley Field. A lot of neighborhood businesses closed because of this massive redevelopment. Neighbors are still not happy with the result.
And neither is the Ricketts clan. People were not spending all their savings on $11 beers at the 12 new alcohol venues Tom put in their paths on the way to the gates. There has to be a large revenue shortfall from the projections made in their original business plan. (As a side note, prior to the purchase, Tom Ricketts convinced his father that the Cubs were a cash machine. Even when the Cubs were lovable losers, the ball park was filled with people spending money.)
The bean counters and marketing people probably had over-valued the revenue from the projects and team performance. The high density, lower than expected revenue bump has to have the Ricketts hard this year. That is why Theo was grousing about how the Ricketts spent $750 million on new construction and that he has no money to spend on players. (Or as some have speculated, that Epstein overspent and borrowed from future payroll budgets to field the 2018 team). The Ricketts are also upset that the city won't allow them to do whatever they want (unlimited night concerts inside and outside Wrigley Field) to make their place a 365 day theme park.
The Ricketts have an entitlement complex . . . being rich means what you say should be followed like the golden rule. They hate following rules enacted by inferior people (politicians). There should be no road blocks in the path of making money.
Well, that is not how over-regulated America works in the 21st Century. Tom Ricketts must have been naive to think that his vision that the Cubs were a modern day gold mine; an ATM machine printing profits. Baseball economics, lower fan interest, declining sports ratings are severe negative trends that were on the table before the redevelopment process. Ricketts wrote some big checks that he may not be able to cash without spending down his daddy's inheritance.
So, even after a celebrated championship, ownership is starting to finger blame on others. The mayor, who is not running for re-election because of the negative crime news and imploding pension deficits, is an easy target. The family is also moving to try to unseat the local alderman who they perceive is a continuing thorn in their side. The family may have to do a double take if MLB signed away its baseball streaming rights to Fox in its new national TV deal extension. It is clear that the Cubs will not get in 2020 a multi-billion Dodger Network deal. Cable operators are not going to fall into that trap.
The Ricketts spent a large chunk of the family fortune on their Wrigleyville real estate ventures. The realization that their return on investment has evaporated would send chills down their spines especially when they continue to read about how other billionaires have extracted huge windfalls from cities to build them state-of-the-art sports complexes.
The Cubs spokesman did not deny the details of the story, per se. Deadspin went through the email trail in its story.
In 2013, when the Ricketts had not yet broken ground on their renovations to Wrigley, disagreements with the mayor on public funds for the family projects appeared to have inspired at least some of the family to consider abandoning the project—or moving the Cubs to a friendlier location, possibly in the suburbs, where Mayor Emanuel would not be so dismissive of the family's huge investment in the city.
It was reported at the time that the Ricketts were looking to build a new stadium in Rosemont, next to O'Hare, but those plans fizzled because of the infrastructure costs and site plan did not allow outside development. (Rosemont squeezed in a minor league park instead.)
In the few years after the Ricketts Family Trust purchased the Cubs, they repeatedly sought to use taxpayer money and subsidies to fund the development of Wrigley and its surrounding areas: They first wanted $200 million to develop the Triangle Building near Wrigley Field, sought the use of local amusement tax funds that might otherwise be spent on public services, and attempted to use a hefty federal subsidy to pay for renovations of the historic field. Though the negotiations, Mayor Emanuel remained unimpressed: “I will not put my money in their field so they can take their money, and invest around the field, and get a greater economic value,” the mayor said in 2012. “If it’s important, they should invest there.”
The angst over Emanuel’s public position apparently lasted even after the Ricketts family offered to put $300 million of their own money into the field, as well as an additional $200 million into surrounding businesses. Having received a final proposal for the Ricketts investment in the Cubs, the mayor said:
When I first started this discussion, the Cubs wanted $200 million in taxpayer dollars. I said no. Then they said we’d like $150 million, and I said no. Then they asked whether they could have $100 million in taxpayer subsidies, and I said no. Then they asked about $55 million in taxpayer subsidies. I said no. The good news is, after 15 months they heard the word ‘No.’”
Todd Ricketts, a prominent Republican fundraiser and the current finance chariman of the Republican National committee, forwarded the story to his father and siblings, writing:
I think we should contemplate moving, or at least recognize that we are maybe not the right organization to own the Cubs.
In a later email, he added:
I just hate the thought of Tom having to grovel to this guy to put money into a building we already own.
Patriarch Joe Ricketts, a prominent conservative, replied:
Yes Todd, it makes me sad, it hurts my feelings to see Tom treated this way. He is way superior to the Mayor in every way.
I have been brought up to deplore the type of value system adopted by the Mayor of Chicago. This is stating it mildly.
Though Tom Ricketts is the chairman and public face of the trust that purchased the Cubs, ownership is split between Joe Ricketts’s children, including Todd. The Ricketts sons did not responded to a request for comment on these emails.
No public funds were spent on upgrading Wrigley Field, and the Ricketts grudgingly paid for the $575 million, five-year renovations that will conclude this winter. But with changes and cost overruns, the investment was closer to $750 million (a figure Theo Epstein stated during one of his post season press meetings).
This report confirms the mentality of the Ricketts clan as it is "business first, community second if at all" philosophy. They should have been happy that the mayor rode Alderman Tunney to agree to allow the Ricketts to "overzone" and over build the land around Wrigley Field. A lot of neighborhood businesses closed because of this massive redevelopment. Neighbors are still not happy with the result.
And neither is the Ricketts clan. People were not spending all their savings on $11 beers at the 12 new alcohol venues Tom put in their paths on the way to the gates. There has to be a large revenue shortfall from the projections made in their original business plan. (As a side note, prior to the purchase, Tom Ricketts convinced his father that the Cubs were a cash machine. Even when the Cubs were lovable losers, the ball park was filled with people spending money.)
The bean counters and marketing people probably had over-valued the revenue from the projects and team performance. The high density, lower than expected revenue bump has to have the Ricketts hard this year. That is why Theo was grousing about how the Ricketts spent $750 million on new construction and that he has no money to spend on players. (Or as some have speculated, that Epstein overspent and borrowed from future payroll budgets to field the 2018 team). The Ricketts are also upset that the city won't allow them to do whatever they want (unlimited night concerts inside and outside Wrigley Field) to make their place a 365 day theme park.
The Ricketts have an entitlement complex . . . being rich means what you say should be followed like the golden rule. They hate following rules enacted by inferior people (politicians). There should be no road blocks in the path of making money.
Well, that is not how over-regulated America works in the 21st Century. Tom Ricketts must have been naive to think that his vision that the Cubs were a modern day gold mine; an ATM machine printing profits. Baseball economics, lower fan interest, declining sports ratings are severe negative trends that were on the table before the redevelopment process. Ricketts wrote some big checks that he may not be able to cash without spending down his daddy's inheritance.
So, even after a celebrated championship, ownership is starting to finger blame on others. The mayor, who is not running for re-election because of the negative crime news and imploding pension deficits, is an easy target. The family is also moving to try to unseat the local alderman who they perceive is a continuing thorn in their side. The family may have to do a double take if MLB signed away its baseball streaming rights to Fox in its new national TV deal extension. It is clear that the Cubs will not get in 2020 a multi-billion Dodger Network deal. Cable operators are not going to fall into that trap.
The Ricketts spent a large chunk of the family fortune on their Wrigleyville real estate ventures. The realization that their return on investment has evaporated would send chills down their spines especially when they continue to read about how other billionaires have extracted huge windfalls from cities to build them state-of-the-art sports complexes.
December 14, 2018
WHITE SOX FREE AGENCY
The 2019 White Sox have a payroll of around $34 million. The rebuild has stripped the club of most of its veteran contracts. So, in theory, the team is poised to spend money on free agents. However, during Reinsdorf's tenure, the team has only spent $64 million total on one player (Jose Abreu).
But the buzz from the Winter Meetings has been that the White Sox have been talking to the superstar free agents like Bryce Harper. Most people scoff at the prospect of a superstar signing with a 100 loss team.
But the real bottom line for superstars is to go where the money is because
that is why they have high power agents.
There is growing case that teams like the White Sox are the only big dollar landing
spots for Harper, Machado, Kuechel, etc. If the White Sox want a marquee player
to be the face of the franchise, they can pay him and still not even break an $80 million
payroll because of the rebuild. They can be selling (like the Cubs did with Lester) all the
great (pitching) prospects in the minors so the turnaround will be quick.
