Chicago Cubs see success off field as well
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THE Chicago Cubs have thrilled fans with a run to Major League Baseball’s National League championship, but the team formerly known more for tough losses and bad luck is now set for a long and lucrative stretch both on and off the field.
Their run going forward will be fueled by young, less costly players, a US$650 million renovation of Wrigley Field that will turn the storied ballpark into even more of a cash cow, and the expected future establishment of a dedicated television network worth billions of dollars, analysts and bankers said.
“The Cubs are going to be a team to reckon with on the field and as a business enterprise for the next decade or so,” said Marc Ganis, president of consulting firm Sportscorp Ltd, which advised Tribune Co in its sale of the Cubs to the Ricketts family in 2009.
While the Cubs have not won a World Series since 1908 and fans over the years have bemoaned black cat and billy goat curses, the mood is more jubilant now following last week’s series-clinching victory over their arch-rival St Louis Cardinals.
Many fans believe the worm has finally turned, but seeds for the changes under way were planted when the Ricketts family purchased control of the team and picked up speed after Theo Epstein moved from the Boston Red Sox to become the club’s general manager two years later.
Everything starts with the play on the field, where this year the Cubs have shed their lovable losers’ image and fans are instead dreaming of winning the World Series.
The losing before this year led Epstein to rebuild the team with an emphasis on lower-priced, young players and that in turn has given the team flexibility to spend on expensive free agents such as the signing of pitcher Jon Lester this past offseason.
“They took their lumps for a while, but now it’s bearing fruit,” said Sal Galatioto, president of sports banker Galatioto Sports Partners, which represented the Ricketts family in their purchase of the Cubs.
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The financial trends all look good for the Cubs.
In 2009, the Cubs’ payroll was more than US$141 million, or third highest among MLB’s 30 pro teams, according to Baseball Prospectus.
That fell last year to 20th at US$93.2 million as the team brought in young stars like third baseman Kris Bryant and outfielder Kyle Schwarber, but missed the playoffs.
The Cubs’ payroll climbed back to US$120.3 million, or 13th in the league, this year.
The Ricketts family bought 95 percent of the Cubs for US$845 million and in March Forbes magazine valued the entire club at US$1.8 billion, the fifth highest in the league and up 50 percent from the prior year. The New York Yankees are No. 1 with an estimated value of US$3.2 billion.
That increase in the team’s value is partly driven by the funds pulled in at Wrigley, where the Cubs have the third highest ticket prices in the league and generate even more from concessions, according to research firm Team Marketing Report, which tracks the industry. Cubs tickets average almost US$45 apiece, compared with a league average of nearly US$29.
Attendance at Wrigley Field, which can seat over 41,000 people, hit almost 3 million this season, good for sixth in the league. That is an increase of almost 12 percent from 2014, when the Cubs ranked 11th in attendance.
Based on merchandise sales at MLB.com/shop, Cubs merchandise finished sixth overall in the league as sales rose 80 percent, league officials said. That was up from ninth place last year and far better than the league average of an increase of 5-6 percent.
To the victor...
With the team’s success, however, both attendance and ticket prices may continue to rise.
Famous for its ivy-covered outfield walls and urban location where home run balls sometimes drop onto a residential street, Wrigley Field is a top tourist attraction and has been declared a city landmark. The ballpark is over 100 years old.
The Cubs last fall started the renovation of Wrigley, which will be completed in phases. It has included a controversial left field videoboard and a right field sign that were protested unsuccessfully in federal court by owners of rooftop bars across the street from the ballpark, who complained their views into the stadium would be blocked. The project has also entails the addition of new bleachers, a new clubhouse, a restaurant and an outdoor plaza. It is expected to be completed by opening day in 2019.
“They’ve taken all the steps to turn the Wrigley area into a Cubs experience and they didn’t do that just to make the fans happy,” said Michael Cramer, director of the sports media program at the University of Texas and the former president of a group that previously owned the Texas Rangers baseball club. The real big payoff is still to come, as the Ricketts plan to establish a Cubs regional sports TV network following the 2019 season.
Given the development of digital technologies, a Cubs network likely be worth more than the US$3 billion at which the New York Yankees’ YES Network was valued, analysts and bankers said.
“We look at ourselves as a baseball team first, but lots of businesses after that, and on the media side we’re really excited about the future,” Crane Kenney, the Cubs president of business operations, said in an interview.
“We’re in the third inning of our plan,” he added. “We’re very, very early in our growth cycle.”
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