Reports: Ricketts Family Exploring Selling Minority Shares of the Cubs

According to reports from Comcast SportsNet, the Sun-Times, the Tribune and ESPN, the Ricketts family is “exploring opening the Cubs ownership to minority shareholders to help finance” the Wrigley Field Restoration project.

Less than 24 hours after Tom Ricketts’ interview on Showtime’s 60 Minutes Sports aired in which he told Armen Keteyian that he “comfortable if the rooftop owners sue” the team in order to protect their views, reports surfaced the family was exploring ways to sell minority shares of the team. Patrick Mooney confirmed the plans with a Cubs source. According to Mooney, the family “hasn’t made any final decisions yet.”

Mayor Rahm Emanuel is “getting antsy” according to the report from Comcast SportsNet as the team still tries to figure out ways to settle their dispute with the rooftop club owners. Remember, the issue with the rooftops was expected to be resolved before the home opener a year ago.

According to Mooney’s report, the Ricketts family would retain controlling interest in the team. Any shares that would be sold would have to be approved by Major League Baseball and the process hasn’t gotten to the point yet. Mooney reiterated the Ricketts family plans on owning the team “through at least the next generation.”

If the Cubs were to sell minority shares of the team, it would not impact the status of either Theo Epstein or Crane Kenney. The Cubs President of Baseball Operations and the team’s President of Business Operations are under long-term contracts.

The terms and restrictions of the sale of the team from Sam Zell to the Ricketts family would remain in place through the 2019 season. The Cubs television contract with Comcast SportsNet also expires after the 2019 season. At that point, the Cubs are expected to start their own television network, another project Crane Kenney has been working on for several years.

According to Darren Rovell, the “ownership group has hired Galatioto Sports Partners, the firm that helped the Ricketts 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.”

Forbes recently valued the Cubs at $1.2 billion but the shares the Ricketts family could be looking to sell would “include all Ricketts-related sports assets including the team, the Wrigleyville development project and stake in Comcast SportsNet Chicago” according to the ESPN report.

The team and the rooftop club owners have been at a stalemate for quite some time and the family is tired of the delays. During the interview that aired on Showtime, Laura Ricketts said, “Our patience is out and has been for a while.” Tom Ricketts admitted that he is not sure the family has a Plan B at this point.

With the home opener on Friday and Tom Ricketts make his usual stops to speak with the various media outlets, the Cubs’ chairman should address his family’s plans on this matter.

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  • SuzyS

    Still gotta go back to Zell on this. Not that it matters much…but Zell to the Cubs is like Scott Boras to the Pittsburghs and KC’s of the world…untenable ruination.

    • Tom U

      Suzy, it is an absolute shock to me that Zell has been virtually ignored in all of this by fans and the mainstream media. In a town like Chicago and with the abundance of Cubs fans, Zell’s head should be on a swivel every time he steps outside (figuratively).

      • DWalker

        its because he A. Isn’t the man at the front now (its much easier to focus on Theo, Kenney and the Ricketts) and B. he is tied up tight with the mainstream media, even competitors are going to think twice about really going after him. C. most fan don’t understand whats going on and don’t have a clue about the finances and really don’t care because all they see is income, players saleries and ticket prices.

    • John_CC

      Can anyone explain to me, as simply as possible, what the “constraints of sale” are that Mr. Zell imposed and how they are so restrictive to the current baseball operation?

      • Denver Mike

        Unfortunately there is no simple way to explain it, but this article tries:

        http://www.csnchicago.com/blog/kapman/ricketts-forced-tribune-take-huge-debt-cubs-purchase

        I think the key excerpt is, “…the Ricketts family, who multiple sources have confirmed to me wanted
        to use much more cash in their offer than Zell would accept due to tax
        implications on the transaction.
        Zell and the Tribune Company required anyone who was interested in
        buying the team to heavily finance their purchase and to allow the
        Tribune Company to maintain a five percent stake in ownership for
        several years going forward. One prospective buyer who quickly withdrew
        from the process told me ‘it was the most complex financial transaction
        he had ever seen,’ with another telling me that he wasn’t willing to
        jump through all of the hoops that the deal required.”

        Basically, if the team was purchased in cash then Zell and the Trib would have had to pay a capital gains tax on the sale. By forcing the interested parties to finance a large portion of the purchase price, and maintaining a 5% ownership share, it has been estimated that Zell saved almost $300 million. Keep in mind that doing this essentially cheated the taxpayers out of this money for his own gain, and hamstrung the Ricketts/Cubs in the process.

      • Tony_H

        I have also been told that a lot of the answers are hidden in the Tribune financial statements, but I have not spent nor do I plan to spend the time to review this entire document. This was a link in an article that tried to explain it, but I don’t know which article it was in.

        http://www.tribune.com/media/pdf/2012%20Consolidated%20Financial%20Statements.pdf

  • JasonPen

    Does anybody have a link to the Showtime interview?