The Sox drew 1.6 million fans in 2017. If Harper adds 5,000/game attendance (405,000)
the gross revenue could increase by $20 million (based on 2017 average cost to attend game)
which would be 2/3 of Harper's salary.
High attendance high payroll clubs like the Cubs do not have any ball park revenue growth
to justify signing a big money free agent. Signing Harper would not increase attendance revenues at Wrigley Field.
Would a superstar like Harper want to be the "brand" of the White Sox. Clearly, if he was, he would get local endorsement deals and his No. 34 jersey would be a top seller. But those in Washington think Harper's personality does not fit that role. He wants to be plugged into a veteran, high win team who can win a championship or two. That is why he has been trolling the Cubs to sign him so he would not have to "carry" the team.
There may be a mystery team in the Harper sweepstakes. For example, the Giants are saying they are in a state of change. They are willing to entertain offers on Bumgartner. They have only 12 veterans on the roster but the projected payroll for 2019 is around $175 million. Adding a $30 million player is feasible to be under the luxury tax threshold, but you could spend the same amount and acquire 5 or 6 second tier free agents to actually create a competitive roster.
Harper's agent, Scott Boras, is still playing the preachy waiting game. It did not work well for last year's client, J.D. Martinez, who signed a team friendly deal with Red Sox prior to the start of spring training. One would think an agent would want to get a deal done sooner than later because teams are now more focused on trading for roster changes than signing free agents.
But the buzz from the Winter Meetings has been that the White Sox have been talking to the superstar free agents like Bryce Harper. Most people scoff at the prospect of a superstar signing with a 100 loss team.
But the real bottom line for superstars is to go where the money is because
that is why they have high power agents.
There is growing case that teams like the White Sox are the only big dollar landing
spots for Harper, Machado, Kuechel, etc. If the White Sox want a marquee player
to be the face of the franchise, they can pay him and still not even break an $80 million
payroll because of the rebuild. They can be selling (like the Cubs did with Lester) all the
great (pitching) prospects in the minors so the turnaround will be quick.
The Sox drew 1.6 million fans in 2017. If Harper adds 5,000/game attendance (405,000)
the gross revenue could increase by $20 million (based on 2017 average cost to attend game)
which would be 2/3 of Harper's salary.
to justify signing a big money free agent. Signing Harper would not increase attendance revenues at Wrigley Field.
Would a superstar like Harper want to be the "brand" of the White Sox. Clearly, if he was, he would get local endorsement deals and his No. 34 jersey would be a top seller. But those in Washington think Harper's personality does not fit that role. He wants to be plugged into a veteran, high win team who can win a championship or two. That is why he has been trolling the Cubs to sign him so he would not have to "carry" the team.
There may be a mystery team in the Harper sweepstakes. For example, the Giants are saying they are in a state of change. They are willing to entertain offers on Bumgartner. They have only 12 veterans on the roster but the projected payroll for 2019 is around $175 million. Adding a $30 million player is feasible to be under the luxury tax threshold, but you could spend the same amount and acquire 5 or 6 second tier free agents to actually create a competitive roster.
Harper's agent, Scott Boras, is still playing the preachy waiting game. It did not work well for last year's client, J.D. Martinez, who signed a team friendly deal with Red Sox prior to the start of spring training. One would think an agent would want to get a deal done sooner than later because teams are now more focused on trading for roster changes than signing free agents.
November 16, 2018
A SURPRISING NEW DEAL
I am more surprised than the average fan.
MLBTR reports that MLB signed a huge deal with Fox.
MLB reached a new seven-year, multiplatform agreement with FOX Sports spanning the 2022-28 seasons. Eric Fisher of Sports Business Journal reports that the contract’s rough value is a staggering $5.1 billion — a near-50 percent increase over the total value of the existing agreement between MLB and FOX. Bloomberg reports a similar total figure and notes that on an annual basis, the agreement represents a 36 percent increase over the prior contract.
Major League Baseball owners approved a three-year, $300MM streaming rights deal with DAZN, wherein DAZN will offer a weeknight show whose coverage bounces from game to game throughout the league — “similar to NFL RedZone.”
Under the terms of the television agreement, FOX Sports and FOX Deportes will retain exclusive rights to airing the World Series, one of the two annual League Championship Series and two of the four annual Division Series and the All-Star Game. FOX will also continue to air a pair of games each Saturday, with today’s release indicating that the number of regular season and postseason games aired on FOX will begin to increase in 2022. FOX also secures expanded streaming, social media and highlight rights, per the announcement.
It’s an enormous windfall for the league and one that further places a spotlight on the ever-increasing revenue available to Major League teams in today’s game — even as league-wide attendance dips and World Series ratings fell dramatically. The financial specifics of each team (or of any team) remain unknown as such information (including revenue sharing figures) is not made publicly available.
But in a general sense, each team will benefit by $170 million or around $24 million/team/year starting in 2022.
From a media standpoint, this is not based on the traditional Nielsen TV ratings book. The rights purchase includes multiplatforms, which would include mobile, streaming, on demand, or the next viewing technology platform (such as the next Facebook). Fox is trying to capture those distribution channels, but it is unclear if this Fox deal hampers the growth of MLB's own internet game applications and subscription based streams.
One thing is certain: the news of this huge extension will be on the minds of the superstar free agents who will not take any idea that the owners are poor or hitting a rough revenue patch.
MLBTR reports that MLB signed a huge deal with Fox.
MLB reached a new seven-year, multiplatform agreement with FOX Sports spanning the 2022-28 seasons. Eric Fisher of Sports Business Journal reports that the contract’s rough value is a staggering $5.1 billion — a near-50 percent increase over the total value of the existing agreement between MLB and FOX. Bloomberg reports a similar total figure and notes that on an annual basis, the agreement represents a 36 percent increase over the prior contract.
Major League Baseball owners approved a three-year, $300MM streaming rights deal with DAZN, wherein DAZN will offer a weeknight show whose coverage bounces from game to game throughout the league — “similar to NFL RedZone.”
Under the terms of the television agreement, FOX Sports and FOX Deportes will retain exclusive rights to airing the World Series, one of the two annual League Championship Series and two of the four annual Division Series and the All-Star Game. FOX will also continue to air a pair of games each Saturday, with today’s release indicating that the number of regular season and postseason games aired on FOX will begin to increase in 2022. FOX also secures expanded streaming, social media and highlight rights, per the announcement.
It’s an enormous windfall for the league and one that further places a spotlight on the ever-increasing revenue available to Major League teams in today’s game — even as league-wide attendance dips and World Series ratings fell dramatically. The financial specifics of each team (or of any team) remain unknown as such information (including revenue sharing figures) is not made publicly available.
But in a general sense, each team will benefit by $170 million or around $24 million/team/year starting in 2022.
From a media standpoint, this is not based on the traditional Nielsen TV ratings book. The rights purchase includes multiplatforms, which would include mobile, streaming, on demand, or the next viewing technology platform (such as the next Facebook). Fox is trying to capture those distribution channels, but it is unclear if this Fox deal hampers the growth of MLB's own internet game applications and subscription based streams.
One thing is certain: the news of this huge extension will be on the minds of the superstar free agents who will not take any idea that the owners are poor or hitting a rough revenue patch.
September 1, 2017
DESPERATION?
The Cubs are at a season high 13 games above .500. But the Brewers are still only 3.5 GB.
For the second time this season, the Cubs are messing with Brewers in regard to playing a game.
First, the Cubs called a game for an alleged rain out on a day that it did not rain. It created a
doubleheader disadvantage for Milwaukee.
Now, the Cubs got a "one time exception" to the Friday night home game ban. The reason:
the Cubs are coming home from a night game in Pittsburgh. Well, the team knew that a year ago
and the Cubs set the start times for their home games - - - a year ago.
The Brewers wanted the day game to go on as scheduled. They appealed to the league office.
No action was taken.
The Cubs may be "tired" on the trip home (?) but it is September - - - you can have 40 men on your roster!
Being tired in September is a weak excuse.
You are the defending World Champs. Why pull bush league schedule changes against your closest rival?
Perhaps it is because the Ricketts are so invested in the new infrastructure that they are desperate for
post-season revenue - - - a lot of post season revenue. World Series type revenue.
Attendance has not been max this year. The official seating number is around 42,000 but local business owners think the "real" capacity with standing room and party decks is more like 45,000. The Cubs have drawn 2.6 million in 66 home games (39,393). If the Cubs owners were banking on a full house for a full home schedule, revenue projections have been light by more than $18 million.
