Thursday, June 09, 2016

And Now For Something Completely Reversed...

The Dead Cardinals Sketch

The cast:


The sketch:

A customer enters a pet shop.

Mr. Hrabosky: 'Ello, I wish to register a complaint.

(Broadcaster Shannon does not respond.)

Mr. Hrabosky: 'Ello, Miss?

Broadcaster Shannon: What do you mean "miss"?

Mr. Hrabosky: I'm sorry, I have a cold. I wish to make a complaint!

Broadcaster Shannon: We're closin' for lunch.

Mr. Hrabosky: Never mind that, my lad. I wish to complain about this baseball team what I watched not half an hour ago from this very stadium.

Broadcaster Shannon: Oh yes, the, uh, the Cardinal Red...What's, uh...What's wrong with it?

Mr. Hrabosky: I'll tell you what's wrong with it, my lad. 'Ere dead, that's what's wrong with it!

Broadcaster Shannon: No, no, 'Ere uh,...ere resting.

Mr. Hrabosky: Look, matey, I know a dead team when I see one, and I'm looking at one right now.

Broadcaster Shannon: No no ere not dead, ere, ere restin'! Remarkable team, the Cardinal Red, idn'it, ay? Beautiful plumage!

Mr. Hrabosky: The plumage don't enter into it. It's stone dead.

Broadcaster Shannon: Nononono, no, no! 'Ere resting!

Mr. Hrabosky: All right then, if ere's restin', I'll wake him up! (shouting at the batting cage) 'Ello, Mister Grichuk! I've got a lovely fresh cuttle fish for you if you show...

(Broadcaster Shannon hits the cage)

Broadcaster Shannon: There, he moved!

Mr. Hrabosky: No, he didn't, that was you hitting the cage!

Broadcaster Shannon: I never!!

Mr. Hrabosky: Yes, you did!

Broadcaster Shannon: I never, never did anything...

Mr. Hrabosky: (yelling and hitting the cage repeatedly) 'ELLO YADI!!!!! Testing! Testing! Testing! Testing! This is your nine o'clock alarm call!

(Takes team out of the cage and thumps it on the counter. Throws it up in the air and watches it plummet to the floor.)

Mr. Hrabosky: Now that's what I call a dead team.

Broadcaster Shannon: No, no.....No, ere stunned!

Mr. Hrabosky: STUNNED?!?

Broadcaster Shannon: Yeah! You stunned him, just as he was wakin' up! Cardinal Reds stun easily, major.

Mr. Hrabosky: look, mate, I've definitely 'ad enough of this. That team is definitely deceased, and when I watched it not 'alf an hour ago, you assured me that its total lack of movement was due to it bein' tired and shagged out following a prolonged energy burst from Kolten Wong being sent down.

Broadcaster Shannon: Well, he's...he's, ah...probably pining for the fjords.

Mr. Hrabosky: PININ' for the FJORDS?!?!?!? What kind of talk is that? Look, why did they fall flat on their back the moment they got home?

Broadcaster Shannon: The Cardinal Red prefers keepin' on it's back! Remarkable team, id'nit, squire? Lovely plumage!

Mr. Hrabosky: Look, I took the liberty of examining that team when I got it home, and I discovered the only reason that it had been sitting on its perch in First Place was that it had been NAILED there.


Broadcaster Shannon: Well, o'course it was nailed there! If I hadn't nailed that team down, it would have nuzzled up to those bars, bent 'em apart with its bat, and VOOM! Feeweeweewee!

Mr. Hrabosky: "VOOM"?!? Mate, this team wouldn't "voom" if you put four million volts through it! 'Ere bleedin' demised!

Broadcaster Shannon: No no! 'Ere pining!

Mr. Hrabosky: Ere not pinin'! Ere passed on! This team is no more! He has ceased to be! Ere expired and gone to meet 'is maker! Ere's a stiff! Bereft of life, 'Ere rests in peace! If you hadn't nailed 'em to the perch 'ere'd be pushing up the daisies! 'Is metabolic processes are now 'istory! Ere off the twig! Ere kicked the bucket, Ere shuffled off 'is mortal coil, run down the curtain and joined the bleedin' choir invisible!! THIS IS AN EX-TEAM!!


Broadcaster Shannon: Well, I'd better replace it, then. (He takes a quick peek behind the counter) Sorry squire, I've had a look 'round the back of the shop, and uh, we're right out of teams.

Mr. Hrabosky: I see. I see, I get the picture.

Broadcaster Shannon: I got a Cub.


Mr. Hrabosky: Pray, does it play the Cardinal Way?

Broadcaster Shannon: Nnnnot really.


Broadcaster Shannon: N-no, I guess not. (gets ashamed, looks at his feet)

Mr. Hrabosky: Well.


Broadcaster Shannon: (quietly) D'you.... d'you want to come back to my place?

Mr. Hrabosky: (looks around) Yeah, all right, sure.

Wednesday, October 07, 2015

Tonight's The Night

"And it's been a long way, but we're here."

Those words were said by Astronaut Alan Shepard just after he stepped onto the moon. Kind of an appropriate quote for today as well. The last three years of Cubs baseball have been a slog. Just as we were told it was going to be. Many of us understood that. Many others chose to either not listen, not understand, or decide to make their own narrative for reasons that are impossible to divine.

Regardless, the turnaround that the entire Cubs organization has undergone is nothing short of spectacular. Theo Epstien is delivering on his promise of waves and waves of talent. Kris Bryant, Addison Russell, Jorge Soler and Kyle Schwarber not all contributed double digit home runs. Tonight's starting pitcher, Jake Arrieta, was acquired in a "sign-and-flip" deal, one in a series of transactions that was criticized by people who didn't understand o have patience for the rebuild.

And more is coming. Eloy Jimenez, Albert Almora, Gleybar Torres, Duane Underwood, Ian Happ, Billy McKinney, and Dylan Cease are all on their way.

These names are brought up for a couple of reasons.

First, to say that tonight's Wild Card game is not the end of the rebuild, but is more likely the beginning of a Cubs renaissance. From 1906 to 1945, the Cubs were in the World Series 10 times. They were a dynasty. Been pretty quiet since. Oh, there were some brief flashes of competence. Usually with multi-year stretches of suckitude in between.

