Monday, June 29, 2009

Lou Not The Problem, But He Needs To Make A Solution

Lot's of people are on Lou Piniella’s back. People are saying he’s quit on the team. That's he become passive and doesn’t care. Even this page has noted that he’s likely a short timer and will probably not return to the Cubs for the 2010 season.

Most of the people making these comments are looking for a single source to blame for the team's reversion from 97 win regular season juggernaut to Dusty Baker era Keystone Copishness. Most of this criticism is underserved. It's stupid to blame Lou for Aramis Ramirez’s bad shoulder. Or Alfonso Soriano's Korey-esque last two months. Or Milton Bradley's predictable demeanor and unexpected loss of a hitting stroke. Or Mike Fontenot's disappearance. Or Carlos Marmol's evolution into Rick Ankiel.

These are good players who, for a combination of reasons, are not playing as well this year as last year. It’s impossible to blame Lou for all of that.

But where Lou made his mistakes was in his handling, or, more accurately, the lack of handling of his corner outfielders.

Soriano should not be leading off. Period. Yes, he hits worse when you bet him elsewhere. At this point, so what? How much worse could he be? Giving Soriano more at bats hurts the team. He needs to hit fewer times, not more. And he needs to be replaced in the outfield late and often.

The Bradley incident from Friday seemed to be handled correctly. After Milton had another tantrum, Lou told him to go home. Smart.

But to start him the next day? Bad move. Maybe Lou felt guilty for calling Bradley what a lot of people seem to have called him. Another so what? After Soriano, of all people, went off on Bradley saying Milton needed to be here 100%, Bradley needed a day to think about it. Lou starting him on Saturday was enabling, not corrective.

There's plenty of time to fix this season. Lou can start with Soriano and Bradley.

Friday, June 26, 2009

Heading Out

If you think we fans are sick of the slow process of the sale of the Chicago Cubs (not to mention their on-field play), take a wild guess how Lou Piniella feels:

"One thing that has made it a little difficult is the fact that there hasn't been any ownership for the three years I've been here. The team has been for sale for a long time, and that's not the easiest of circumstances for any organization.

"But my job is to manage the team. My job is to do the best that I can with the talent I have, and that's what I try to do. I try to stay in my area as much as possible."

So with everything that has gone on, will Piniella be back with the Cubs next year?

"I'm signed through next year, and that's it," he said. "I'm signed."

That answer could be interpreted in many ways. Just because he's signed doesn't mean he'll be back. Nevertheless, Piniella refused to confirm his return.

"I am [signed]," he repeated. "The club picked up my option at the end of last season, and I'm signed through next year."

There's almost no way Lou returns next year. If the team doesn't make the playoffs, there will be a pressured resignation. If they make the playoffs and fail again, there will be some combo of the pressured resignation and the "take the job and shove it" approach from Lou.

And if they somehow win the World Series? Lou exits as the conquering hero.

So, is Ryne Sandberg the manager in waiting? Assuming the sale is not complete, just how much money will Jim Hendry have to hire someone?

While 2009 is not even half over, there are a ton of questions already being asked about 2010.

Wednesday, June 24, 2009

The DOOMsday Scenario

As the Cubs sale more and more resembles an episode of 90210, with fewer bikinis, an underlying issue with the process seems to be overlooked.

While there are more potential buyers today than there were a few months ago, the purchase price of the team appears to be falling. Over at (POP!), CCD and gaius marius have discussed this issue on a cursory basis. They note, correctly, that there is no impetus for either the Ricketts Family or Marc Utay to do a fast close as the purchase price for the Cubs that Sam Zell can command continues to drop given the credit markets and the Tribune’s financial distress. Both parties could theoretically wait out Zell and grave dance on him until they get the Cubs for a (relatively) bargain price.

This makes a lot of sense until you remember that there is a group of people outside the Tribune who have a vested interest in seeing the Cubs sold for the highest possible amount. Who are these people?

The 29 owners of every other major league baseball franchise.

Each individual franchise is valued relative to the value of every other franchise. If one franchise sells for X, then every other franchise can determine their value by applying the same metrics to their franchise.

Having the Cubs' "X" equal $1,200,000,000.00 would have been a nice "X" from which each franchise could base their current value.

If the Cubs selling price is falling, as CCD and gaius and other people think, then 29 other owners are seeing the enterprise value of their investment shriveling away all because Sam Zell can't close on a deal.