For the second time this season, the Cubs are messing with Brewers in regard to playing a game.
First, the Cubs called a game for an alleged rain out on a day that it did not rain. It created a
doubleheader disadvantage for Milwaukee.
Now, the Cubs got a "one time exception" to the Friday night home game ban. The reason:
the Cubs are coming home from a night game in Pittsburgh. Well, the team knew that a year ago
and the Cubs set the start times for their home games - - - a year ago.
The Brewers wanted the day game to go on as scheduled. They appealed to the league office.
No action was taken.
The Cubs may be "tired" on the trip home (?) but it is September - - - you can have 40 men on your roster!
Being tired in September is a weak excuse.
You are the defending World Champs. Why pull bush league schedule changes against your closest rival?
Perhaps it is because the Ricketts are so invested in the new infrastructure that they are desperate for
post-season revenue - - - a lot of post season revenue. World Series type revenue.
Attendance has not been max this year. The official seating number is around 42,000 but local business owners think the "real" capacity with standing room and party decks is more like 45,000. The Cubs have drawn 2.6 million in 66 home games (39,393). If the Cubs owners were banking on a full house for a full home schedule, revenue projections have been light by more than $18 million.
June 14, 2017
MAKING GREEN
The Cubs have announced three more private clubs for season ticket
holders. Underneath the entire bowl of box seats will be private clubs
where season ticket holders can spend a lot of money for an exclusive
place to eat and drink before, during and after the game. The infield
clubs have no views of the field and the bleacher club will have a peek
into the Cubs bullpen.
It is another aspect of the Ricketts family trying to seize every dime from Cub fans who come to Lakeview for games.
But there is more.
ESPN's business sports reporter, Darrem Rovell, the Cubs are marketing to their season ticket holders a "piece" of the championship season. Literally, a piece of the ivy from 2016.
The Cubs are offering up leaves of ivy that covered Wrigley Field's outfield wall last season to season ticket holders — and the price tag is $200 per leaf.
From Rovell:
The team emailed premier clients and season ticket holders on Tuesday offering the Ivy leaves that cover Wrigley Field's outfield walls from the 2016 season. Typically discarded when the ivy turns to red and sheds its leaves in November, the team, after the 2016 historic season, instead chose to collect the leaves for the first time and have them each authenticated with a hologram.
2,016 leaves will be sold. $403,200 in additional revenue to the Cubs.
How much more will premier season ticket holders have to pay to support their team?
It is another aspect of the Ricketts family trying to seize every dime from Cub fans who come to Lakeview for games.
But there is more.
ESPN's business sports reporter, Darrem Rovell, the Cubs are marketing to their season ticket holders a "piece" of the championship season. Literally, a piece of the ivy from 2016.
The Cubs are offering up leaves of ivy that covered Wrigley Field's outfield wall last season to season ticket holders — and the price tag is $200 per leaf.
From Rovell:
The team emailed premier clients and season ticket holders on Tuesday offering the Ivy leaves that cover Wrigley Field's outfield walls from the 2016 season. Typically discarded when the ivy turns to red and sheds its leaves in November, the team, after the 2016 historic season, instead chose to collect the leaves for the first time and have them each authenticated with a hologram.
2,016 leaves will be sold. $403,200 in additional revenue to the Cubs.
How much more will premier season ticket holders have to pay to support their team?
July 18, 2016
EXTENDING THEORIES
Hanley and Haugh were on this morning's sports talk discussing the question of Theo Epstein's contract extension which continues to be going no where.
They indicated that writer Jon Heyman speculates that since Andrew Friedman got $7 million plus bonuses from the Dodgers, Epstein is worth $10 to $12 million. If true, the question is whether any baseball executive is worth that kind of money.
Hanley and Haugh opined that since the Cubs "are printing" money with all the new construction and revenue sources inside and outside of Wrigley, making Epstein the highest paid executive is basically a no brainer.
But their premise is incorrect. The Cubs are not building the new plaza building or McDonald's block commercial spaces. Those real estate development projects are owned and controlled by different Ricketts family business entities. The Cubs are basically only a tenant in Wrigley Field (also owned by a different legal entity). The Cubs main revenue sources are ticket sales, concessions and broadcast revenues. The rest of the revenue generating business ventures goes directly to the Ricketts family.
Then, Haugh confirmed that Ricketts told him last year the most "undervalued" person in the Cubs organization was Crane Kenney. Kenney is in charge of the "business" side of the Cubs. He is the one who sets the baseball budget, not Epstein. Haugh said that Kenney recently got his contract extension from Ricketts.
Which gets back to earlier posts on this blog.
The Ricketts have used broad brush strokes of the Cubs and the team's continued success relying upon new revenue sources from outside the park real estate and business ventures. But those ventures are separate and legally distinct from the Cubs baseball team.
Epstein has said that he has had to get create and pull teeth in order to make last off-season's moves to sign Ben Zobrist, Jason Heyward and John Lackey. The business side of the organization has put the brakes on what Epstein really wants to do with the Cubs. Since day one, there has been this conflict.
At least the radio hosts recognize that Epstein may be fed up with the office politics and penny pinching budgeting of Kenney so Epstein does not sign a contract extension with the Cubs.
Then what happens?
Ricketts and Kenney could still claim their leadership and business skills were part and parcel to the success of the Cubs. They are the ones who approved all the major moves Epstein made during his tenure. It seems like the Red Sox situation all over again, when Epstein was tossed aside due to upper management and ownership wanted the spotlight on them for the championships.
It comes down to these theories:
1. Epstein will only sign an extension if he gets FULL control of all Cubs operations, including business side and budget.
2. Epstein does not want to sign an extension so he can get a better deal as a "free agent," which in my mind could include an equity stake in a franchise.
3. Ricketts does not want to pay $60 million for a President of baseball operations when there are costly overruns on his dream real estate projects.
4. Ricketts and/or Kenney may believe that since the minor league foundation of success is in place, they don't need Epstein or Hoyer to lead the franchise in the future. They can find someone else to be the General Manager under their control.
5. At the last minute, both sides will come to a compromise agreement.
However, if Epstein really wants to stay, and Ricketts really wants Epstein to stay, a contract extension should have been worked out a year ago.
They indicated that writer Jon Heyman speculates that since Andrew Friedman got $7 million plus bonuses from the Dodgers, Epstein is worth $10 to $12 million. If true, the question is whether any baseball executive is worth that kind of money.
Hanley and Haugh opined that since the Cubs "are printing" money with all the new construction and revenue sources inside and outside of Wrigley, making Epstein the highest paid executive is basically a no brainer.
But their premise is incorrect. The Cubs are not building the new plaza building or McDonald's block commercial spaces. Those real estate development projects are owned and controlled by different Ricketts family business entities. The Cubs are basically only a tenant in Wrigley Field (also owned by a different legal entity). The Cubs main revenue sources are ticket sales, concessions and broadcast revenues. The rest of the revenue generating business ventures goes directly to the Ricketts family.
Then, Haugh confirmed that Ricketts told him last year the most "undervalued" person in the Cubs organization was Crane Kenney. Kenney is in charge of the "business" side of the Cubs. He is the one who sets the baseball budget, not Epstein. Haugh said that Kenney recently got his contract extension from Ricketts.
Which gets back to earlier posts on this blog.
The Ricketts have used broad brush strokes of the Cubs and the team's continued success relying upon new revenue sources from outside the park real estate and business ventures. But those ventures are separate and legally distinct from the Cubs baseball team.
Epstein has said that he has had to get create and pull teeth in order to make last off-season's moves to sign Ben Zobrist, Jason Heyward and John Lackey. The business side of the organization has put the brakes on what Epstein really wants to do with the Cubs. Since day one, there has been this conflict.
At least the radio hosts recognize that Epstein may be fed up with the office politics and penny pinching budgeting of Kenney so Epstein does not sign a contract extension with the Cubs.
Then what happens?
Ricketts and Kenney could still claim their leadership and business skills were part and parcel to the success of the Cubs. They are the ones who approved all the major moves Epstein made during his tenure. It seems like the Red Sox situation all over again, when Epstein was tossed aside due to upper management and ownership wanted the spotlight on them for the championships.
It comes down to these theories:
1. Epstein will only sign an extension if he gets FULL control of all Cubs operations, including business side and budget.
