10-30-2016, 03:17 PM
Quote:With or without Cubs clinching Series, Ricketts family has $2B ballclub
Since buying the Chicago Cubs for $845 million in 2009, the billionaire Ricketts family has been painstakingly laying the groundwork for new sources of revenue to revitalize the team once known as lovable losers.
And now, as if on cue, the teams breakthrough into the World Series after a 71-year drought promises to pump up those revenues and boost the franchises value beyond the already stunning $2.2 billion that Forbes estimated this year. And that estimate, for those counting, does not include Wrigley Field and other assets tied to the 2009 purchase price.
Regardless of what happens in the World Series, experts say, the Ricketts family has won already.
The timing couldnt be better, said Marc Ganis, a sports industry consultant.
The familys to-do list some jobs done and some in the works is exhaustive: video boards and other electronic advertising signs, expanded bleachers, upgraded suites and premium seating, enhanced concessions and luxury clubs at the creaky, 102-year-old Wrigley Field.
But what is perhaps the most important decision has yet to be made.
With its agreements for local television rights expiring after the 2019 season, the Ricketts family is exploring the launch of its own regional sports network. That approach has been embraced in other major markets such as New York and Boston. Media rights most likely will become the biggest direct source of revenue for professional sports teams by 2018, according to a forecast by consulting firm PwC. A less risky alternative is to renew with Comcast SportsNet.
Either way, the World Series appearance will only help secure a more lucrative deal. And they are about to start marketing suites, club seats, advertising and sponsorships for the renovated ballpark, said Ganis, president of Sportscorp.
Experts also point out that, in the Cubs case, a World Series appearance builds on what is already an unusually broad and big spending fan base.
Normally, if a team just goes to the World Series, let alone wins the World Series, the next year you see a tremendous uptick in attendance, said Andrew Zimbalist, an economics professor at Smith College. In the case of the Cubs, they basically sell out one way or the other, so youre not going to get the same uptick.
The Cubs already have a great brand in a good market and they have a great building, one of the most iconic buildings in baseball, said sports consultant Sal Galatioto, who advised the Ricketts family on the purchase of the team. When you have a big base, (a World Series) moves the needle a little bit.
The Cubs rank as the fifth most valuable Major League Baseball team, according to a Forbes roster that is led by the New York Yankees and followed by the Los Angeles Dodgers, the Boston Red Sox and the San Francisco Giants.
While some observers think the Cubs could push into the No. 2 or No. 3 slot fairly quickly, others arent so sure.
Anything is possible, but the fact is there are a lot of very, very strong, very valuable sports franchises and one World Series doesnt really change that, right? Galatioto said. But they are going to be one of the most valuable franchises, no question about it.
The World Series didnt work a lot of magic for the Chicago White Sox, which lacks the cultish following of the Cubs. The South Side team has a middle-of-the-pack ranking among major league ball teams, with a value estimated at about half that of the Cubs.
The reality is, the White Sox are nowhere near as much of a glamour team as the Cubs are they dont have the same level of celebrity interest or fan interest, Ganis said. Their fans are wonderful and they are passionate, but there are far fewer of them.
Since the Cubs reached the World Series, the Ricketts family will have more pricing power on everything from tickets and ballpark advertising to sponsorships and media rights, experts say.
Its a business model that allows for a much larger economic engine, said John Rowady, chief executive of rEvolution, a Chicago sports marketing firm.
The Rickettses also have benefited from an overall increase in the value of professional baseball teams during the past few years, driven largely by lucrative new television deals.
The most stunning transaction came in 2014, when the Los Angeles Dodgers agreed to launch a regional network, SportsNet LA, with Time Warner Cable. The 25-year deal could bring the team $8.35 billion, though many cable providers have balked at paying a higher premium to carry the channel.
With that resistance, the Dodgers lofty terms could be hard to match now. With the rise of free or lower-cost entertainment on the internet, traditional cable providers are losing subscribers. The shrinkage has led cable carriers to balk at the high prices for programming sought by sports networks.
If every team had its druthers, being able to control their own content is probably the holy grail but then you also get into a different set of pitfalls, said sports sponsorship veteran Dany Berghoff, principal in the sport leadership practice of RSR Partners, an executive search firm.
Nonetheless, the Cubs continue to see potential in forming their own network, perhaps with a television partner like Comcast SportsNet Chicago, which currently airs 79 games and pays the Cubs about $500,000 a game. The other games are televised by several local television channels, or nationally.
The business is still good for everyone even though theres fraying at the edges as you see some of the (cable) cord-cutting going on, Crane Kenney, president of business operations for the Cubs, said last month. Since our rights dont come back to us until the 2020 season, we have a little bit of time to see which way the market goes. The Cubs and the Ricketts family declined interview requests.
However it plays out, it will build on the Rickettses winning bet in 2009. While MLB teams generally have seen a healthy run-up in valuations in recent years, the Cubs rise has been off the charts, something observers attribute to long-range, strategic thinking.
Outside the park, through a separate venture, the Ricketts family is building a sleek hotel with trendy restaurants, a plaza for game-day drinks, and an office and retail complex to be adorned with a huge video screen. The family also is buying up the rooftop clubs along the eastern and northern edges of the ballpark.
The teams entry into the World Series should polish the potential of the familys myriad investments, experts say.
A winning team equals mass interest from fans, said Rowady, the sports marketing executive, which equals more revenue.
2016 Chicago Tribune