Fortunately for them, there is another potential buyer of the Chicago Cubs.

Major League Baseball, Inc. and the 29 owners with enterprise values at risk.

Far fetched? Yes. Unprecedented? Hardly.

The story of the Montreal Expos is a precedent for the league owning a franchise. Granted, the background of why the league bought the Expos and why they could buy the Cubs are completely dissimilar. But there is a certain logic for the league coming to the rescue of the Cubs and the Tribune.

The league clearly does not want a replay of the Phoenix Coyote situation on their hands. They want the bankruptcy court to stay as far away from the Chicago Cubs as possible. Why?

Suppose the sale process continues to drag. The Tribune nears the date of needing to make a principal payment on their $12 billion in debt and they are short on the cash. Could a bankruptcy court force a fast sale of the Cubs for a below-normal market cost to help generate the cash? What if the buyer chosen by the court was unacceptable to the other owners?

The 29 other owners could step in and buy the Cubs themselves and hold the franchise until the economy turns and values stabilize. Further, they could buy at a price above the current offers from Ricketts/Utay and provide the Tribune with the cash they need. It would be very hard for a court to reject such a scenario as Tribune creditors would be clamoring for the cash.

Could the clubs swing such a transaction? Perhaps. Assuming the clubs could get the $350 million in bank financing that the Ricketts secured, a purchase price of $785,000,000 would require an equity contribution of $15,000,000 per team. If the Cubs were held for 2 years and then flipped to a Ricketts type group for the original agreed upon price of $900 million, each club would generate an IRR of 12.4% on their $15 million investment (not adjusted for interest expense, fees, etc.). Not only that, but they would defend the value of a cornerstone franchise of the league. In doing so, they defend the values of their own franchises.

Now, is this as a likely scenario? No. But the probability of this occurring is certainly greater than 0%.

And can you imagine how the Cubs could be run with a front office like that that ran the Expos from 2002 to 2006? Clearly, this is a doomsday scenario.

But watching something like this play out would be a lot more entertaining to watch than a Kevin Gregg ninth inning.

Tuesday, June 23, 2009

It's Been 25 Years Since a Hall Of Fame Career Was Born

This was our "Kennedy Moment." We all know where we were when this game was played. I was in Lake Bluff in a gas station parking lot selling sparklers and smoke bombs for the 4th of July. I listened to the game on a rather large, very 1980's boom box.

After we were done working for the day, I drove myself home and stopped at my uncle's house. I asked him if he'd watched the game. "Turned it off!" he said snappishly. "So, you don't know what happened?" I asked.

In those pre-internet, not much ESPN days, he had to wait for the 10 PM news to see the results.

Thanks to the magic of Comcast Sports Net and a DVD burner, here is Ryne Sandberg's at bat in the bottom of the ninth inning and the full bottom of the tenth inning of The Sandberg Game. The tenth inning is a little long, but it's worth watching the whole thing. With the 2 run lead and Bruce Sutter on the mound, Bob Costas gets his verbal signoff credits in as the game was effectively over. Then, Dernier takes ball four on a pitch that would have Hawk Harrelson hemorrhaging out his ears in umpire hatred. Finally, watch Sutter's disgust at giving up the second long ball (looking an awful lot like Kerry Wood after serving up a meat pitch to Derrek Lee earlier this week).

If you need any more setup than that, click the link to read Mike Donohue's excellent summary.

Monday, June 22, 2009

Finding The Bottom

News of the Marc Utay's original offer for the Cubs are making the rounds again in advance of him becoming a player for the team:

The group’s original bid, led by Glenview native and New York private-equity investor Marc Utay, proposed that Tribune keep 22% to 25% of the team, according to a person familiar with the matter.

Mr. Utay's bid was thought to be runner-up to the roughly $900-million offer from the family of Chicago bond salesman Tom Ricketts. Tribune recently resumed discussions with Mr. Utay’s group following five months of exclusive negotiations with the Ricketts clan, several news outlets reported last week.

It's unclear whether Mr. Utay's original proposal is still in play, or if it's been revised. The value of his bid could not be learned.


For a deal like Mr. Utay's original plan to work, Tribune's creditors would have to accept a larger equity stake in lieu of cash. The team is not included in Tribune's ongoing Chapter 11 bankruptcy proceedings, but the sale effectively would need the creditors' blessing.