Look at where this franchise is in terms of talent in the organization, payroll level, expected future revenues. It's very hard to see this being another case of a brief awakening followed by a long nap. Tonight is the starting gate, not the finish line.

Second, and more importantly, tonight is for the fans who understood and had the patience for the job Theo and his cohorts had to do. Those who had the patience, who watched the players develop, who evaluated the trades, who watched the draft boards, who monitored international signing dollars, and who didn't get pissed over the poor record at the major league level (because they understood a worse record on top meant a better chance at better talent), this Wild Card game is yours to enjoy.

The people who were in opposition to the strategy that the Cubs undertook will say they are enjoying this as well. But deep down (the place where some people still wish failure on 21 year olds so as to support their worldview), the know that they were wrong. Tonight is not for them. Yeah, they'll say they love this. And maybe they'll say that none of us knew this was coming (heh!). They can rationalize whatever they want. The reality is that they are outsiders on this team.

We aren't.
We are good.
Let's go.

Thursday, January 30, 2014

From The VHS Files In Glenview, Illinois...

Many of you know that old tapes with sporting events on them are stored in a basement and never get thrown away. Many of you also know that the last VHS tape player in the 60025 zip code is located in this house. What many of you don't know is that there's a DVD burner attached to said VHS tape player. The burner is great for transferring wedding and bar mitzvah videos to a digital format.

But it's also good for converting old sporting events.

Today, Ivy Chat awakes from its slumber (and stupor) to bring you a piece from the WGN telecast of the first night game in Wrigley Field history. It turns out that the Tribune also had problems with the neighborhood over adding lights to Wrigley Field, just like the Ricketts are having today. It took 5 years for the Trib to get approval to add lights and 6 years to complete the project.

What the Trib didn't have until year 5 was a compliant City Council. They also had to overcome losing a lawsuit. Guess what the Trib had to threaten to get approval?

Perhaps a bit of a case study for the Ricketts. And perhaps the losing of the lawsuit is what's sticking in Tom Ricketts' craw

Thursday, November 07, 2013

And…. We’re Back

No need to spend a lot of time explaining the lack of long form Cubs talk from this blog (let’s assume you spent a modicum of time watching the last season).  So, what’s got this site active again? An article in Crain’s Chicago Business by Danny Ecker.

It seems the Cubs had an opt-out clause in their TV contract with WGN.  The current contract pays the Cubs about $300,000 per game for 70 broadcasts per year.  That’s woefully below market. The Dodgers are set to earn close to $1.5 million per game (net of revenue sharing - $2.1 million before revenue sharing).  The Angels and Rangers get about $930,000 per game.

In short, the Cubs are due for a raise.

Now before people start screaming that the Trib screwed the Ricketts and foisted a below market contract on the team and shortchanged the team’s ability to compete, remember that the Ricketts knew what the payout from WGN was when they bought the team.  They paid $865 million to get that $300,000 per game for 70 games.  Had that number been $1,000,000 per game, the Ricketts would have paid far more than $865 million.

Others have been ranting and raving that the Ricketts are broke and no one will pay broadcast rates at Angels / Rangers / Dodgers prices to for a team that loses 90+ games per year.  First, the Cubs won’t be losing 90+ games much longer (or any longer as this site expects). Second, sports fees remain high as sports is about the only DVR proof broadcasts left. That commands higher advertising rates.

In short, those projecting doom for the Cubs TV contract negotiations are wrong.

Now, what does this all mean for the Cubs?  Well, going from $300,000 to $1 million per game for 70 games would generate $49 million per year in gross revenue and close to $34 million per year post-revenue sharing.

And that’s only for 70 games.  There’s another 85 games or so from which the Cubs can eventually get more revenue.  This revenue also comes without added expense so it can all be used for whatever the team wants to use it for.

Given the declining ticket sales and in-house attendance, there is one obvious thing to use it for that would both improve attendance and boost TV ratings: Payroll.

It’s certainly possible that the Ricketts will not use the money for payroll, but would use it to retire debt or support payments to rehab Wrigley Field and build a hotel.  But those projects require a strong brand to draw customers.  The Cubs brand right now is weaker than it’s been since 2006.

The Cubs have cleared out payroll (lowered costs) and are about to strike a new TV deal (raise revenue).  A smart businessman would use at least some of those monies to try to put more butts in the seats than just make the seats more comfortable.

It’s time to find out just how smart the Ricketts are.

Tuesday, February 05, 2013

Changing the Argument

This is not a good time to be a rooftop owner.  It’s not only that they have they been semi-vacant the past few years as the Cubs have been a painful on-field product to watch.  They’ve also been in a private battle with Cubs management on the future of their business model.

Now, with the announcement of new, and very reasonable, plans to renovate Wrigley Field, the Rooftoppers went public with their argument with a press conference.  At that event, they not only threatened to sue the Cubs to protect their ability profit from a product they don’t own, but also insulted Cubs ownership.  Cubbie Bear owner George Loukas said he was once Ricketts' landlord but would've jacked up the rent if he knew he'd eventually be Cubs owner.  They also kicked a Cubs PR representative out of the meeting.  One guesses they knew how well their position would stand to criticism.  Or maybe they don’t.

The opinion here is that the Rooftoppers don’t have a leg to stand on.  They are freeloaders on the Cubs’ product.  Well, they were freeloaders until they signed a contract with the Cubs that gives 17% of revenue to the Cubs in exchange for a business arrangement.  The details of this contract were not publicly available.

Until yesterday.

Phil Rosenthal’s report in the Chicago Tribune suggests he’s viewed at least a portion of that contract.

"...the contract allows that "any expansion of Wrigley Field approved by governmental authorities shall not be a violation" of the deal, which means if Mayor Rahm Emanuel gets behind the Ricketts, look out.

the contract calls for the Cubs to help hype them in a variety of ways, advancing the argument that the rooftop clubs are part of the appeal of Wrigley.