    • Jim Canavan

      Jason I have no ink but I saw it. Absolutely no insight from the segment. Tom Ricketts said he was frustrated with the roof tops and Beth murphy asked how big of scoreboard do the cubs need.

  • http://theboardridersuite.wordpress.com/ Theboardrider

    Time for a Plan B. doesn’t seem real smart not to have one. Like moving to Itasca…

    • Denver Mike

      I’m only one fan, and don’t even live in Chicago anymore, but I can honestly say that if the Cubs moved to the suburbs I likely wouldn’t go to another game. Wrigley and the city is the appeal, a cookie-cutter stadium in the suburbs not so much.

      • BigJonLilJon

        Cant agree…. The team should be the appeal, not the park. Don’t get me wrong – I love Wrigley, but I go to the game to see the TEAM, not the stinky troughs!!!

        • Denver Mike

          Keep in mind I never said I’d stop being a Cubs fan, that’s never gonna happen. But it’s just as easy (and cheaper) for me to be a Cubs fan from my couch, in HD. Wrigley is the incentive I have to get off the couch and spend my hard earned money to go to a game, dropping a couple hundred bucks to hang out in Rosemont for the day? No thanks, keep it.

          • BigJonLilJon

            I know that you wont stop being a fan. And I agree about staying home to watch from the couch. For me, however, I refuse to go and spend my hard earned money to watch this product whether its at Wrigley or Rosemont. I’ll be on the couch with remote in hand just in case!!!

  • Cubsin

    Hard to believe that a year after the rooftop issue was supposed to be resolved the Ricketts family hasn’t developed a Plan B. I’d be beyond Plans B, C and D by now.

  • Roll

    This is just another Big Red Flag from Ricketts.
    Fifth Highest Operating income in MLB per Forbes with the third lowest payroll in all of MLB per USA Today.
    With over 5 years of ownership and the rooftop contract is not resolved is a complete failure by Ricketts (Buy out the contracts or the properties). Ricketts and his lawyers knew before he bought the Cubs they would have to go to court without a buyout of some sort, trust me any pre purchase due diligence would have revealed that. But it is convenient to use the rooftop issue to postpone spending money to improve Wrigley.
    Spent almost no money on the new Cubs Park facility in Arizona (tax payer money) and only 8 million on the Dominican facility. Has spent almost no money on free agents, went from 146m in payroll in 2010 to less than 75m in 2014. 3.3m in attendance in 2008 to 2.6m in 2013. Zell played Ricketts like a naïve fan when he sold him the Cubs and Ricketts is playing cubs fans (including me) like a Stradivarius with a lot of empty promises. Now he wants minority owners, something is not right with this ownership. I’m embarrassed at this ownership. We do have some real exciting players in the minors but prospects are suspects until they preform in the majors. I would not be surprised to see Theo and company jump ship when his contract is up.
    New on the trade market: Emilio

    • Tony_H

      Any owner would have been under these restrictions. Tom U is absolutely correct, Sam Zell is the bad guy in all of this.

      You say just buy out the contract or the properties. What if just one of the rooftop owners says no to both situation? They can’t force them to sell or give up their contract. Yes they should just move forward and go to court, but that could also create an even longer delay as they these type of lawsuits can drag on for years, because one side (the rooftops) have no urgency to get this settled.

      I don’t see what is wrong with minority ownership’s, that makes you say this shows something is wrong.

      Theo isn’t going anywhere.

      • J Daniel

        Theo is not going anywhere. In a year he will be extended.

      • Roll

        Zell bought the Tribune the Cubs were just a piece of that puzzle that he could spin off. Zell is a shrewd business man not a baseball man he was going to maximize his price for the Cubs. Several potential buyers like Cuban walked away because of the terms of the sale. What should have happened is MLB and our friend Bud should have stepped in and turned down the sale until the debt/financing part of the sale was rewritten, the sale was not healthy for the Cubs the City of Chicago or Major League Baseball.

        • Tony_H

          I agree with that. But Bud didn’t to that and whoever of the groups that took it to the end (I believe there was 3) would have had the same restrictions.

          • Roll

            As far as the rooftop owners this should have been addressed by Ricketts in year one of ownership. You could have estimated attendance over the life of the contract and doubled it and the rooftop owners would have jumped at it. Or you could have partnered up with sponsors to help buy out the rooftop owners, get creative. I have been involved in a couple dozen business mergers/buyouts/takeovers and if I’ve learned one thing it is that everyone has a reasonable price. Ricketts should have been stepping on their necks from day one knowing that if/when it goes to court it would have been settled by now.
            About Theo, the man can’t be having fun being handcuffed by payroll restrictions and if the Angels/Rangers/Yankees come calling in his last year of his contract I think he will jump. Ricketts may want him to stay but I think he will not. Unless you know something the rest of us don’t.
            Last, Ricketts said several times that when tax payer funding fell though that his family will finance the improvements, selling minority shares is about 180 degree’s from those statements. Not good.