"There is more to consider than how many dollars you get upfront," said a person close to the Tribune. "The (Tribune), board and creditors all want to do a deal in the best interest of the company long term."

In general, creditors have become more open in recent years to accepting equity stakes instead of cash, said Douglas Baird, a bankruptcy expert at the University of Chicago.

"If Tribune's investors thought holding onto a 25% stake in the Cubs provides the maximum value long term, then they'd be fine with that," Mr. Baird said.

What Mr. Baird is suggesting is very interesting, and has some implications for the rest of baseball. Such a deal could have less cash than the Ricketts' deal, but actually provide a higher purchase price. This benefits 29 other owners as their franchise values will be a function of what the Cubs are monetized for.

More on this on Wednesday, but tomorrow, we take you back 25 years with some video.

Nice Weekend. Now, Get To Work

Last year, as a guest of a friend, I attended a game where the Cubs fell behind 9-1 and won 10-9. This year, same host, Cubs only trail by 7. Similar outcome.

Thus wraps up a 5-3 home stand, the results of which would be even more impressive if they'd beaten a decent team in that run. Only Minnesota is marginally good. The White Sox and Cleveland are putrid. Let's see if they can keep any momentum going on their day trip to Atlanta and excursion into Detroit. If they can, there may be reason to get excited about this team for reasons other than simply being tied for first place in the loss column.

A few other quick hits:

- A standing ovation for Mark DeRosa? Really? This guy is a poor man's Keith Moreland! What a pathetic display.

- Kerry Wood in another uniform is a sad sight. Until he gets to the mound. Then, the sight is quite welcome. For as bad as the contracts are that Jim Hendry hands out (Neifi Perez - 2 years; Aaron Miles - 2 years; Jason Marquis - 3 years; Milton Bradley - 3 years; Alfonso Soriano - 8 years), giving Kerry Wood multiple years was pretty dumb.

- And a quick thanks to Bruce Miles who dropped by the seats. Bruce brought down a press/stats pack from the press box for us to peruse through. Much appreciated.

Thursday, June 18, 2009

And Then There Was... Two?

In a move sure to surprise only the comatose, the Tribune let slip today that they've opened the bargaining table up to other bids:

An exclusivity period between Tribune and the Ricketts group has ended and the media company is now talking to a group that includes private equity investors Marc Utay and Leo Hindery, three sources familiar with the situation said.

"We know that they went back to the Utay group," said one of the sources, who asked not to be identified because the sales process has not closed.

Spokesmen for Tribune Co and Tom Ricketts, who is leading his family's bid, said their talks are ongoing and Ricketts spokesman Dennis Culloton described them as positive. Utay and Hindery declined to comment.

The Ricketts peeps pooh-poohed Zell's public comments last month that he was willing to find other bidders. "So, if the Ricketts deal doesn't get done, I'm sure there will be other ones," said Zell on May 28th.

We're just about back to square one.

Still No Sale

CNBC with an update on the sale. Very little new information, but from the two some very interesting quotes antagonists, uh, I mean, sides in the sale process:
Sources confirmed to CNBC that Ricketts received a letter from Tribune Company about the matter a few weeks ago.

The letter stated that unless the remaining matters were agreed to within a specific time frame, Ricketts could risk losing the deal or Tribune could begin talks with other interested parties.

Sources say Ricketts is seeking to reduce the final purchase price by tens of millions of dollars.

Ricketts declined to comment personally, but Dennis Culloton, a spokesperson for the Ricketts family, told CNBC's Darren Rovell, "the negotiations are ongoing, the Ricketts family financing is virtually in order and we have had positive talks with the Tribune Company as early as this morning."

So, Sam Zell is playing hardball by telling the Ricketts to get moving or get out of the way. And the Ricketts have their virtual financing in place. I don't think Sam Zell or Tribune creditors will accept virtual dollars.

Two parties who can't agree on price and financing not yet arranged. Too perfect. The Cubs can't hit on the field or hit on a deal. Clusterfuck symmetry. Catch it!