There's a requirement that "WGN-TV will show and comment upon the Rooftops' facilities during the broadcasts of Cubs games and the Cubs will request other Cubs television broadcasting partners to do the same." There's also a mandate for the team to "include a discussion about the Rooftops on their tour of Wrigley Field" and to include stories positive about the Rooftops in The Vine Line," the team's publication."

Be sure of one thing: If Rahm can close a deal to get $300 million spent on a Chicago landmark and $-0- comes from the city, he’s going to be behind it.

Rosenthal makes one other point:

"Rooftop owners talk about the taxes they pay, the people they employ, the money they've invested to make their businesses safe and viable, the character they add to the neighborhood."

Actually, they really haven’t made this full argument.  They’ve spent most of their time talking about the character aspect.

That’s the wrong argument to make.  It makes the Rooftoppers look self-important and unsympathetic.

But there is a way they can turn this around.  That way is to focus on the contract and the money they’ve spent.

The angle they need to take goes like this:

Yes, we are freeloaders.  Or we were.  In 2004, we signed a contract that made us partners with the Cubs.  Since that time, knowing we had a 20 year deal in place, we spent millions of dollars of our private money to improve these properties.  We’ve hired a lot of people.  We’ve paid a lot of taxes.  And we’ve give the Cubs a lot of money.  All we are asking for is this: Give us the chance to complete the contract we signed in good faith.  It would set a terrible precedent for Mayor Emanuel to back the interests of billionaires from Nebraska while ignoring small business owners, who have been in Chicago far longer than the Ricketts, and who never once asked for a dime of government money.

We pledge to work with the Cubs to increase their revenues they generate from us.  We believe that by the end of the contract the Cubs will recognize the value we add to their brand, both in dollars and aesthetics.

Please, Mr. Mayor.  Don’t confirm our worst fears that your government only backs those who can buy influence with you while turning your back on long time community investors, employers and taxpayers.

Frankly, it’s unlikely this would work.  Most likely, the Rooftoppers have already burned their bridge and they are about to be steamrolled.  But if they turn the argument from insults and neighborhood beauty from one of small business only striving living up to a deal signed in good faith, they might  have a chance to get public opinion on their side.

And, with that, a mayor who wants to be re-elected in two years.

Monday, January 21, 2013

The Wrigley Plan That Works

The Cubs took the opportunity at last weekend's Cubs convention to make some real news. This is news that’s not only good for Cubs fans, but it's also good for taxpayers. Rather a shocking but welcome development that's totally unexpected from the Ricketts family. But also one that makes sense for a lot of reasons.

If you recall, the Ricketts had floated a plan called "Sales Tax Increment Financing," or STIF. The idea was this: For every ticket sold, the Cubs are required to add on an "Amusement Tax" of 12% of the face value of each ticket. This money is given to the city (9%) and the county (3%). The Cubs collect a substantial amount of tax for the city and county. The most recent numbers I could find were a total of $16.1 million collected in 2009.

Notice the word "collected" and not "paid." That's because the Cubs don't really pay the tax, you and I do. Just look at this ticket. See the advertised price is $90? The Cubs add on the $10.80 to the face. The Cubs get their full $90. Now, the amount of tax can certainly affect demand for tickets, but demand to see the Cubs had been pretty consistent the last few years.

What a STIF does is this: Say the Cubs are currently collecting $16.1 million in tax on ticket sales of $134.2 million. If the Cubs raise prices by 10%, then the tax collected should rise to $17.7 million, an increase of $1.6 million. The STIF plan diverts the $1.6 million from the city and county back to the Cubs. In short, the Cubs want to raise prices but freeze the amount of tax they collect until such time as the stadium renovations are paid for. It's just additional revenue to the team that they don’t pay corporate income tax on because it's dedicated to payment of debt.

On Saturday, Tom Ricketts and Crane Kenney said this plan has been scrapped and they plan to pay for renovations to Wrigley out of the Ricketts family pockets. This is great news, but it does get one wondering why they gave up?

Reason #1 is that they City of Chicago and Cook County really don't have the money to give the Ricketts to boost the value of their private company. In fact, the city and county really need more tax revenue from ticket sales and any freeze hurts future budgets. The chance of this actually getting approved and funded was pretty low.

But reason #2 is this: Joe Ricketts, patriarch of the Ricketts family and source of the family wealth, decided to drop $10 million of his own money on political commercials criticizing President Obama for spending too much money. Kinda hard to blast the president for that and seek his defeat while your kids go ask Obama's former Chief of Staff, current Chicago Mayor Rahm Emanuel, for more government spending. Kinda pissed Rahm off, too.

So, after much soul searching, the Ricketts released they better go another way. And they did. They went the right way.

What the Cubs want now is to spend $300 million of their own money over five years and upgrade Wrigley Field. They want to build a hotel next door. And they want some help from the City.

But they no longer want any money. What they want is pretty simple. They want to be able to make a shit load of money by putting up a shit load of signs, ribbon boards, jumbotrons, more night games, and anything else they can think of to make the money they will need to pay for renovations.

The city should let them do this instantly.

The Cubs are only being asked to be treated like what they are: A private business. The problem is, right now, the Cubs are a private business with major public restrictions. The city tells them how many night games they can have, how many signs they can have, and how they can change the structure of the ballpark. This limits the profit potential of the team.

The opinion here is that they city is fully within their rights to restrict what the Cubs, or any company does, in terms of making changes to buildings with significant historical or architectural value and significance. The opinion here is also that if the city is going to restrict a company in such a way and limit their profitability, the city also has a duty to subsidize such a company to cover the company in ways laws are holding back the profit maximization.

In these times, the City of Chicago and Rahm really just can't afford the subsidization of Wrigley Field. Furthermore, he really doesn't want to do it for a family who knew they shape of Wrigley Field when they bought the team three years ago. And lastly, he doesn't want to do it for a billionaire who is hypocritically asking for money while seeking the defeat of his political allies for the crime of spending money.

Given all this, the Ricketts crew finally caved and said, "OK, uncle. Keep your money. All we want is free enterprise and we'll pay." Early returns from the public are positive. Mayor Emanuel seems to be on board. There only seems to be one set of opponents left. That's the rooftop owners and their water carrying lackey, Alderman Tom Tunney.