2. Epstein does not want to sign an extension so he can get a better deal as a "free agent," which in my mind could include an equity stake in a franchise.
3. Ricketts does not want to pay $60 million for a President of baseball operations when there are costly overruns on his dream real estate projects.
4. Ricketts and/or Kenney may believe that since the minor league foundation of success is in place, they don't need Epstein or Hoyer to lead the franchise in the future. They can find someone else to be the General Manager under their control.
5. At the last minute, both sides will come to a compromise agreement.
However, if Epstein really wants to stay, and Ricketts really wants Epstein to stay, a contract extension should have been worked out a year ago.
May 11, 2016
STRASBURG EXTENSION
He will still be the 6th highest paid pitcher in MLB history. But why did Washington's ace pitcher accept a long term extension early in his free agent walk year?
It was a baffling move from all sides. The Nationals have agreed to a seven-year, $175 million extension with RHP Stephen Strasburg. Strasburg is a Scott Boras client. Boras has the reputation of getting his clients to free agency where he can leverage the biggest deals (by getting teams to bid against each other). With an extension, Boras loses leverage to make a long term deal.
For Washington, it is a seven year risk based on Strasburg's injury history. The ace pitcher has underperformed throughout his career. He will soon be on the 7th anniversary of his Tommy John surgery. The Nats had said in the past that their major concern with any pitcher post-TJ is in year 7: they don't think the repaired ligament will hold after seven full MLB seasons. There is proof of this by the rash of pitchers having second TJ surgeries. So the Nationals are going against their own medical philosophy to make this extension.
In order to make a deal, both sides must receive something they value. For Strasburg, it is guaranteed money and an opt-out. For the team, it is deferring most of the guaranteed money.
According to the Washington Post, Strasburg will take home a team friendly $15 million annually from 2017 through 2023, excluding bonuses which could reach $7 million. The remaining $70 million will be deferred without interest and paid out in $10 million installments from 2024 through 2030. The team is spinning this extension at a "present value" of only $162 million.
Strasburg can opt out after its third and fourth seasons. If he can stay healthy, he can be a premier free agent in 2019 at age 30. But the real value to Strasburg, given his history, is this deal acts like an insurance policy against another major injury. If his arm gets hit by a bus tomorrow, he will get paid a lot of money through 2030.
In additional minor give and takes, Strasburg won’t receive no-trade protection but the team got no provisions relating to arm health to discount any future payouts.
The question remains why would Strasburg forego free agency? One would believe that he would have asked for a $200 million type David Price deal. Some could say that Strasburg did not want to "bet" on himself going into this off-season. Which is odd concerning in his first seven starts, he is 5-0, 2.76 ERA, 1.041 WHIP. But his body or his mind must have told him to cut a long term deal now when things are going well to take off any future financial pressures on his family.
The Nationals must believe that they got a star player at a market discount. But other teams see the revenue horizon being darker than today. Cable television model, which fueled the mega-local broadcast rights deals in the past few years, is going by the wayside. Younger fans consume their entertainment on demand and not by sitting to watch a designated game at a designated time on a designated channel. The big money spenders like ESPN have started to purge high priced talent and reign in expenses since their carriage charges are being balked at by the cable and satellite operators. In seven years, the MLB broadcast revenue could be cut in half which would make even Strasburg long term deal seem very expensive.
It was a baffling move from all sides. The Nationals have agreed to a seven-year, $175 million extension with RHP Stephen Strasburg. Strasburg is a Scott Boras client. Boras has the reputation of getting his clients to free agency where he can leverage the biggest deals (by getting teams to bid against each other). With an extension, Boras loses leverage to make a long term deal.
For Washington, it is a seven year risk based on Strasburg's injury history. The ace pitcher has underperformed throughout his career. He will soon be on the 7th anniversary of his Tommy John surgery. The Nats had said in the past that their major concern with any pitcher post-TJ is in year 7: they don't think the repaired ligament will hold after seven full MLB seasons. There is proof of this by the rash of pitchers having second TJ surgeries. So the Nationals are going against their own medical philosophy to make this extension.
In order to make a deal, both sides must receive something they value. For Strasburg, it is guaranteed money and an opt-out. For the team, it is deferring most of the guaranteed money.
According to the Washington Post, Strasburg will take home a team friendly $15 million annually from 2017 through 2023, excluding bonuses which could reach $7 million. The remaining $70 million will be deferred without interest and paid out in $10 million installments from 2024 through 2030. The team is spinning this extension at a "present value" of only $162 million.
Strasburg can opt out after its third and fourth seasons. If he can stay healthy, he can be a premier free agent in 2019 at age 30. But the real value to Strasburg, given his history, is this deal acts like an insurance policy against another major injury. If his arm gets hit by a bus tomorrow, he will get paid a lot of money through 2030.
In additional minor give and takes, Strasburg won’t receive no-trade protection but the team got no provisions relating to arm health to discount any future payouts.
The question remains why would Strasburg forego free agency? One would believe that he would have asked for a $200 million type David Price deal. Some could say that Strasburg did not want to "bet" on himself going into this off-season. Which is odd concerning in his first seven starts, he is 5-0, 2.76 ERA, 1.041 WHIP. But his body or his mind must have told him to cut a long term deal now when things are going well to take off any future financial pressures on his family.
The Nationals must believe that they got a star player at a market discount. But other teams see the revenue horizon being darker than today. Cable television model, which fueled the mega-local broadcast rights deals in the past few years, is going by the wayside. Younger fans consume their entertainment on demand and not by sitting to watch a designated game at a designated time on a designated channel. The big money spenders like ESPN have started to purge high priced talent and reign in expenses since their carriage charges are being balked at by the cable and satellite operators. In seven years, the MLB broadcast revenue could be cut in half which would make even Strasburg long term deal seem very expensive.
April 27, 2016
EXPANSION
MLB is floating the idea that the league should expand teams. It is currently dealing with an odd 30 team, 2 league set-up. The idea is to add at least two teams to balance out the leagues.
However, that may not be a great idea. It dilutes the talent pool. It weakens the overall product.
But for owners, the division of $2 billion or so as entry fees is incentive enough to open the club to new members.
The potential new franchise cities include Montreal, which had the Expos but could not support the team; Mexico City, because all sports commissioners want their brands to be international; Vancouver, because it is foreign but too close to Seattle's market; Las Vegas, which wants any pro team but still has the gambling stigma; Austin Texas, because it is hip; Charlotte, but that may not be politically correct; Nashville, because it is central; or New Orleans, because it is NOLA.
If the MLB wants to even things out, it could always contract two teams. As it stands, the high revenue, big market clubs are subsidizing the small market teams. If a team cannot draw enough local support to survive on its own (like Tampa Bay or San Diego), then fold those teams into the remaining 28. The player's union would object since it would be losing 80 pro contracts.
But MLB has to start to realize that new public stadium financing is an impossible sell. Municipalities are bankrupt. Sports economists have been saying for decades that city financed sports facilities are dead money deals and do nothing for local economic development. Long term bond debt cripple city budgets and negatively impact other critical areas such as school funding.
The are no known billionaires crazy enough to buy a new franchise and build a new stadium with their own money. The political climate in the US is anti-government, anti-crony capitalism, anti-establishment. Public financing for private sports franchises is the last thing voters want to happen with their tax dollars.
Also in the head wind is the fact that the billion dollar cable team network deals have evaporated. The Yankees network is a dinosaur. The Dodgers network is a financial disaster for Time-Warner. Cable operators are balking at paying premium sports fees. And viewers are abandoning the cable box for streaming services which do not pay content providers as well as old network programming deals. Baseball may be at its peak revenue, but the trend is a steep drop-off.
Baseball owners are first and foremost businessmen. If they can see the massive changes that will come to the sport, there is no reason to rush into an expansion franchise. Just wait until the baseball economy tanks and pick up an existing weak franchise on the cheap.
However, that may not be a great idea. It dilutes the talent pool. It weakens the overall product.
But for owners, the division of $2 billion or so as entry fees is incentive enough to open the club to new members.
The potential new franchise cities include Montreal, which had the Expos but could not support the team; Mexico City, because all sports commissioners want their brands to be international; Vancouver, because it is foreign but too close to Seattle's market; Las Vegas, which wants any pro team but still has the gambling stigma; Austin Texas, because it is hip; Charlotte, but that may not be politically correct; Nashville, because it is central; or New Orleans, because it is NOLA.
