Celebrate the Facts!
The Chicago Cubs had a nice run and won a World Series in 2016, and their ownership appears to have taken a page out of the Chicago professional franchise owners’ playbook. Chicago Cubs fans hoping for a winning team better be young, as it appears it will be a long time until the next good Cubs team.
Chicago has four professional sports franchises: the Cubs and White Sox in baseball, the Bulls in basketball, the Bears in football, and the Black Hawks in hockey. In addition, Chicago is the third-largest media market and has a considerable population of affluent, loyal, and arguably masochistic fans. Unfortunately for Chicago sports fans, Chicago franchise owners appear to have developed a template for operations that include occasionally building a good team, reducing costs, and harvesting the profits for decades.
These franchises have a lot in common:
Jerry Reinsdorf, an 86-year-old worth $1.7 billion, is the public face of ownership of the Chicago Bulls. The Chicago Bulls, founded in 1966, won an NBA championship was 1998, giving them a 23-year drought. The Bulls are the fourth most valuable NBA team at about $3.7 billion.
The Chicago White Sox, also purchased by Reinsdorf in 1981, won the World Series in 2005, so now they’re going on a 17-year drought. The White Sox had gone 88 years without a championship, as they last won a title in 1906. The White Sox franchise is worth about $1.7 billion. Given the relative disparity in value between the Cubs and White Sox combined with Reinsdorf’ s advanced age, one might suspect the White Sox are next in line for investments and attendant titles.
The Chicago Bears had a dream team in 1985 that won the Super Bowl. Unfortunately, the Bears have now gone 37-years without a Super Bowl win. The Bears had gone 22 years as their previous league championship was in 1963. As outlined in an earlier investigation, the McCaskey family owns the Chicago Bears, but that will almost certainly change soon,
The Chicago Blackhawks last won the Stanley Cup in 2015, winning three championships between 2010 and 2015. Their most recent title prior had been 1961, 49 years prior. The Wirtz family owns the Chicago Black Hawks, and they now have a net worth of $4.4 billion. The Chicago Blackhawks are the fourth-highest valued NHL franchise at $1.4 billion.
The Cubs won the World Series in 2016, after having gone 108 years without a championship team. The Rickets family bought the Chicago Cubs in 2009 and have a net worth of $4.5 billion. Ricketts bought 95% of the Cubs from the Chicago Tribune for $900 million and sold part ownership in 2014 to raise $150 million to help fund renovations to Wrigley Field.
Originally priced at $550 million, the investments are at least 100% over budget. Don’t cry a river for the Ricketts family as the Chicago Cubs are now worth about $3.4 billion, making them the fourth most valuable team in major league baseball. The Cubs trimmed their payroll to about $98 million for 2022 from about $144 million in 2021, a reduction of $46 million. Their payroll costs now rank 18th in a 30-team league.
The Ricketts family runs a real estate investment firm called Hickory Street Capital. They used this organization to develop a sports-industrial destination nested around Wrigley field. This development includes 93,000 square feet of office space, 85,100 square feet of retail space, a 173-room Hotel Zachary adjacent to the area, and an open-air entertainment plaza. These ancillary investments allow the Ricketts family to charge their organization for office leases and harvest the spin-off party culture around Wrigley Field.
Profit considerations have already determined the future of the Chicago Cubs. The Ricketts family purchased a moribund franchise from the Chicago Tribune in a fire sale at a bargain cost, then moved strategically to build infrastructure in and around the stadium while bringing the franchise back to winning status.
In the process, their project has been highly successful. The franchise value increase alone has yielded huge returns. Regardless Chicago Cubs officials paint a bleaker picture of operating losses. The Ricketts family does not have to open their books to the public, so these statements are open to question. Empirical evidence suggests that any narrative implying losses is erroneous.
The Ricketts family benefits from the losing money narrative in many ways. It allows them to maintain selling costs of tickets and concessions and reduce payroll investments.
Borrowing from the timeworn playbook, the Chicago Cubs organization will maintain a manager whose job appears to be more a media punching bag for poor performance than actual managing. Instead, marketing will likely combine nostalgia for past great teams and players with hopes for the future.
Future marketing messaging will glorify hopes for young arms and youthful bats combined with cheap aging castoff veterans. One can expect nostalgic banners of past Cub greats pasted all over Wrigley Field combined with hopes about the next title. Such might occur, but it will happen without attendant investments in payroll.
Regardless the Ricketts family fortune will continue to grow because of their canny business practices. But anyone who confuses franchise ownership in Chicago to commitment to winning needs a reality pill.
Michael Donnelly investigates societal concerns with an untribal approach - to limit the discussion to the facts derived from primary sources so the reader can make more informed decisions.