The rooftoppers don't have a leg to stand on. They've been able to make a lot of money over the years by stealing the Cubs product. Up until just a few years ago, the rooftoppers didn't pay a nickel for the Cubs product yet charged a premium to view it. They were freeloaders (no longer as now they do pay a portion of their ticket sales to the Cubs).

Tom Tunney is, at this point, backing the rooftoppers. The guess here is that this is posturing. There are about 15 rooftop clubs overlooking Wrigley Field. Per Metromix, there are 105 bars, and 269 restaurants in Lake View. The owners of these businesses have a lot to benefit from a renovated Wrigley Field, with more than 40 night games, with a hotel open year round. You think they will influence Tom Tunney? And who would have more pull? Fifteen roof top owners who were freeloading for over a decade or 374 other businesses? I know where I'm laying my bet. Tunney will cave, just as soon as he extracts a price from Rahm. What that will be specifically is anyone’s guess, but the bet here is that the price benefits Tunney more than the rooftoppers.

This page has been highly critical of Tom Ricketts over the years. He came into his role with the Cubs woefully unprepared and often seemed to be lacking in understanding of how things get done. The two year dance on the Wrigley renovations is just another case in point. Despite all that, he seems to have found the correct path for all involved.

That path deserves our support.

Tuesday, June 26, 2012

The Future On Display

Anthony Rizzo is here.  Only 172 days ago, no one in Chicago knew his name.  Today, you'd think it he was the next Kerry Wood.  Or Mark Prior.   Or Kevin Orie.  Or Mike Harkey.  Or... you get the point.

This page will be honest and say that we’re really cheering for the kid.  He’s already our favorite player on the team.  If only he can live up to even a small piece of that hope.

With his Cub debut tonight, if you are a Cubs fan and you don't care to watch tonight's game, you really aren't a Cubs fan.  But the reason to watch is not to watch Anthony Rizzo, per se.  It's to watch what Rizzo represents.

Tonight, for the first time in the Theo Esptein Regime, there will be a player on the field that Theo Epstein has hand picked to be here.  Epstein and Hoyer like this kid so much they acquired him three times (ok, Theo twice and Hoyer three times).  Sure, they signed guys like David DeJesus and Ian Stewart, but those guys were not to build around.  Those guys are here because there are 324 games that needed to be played in 2012 and 2013 and someone had to play in them.  None of those guys were brought here to win a World Series.  They are here to be placeholders for the guys that will come here to win a World Series.

Anthony Rizzo is the first of Theo's player to arrive who projects be a starter on a winning team's roster.  He is the first piece in the team Theo is building that just might actually win something for the Cubs.  Rizzo may turn out to be a prime piece of that team.  He may turn out to be less.  But regardless if Rizzo goes on to the Hall of Fame or only ends up being a AAAA player who never pans out, we fans are getting our first real look at where the organization is headed.

The basis for the hope in the new front office was in their ability to identify and develop young talent.  Anthony Rizzo is the first player in a Cub uniform that represents that future.  For as good as Starlin Castro or Jeff Samardzija ever will be, they will never be guys that Epstein and Hoyer selected, groomed, and developed.

While many Cub fans are looking at tonight as THE ARRIVAL of the NEXT SAVIOR, they are missing the point.  The Saviors arrived last fall.  Tonight, we can begin to see for ourselves if Epstein and Hoyer deserve the title.

Monday, June 25, 2012

Is this Thing On?

Yes, it is alive.  It's been about seven months since this doorstep to the Internet was darkened with my scribblings.  With any luck, it won't be that long again. (Then again, you may be saying, "Oh, shit. Chuck is back? Yellon caused this, didn't he!" My apologies to those of you.)

This place has been dark for a couple of reasons.  First, the allure of Twitter has enabled the thoughts and opinions of this site to get out there for all to see and to be recorded for posterity at the Library of Congress. Writing thoughts 140 characters at a time does fit the week writing style found herein.

Second, there really hasn't been much to talk about with the Cubs.  For 2012, the on-field performance, at least in terms of record, is meaningless.  Theo Epstein and Jed Hoyer are just beginning the process of tearing apart the clusterfuck that Jim Hendry and Andy MacPhail left behind.  This is not a simple two-year re-build of the major league roster.  This is a total gut-and-rehab of the entire organization.  From scouting, to minor league training, to even such things like the EAMUS CATULI sign, the Chicago National League Ballclub is finally getting the enema it's needed since Dallas Green's foundation was allowed to collapse.

These changes are incremental and gradual.  They will occur over long period of time and only become visible at the major league level after several years.  Given that, the ability to discuss on a daily basis the organization's progress is not only very hard due to lack of information, but it's pretty damn boring.  And if you want boring daily writing about the Cubs, there are plenty other places to get that.

So, how are Theo Epstein and Jed Hoyer doing so far?  Well, it's nearly impossible to tell.  They only recently begun to add players to the organization who will be on the roster two years from now.  Other than perhaps finally being able to see Anthony Rizzo in person and seeing if Jeff Samardzija and Starlin Castro are long term solutions or trade bait, there really is little reason to watch the on-field product.

All the fun stuff this year has come from the business side.  And by fun, it's always the Ricketts themselves that provide the hilarity.

The more and more you watch these people try to run a baseball team, the more of a disaster they show themselves to be.

First, they tried to do Gandalf and the Dwarves and slowly increase the cost of the Wrigley rehab.  Using Crain's as their mouthpiece, we were told back in 2011 that the total cost of rehab would be $200 million.  Then, some time last summer, it nudged up to $300 million.  Come December?  $400 million.  We got to opening day 2012 and Crain's had it at $500 million.  Just amazing that the cost could go up by 150% in just a year.  Inflation is a bitch.  No wonder Joe Ricketts wants new leadership in Washington.

Which leads us to the next bit of hilarity.  Joe Ricketts has clearly wanted to be a player in national politics for a long time.  Eldest son Pete ran for US Senate in Nebraska a few years ago. Joe has had his PAC, Taxpayers Against Earmarks, for quite a while.  The PAC changed its name to Ending Spending in 2011.  The goal of this PAC?  No more government spending.