If the MLB wants to even things out, it could always contract two teams. As it stands, the high revenue, big market clubs are subsidizing the small market teams. If a team cannot draw enough local support to survive on its own (like Tampa Bay or San Diego), then fold those teams into the remaining 28. The player's union would object since it would be losing 80 pro contracts.
But MLB has to start to realize that new public stadium financing is an impossible sell. Municipalities are bankrupt. Sports economists have been saying for decades that city financed sports facilities are dead money deals and do nothing for local economic development. Long term bond debt cripple city budgets and negatively impact other critical areas such as school funding.
The are no known billionaires crazy enough to buy a new franchise and build a new stadium with their own money. The political climate in the US is anti-government, anti-crony capitalism, anti-establishment. Public financing for private sports franchises is the last thing voters want to happen with their tax dollars.
Also in the head wind is the fact that the billion dollar cable team network deals have evaporated. The Yankees network is a dinosaur. The Dodgers network is a financial disaster for Time-Warner. Cable operators are balking at paying premium sports fees. And viewers are abandoning the cable box for streaming services which do not pay content providers as well as old network programming deals. Baseball may be at its peak revenue, but the trend is a steep drop-off.
Baseball owners are first and foremost businessmen. If they can see the massive changes that will come to the sport, there is no reason to rush into an expansion franchise. Just wait until the baseball economy tanks and pick up an existing weak franchise on the cheap.
April 12, 2016
INSECURITY
Did you see the pregame nonsense?
The day before the home opener, Ricketts was whining about the need to close off Clark and
Addison streets for "security reasons." He enlisted a local Congressman to shill about the
need for closure since large crowds are "soft targets" for terrorists. It was a specious argument.
Ricketts has wanted to shut down all traffic around the ballpark so he can create a Fenway fan experience. In reality, a closed off street is another free use of public space for the Cubs to sell its products to fans. In order to get his way, he floats a solution before unleashing a problem on the city.
In a calculated move which put fans in more danger, Ricketts puts the new metal detectors
outside the main gates so the fans are pushed toward from the Clark and Addison intersection. So 40,000 fans have to compress like sardines between the new checkpoint and curb in order to get into the plaza before the main gate.
It was the perfect storm for a Who concert line crush or a bus clipping a fan standing on the curb. The police used saw horses and real horses to slow down traffic and jaywalkers. If the Cubs wanted to create a chaotic scene in order to arm twist their entire domain over the streets, then the above image was on point.
Ricketts has run rough shod over the city and neighbors on what he wants for his venue.
He truly believes that every single dollar that comes into Wrigleyville during a Cub game day
is his. So he just goes ahead and pushes his agenda without approval or consequence.
The Cubs created a crushing fan safety situation by putting the metal detectors next to the intersection
instead of just outside the gate. The idea of creating a long line was to make sure that people came to the ball park earlier in order to get inside the park - - - to spend money inside the Wrigley confines.
Long lines at extended check point will mean people will want to get inside Wrigley quicker so more outside the bar sales of food, beer and merchandise will go into the Ricketts coffers instead in the neighborhood bars and restaurants.
Mayor Emanuel was quick to say that closing two major city streets so the Cubs can control
beyond the limits of their property lines and into the streets (again) was "a swing and a miss."
If the metal detectors are not relocated back to a sensible level, the danger of pedestrian and vehicle encounters will increase since the next phase of development is an entire commercial block with a hotel, taxi traffic, restaurants and health club patrons funneling through Clark and Addison.
Fans coming to the park were upset that the McDonald's had closed on the block across from the main gate. This was a landmark for people to meet prior to going into Wrigley. Families brought their kids to the restaurant because the food was cheaper than inside Wrigley. But now, for the time being, it forces fans into Wrigley to have lunch or dinner.
Ricketts will continue to say all of the ball park construction is to enhance the ball park experience for fans. But make no mistake about it, every move made by ownership is to improve the family's revenue streams and profit margins.
The day before the home opener, Ricketts was whining about the need to close off Clark and
Addison streets for "security reasons." He enlisted a local Congressman to shill about the
need for closure since large crowds are "soft targets" for terrorists. It was a specious argument.
Ricketts has wanted to shut down all traffic around the ballpark so he can create a Fenway fan experience. In reality, a closed off street is another free use of public space for the Cubs to sell its products to fans. In order to get his way, he floats a solution before unleashing a problem on the city.
In a calculated move which put fans in more danger, Ricketts puts the new metal detectors
outside the main gates so the fans are pushed toward from the Clark and Addison intersection. So 40,000 fans have to compress like sardines between the new checkpoint and curb in order to get into the plaza before the main gate.
ABC-Channel 7 Chicago news image
It was the perfect storm for a Who concert line crush or a bus clipping a fan standing on the curb. The police used saw horses and real horses to slow down traffic and jaywalkers. If the Cubs wanted to create a chaotic scene in order to arm twist their entire domain over the streets, then the above image was on point.
Ricketts has run rough shod over the city and neighbors on what he wants for his venue.
He truly believes that every single dollar that comes into Wrigleyville during a Cub game day
is his. So he just goes ahead and pushes his agenda without approval or consequence.
The Cubs created a crushing fan safety situation by putting the metal detectors next to the intersection
instead of just outside the gate. The idea of creating a long line was to make sure that people came to the ball park earlier in order to get inside the park - - - to spend money inside the Wrigley confines.
Long lines at extended check point will mean people will want to get inside Wrigley quicker so more outside the bar sales of food, beer and merchandise will go into the Ricketts coffers instead in the neighborhood bars and restaurants.
Mayor Emanuel was quick to say that closing two major city streets so the Cubs can control
beyond the limits of their property lines and into the streets (again) was "a swing and a miss."
If the metal detectors are not relocated back to a sensible level, the danger of pedestrian and vehicle encounters will increase since the next phase of development is an entire commercial block with a hotel, taxi traffic, restaurants and health club patrons funneling through Clark and Addison.
Fans coming to the park were upset that the McDonald's had closed on the block across from the main gate. This was a landmark for people to meet prior to going into Wrigley. Families brought their kids to the restaurant because the food was cheaper than inside Wrigley. But now, for the time being, it forces fans into Wrigley to have lunch or dinner.
Ricketts will continue to say all of the ball park construction is to enhance the ball park experience for fans. But make no mistake about it, every move made by ownership is to improve the family's revenue streams and profit margins.
April 8, 2016
DODGER SPENDING
The Los Angeles Dodgers open the season with the largest MLB payroll: $253 million. Only one other team has a payroll more than $200 million.
From the data collected by Spotrac, the Dodgers are the Kings of Dead Money. The Dodgers do not have $253 million worth of talent taking the field on Opening Day. Of the Dodgers' $253 million in 2016 salaries, only $140 million (55%) is committed to players on the active, 25-man Opening Day roster. The other 45% of payroll, $113 million, is for players on the disabled list, key players in the minors, or former players now playing on other teams. The $113 million is more than the entire payroll for 14 teams, according news reports.
The biggest chunk is for players on the disabled list, inlcuding outfielder Andre Ethier ($18.0 million salary), pitcher Brett Anderson ($15.8 million), Brandon McCarthy ($12.5 million), and second baseman Howie Kendrick ($10.0 million). The Dodgers are also paying $23.7 million for players on other teams, including all $8.0 million of the 2016 salary for first baseman Michael Morse, who was traded to the Pirates last season with the Dodgers agreeing to pay most of his remaining salary.
The Dodgers are in the position to be spendthrifts because of its billion dollar TV rights deal with Time-Warner to create new Dodger Network. The Dodgers are still getting paid, but TW is getting burned since it has been unable to sell the channel to other cable and satellite TV providers.
The blueprint follows the big money teams of the Yankees and Red Sox, who could afford to bury their mistakes by buying or trading for expensive talent. However, outspending your opponents does not necessarily mean that you can buy a championship. The KC Royals are a prime example of that principle.
From the data collected by Spotrac, the Dodgers are the Kings of Dead Money. The Dodgers do not have $253 million worth of talent taking the field on Opening Day. Of the Dodgers' $253 million in 2016 salaries, only $140 million (55%) is committed to players on the active, 25-man Opening Day roster. The other 45% of payroll, $113 million, is for players on the disabled list, key players in the minors, or former players now playing on other teams. The $113 million is more than the entire payroll for 14 teams, according news reports.