Tuesday, June 16, 2009

$36,500,000 Worth of Outfield

The Cubs starting outfield of Alfonso Soriano, Kosuke Fukudome and Milton Bradley has been pretty bad from the offensive side of the ledger. Here's how bad:

Alfonso Soriano 58 58 249 40 57 14 0 14 27 22 4 2 66 6 2 0 1 2 0.229 0.296 0.454 0.750
Kosuke Fukudome 53 47 177 30 47 12 1 5 22 37 1 2 42 4 4 1 2 3 0.266 0.394 0.429 0.823
Milton Bradley 47 38 141 20 32 5 1 5 16 20 1 3 29 0 0 0 0 6 0.227 0.335 0.383 0.718

567 90 136 31 2 24 65 79 6 7 137 10 6 1 3 11 0.240 0.340 0.429 0.769

For comparison, if you projected out Ryan Braun to 567 at bats, he'd have 34 homers and 115 RBI at the pace he's on right now. Carlos Lee would have 27 homers and 100 RBI.

But, it gets worse. If you factor out April, the numbers for these three are a batting average of .222; OBP of 309; SLG of .372; and an OPS of .680 with 11 homers, 34 RBI to go with 90 strikeouts and 44 walks.


It's hard to see how the Cubs plan to stay above .500 with performance like this over a full season. These are guys who Jim Hendry hired to be cornerstones, not dead weights. Now, you could "keep the faith" and say that they all have to get better. Soriano will do what he always does and get hot for 2 weeks and go from being an anchor on the teams offense to actually carrying it. Fukudome can't have tracked the same as he did last year and be good, then terrible (how could he have been good for 6 weeks?). And Bradley has to start having numbers somewhat similar to his career norms.

But it's also possible that no team will throw Soriano anything other than a slider away until he stops swinging at it, Fukudome will continue to imitate a "Sit N' Spin" and Bradley will wish that the disabled list came with frequent flyer miles.

There are no guarantees here. Anyone who says otherwise is selling something.

Monday, June 15, 2009

Goodbye, Gerry

What was interesting about the firing of Cubs hitting coach Gerald Perry yesterday was not that he was fired. This is baseball. When you have a roster of players who aren't hitting and most of those players have no trade clauses, you can't get rid of them. So, you get rid of their baby sitter instead. Perry taking the fall was he obvious, albeit meaningless move.

As fans, we can only speculate as to a coach's real affect on a team. We see sports performance improve, we credit the coaches. We see it fall, we blame the coaches. Now, correlation is not always causation, but it's all we have to go on as fans. So we often convert "correlation" into "axiom." Did Gerald Perry go from brilliant to terrible? We'll never know.

But what was really interesting was the way the professional media characterized the way the change was made.

Bruce Miles: General manager Jim Hendry flew home early this morning from the College World Series in Omaha to make the announcement.

Dave van Dyck: "Obviously, we've been struggling for a long time," said general manager Jim Hendry, who personally fired Perry. "I'm not one to dump all the blame on my coaches. But I think sometimes you need a different voice.

Even Carris Muskat: Perry was at Wrigley Field on Sunday, and taking part in batting practice when he was called off the field around 11 a.m. CT and into the clubhouse to talk to Hendry.

The lack of Lou Piniella's name tied to this announcement is telling. It seems clear that Lou didn't sign off on this move. While he may have agreed to it, he hasn't appeared to endorse this either.

Speculation should now jump to Lou's future. Regardless of what happens this year, you have to start to believe the Lou will be leaving the Cubs after the 2009 season. Lou will be 66 years old at the end of August. He's managed five teams. He's financially secure. He has an aging roster of players with long term contracts many of whom are likely are past their baseball prime. He's working for a team with a questionable ownership situation which may or may not get resolved anytime soon which likely prevents spending large sums of money to correct roster deficiencies.

And he now had to allow his boss to mess with his coaching staff.

Dilbert would clearly characterize Lou as a "Flight Risk" these days.

