Wednesday, January 13, 2010

A Mistake Has Been Made

The Ricketts family has done a very good job of setting the capital position of the Cubs for the long term. They will have the ability to set both capital construction and payroll budgets going forward for the next 13 years due to the actions they have taken during the past 10 weeks since taking over the club.

Reality check: The Ricketts have had control of the Cubs for 10 weeks. That's it. Before then, they had no decision power on club actions for multiple reasons, the biggest of which was that there was no lock guaranty that the deal would close.

Deals fall apart at the 11th hour all the time (and it's really ugly when that happens).

Without 100% certainty that a deal would close, there's no way that the Tribune would let a non-executive of their corporation have decision making power over any business transactions related to the team. If they had allowed a prospective owner such power, and the deal cratered, the Tribune could open themselves to major problems, not the least of which could be lawsuits from all sorts of sources.

All that changed on October 30, 2009.

So, why hasn't the prediction of this page, that Jim Hendry and Crane Kenney would be canned, occurred? Well, there are a couple of reasons.

First, Hendry and Kenney's multi-year contracts were transferred to the Ricketts along with every other contract that the Cubs have executed. Firing them and hiring replacements would be tantamount to creating additional debt in the form of paying their salaries for the next several years. The Ricketts are looking for less debt, not more.

Second, look at the sports world. No one is getting fired these days. The NFL saw 7 coaches change in 2008 and another 9 coaches change going into the 2009 season. Major League Baseball saw 8 managers change jobs in 2008 and 5 managers in 2009.

This year? Hardly any changes. Why? A big reason is the economy. Teams have seen their franchise values drop. In MLB, one third of teams saw enterprise values fall, while, in the NFL, 25% of teams saw their value fall.

With cash flows tightening, and economic uncertainty, professional sports teams are trying to save money.

How capitalistic of them!

Now, the finances of keeping Crane and Hendry makes sense, but does it from a business case?

Well, believe it or not, keeping Crane Kenney probably makes sense. The guy is a lawyer from a media company. He's probably very competent at negotiating media contracts, something the Cubs now have to do for themselves. He would be a good representative for the Cubs at league meetings. And, he could probably be a good sounding board for pending capital improvement projects (e.g. the Triangle Building project).

That said, the guy has no business being anywhere near a blade of Wrigley Field grass, much less attending the Winter Meetings as he did this year. It's up to the Ricketts to lay out a job description for Kenney that clearly defines limits to his role.

With well defined limits (which should be very limited), Kenney can be an effective member of Cubs management.

Which brings us to Jim Hendry.

The case for Jim Hendry's inability to create a major league roster and develop a strong minor league system has been well documented. Jim's only sustained success (sustained for 2 consecutive years) has been at the major league level, and that required an unlimited budget to cure team ills.

As we all well now know, that budget is no longer unlimited as cash flow is committed elsewhere.

Should Jim be fired? Certainly. But, he hasn't been so far. But, as they were joking around on WSCR this morning, it's not a secret that Jim has to "get it done" this year or he's out. So, it's in Jim's interest to place the 2010 on-field performance ahead of all other interests. Not a good idea. People who fear for their jobs have an incentive to make decisions that enhance the short term benefit at long term detriment. Strong business do not allowed decisions for an organization by people under duress.

Tom Ricketts can immediately fix this situation and not fire Jim at the same time. How?

Ricketts can hold a press conference and announce Jim Hendry's contract has been extended.

Such a move would give Jim a clear path to set a long term plan for the team on the field. This move would make the new manager brought in after Lou Piniella leaves at the end of the 2010 season certain who his boss would be. It give agents a signal that Hendry wasn't negotiating contracts out of desperation.

A lot of uncertainty about the Cubs would be removed.

This page does not endorse the return of Jim Hendry. But allowing Jim Hendry to make roster decisions for 2010 and beyond with the possibility that he could be fired very soon, is potentially a worse scenario than bringing him back.

Tom Ricketts has been a fan for at least 20 years, and has been doing due diligence on the team for the last three years. One hopes he already has a feeling for Jim Hendry's work.

Leaving Jim Hendry's status as uncertain beyond the 2010 season is the biggest mistake the new owners have made so far. They need to fix this very quickly.

Aren't you overstating the "increase in debt" that comes with canning one or both of these jokers? Obviously, it is not happening now, but after 2010, when Jim has two years left on the deal, how much could he really be owed? $2,000,000 - $2,500,000 total? (Keep in mind he negotiated it!) Not exactly crippling for an $800,000,000 entity.

Also, wouldn't that figure be far less than the potential revenue lost by staying with the status quo of on-field disappointment for 2011 and beyond?
Instead of extending Hendry, why not simply sign someone else long term and make Jimbo the guy that brings Maddux doughnuts?
Instead of extending Hendry, why not simply sign someone else long term and make Jimbo the guy that brings Maddux doughnuts?
I'd propose another method of going forward to Ricketts.

1. Redefine the role of Kenney as some sort of VP of Multimedia and get him out of day to day baseball operations.

2. Begin a search for a new President of Baseball Ops (McFails old job) to oversee the day to day baseball stuff.

3. Let the new guy evaluate Hendry and provide oversight to keep Hendry from Mortgaging the future for a Left-handed utility bat or 6th inning bullpen lefty.

Then you are protected going forward, without having to pay Hendry any longer than absolutely necessary.

Even if Hendry does manage to defy all odds and keep his job. The organization needs someone above his head to help negotiate these future contracts. His total lack of negotiating acumen has undermined even the good moves he has made.

The rumor is that Hendry makes $2.5mm per year. He's still owed $7.5mm right now.
Chuck, do you play poker? Because if you better stop or your not going to have a possession to your name! The Cubs brass has spent hundreds of millions on the current roster. For better or worse, they need to play out this hand and that is exactly what Ricketts is doing. He has given Jimbo a few coins to call but that is it. You should never fold on the flop Chuck and that is exactly what you are saying to do. Besides, money is coming off the book in the next few years. Lilly and Lee will be off the books next season (say hello to Lance Berkman perhaps) followed by Fukudome and most likely Ramirez. Give Hendry who has built a winning team a chance to complete the run using the team he has built. You can always let him go too and a get a new GM in a few years. Besides maybe Ricketts has someone in mind to be the next GM in 2-3 years once the current roster can be flip correctly. Some professor looking 300+ game winner I think could be a possibility. :)
I like to believe that Crane is being kept around to roll out some of the more unpopular changes. I'm not even sure what they are (but given the hypersensitivity of a vocal minority of the fan base, it'll be something). And then when his deal is done, or closer to done, he's gone too.

You see it a lot in big companies who are planning layoffs. The incumbent HR guy gets to hand out the news that employees are getting fired, and then when that's done he gets whacked, too and a new guy comes in to fill the role without that baggage.

Kenney is being kept around because he has shown a ability to get things down with the city and has shown good business sense. The bleacher reconstruction was one of his pet projects and it came off really well. What Kenney is not going to do is touch anything with the baseball stuff including sending a Greek Priest to bless the dugout of spirits! About all Kenney is going to do is count the beans to make sure Jimbo doesn't go over like this is a game of "The Price is Right". LOL!!

Another smart move by Ricketts. He used two competing cities to get the best deal possible.

You are starting to attract non-paying advertisers just like the Tribune site!!!
Post a Comment

Subscribe to Post Comments [Atom]

<< Home

This page is powered by Blogger. Isn't yours?

Subscribe to Posts [Atom]