The biggest chunk is for players on the disabled list, inlcuding outfielder Andre Ethier ($18.0 million salary), pitcher Brett Anderson ($15.8 million), Brandon McCarthy ($12.5 million), and second baseman Howie Kendrick ($10.0 million). The Dodgers are also paying $23.7 million for players on other teams, including all $8.0 million of the 2016 salary for first baseman Michael Morse, who was traded to the Pirates last season with the Dodgers agreeing to pay most of his remaining salary.
The Dodgers are in the position to be spendthrifts because of its billion dollar TV rights deal with Time-Warner to create new Dodger Network. The Dodgers are still getting paid, but TW is getting burned since it has been unable to sell the channel to other cable and satellite TV providers.
The blueprint follows the big money teams of the Yankees and Red Sox, who could afford to bury their mistakes by buying or trading for expensive talent. However, outspending your opponents does not necessarily mean that you can buy a championship. The KC Royals are a prime example of that principle.
April 2, 2016
SHUT OUTS
The season has not started by millions of baseball fans will be shut out.
NY Post reports the continuing saga of sports teams and cable operators over team license fees.
Cable operators are winning.
The head butt over broadcast rights fees continues at the start of the season by big carriage standoffs for regional sports networks in New York and Los Angeles.
The LA Times reports that Time Warner Cable sweetened its deal for SportsNet LA, the exclusive TV home of the Dodgers, but no deal has been come to pass.
The cable provider, which already cut the channel’s price by 30 percent for one year, offered pay-TV providers a new six-year deal to carry the regional sports net.
The first year would be at the lower $3.50-a-month introductory price with the rate ticking up in subsequent years, according to the LA Times, citing a source close to the talks.
So far, AT&T’s DirecTV and other pay-TV operators in Southern California have not responded to the latest offer, which means some 3 million homes in Southern California will miss out on Dodgers games for a third straight season.
The billion dollar Dodger cable network deal was based upon full coverage of the LA area. That has not happened, and it makes future megachannel deals unlikely for teams, including the Cubs.
The same situation is playing out in the New York area. YES, which airs Yankees games, has been blacked out on Comcast since November amid a carriage dispute with the network’s majority owner, 21st Century Fox.
The blackout affects about 900,000 Comcast subscribers who live in New Jersey, Connecticut and Pennsylvania.
Under its old contract, Comcast was guaranteed the lowest price because of a so-called “most favored nation” clause. It wants to continue that even though it lost its title as the biggest pay-TV provider to the combined AT&T- DirecTV.
NY Post reports the continuing saga of sports teams and cable operators over team license fees.
Cable operators are winning.
The head butt over broadcast rights fees continues at the start of the season by big carriage standoffs for regional sports networks in New York and Los Angeles.
The LA Times reports that Time Warner Cable sweetened its deal for SportsNet LA, the exclusive TV home of the Dodgers, but no deal has been come to pass.
The cable provider, which already cut the channel’s price by 30 percent for one year, offered pay-TV providers a new six-year deal to carry the regional sports net.
The first year would be at the lower $3.50-a-month introductory price with the rate ticking up in subsequent years, according to the LA Times, citing a source close to the talks.
So far, AT&T’s DirecTV and other pay-TV operators in Southern California have not responded to the latest offer, which means some 3 million homes in Southern California will miss out on Dodgers games for a third straight season.
The billion dollar Dodger cable network deal was based upon full coverage of the LA area. That has not happened, and it makes future megachannel deals unlikely for teams, including the Cubs.
The same situation is playing out in the New York area. YES, which airs Yankees games, has been blacked out on Comcast since November amid a carriage dispute with the network’s majority owner, 21st Century Fox.
The blackout affects about 900,000 Comcast subscribers who live in New Jersey, Connecticut and Pennsylvania.
Under its old contract, Comcast was guaranteed the lowest price because of a so-called “most favored nation” clause. It wants to continue that even though it lost its title as the biggest pay-TV provider to the combined AT&T- DirecTV.
March 15, 2016
SHOW DOWN
There is a sense of baseball reaching a new golden age with the rise of many exciting new players and teams like the Cubs with championship expectations.
But this new age may have a real problem. The golden goose may get strangled in the players union and owners contract negotiations.
The MLB players union is going to take a hard line tact in the new CBA negotiations.
The current collective bargaining agreement expires 12-1-2016.
The players and agents are ticked off by the current CBA "service time" requirements
for free agency. The Cubs sat Bryant in the minors for 12 days which gave them an
extra year of control. The union wants to drastically change those rules, retroactively.
This CBA is going to get hot under the collar because the owners are starting to realize
that the Dodger billion dollar cable deals are not going to happen in the future.
The owners will press for economic concessions from the players to off-set cable TV
viewer and contract declines.
This could get drawn out and nasty.
The owners have established a series of spending caps for June draft and international signings. This was done to level the playing field for small market teams. The idea that a competitive balance through restricted spending will create a better baseball product throughout the league.
Draftees still get their million dollar bonus money for being first round selections, and teams have found ways to pay second and third rounders more money than slot values. So this part of the agreement may not get tweaked at all. It is the control aspect of the player development years that is at issue. A team can control a high schooler for 6 years and college players for 5 years. If they get to the major league roster, their base salary is $507,000. Not bad for a 20-something young man, but since many of them start their careers with break out seasons, their agents believe that teams are getting bargain basement value from non-arbitration eligible players.
More teams are filling roster spots with young, controllable players because they are cost effective with more upside than veteran free agents. And fans like to gravitate toward home grown rookie talent.
The union could demand that service time concept be eliminated all together. Teams would have a set amount of years to develop and promote a player to the major league roster or the player automatically becomes a free agent. Since most teams have a minor league system of a) rookie ball, b) low Class A, c) high Class A, d) Class AA, and Class AAA, the union could say that 5 years is the maximum amount of control time for any player. Ownership could counter saying that the 5 years would not give the team any return on development investment in a player even if they are promoted each step every year. A team would like 5 years of major league control of a player. But the union would not agree to 10 years of team exclusivity.
Opt-outs are becoming popular with player and player agents. Perhaps the minor league player could "opt-out" of team control if he is not being promoted or developed by a team, or he is blocked at the major league service after a certain amount of years. The union wants to get its members to the majors as fast as possible in order to earn major league pay (and pay dues). Owners and general managers do not want to "rush" players to the majors. And some veterans may not like the idea of forced promotion of minor league talent because that could affect their standing on a roster or in the free agent market.
The new CBA will be a show down between two factions at the economic cross road of the game.
But this new age may have a real problem. The golden goose may get strangled in the players union and owners contract negotiations.
The MLB players union is going to take a hard line tact in the new CBA negotiations.
The current collective bargaining agreement expires 12-1-2016.
The players and agents are ticked off by the current CBA "service time" requirements
for free agency. The Cubs sat Bryant in the minors for 12 days which gave them an
extra year of control. The union wants to drastically change those rules, retroactively.
This CBA is going to get hot under the collar because the owners are starting to realize
that the Dodger billion dollar cable deals are not going to happen in the future.
The owners will press for economic concessions from the players to off-set cable TV
viewer and contract declines.
This could get drawn out and nasty.
The owners have established a series of spending caps for June draft and international signings. This was done to level the playing field for small market teams. The idea that a competitive balance through restricted spending will create a better baseball product throughout the league.
Draftees still get their million dollar bonus money for being first round selections, and teams have found ways to pay second and third rounders more money than slot values. So this part of the agreement may not get tweaked at all. It is the control aspect of the player development years that is at issue. A team can control a high schooler for 6 years and college players for 5 years. If they get to the major league roster, their base salary is $507,000. Not bad for a 20-something young man, but since many of them start their careers with break out seasons, their agents believe that teams are getting bargain basement value from non-arbitration eligible players.
More teams are filling roster spots with young, controllable players because they are cost effective with more upside than veteran free agents. And fans like to gravitate toward home grown rookie talent.
The union could demand that service time concept be eliminated all together. Teams would have a set amount of years to develop and promote a player to the major league roster or the player automatically becomes a free agent. Since most teams have a minor league system of a) rookie ball, b) low Class A, c) high Class A, d) Class AA, and Class AAA, the union could say that 5 years is the maximum amount of control time for any player. Ownership could counter saying that the 5 years would not give the team any return on development investment in a player even if they are promoted each step every year. A team would like 5 years of major league control of a player. But the union would not agree to 10 years of team exclusivity.