Wednesday, June 10, 2009

A Tale of Two Stat Boards

Just look at the Cubs offensive statistics of their main players since the first of May (sorted by OPS; minimum 40 at bats; stats from Dave Pinto's Day-by-Day Database):

Derrek Lee 26 26 97 15 31 6 0 5 14 16 2 1 23 0 0 0 0 1 0.32 0.421 0.536 0.957
Reed Johnson 22 13 63 11 20 6 1 3 15 4 0 0 7 1 0 0 1 1 0.317 0.353 0.587 0.940
Ryan Theriot 34 32 133 23 36 8 1 6 16 10 0 4 20 5 3 2 0 4 0.271 0.34 0.481 0.821
Bobby Scales 22 14 53 11 12 2 1 3 7 7 0 1 13 0 0 0 0 2 0.226 0.328 0.472 0.800
Milton Bradley 29 25 94 15 23 3 1 4 13 11 1 1 19 0 0 0 0 4 0.245 0.33 0.426 0.756
Kosuke Fukudome 29 25 92 16 23 6 1 1 7 20 1 1 19 3 1 1 1 1 0.25 0.386 0.37 0.756
Mike Fontenot 31 29 103 7 27 6 1 3 17 10 2 0 23 2 0 0 3 2 0.262 0.319 0.427 0.746
Geovany Soto 30 26 97 8 26 3 0 2 12 14 1 1 19 0 0 0 1 6 0.268 0.363 0.361 0.724
Micah Hoffpauir 28 16 71 6 18 5 0 2 9 6 0 0 18 0 0 0 0 2 0.254 0.312 0.408 0.720
Alfonso Soriano 33 33 145 18 30 8 0 7 13 10 2 1 40 3 0 0 1 1 0.207 0.261 0.407 0.668
Aaron Miles 21 13 57 9 12 5 0 0 2 4 1 0 9 3 0 1 0 1 0.211 0.262 0.298 0.560

That's some pretty pathetic offense there.

But there is one other stat to look at, and it's the only one that matters. The standings:

Central W L Pct GB
Milwaukee Brewers 33 25 0.569 --
Chicago Cubs 29 26 0.527 2.5
Cincinnati Reds 30 27 0.526 2.5
St. Louis Cardinals 31 28 0.525 2.5
Pittsburgh Pirates 26 32 0.448 7
Houston Astros 25 31 0.446 7

The Cubs are one game out of first in the loss column, the only one that matters. That the Cubs have played three fewer games than the Brewers is simply good luck due to the number of injuries the Cube have had. Hopefully, by the time they actually play these games, the team will be far more healthy on the offense.

This is the advantage of having a strong balance sheet. You can absorb more pain.

Monday, June 08, 2009

Zell Heading Out?

Potential big news on the Tribune financial front could have huge, positive issues for the Cubs. It seems that in order to alleviate the debt burden of the company, the banks that lend money to the Trib may exchange their debt for equity and Zell may be out:

The central logic behind the debt-for-equity swap is that Tribune Co. can no longer afford the nearly $13 billion in debt that grew out of Zell's $8.2 billion deal to take the company private in 2007. With advertising revenue in decline and the company's cash flow deflated, the company must shrink its obligations to a more sustainable level while giving creditors enough potential value in return that they agree to the cuts without a fight.

Zell stands to lose $80 million in stock warrants and a $250 million a note that represents a loan he made to the company as part of the initial going-private transaction. He may also lose control of the company.

Sources close to both the creditors and the company said it is too early to make such decisions and Tribune management continues to control the process because it currently has the exclusive right to propose whatever reorganization plan it wishes. But Zell's team has indicated that it wants to work toward a consensual plan with the company's creditors, which means issues such as who manages the company and whether those managers are given equity as part of an incentive package will be negotiated over time, experts said.

"It completely depends on whether the new owners see value in keeping Zell," said Douglas Baird, a corporate reorganization specialist at the University of Chicago Law School. "They have to decide: Is the person at the helm when the company went into the storm the most able person to steer it out?"

This may actually speed up the Cubs sale process. Why? Several reasons. First, it's clear that Zell and the Ricketts family have had a difficult negotiation. Removing Zell from the table won't hurt. But second, the banks that would take the Tribune back from Zell are also the banks that are willing to lend to Ricketts to buy the Cubs.

They would likely be very willing to lend to the Ricketts to diversify their credit risk from $13 billion in Tribune risk to $12.1 billion in Tribune risk and $350 million in Cubs/Ricketts risk.

This bears closer watching. Unlike the Cubs themselves.

Sending Out Good Thoughts

Ryan Dempster decided to go public with the family crisis he's been dealing with. Paul Sullivan writes about the Dempster family's ordeal with a genetic disease affecting his young daughter.

Here's hoping the what Ryan says in the article, that by the time she is 2, hopefully she's as normal as any other kid, comes true.

Thursday, June 04, 2009

Need a Six Pack?

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