Friday, August 19, 2011

Buh Bye

I think I'll have a drinkIn what was the Ricketts' family's best move since refinancing some of their bank debt, Jim Hendry has been dismissed as General Manager of the Chicago Cubs.

Now, this move comes two years later than it should have. When the Ricketts got the team in 2009, they should have either fired Hendry on the spot or extended his contract. Instead, they dithered and blew two minor league drafts and millions on Milton Bradley.

That said, if you are going to change GMs, now was the perfect time to do it.

See, the best time to hire a new GM is right after a draft and signing period is complete. If you bring in the new GM just before the draft, the new guy is most likely unprepared and will have to conduct the draft using the scouts and data from the previous regime. That's not a good idea since the new GM will have his own scouting and development people he wants to hire and his own metrics to select new players.

You also don't want to hire the new GM during the post-draft signing period as the old GM will have already talked to agents for the draftees and has managed all the negotiations. A new GM hired post-draft but during the signing period could be a recipe for disaster.

Either way, you could blow a whole draft year by changing close to the draft.

The best time to change is right now. The new GM gets a full year to get his scouts in place for the draft and 8 to 10 weeks to review the organization and determine off-season free agent needs. If you wait to the end of the season, you cost your new GM the chance to see your minor leaguers in play and shorten his free agency prep.

Jim Hendry's disastrous reign is over. Hope once again springs eternal at Wrigley. And the Ricketts finally did something right.

Thursday, August 18, 2011

If At First You Don't STIF Us... Try, Try, Again

Crain's runs with a new story on the Ricketts latest attempts to get public financing to fix Wrigley Field.

The details are really the same as the old story. What do they want? $200 million, same as last time. How do they want it? There's the amusement-tax revenues. This is called Sales Tax Increment Financing or STIF. That method diverts the growth in tax receipts that are used for general municipal purposes into the Ricketts hands. Then, there's the sales or property-tax subsidy. This is actually a bigger giveaway than the STIF as it doesn't just take the growth in taxes, it takes taxes already collected and redirects them from schools and roads to the Ricketts. Lastly, they suggest bonds issued by the Illinois Sports Facilities Authority. Why tax bonds? Because those bonds carry a lower interest expense than private bonds. I'm sure a lot of private entities would like that.

The reality is that the State of Illinois, Cook County, and City of Chicago are all running budget deficits. To divert money from public uses to a private enterprise, one that knew that Wrigley needed rehabbing when they bought the team two years ago, is insane.

It's also certain that a guy like Joe Ricketts, who is the leader and primary funder of the Ending Spending Fund, would despise such a project.

The Ricketts are going to smile and talk about how Wrigley is an economic engine that creates jobs and brings in tourist dollars. That's going to be a hard sell given the empty seats this year and little expectation of improvement for next year.

All the news in this story is really that the Ricketts have decided that the time is right to renew their request for taxpayer dollars. Like the decision to change the front office, they've dithered so long that their request looks even more silly now than it did the last time they asked.

Wednesday, August 03, 2011

Let History Be The Guide

The conventional wisdom on the Cubs have changed over the past two weeks. The Cubs inability and/or unwillingness to trade even tradable guys (Sean Marshall, Marlon Byrd, Carlos Pena) has certainly flipped a switch amongst even the most forgiving of fans and media types (save Gordon Wittenmyer).

Tonight, Cubs Insider on ChicagoNow (HT: Dave Kaplan) talks about was the inaction due to Jim Hendry's hands being tied? Cubs Insider quotes Bruce Levine, mouthpiece for Jim Hendry:

(T)he Cubs need some direction from above Jim Hendry. Either make a commitment Jim or move on to next management group and let them come up with game plan. Right now Hendry and Co. are in the in-between mode, and you're not going to accomplish very much that way.

I would not necessarily agree on Carlos Pena and Ramirez. I think again ownership has to identify a direction. If Hendry is coming back for last yer of his contract, he should be extended or let go. It's not fair to him or the organization to hold a team in limbo.
Since Levine has a direct line to Hendry, this could mean two things. First, Hendry is making up a story as to why he didn't make a move. "It's the owners who won't let me do anything!"

This fits with Hendry's operating methods from the past. Just look at how he's defended himself from the Alfonso Soriano signing. "It's not me, it was all that John McDonough guy that did that! Don't blame me!"

Another possibility is that this is true and Tom Ricketts can't decide what to do. Unfortunately, the level of Tom Ricketts management skills is largely unknown. We know that he graduated late from college. We know that his company, Incapital, wasn't terribly successful for a long time.

Google also turns up this bit of info from Forbes back in 2002:

Tom Ricketts has a great idea for selling bonds to individual investors. So how come he waited so long to sign up clients?

Thomas Ricketts is a potent argument against sitting on your hands. The onetime marketmaker in options came up with the idea of using the Internet to aggregate supply and demand for a security most retail investors wouldn't think to buy--corporate bonds. (Only 12% of the $3.7 trillion in corporate bonds is in the hands of individuals.) He helped launch the system in 1996 as a vice president at ABN-Amro. It took him three years get up the gumption to quit and start his own company, Incapital LLC.

Ricketts rounded up companies eager to borrow and brought them to brokers, who then sold bonds in blocks as small as $1,000 to investors. Besides tapping new investors, corporations benefited by shaving a point or two off the usual underwriting spread and by offering slightly lower yields than they would have offered on identical issues sold to institutions. Investors liked the system because the bonds were sold at par and at yields that changed daily--and because they could eventually sell them back to brokers at yields comparable to market prices.

All good in theory. Trouble was, Ricketts wasted nine precious months during 2000, haggling over a $1 million-plus grubstake from Bank of America Technology Investments for an undisclosed minority share of the company. And while his backers delayed, his old employer played: ABN-Amro's LaSalle Broker Dealer Services was selling $2 billion in bonds on the Net. "To watch the product go on without you as you're getting ready to come back into the market, it's not a comfortable feeling," he says. "There was an opportunity cost there; I just wouldn't be able to quantify it."

Try $1 billion worth of business--or more.
This is a guy that has a hard time making decisions.

There's a reason why this blog supported Don Levin first, then Mark Cuban after Levin got outbid for the new owner of the Cubs. They know what they are doing when it comes to managing a sports franchise.

WSCR's Dan Bernstein chimes on on the same article.

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