Opt-outs are becoming popular with player and player agents. Perhaps the minor league player could "opt-out" of team control if he is not being promoted or developed by a team, or he is blocked at the major league service after a certain amount of years. The union wants to get its members to the majors as fast as possible in order to earn major league pay (and pay dues). Owners and general managers do not want to "rush" players to the majors. And some veterans may not like the idea of forced promotion of minor league talent because that could affect their standing on a roster or in the free agent market.
The new CBA will be a show down between two factions at the economic cross road of the game.
December 11, 2015
SHOCK AND AWE
Multiple reports state that the Cubs will sign free agent Justin Heyward.
This is a shocking development since the Cubs have been gerrymandering their books in order to sign Ben Zobrist and John Lackey.
It may go back to a comment made last week.
"We have a sense of urgency. We have a short championship window."
Jed Hoyer said that last week.
Talk about "the Plan" being turned inside out.
The front office has been frantic in their change in philosophy, spending
2015 "leftover" money (maybe the extra revenue from this post season),
deferring/back loading contracts and trading veterans for salary dumps.
Perhaps it is because Theo Epstein's contract expires in October 2016.
Perhaps the writing is on the wall that the Boom Revenue of 2020 is a mirage.
Perhaps because the Cubs won't be able to afford signing Bryant, Schwarber,
Soler and Russell.
And because the core of the pitching staff is on the downside of career
(Lester and Lackey) and one (Arrieta) who had an unrepeatable magical season.
One report said the Nationals offered Heyward $200 million. The Cub report says Heyward will sign for less than $200 million.
Analysts have had a wide range of opinions on Heyward's value, from a low of $100 million to a high end $192 million. It was reported that Heyward was looking for $24 million/season, money usually reserved for power hitters like Pujols and Cano (Heyward only hit .293, 13 HR, 60 RBI last year).
There is also an open question whether Heyward can play an expanded center field between slow footed, negative defenders Schwarber and Soler.
By coming to the Cubs, Heyward can hide in the shadows of other players such as Lester, Rizzo, Bryant and Schwarber.
And the Cubs have gone "all in" in 2016 so that may have convinced Heyward to sign with Chicago.
This is a shocking development since the Cubs have been gerrymandering their books in order to sign Ben Zobrist and John Lackey.
It may go back to a comment made last week.
"We have a sense of urgency. We have a short championship window."
Jed Hoyer said that last week.
Talk about "the Plan" being turned inside out.
The front office has been frantic in their change in philosophy, spending
2015 "leftover" money (maybe the extra revenue from this post season),
deferring/back loading contracts and trading veterans for salary dumps.
Perhaps it is because Theo Epstein's contract expires in October 2016.
Perhaps the writing is on the wall that the Boom Revenue of 2020 is a mirage.
Perhaps because the Cubs won't be able to afford signing Bryant, Schwarber,
Soler and Russell.
And because the core of the pitching staff is on the downside of career
(Lester and Lackey) and one (Arrieta) who had an unrepeatable magical season.
One report said the Nationals offered Heyward $200 million. The Cub report says Heyward will sign for less than $200 million.
Analysts have had a wide range of opinions on Heyward's value, from a low of $100 million to a high end $192 million. It was reported that Heyward was looking for $24 million/season, money usually reserved for power hitters like Pujols and Cano (Heyward only hit .293, 13 HR, 60 RBI last year).
There is also an open question whether Heyward can play an expanded center field between slow footed, negative defenders Schwarber and Soler.
By coming to the Cubs, Heyward can hide in the shadows of other players such as Lester, Rizzo, Bryant and Schwarber.
And the Cubs have gone "all in" in 2016 so that may have convinced Heyward to sign with Chicago.
December 1, 2015
YES NETWORK TOLD NO
Over the holiday weekend, Comcast just dropped the YES network.
Putting together the pieces, the cable operator said it was too expensive to carry the network. From reports: Comcast dropped YES Network, the television home of the New York Yankees, Brooklyn Nets and other programming, in Connecticut, New Jersey and Pennsylvania at midnight Wednesday.
The Yankees have a 20 percent stake in YES, while 21st Century Fox owns the remaining 80 percent. Comcast claims Fox's demand for a 33 percent increase in subscriber fees is too high for the network, which leans heavily on its Yankees programming for viewers. The two parties' previous agreement expired earlier this year during the Yankees' season. Comcast and Fox agreed to temporary deals to keep broadcasting during the Yankees' playoff hunt.
However, now that the season is over and the Nets are one of the worst teams in the NBA, Comcast has hardened its line and Fox won't budge. The final midnight deadline passed, and YES Network was blacked out.
Comcast said in a statement:
YES Network carried approximately 130 baseball games this past season and well over 90 percent of our 900,000 plus customers who receive YES Network didn’t watch the equivalent of even one quarter of those games during the season, even while the Yankees were in the hunt for a playoff berth. Viewership of the network in the baseball offseason is even lower. FOX and the Yankees are asking all of our customers to pay them hundreds of millions of dollars over the next several years to continue receiving the channel. The price FOX and the Yankees are requiring from our customers is not acceptable given the Network’s minimal viewership, which is why we have decided we can no longer justify continuing to carry the Network. YES simply does not present an appropriate price-value proposition for our customers.
A Comcast spokesman declined to comment on whether negotiations would continue.
Comcast has 900,000 YES subscribers in Pennsylvania, Connecticut and New Jersey — the latter two states will be most affected by the loss of hometown sports broadcasts. Comcast is not currently franchised in New York, where YES will continue to broadcast. With the Yankees season over and the Brooklyn Nets off to a less-than-stellar start, losing nine of the last 10 games, the YES Network may not have much leverage on its side at the moment. Moreover, the network is the most costly regional sports network, according to SNL Kagan, raking in $4.89 a month on average per cable TV customer. YES Network is carried in more than nine million homes in the New York market.
>>>> Two key points from the reports: 1. YES Network was extremely expensive to pass on to cable viewers, which shows in that only 10% of Comcast customers carried the channel. 2. The YES network received about $53 million per year from Comcast, which is a huge revenue source.
This also bodes ill for the Cubs planned 2020 launch of the Cubs Network. New York-New Jersey-Philadelphia market is about double the Chicago television market. The YES Network wanted a 33% increase in its carriage fees. Now, cable operators have been losing subscribers for years, mostly from the high cost of sports channels that many do not want to have on their bills. Comcast made a business decision that puts approximately 225,000 Yankee-Nets fans in the dark.
If you try to tie down the projected Cubs numbers off the YES model, with a 10 percent saturation rate, the Cubs cable base would be around 450,000 paid viewers, at only $13.5 million in annual revenue. This is a far cry from the billion dollar Dodger network deal, which now seems like a total disaster for Time Warner cable, the Dodgers' partner.
ESPN has been the kingpin in cable channels, but its luck has turned for the worse.
A steep drop in subscribers over the last two years has resulted in a $900 million annual hit to ESPN's bottom line.Analyst reports and SEC filings indicate that between 2013 to 2015, ESPN lost about 7 million total subscribers, with the flagship channels ESPN and ESPN 2 each dropping 4 percent from a high of 99 million to 95 million subs today. Dropping most dramatically was ESPN Classic, which is down 16.1 percent to 26 million subscribers.
The launch last year of the SEC Network, which has around 63 million subs, has helped "mask" a huge drop in affiliate revenue from ESPN's other networks. Based on an average per-subscriber carriage fee of $6.61 for ESPN, $0.83 for ESPN2, $0.63 for the SEC Network and $0.22 for ESPNU, the national sports conglomerate is taking in around $650 million less each year in affiliate fees compared to two years ago.
Meanwhile, he estimates the resulting loss of advertiser reach has shaved off another $200 million to $300 million from ESPN's bottom line.
So the gold standard of cable sports channels is getting hammered by lower subscriber base and declining cable advertising revenues. If ESPN and YES have major problems with their sports networks, how can anyone in the Cubs business office think they can do better on a more limited product in a smaller market?
Putting together the pieces, the cable operator said it was too expensive to carry the network. From reports: Comcast dropped YES Network, the television home of the New York Yankees, Brooklyn Nets and other programming, in Connecticut, New Jersey and Pennsylvania at midnight Wednesday.
The Yankees have a 20 percent stake in YES, while 21st Century Fox owns the remaining 80 percent. Comcast claims Fox's demand for a 33 percent increase in subscriber fees is too high for the network, which leans heavily on its Yankees programming for viewers. The two parties' previous agreement expired earlier this year during the Yankees' season. Comcast and Fox agreed to temporary deals to keep broadcasting during the Yankees' playoff hunt.