Joe must not be a chess player because he didn't bother to look a few moves ahead. See, the Wrigley Rehab project that requires $500 million wants to use taxpayer dollars to support the project - the exact kind of dollars Joe doesn't want spent.

Moreover, the guys who would approve this subsidy go by the names of Rahm Emanuel and Pat Quinn.  Both these guys have a (D) that goes after their names.  Joe clearly didn't think about the ramifications on his request for tax money while he was, at the same time, going full bore to defeat Rahm and Pat's close pal Barack Obama.  Now that deal is stuck in quicksand (note to self: will be seeing Rahm speak at a lunch this week - be sure to ask him on the status of Wrigley if he takes questions).

Yes, it's been a Cubs season unworthy of blogging fresh stuff.  I don't know how the professional writers keep from pulling their hair out.  I know even less how fan writers can push out fresh drivel on a daily basis.  It's why this site has been dark.

Maybe I should just look back in my archives and see if there's anything I can self plagiarize?

Friday, November 18, 2011

It Keeps Getting Better

It's been nearly a flawless offseason for the Cubs. Theo Epstein is here and he's brought with him a cavalcade of management stars. Jed Hoyer is the GM to do the dirty work of dealing with the media and the 29 other baseball GMs every day. Jason McLeod will attempt to remove the Hendry from Oneri Fleita and Tim Wilken (aside: what are they still doing here? Weren't we told they were too loyal to Hendry to stay if he left?). And new manager Dale Sveum will babysit the clubhouse as everyone not named Garza, Castro and Cashner consults out of town real estate agents.

This could not have possibly gone any better for Tom Ricketts. His tenure as owner to date was not exactly inspiring. He needed a quick turnaround in the franchise's direction or things could have spiraled down and gone out of control.

Theo's hire, and the hires that followed, reversed that trend sharply. How sharply?

To the point that the press looks at this story and sees money to renovate Wrigley Field as a real possibility.

Mayor Rahm Emanuel is dumping all three city members of the Illinois Sports Facilities Authority — including former Mayor Richard M. Daley’s nephew — in a housecleaning that could set the stage to renegotiate the White Sox lease, modify its restaurant deal and, possibly, have the state acquire and renovate Wrigley Field.
As a first step, none of the new members will accept the perks that come with the job: discounted tickets; free food and beverages; special parking privileges and access to skyboxes for non-charity events.
Nice to see more of the Daley cronyism fading away. But, how likely is more money for Wrigley Field? The article is pretty silent. It focuses mostly on the White Sox sweetheart lease, a lease that, according to the article, "requires the Sox to pay just $1.5 million in annual rent."

What does it say about the Cubs?

(Emanuel's) board members could attempt to revive a failed 2008 plan to have the state acquire and renovate Wrigley Field. Emanuel wants to find a way to save 97-year-old Wrigley without forfeiting 35 years' worth of amusement tax growth. The mayor has called that Cubs' plan a "non-starter."
So, there really is no plan or structure currently being floated, but Crain's sees turnover at ISFA as a sign of good things for the Cubs.

Just maybe nothing has happened at all yet, but the Cubs new reputation is so good that Crain's just assumes plans are being made? That's a fairly logical assumption.

And it speaks volumes about the good will that Theo Epstein has injected into this franchise.

Friday, October 28, 2011

Staying on a Theme

IvyChat has come across a recording of Theo Epstein's exit interview in Boston:

Theo Epstein: Last night we said a great many things. You said you were going to do the thinking for both of us. Well, I've done a lot of it since then, and it all adds up to one thing: I’m getting on that plane for Chicago.

Larry Lucchino: But, Theo, no, I... I...

Theo: Now, you've got to listen to me! You have any idea what you'd have to look forward to if I stayed here? Nine chances out of ten, we'd wind up in third place again. Isn't that true, Ben?

Ben Cherrington: I'm afraid Andrew Friedman and Brian Cashner would insist.

Larry: You're saying this only to make me let you go.

Theo: I'm saying it because it's true. Inside of us, we both know you‘ll be better off with Ben. He's part of your work, the thing that keeps the Red Sox going. If that plane leaves the ground and I'm still working here, you'll regret it. Maybe not today. Maybe not tomorrow, but soon and for the rest of your life.

Larry: But what about us?

Theo: We'll always have 2004 and 2007. What we had left, we lost when Papelbon blew the season in Baltimore.

Larry: When I said I would never fire you...

Theo: And you never will. But I've got a job to do, too. Where I'm going, you can't follow. What I've got to do, you can't be any part of. Crane Kenney won't allow it. Larry, I'm no good at being noble, but it doesn't take much to see that the problems of three little people, you, me and John Henry, don't amount to a hill of beans in this crazy world. Someday you'll understand that.

[Larry lowers his head and begins to cry]

Theo: Now, now... Here's looking at your new kid.

Here's Looking To You, Kid

Of all the baseball parks, in all the towns, in all the world, he walks into ours. About time.

On Tuesday, the Chicago Cubs introduced Theo Epstein as the guy to fix the organization. He gave a masterful press conference answering most of the questions posed smartly and professionally. Others, ones that related to specific actions he would take in the near term, he deferred deftly and appropriately. In short, not even the most jaded of Cubs fans could listen to Theo and not feel confidence that this 38 year old has the ability to modernize this baseball organization. It was a memorable debut. I remember every detail. The Cubs wore blue, Theo wore gray.

What was the most exciting thing to hear was the focus on development. Scouting will be based on a foundation of metrics, not just a round up of the usual prospects. How refreshing.

Theo and his staff have a ton of work ahead of them. He, new GM Jed Hoyer, and new scouting and player development director Jason McLeod will be shocked, shocked to find baseball mismanagement going on here. They are going to probably have to hire all new minor league scouts and coaches. One hopes the focus on fundamentals will lead to fans being able to watch good, solid, consistent play.

