SBD/April 4, 2014/Franchises

Ricketts Family Eyeing Sale Of Minority Shares In Cubs Ahead Of $500M Wrigley Renovation

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Ricketts wants assurances the team won’t get sued before approving the renovation
The Ricketts family is "exploring the idea of selling minority ownership shares" in the Cubs as a "way to help finance" the $500M Wrigley Field renovation, according to sources cited by Patrick Mooney of CSNCHICAGO.com. A source said that those shares would be for a "non-controlling interest." The source added that the family "hasn’t made any final decisions yet." Mooney reported the move would be an "acknowledgment of the team’s complicated financial reality." Chicago Mayor Rahm Emanuel "is said to be getting antsy" as Cubs Chair Tom Ricketts "continues to negotiate with the rooftop owners after already missing one offseason of construction." Emanuel "wants the ribbon-cutting ceremony at the groundbreaking, the image of hard hats, concrete and steel," while Ricketts "wants assurances the team won’t get sued before green-lighting" the project. The rooftop owners "want their piece of the action, clinging to a revenue-sharing agreement with the team" that runs through '23. A source said that a sale "wouldn’t impact the futures" of Cubs President of Business Operations Crane Kenney and President of Baseball Operations Theo Epstein. Sources said that as the Ricketts family "does estate planning, the intention is to still control the team through at least the next generation." Sources suggested that whatever happens, the "spending restrictions imposed" by the terms of Sam Zell’s sale of the team in October '09 "will remain in place" through the '19 season. At that point, the Cubs "would also be free to start their own cable network, while seeing new revenues from the Wrigley Field renovation" (CSNCHICAGO.com, 4/3).

DECISION DETAILS: ESPN.com's Darren Rovell cited sources as saying that the Ricketts family has "hired Galatioto Sports Partners, the firm that helped" it buy the team. GSP "already has begun to talk to high net worth individuals with the goal of raising capital through as few investors as possible" (ESPN.com, 4/3). Meanwhile, in Chicago, Robert Channick notes it "does appear the rooftop situation needs to be resolved before the family makes a decision whether to sell shares." This "wouldn’t be the first time the Ricketts family considered bringing in partners." When the family was negotiating to buy the team and ballpark, Ricketts "had separate conversations with a handful of celebrities, including Bill Murray, about investing in the Cubs" (CHICAGO TRIBUNE, 4/4).

NATIONAL PROFILE: The Ricketts family this week was profiled on Showtime's "60 Minute Sports." CBS' Armen Keteyian said the Ricketts family since acquiring the Cubs has "preached patience as they've dealt with a grand slam of problems: An aging ballpark; depleted farm system; Chicago politics; and a team that's finished an average of 27 games out of first place the past four seasons." Ricketts said the moniker "'lovable losers' hits a raw nerve for everybody in the family." Keteyian noted the Ricketts family is "doubling down on a radical baseball bet for a big-market team." While the Dodgers and Yankees have "loaded up on high-priced free agents," the Ricketts family has "gutted their team of aging stars and weighty contracts." They instead have "poured tens of millions of dollars, far more than most teams, into their farm system." The Cubs "once had one of the worst facilities" in the Dominican Republic, but the Ricketts family has poured $7M "into a new 50-acre baseball academy." Epstein said, "There's a real dichotomy between how we're perceived from the outside looking in, which is fair, and then they assume we're depressed and they assume we can’t wait to get out of here and nothing could be farther from the truth. The morale inside the organization is fantastic." Keteyian noted under the Ricketts' ownership, the family "has committed about" $1.4B to the team, including $300M to "restore century-old Wrigley Field to its glorious past." Meanwhile, Cubs BOD member Laura Ricketts said of the dispute with the rooftop owners, "Our patience is out and has been for awhile" ("60 Minutes Sports," Showtime, 4/2).

SKEPTICAL PRESS: In Chicago, Rick Telander wrote with all of the Ricketts family's "thrashings and firings, and the addition of scores of genius front-office people, led by smartest-man-in-any-room-on-any-planet Theo Epstein, and all the promises and vows, and all the 'rebuilding,' you would reasonably be led to believe that the Cubs once were far worse than they are now." Telander: "What have the Rickettses been 'rebuilding' except whatever mess they made? And when does this 'comeback' begin?" (CHICAGO SUN-TIMES, 4/3).
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