However, now that the season is over and the Nets are one of the worst teams in the NBA, Comcast has hardened its line and Fox won't budge. The final midnight deadline passed, and YES Network was blacked out.
Comcast said in a statement:
YES Network carried approximately 130 baseball games this past season and well over 90 percent of our 900,000 plus customers who receive YES Network didn’t watch the equivalent of even one quarter of those games during the season, even while the Yankees were in the hunt for a playoff berth. Viewership of the network in the baseball offseason is even lower. FOX and the Yankees are asking all of our customers to pay them hundreds of millions of dollars over the next several years to continue receiving the channel. The price FOX and the Yankees are requiring from our customers is not acceptable given the Network’s minimal viewership, which is why we have decided we can no longer justify continuing to carry the Network. YES simply does not present an appropriate price-value proposition for our customers.
A Comcast spokesman declined to comment on whether negotiations would continue.
Comcast has 900,000 YES subscribers in Pennsylvania, Connecticut and New Jersey — the latter two states will be most affected by the loss of hometown sports broadcasts. Comcast is not currently franchised in New York, where YES will continue to broadcast. With the Yankees season over and the Brooklyn Nets off to a less-than-stellar start, losing nine of the last 10 games, the YES Network may not have much leverage on its side at the moment. Moreover, the network is the most costly regional sports network, according to SNL Kagan, raking in $4.89 a month on average per cable TV customer. YES Network is carried in more than nine million homes in the New York market.
>>>> Two key points from the reports: 1. YES Network was extremely expensive to pass on to cable viewers, which shows in that only 10% of Comcast customers carried the channel. 2. The YES network received about $53 million per year from Comcast, which is a huge revenue source.
This also bodes ill for the Cubs planned 2020 launch of the Cubs Network. New York-New Jersey-Philadelphia market is about double the Chicago television market. The YES Network wanted a 33% increase in its carriage fees. Now, cable operators have been losing subscribers for years, mostly from the high cost of sports channels that many do not want to have on their bills. Comcast made a business decision that puts approximately 225,000 Yankee-Nets fans in the dark.
If you try to tie down the projected Cubs numbers off the YES model, with a 10 percent saturation rate, the Cubs cable base would be around 450,000 paid viewers, at only $13.5 million in annual revenue. This is a far cry from the billion dollar Dodger network deal, which now seems like a total disaster for Time Warner cable, the Dodgers' partner.
ESPN has been the kingpin in cable channels, but its luck has turned for the worse.
A steep drop in subscribers over the last two years has resulted in a $900 million annual hit to ESPN's bottom line.Analyst reports and SEC filings indicate that between 2013 to 2015, ESPN lost about 7 million total subscribers, with the flagship channels ESPN and ESPN 2 each dropping 4 percent from a high of 99 million to 95 million subs today. Dropping most dramatically was ESPN Classic, which is down 16.1 percent to 26 million subscribers.
The launch last year of the SEC Network, which has around 63 million subs, has helped "mask" a huge drop in affiliate revenue from ESPN's other networks. Based on an average per-subscriber carriage fee of $6.61 for ESPN, $0.83 for ESPN2, $0.63 for the SEC Network and $0.22 for ESPNU, the national sports conglomerate is taking in around $650 million less each year in affiliate fees compared to two years ago.
Meanwhile, he estimates the resulting loss of advertiser reach has shaved off another $200 million to $300 million from ESPN's bottom line.
So the gold standard of cable sports channels is getting hammered by lower subscriber base and declining cable advertising revenues. If ESPN and YES have major problems with their sports networks, how can anyone in the Cubs business office think they can do better on a more limited product in a smaller market?
November 18, 2015
TICKET HIKE
On average, Cub ticket prices for 2016 will go up approximately 10 percent.
The number of marquee games also has been increased from nine to 14 in the bowl and the bleachers, while one section of outfield terrace reserve has been reclassified to corner box reserve, with a 38 percent increase.
Colin Faulkner, senior vice president of sales and partnerships, said the team's annual analysis of ticket sales from 2015, along with its renewal numbers, the waiting list for tickets and the huge demand for postseason tickets, led to the team's highest increase since 2010.
"We've clearly seen an increase in demand, so that helped factor into an increase in our prices," Faulkner said. "Our goal is to remain competitive for the long term and provide value to our fans for a competitive baseball team, but also (value) in their tickets."
Faulkner said a team analysis found there was a 20 percent increase in 2015 for tickets on the secondary market over 2014, while postseason tickets were going for three to four times face value.
The first payment deadline of 20 percent is Dec. 2, with the full amount due Jan. 12. Faulkner said the majority of fans have put their postseason ticket refunds for the unplayed playoff games (Game 5 of the NLCS and three World Series games) toward next year's tickets.
In other words, the Cubs are trying to capture some of the "secondary market" value of Cub tickets. This goes back to the philosophy that ownership seethes about: no one but the Cubs should make money off the Cubs. The spike in prices for post season tickets is a natural occurrence and a benefit to season ticket holders who paid for years of dreadful teams. But the Cubs only want the team to profit from its success.
The Cubs had the third-highest average ticket price in the game in 2015, according to Team Marketing Report. They finished sixth in major-league attendance at 2.959 million fans after ranking 11th at 2.562 million in 2014.
The Trib reports the increases will range from about 7 percent in the upper box midfield/outfield to 14.5 percent in upper infield reserve to more than the 38 percent increase in some of the newly reclassified terrace boxes.
The highest average ticket price, a club infield box, is $105.24 per game, or $118 with the 12 percent amusement tax added. The lowest, upper deck outfield reserve, is $20.37, or about $23 with the amusement tax. Bleacher tickets remain about the same, from $16 to $65 before taxes, though the addition of marquee games will increase the total price.
One section of the terrace reserved outfield, affecting about 900 seats, or about 350 season-ticket holders, will be reclassified.
"Those are going up 43 percent," Faulkner said. "We found the first five or six rows are much different than the seats that could potentially be in Row 28-29 or 30 at the back of those sections."
The number of marquee games also has been increased from nine to 14 in the bowl and the bleachers, while one section of outfield terrace reserve has been reclassified to corner box reserve, with a 38 percent increase.
Colin Faulkner, senior vice president of sales and partnerships, said the team's annual analysis of ticket sales from 2015, along with its renewal numbers, the waiting list for tickets and the huge demand for postseason tickets, led to the team's highest increase since 2010.
"We've clearly seen an increase in demand, so that helped factor into an increase in our prices," Faulkner said. "Our goal is to remain competitive for the long term and provide value to our fans for a competitive baseball team, but also (value) in their tickets."
Faulkner said a team analysis found there was a 20 percent increase in 2015 for tickets on the secondary market over 2014, while postseason tickets were going for three to four times face value.
The first payment deadline of 20 percent is Dec. 2, with the full amount due Jan. 12. Faulkner said the majority of fans have put their postseason ticket refunds for the unplayed playoff games (Game 5 of the NLCS and three World Series games) toward next year's tickets.
In other words, the Cubs are trying to capture some of the "secondary market" value of Cub tickets. This goes back to the philosophy that ownership seethes about: no one but the Cubs should make money off the Cubs. The spike in prices for post season tickets is a natural occurrence and a benefit to season ticket holders who paid for years of dreadful teams. But the Cubs only want the team to profit from its success.
The Cubs had the third-highest average ticket price in the game in 2015, according to Team Marketing Report. They finished sixth in major-league attendance at 2.959 million fans after ranking 11th at 2.562 million in 2014.
The Trib reports the increases will range from about 7 percent in the upper box midfield/outfield to 14.5 percent in upper infield reserve to more than the 38 percent increase in some of the newly reclassified terrace boxes.
The highest average ticket price, a club infield box, is $105.24 per game, or $118 with the 12 percent amusement tax added. The lowest, upper deck outfield reserve, is $20.37, or about $23 with the amusement tax. Bleacher tickets remain about the same, from $16 to $65 before taxes, though the addition of marquee games will increase the total price.
One section of the terrace reserved outfield, affecting about 900 seats, or about 350 season-ticket holders, will be reclassified.
"Those are going up 43 percent," Faulkner said. "We found the first five or six rows are much different than the seats that could potentially be in Row 28-29 or 30 at the back of those sections."
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