          • Tony_H

            Not everything is for sale. And sorry, I have first hand experience in mergers/buyouts/takeovers, as many people do, and not everyone is reasonable.

            Theo has stated they they do enjoy what they are doing and can’t wait for the Baez, Bryants, Almora’s, etc to get to Wrigley. He is not going anywhere.

            Selling a majority would be 180 degrees, selling minority shares can have many advantages to the team.

          • Roll

            Everything is for sale, the rooftop owners are business men not fans. Tony you can spin it all you want but look at Ricketts pattern, except for a couple new small scoreboards and improvements in right field stands (which are nice) he has spent less than 5-6% of total value of the organization on Capital Improvements in 5 years of ownership. The value under his ownership has increased 40-50%. The pattern I see is that Ricketts may be the unreasonable party in rooftop negotiations. The longer he waits to spend any money (that Tom has mentioned many times) the closer he is to a new TV deal. Suntimes had an enlightening article today that you should read.

          • Tony_H

            Everything is not for sale. Sorry you can’t except this, but it is true.

            If I was him, I wouldn’t spend one dime on Wrigley until the rooftops situation is settled.

            The increased value is on paper in Forbes. Unless he is selling or needs financing and a bank will use Forbes number it means nothing.

            I read the Suntimes article(s) today. Found most of them to be good articles for the uneducated on this subject, that feeds to the ignorant fans who get their info from the newspaper.

          • Roll

            Tony H I respect your opinion and your reply’s tell me all I need to know.

  • Eugene Debs

    This is when it gets tough to buy “the narrative” of the current plan. Are we not spending on MLB payroll b/c we are purposely building the farm system? Or, are we not spending b/c Ricketts is relatively broke and in debt and the plan as we see it was out of necessity rather than some Theocratic Theory of Excellence?

    Is he a frugal college student cooking his own meals or a broke college student eating ramen noodles?

    I like a lot of what we are doing and the fan in me just can’t seem to walk away but I keep getting the feeling that current ownership had absolutely no idea what they were getting into.

    • Tony_H

      Both.

      Ricketts knew what he was getting into and that is what would lead him to the idea of rebuilding the entire franchise, literally from the ground up. Zell’s spending restrictions, which anyone who bought the Cubs would have had to follow, last until 2019. Sam Zell is the reason a guy like Mark Cuban walked away.

      • Eamus Catuli

        Ricketts is in over his head – If he knew what he was getting into he wouldn’t have waited a couple years to start the rebuild. He would have approached the renovation differently.

        • Tony_H

          Do you have the same information that he has? I doubt it. I almost guarantee that only the top few people, Theo, Jed, Crane know enough to make a determination of this level. We are all on the outside and only know what he has told us.

          If you are saying you think if he knew then what he knows know he would have made different decisions, well that is in everything in life.

          • Denver Mike

            Not to mention the article I posted in response to John’s questions pretty much says he knew exact what he was getting in to and stayed the course. I had said at one point last year, and still believe, that Ricketts is a successful businessman that happens to be a lifelong Cubs fan, not a lifelong Cubs fan that happens to be a successful businessman. There is a distinct difference in priorities between the two.

          • Swish23

            your constant rebuttles of everything anti-Theo or Ricketts is beyond annoying and uncalled for. apparently people can only have 1 opinion; that of Tony’s. what makes sites like this great: differing opinions. what ruins it? having one person rebuttal on every comment he does not agree with. it’s really tough to defend an owner that has top 3 tix prices, top 5 revuenues, shaved 60M off payroll plus another 25M in tv money and 10M in new budweiser contract; total of 95M and then lie to the fan base that it’s all going to the baseball operations. sure it is. and i’m the easter bunny. and so begins 2014; year 5 of the ricketts regime, year 3 of the expansion era and tanking seasons on purpose; year 106 of no championships. yeah; its all peaches and cream being a cubs fan; but only if you are named tony. the rest of the world sees the problems and they are huge.

          • Tony_H

            You seem to have no problem giving the opposite view and in case you haven’t notice there is enough negativity on this site and rebuttals of anything I say. The ones of us who stay positive have to take it from guys like you, who hate that we try to explain things in a logical way.

  • The Dude Abides

    Hopefully not having a plan B and be held hostage by rooftops is not in the presentation deck he will be using with potential investors.

    • J Daniel

      The problem is they do not want to move.

      • BigJonLilJon

        Needs to be considered… even if only as a threat to get movement with the roof top owners.