What is also hoped is that the Cub fans will give Theo's team a chance to really build this from a weak team into a strong organization. If you listened closely we were told that there will be no quick fixes. There will be no Prince Fielders or C.J. Wilsons or Albert Pujols in the near future. Aramis Ramirez, Ryan Dempster and Carlos Zambrano may end up in other uniforms sooner rather than later. It will be a tough slog for a few years. But, as time goes by, this will change. The plan is for the "Cub Way" to represent consistency and quality rather than another new way to lose.

Welcome to Chicago, Theo. I think this is the beginning of a beautiful friendship.

Wednesday, October 12, 2011

Big Time Move

At about 6 PM Chicago time last night, all hell broke loose on Twitter (you can follow me there @ivychat) with the cross posting of Steve Buckley's Boston Herald article:

Two baseball sources have confirmed that Theo Epstein is on the cusp of leaving his job as general manager of the Red Sox to accept a position with the Chicago Cubs that is believed to include powers greater than he has in Boston, with an announcement expected to be made "within the next 24 to 48 hours."

Now, this isn't a done deal yet. There's still the possibility that Tom Ricketts will go Full McCaskey and make this McGinnisGate II. But if they don't, this signing will go down as the biggest acquisition for the Cubs franchise since Dallas Green acquired Rick Sutcliffe. That move by Green told the world that the Cubs weren't screwing around anymore.

This move is a little different. If the Ricketts get Theo, it's because they can't afford to screw around anymore. The days of Jim Hendry's lack of organizational development, Crane Kenney's douchbaggery, and Mike Quade's sheer cluelessness are over.

Empty seats always bring change. In 2006, empty seats brought Lou Piniella, Ted Lilly, Jason Marquis, and Alfonso Soriano. In 2011, the empty seats brought the Ricketts something they didn't expect.


When they bought the team, the Ricketts believed they had a cash cow. They believed as Tom told his dad: They sell out every game, win or lose. After 2 seasons of ownership and having a winning record for 48 hours of that time, the sellouts were over.

The Ricketts, who want, more than anything else, to be multi-generational owners, discovered they had more risks than they realized. They need to repay debt and they need another $300 million to rebuild their crumbling, outdated physical plant known as Wrigley Field.

With attendance down, cash flow fell and debt became harder to service. Furthermore, with fans avoiding the park, it would be impossible to get new Mayor Rahm Emanuel to sign off on a tax grab. Why give $300 million in a down economy with record city deficits to support a venue, owned by billionaires, that no one is using?

They had to do something.

Were this 2006, the answer would be easy. Albert Pujols in left, Prince Fielder at first and CC Sabathia and CJ Wilson on the mound. That's not possible now. What is?

A face of a winner. This face.


Hiring Theo works for the Cubs and the Ricketts on multiple levels. With the Red Sox, he's built a successful organization. He's won two titles. He's worked with a city to update a landmark baseball stadium. And he's done all this in a major media market.

That means that Theo brings the gravitas, and political cover, to allow Emanuel to give the Ricketts their tax grab. This doesn't mean the tax financing is a done deal, but Andrew Friedman or Josh Byrnes or Rick Hahn don't have the resume to give Rahm the help needed. Only Theo Epstein and Brian Cashman have the background to get this done.

If Theo Epstein is introduced as the Cubs next President of Baseball Operations, the Ricketts have bought themselves more than just a GM. They've bought credibility. And probably a cashier's check in the amount of $300 million.

If they blow this, they better get Cashman. Or they better get ready to run back to Omaha.

The multi-generational ownership plan will likely be determined in the next few days.

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.

Friday, July 15, 2011

Too Late

Man, Carlos Marmol blows a 2 run lead recording only 7 strikes in the 25 pitches he throws and Cub Nation has finally seen enough. Not that the 37-55 record going into last night was enough. Not that ownership has been silent other than platitudes was enough. Nope. What did it was Marmol blowing a save. And Mike Quade's comment after the game didn't help:

"Now is not the time or place to be making bold statements about changes." - Mike Quade, Cubs Manager Pro Tempore

The Cubs hashtag in Twitter is alight with people upset and referencing the 2003 NLCS Game 6 similarities and calling for massive change. Even the sycophants at the "Cubs Internet Community" were upset by Quade's comments with the ringleader going so far to say, "Quade and his minor-league coaching staff" are "managing to be liked, not to win."

Dan Bernstein, who was snookered by Tom Ricketts two years ago into believing that the new owners knew Jim Hendry was a problem, is now saying that Hendry will be gone at the end of the season. Internal sources from the Cubs front office tell him that Ricketts will be making a change and simply to discount what Ricketts says publicly.

The problem here is that a change at the end of the season is far too late. Barry Rozner correctly notes today:

(Ricketts allowing Hendry to determine the shape of the 2012 roster with moves that Hendry will make before July 31 — or moves that he’ll choose not to make.

Either way, Hendry is putting in place the pieces or removing those he doesn’t believe are necessary.

He’s also holding on to players who might have great market value because he believes they will be a big part of 2012 and beyond. He may be right or he may be wrong with those choices, but whatever the choices are, they’ll be Hendry’s.

So if Ricketts really has it in mind to make major front-office changes at the end of the season, the changes should have been made already.

Not in October, not in September and not even 15 minutes from now. Those changes should be made immediately.

So speak now, Mr. Ricketts, or forever hold your GM’s hand through another winter, spring and summer.

If changes are made after this season, and if Ricketts fires Hendry then after letting him shape the team now, he’s going to look really foolish and will have some serious explaining to do about why the changes weren’t made in June when the season was obviously over.

Barry's close to being exactly right. Yes, Hendry should not be the GM today and certainly not be allowed to make an roster changes that affect the 2012 rosters at any level of the Cubs organization.

But, if Ricketts has decided to make a change, the time to do so was last month after the draft was complete. A change at that point gives a new GM the maximum amount of time to build a scouting staff for next year's draft as well as give the new GM as big a lead time as possible on the trade deadline to evaluate what talent exists within the system.

It's already past the time to make a change. It should have been done two years ago when the team transferred ownership. The opinion here was that Jim Hendry should have been fired in October 2009 or had his contract extended to really show the Ricketts' confidence in him. Since then, with no extension, Jim Hendry has simply been a lame duck.

