Tuesday, August 25, 2009

Open Letter #7,412 to Tom Ricketts and His Family

Everyone seems to be getting their two cents in on what Tom Ricketts should do with the Cubs (assuming the deal actually closes). Ivy Chat only has three pieces of advice:

1) Hire a team president who knows what the hell he's doing. Names being floated for this include Sandy Alderson, Pat Gillick, John Schuerholz and even Theo Epstein. Those all sound like decent choices. The key question to ask them in the interview process is how they approach building a team. If the answer doesn't focus on an overhaul of the disastrous farm system that Jim Hendry has either run or overseen since 1995 (yes, Hendry was the Cubs Director of Player Development starting 14 years ago!), then move on to the next candidate.

Owning this team should be like owning a yacht. It should be your personal plaything to show off to friends and competitors. But don't try to pilot it yourself. Hire a good captain and simply enjoy the ride.

2) Pay down the debt you've accumulated in acquiring the team. Listen. Fans everywhere are thrilled that you are going to rescue the team from the Tribune's profit-oriented ownership. That will free up cash flow for free agents.

But Ivy Chat is quite aware how bank financing works. You likely have the interest rate spreads on your $400 million in debt locked in for only 5 years, and most of that is likely floating rate debt. You have major risks in terms of not only re-finance, but just about everyone expects interest rates to rise which exposes you to the potential of rising debt service costs. This has the potential to divert revenues away from baseball operations. You resolve this by lowering payroll and reducing debt. How do you reduce payroll yet still have a competitive product on the field? See advice piece #1.

3) This last piece is the most important. Once you hire the president (who will hire a new GM who will hire a new manager), STAY OFF THE FIELD AND OUT OF THE CLUBHOUSE.

Make your hires and let the people do their jobs. You can focus on paying down the debt, building the Triangle Building, starting Cubs Network, gutting Wrigley from fair pole to fair pole, and being the Cubs voice in matters with the league. If you try to be Daniel Snyder or Jerry Jones or the pre-1993 George Steinbrenner or Mike McCaskey, not only are the fans going to hate you, but you are also going to fail miserably. You and your family are a bunch of bankers.

What the hell do bankers know about running a baseball team, eh?

Good luck and hope you close the deal soon.

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