Cleaning out the Cubs management team from stem to stern wouldn't be "knee herk," it would be well deserved. And already far too late.

Thursday, June 16, 2011

Tom Talks

Tom Ricketts must have finally had enough of people bitching that he doesn’t have a long term plan for the Cubs and the same people bitching that he should say something about it. So, Tom called an impromptu press conference and promptly admitted that he does have a plan and that it’s the exact plan that led to the 27-40 record the team has posted this year.

"I have 100 percent confidence in Jim. He's working very hard to do everything he can to get this season back where we want it to be."

Just where do you want it to be, Tom? And, while you’ve said, full stop, that you have confidence in Jim Hendry, can you tell us why that confidence is warranted?

"And I think Mike (Quade)'s done a great job. Mike's got those guys playing hard. You know they're not giving up, and there's a good spirit in the clubhouse. So those guys' (jobs) are fine."

Yeah, Mike's done about as can be expected with the talent Hendry gave him. He’s also kept a tight control on the clubhouse. No issues there.

"I think we're not going to wear (the "F**k the Goat" shirts) outside. Kind of the language in it, you've got to be careful. But I'm not too worked up about it."

If only there was a guy in the clubhouse who could police or even manage the players before they take the field.

"I've never bought into the [idea that] I should have a baseball guy to watch my baseball guy. And then what do you get? A baseball guy to watch the baseball guy who’s watching the baseball guy? I really haven’t through about an extra baseball guy. I'm not regretting not having an extra baseball guy."

While you don't regret having a "extra" guy, 27-40 suggests you might regret not having a good one.

"Obviously we don't believe it"s a dump."

Ah, faith. Wrigley Religion. Seen this many times before. Always annoying.

"In fact, Wrigley Field is the third largest tourist attraction in the state, generates $600 million for the business in the area. ... It's not a dump."

Using economic value to gauge the quality of a physical plant is not the correct comparative. Waste Management, National Waste Services, Flood Brothers, Recycling systems Inc. and a host of other companies combine to create a lot of business for the Chicago area, and far more jobs than the Cubs do. And those companies are literally dumps.

"That said, we know that it can be improved. We know we've got a lot of work to do to preserve it and improve it for the fans."

So, it is a dump. Thanks for clearing that up.

"There are a couple of factors (in lower attendance) – obviously the economy and obviously the weather. But the most important thing is I’m not worried about the attendance because if we win, we'll be full. And everything we’re doing is to win."

Didn't your dad say that you told him that they "sell out every game, win or lose"? Someone’s getting tee’d up by his father for Who You Crappin'!

What's becoming more and more apparent about the Ricketts' leadership is that he doesn’t really have a plan for the product on the field. He thought, and sold his family, on the idea that the Cubs were a cash cow that they could buy. They could use the cash flow from an inelastic demand for tickets to pay off the debt they incurred to buy the team over a period of 10 to 15 years, and then the family would have a terrific source of income for generations based in the third largest city in the US that would give them huge business and political connections. Hell, we even saw a guy become a US President after using his dad's money to buy him a baseball team.

What they failed to see was that the demand for tickets stopped being inelastic in about 2006, at least on the basis of quality of team on the field. They also haven't seemed to notice that their front office, that has been here for 17 years, can’t develop talent – a key function that the Ricketts said they needed to do. The failure to see what's really going on inside the business of the Cubs has created an environment where Tom Ricketts is the new Mike McCaskey in this town. That's a reputation that's going to be hard for him to shake.

There's a reason this page was nonplussed about the Ricketts owning the Cubs. That's because we had no idea what kind of owners they would be. At least with Don Levin and Mark Cuban, we fans had a basis for measuring their skills as an owner: The Chicago Wolves and Dallas Mavericks. Those two franchises have had solid runs of success.

That certainly is appearing less and less to be something we can expect from the Ricketts.

Friday, June 03, 2011

Much Ado About Nothing

With Cubs finances in the papers today, it's time to dust off Ivy Chat for a day. The story reports that the Cubs, among other teams, have too much debt:

(N)ine franchises (are) in violation of MLB's debt service rules, according to information presented in a confidential briefing at the owners meetings last month and confirmed to the Los Angeles Times by three people familiar with the presentation.

The Dodgers and Mets have been in headlines for their troubles and find themselves among the nine with the Cubs. Those three are joined by the Orioles, Tigers, Marlins, Phillies, Rangers and Nationals as teams out of compliance with MLB's rules, according to sources, none of whom was authorized to disclose the information.

Why are the Cubs on this list and what does it mean? Let's look at the rule they are in violation of first:

The rules, intended to ensure clubs have the resources to support their financial obligations, generally limit a team's debt to 10 times its annual earnings, although Commissioner Bud Selig has wide latitude to enforce those rules. Selig declined to comment for this story.

Earnings is used kind of nebulously here. Most likely what is meant here is operating revenues. This number is a company’s total revenues less its operating expenses (payroll, cost of goods sold, marketing expenses, etc.). MLB rules limit total debt to an amount capped at 10 times this number. If the Cubs generate $200 million in revenue, but only make $50 million after expenses, they would be limited to $500 million in debt.

OK, now we know the numbers, what does this mean for the Cubs?

Most likely nothing.

When we go back and look at the Cubs debt situation, we see that total debt is about $674 million. But of that amount, $175 million of the debt is funded by the Ricketts themselves. This debt is really equity, but was designed as debt to help the Tribune Corporation avoid paying taxes purposes on the sale. Another $74 million in subordinated debt might also be structured in such a way that the Cubs don’t have to actually make any cash payments on the debt for years.

The MLB debt calculation most likely includes all the debt and doesn’t distinguish between senior and sub debt. And sub debt is more like equity than a real loan.

One supposes that this story does serve as a reminder that the Cubs do have a lot of debt and that a reasonable person would expect much of the payroll runoff the next two years to not be re-spent. But is this story an alarm bell for anything? No.

In short, there's nothing to see here. Move along.

Friday, April 22, 2011

History Repeating

The Dodgers are a mess. So big of a mess that Bud Selig had to have Major League Baseball take over the team's operations. This means that the Dodgers are now in a position similar to what the Montral Expos were in. How did they get here? Debt, divorce and really stupid management:

McCourt fired his wife, Jamie, from her position as the team's chief executive officer. She filed for divorce days later and McCourt responded by saying she had an affair with her bodyguard/driver and hadn't been doing her job.

That set up an ugly fight over money and control of the Dodgers that went on for months.

Bob Daly, the team's managing partner from 2000 to 2004, said baseball executives knew McCourt borrowed heavily to buy the team but they assumed he would pay down that debt once he took over. The divorce proceedings revealed that he and his wife paid themselves huge salaries and bought a handful of Southern California properties.

McCourt gave himself a $5 million salary and his ex-wife $2 million, according to evidence at their divorce hearing.

Among their many incidental expenses was a six-figure fee they paid Vladimir Shpunt, a self-described scientist and healer in Boston, to send positive energy across the country to the team. Each of the McCourts has since said it was the other one's idea.

All the drama has left some fans wondering whether the Dodgers are a second-tier team in a run-down stadium that has become increasingly dangerous — so dangerous that the Los Angeles police are now plentiful at the stadium to provide security since the beating of the Giants fan.
Too much debt, a .500 team, a run-down stadium.

Just terrible that this could happen.

Never again?

Friday, April 15, 2011

Cutting Spending

The Cubs need to maximize attendance, and also the value of the brand, is more than just a simple profit proposition. In acquiring the Cubs, the Ricketts took on a massive amount of debt, in the order of $674 million. Our good friend and former 1060 West blogger Gaius Marius provided a link to this summary of the Cubs debt picture. In short, the debt includes:

$250 million in private placement notes due in staggered maturities through January 2022
$175 million in bank debt due October 2013
$249 million in subordinated debt, of which at least $175 million is owned by the Ricketts

The first two pieces have all the Cubs assets, including Wrigley Field, pledged as collateral for the loan.

While it’s impossible to know exactly what the annual costs are for these loans, we can make a reasonable guess. Interest rates are probably somewhere near 5% for the bank debt, 65 to 7% for the private placement debt, and even higher for the subordinated debt.

Since the Ricketts own the bulk of the sub debt, the payments related to this are really irrelevant. If the Chicago National League Ball Club, Inc. has to cut a check every year to the Ricketts Family Trust, the Ricketts can turn that money right around and put it back into the Cubs.

The private placement notes are trickier. The amortization schedules over the 13 year time period could be very irregular. But, we do know they need to be paid in full by the end of 13 years. We can also guess that none of them mature for at least 5 years. If you figure that the notes are interest only for the first 5 years, then begin to paydown evenly over the next 9 years, we can estimate the private placement debt service like this:

Year Interest Principal Total
2010 $15,000,000.00 $- $15,000,000.00
2011 $15,000,000.00 $- $15,000,000.00
2012 $15,000,000.00 $- $15,000,000.00
2013 $15,000,000.00 $- $15,000,000.00
2014 $15,000,000.00 $27,777,777.78 $42,777,777.78
2015 $13,333,333.33 $27,777,777.78 $41,111,111.11
2016 $11,666,666.67 $27,777,777.78 $39,444,444.44
2017 $10,000,000.00 $27,777,777.78 $37,777,777.78
2018 $8,333,333.33 $27,777,777.78 $36,111,111.11
2019 $6,666,666.67 $27,777,777.78 $34,444,444.44
2020 $5,000,000.00 $27,777,777.78 $32,777,777.78
2021 $3,333,333.33 $27,777,777.78 $31,111,111.11
2022 $1,666,666.67 $27,777,777.78 $29,444,444.44

The line of credit that is due in 2013 is probably interest only which adds another $8,750,000 in annual debt service. It is possible that there are currently some principal reductions required, but not likely given that the banks were already paid down via the private placement notes. All in, it appears the Cubs annual debt service is close to $24 million per year with a major refinance need in 2013. Furthermore, when that debt is refinanced, it will likely be required to start to amortize beginning in 2014. That could escalate the debt service required beginning in 2014 to over $60 million per year, up from $24 million now.

To sum up, while the Cubs can certainly afford the cost of their debt today, the cash flow requirement is going to escalate dramatically beyond 2013. The key risk to the Ricketts is the bank debt that will need to be refinanced. The terms of that refinancing will be dictated by the cash flows available for debt service. The more cash available after paying for operations, the less risk to a lender. The less risk, the better the terms.

So, how do the Cubs improve cash flows if the seats are empty? There are a few ways. The easiest one is also the most obvious. Cut payroll.

Per Cot's Contracts, the Cubs 2011 payroll is $134,004,000. That drops radically over the next two seasons, which happen to be just before the debt needs to be refinanced. Let's see what goes away::

Aramis Ramirez - $14,800,000
Kosuke Fukudome - $14,500,000
Carlos Pena - $10,000,000
John Grabow - $4,800,000
Jeff Samarzdija - $3,300,000
Kerry Wood - $1,500,000
Reed Johnson - $900,000
Carlos Silva - $9,250,000
Total: $59,050,000

Carlos Zambrano - $19,000,000
Ryan Dempster - $14,000,000
Marlon Byrd - $6,500,000
Sean Marshall - $3,100,000
Total: $42,600,000

Grand Total: $101,650,000

That’s a lot of free cash flow. Now, clearly the Cubs won’t just replace those 12 guys with guys salaried at the major league minimum (total cost of about $6 million). Some will go to raises for other players (like Geovany Soto and Carlos Marmol). Some of that money will go to replacements, a few of which might get good sized dollars. As you can see, an Albert Pujols level contract is certainly affordable if payroll is kept flat.

But if evil bankers tell the Ricketts that they need to see more earnings before interest and taxes, payroll could easily be cut. If payroll goes down, minor league development is paramount to keep the team competitive on the field. Unfortunately, Jim Hendry's track record in player development is spotty at best.

Now, payroll is only the easiest way to free up cash flow. Another is to raise revenue. The solution here could raise more bitching than discussion of raising taxes does.

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