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The insanely revealing sale of the Chicago Cubs


Deadspin has a massive story today about the sale of the Chicago Cubs to the Ricketts family ten years ago. It’s sourced by leaked emails from family patriarch Joe Ricketts’ inbox. It contains deal points, presentations from bankers, lawyers and consultants and communications between and among members of the Ricketts family.

And boy oh boy it is a treasure trove of information about the state of modern baseball economics. It’s must-click material.

The two biggest takeaways:

Baseball ownership is idiot-proof

As the Ricketts were gearing up to bid on the Cubs they worked with financial consultants to give them the lay of the land. One of the Powerpoint slides given to the Ricketts family involved how the risks of baseball team ownership are mitigated by the unique benefits of baseball team ownership:

The short version: owners are basically insulated from the consequences of bad business. They have a legal monopoly and can get away with all manner of things other businesses can’t. They can cut payroll if they want to. Since franchises don’t depreciate in value, they can bail out by selling, even if they’re losing money. If things get really bad they can rely on local governments to grant them new revenue streams with tax dollars or, worst case scenario, the league will bail them out.

We’ve touched on all of these things here before. There’s always a group of readers, though, who say I’m just a flaming pinko lefty for bringing that up. Know, now, that it’s not just me, but actual Wall Street folks who consider this to be the defining feature of baseball ownership.

In light of that, I would ask those of you who like to go on about how much risk owners take on and how harrowing a financial path they are traveling in the uncertain, rough and tumble world of professional sports to print that slide out on adhesive paper and smack it to your foreheads.



Not that the business of baseball is guaranteed to be idiot-proof forever. One key component of the Cubs sale, and of all other recent team sales, is massive debt.

The Deadspin story does a great job of revealing just how dependent upon debt modern baseball ownership truly is. We know owners take on a lot of debt to purchase teams, but the size and structure of that debt is hard to get your brain around until you see it written out in black and white like it is here. Major League Baseball has rules about how much debt an ownership group can take on but, as the Ricketts case makes clear, they are easily circumvented and often ignored by MLB.

The reason for that debt is soaring franchise costs. Teams are expensive now! They are expensive because revenue streams, particularly from cable television, have spiraled upward. Despite the allegedly bad cash flow of big league clubs, Wall Street, eager to get a cut of that action, has freed up capital to give to would-be team owners. As more would-be team owners enter into bidding armed with billions, the sale prices go up and up.

The consequence of that debt: a lot of revenue goes to debt service, strapping the cash flow of ownership groups. At least theoretically. Since we have no access to most teams’ books we don’t know how strapped that cash flow is by the debt payments, but it would seem to me that either (a) debt service from owners is cutting into cash flow, thereby limiting what they can pay players; or (b) the reported debt provides a handy excuse for teams to say they can’t pay players more due to debt service. Those aren’t mutually-exclusive, of course. Could be a bit of both. I’ll also add that this could provide some insight into why Major League Baseball doesn’t seem all that concerned with policing its own debt limits. It’s better for owners if revenues go to debt service than to the players, right? Once it goes to the players its gone. If it goes to Wall Street, it keeps Wall Street happy which could benefit owners down the line.

Of course, a possible down-the-road consequence of all of this is something we’ve talked about a lot here before: what happens if the big TV deals which fuel this bubble dry up and causes it to burst? What if cable networks decide that it’s simply not worth paying a team $3 billion to broadcast games? What if a cable network declares bankruptcy to get out of an existing TV deal? What if, like every other media sector, the Internet finally outflanks legacy media in baseball broadcasting and causes its value to plummet?

That . . . would not be good! Stay tuned kids!


Other stuff

  • So much in the story involves the petty squabbling among the Ricketts family members about how they were portrayed in the media at the time of the sale. Tom Ricketts, who did end up becoming the control person of the Cubs, was out front and other members of the family chafed at that. Seeing them talk about it in faux high-minded businesspeak, all while circulating talking points and meeting with publicists and stuff, is kind of hilarious. I can’t imagine interacting with my family like this, but then again, my family doesn’t have many billionaires in it, so we tend to talk about different things;
  • Every time family patriarch Joe Ricketts makes the news for saying or writing or doing something insanely racist, the Cubs and/or Major League Baseball issue a statement about how he has no connection to the team. The financial documents here cut against that. Tom Ricketts does not become owner of the team and the Ricketts family does not gain its interest in the team without Joe’s money and active participation in its purchase. He may not do stuff on a day-to-day basis with the Cubs, but to cast him as some outsider is dishonest in the extreme;
  • There’s a memo in there about how the Ricketts met with the Red Sox owners as they were doing due diligence. It was a productive meeting. In addition to getting all kinds of insight into the lucrative Fenway Park renovations, which the Ricketts would largely ape over the next decade with Wrigley Field, John Henry and company gave them notes about how big market teams like the Red Sox have worked hard to make sure as much revenue is possible is classified as non-shareable with the other teams as opposed to shareable. The insight, no doubt, was given because that same strategy would benefit the Cubs. Keep that in mind the next time someone talks about a salary cap with the players getting a set percentage of baseball revenue. If the clubs are working that hard to classify income as non-shareable with other owners, you know damn well they will work extra hard to classify as much revenue as possible as “non-baseball revenue” to keep it out of the players’ pot as well. They do this informally already. Imagine if they had a stronger incentive to do so.

Anyway, a very revealing look at the business of baseball in general and the business of the Cubs in particular. Take some time today to give it a read.



Dodgers clinch NL’s top seed, West title with win over A’s

Gary A. Vasquez-USA TODAY Sports
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Wrapping up an NL West title has become routine for the Los Angeles Dodgers, but in a year in which no one was sure three months ago if there would be a baseball season, manager Dave Roberts wanted his team to still savor the moment.

The Dodgers clinched the NL’s top postseason seed and eighth straight division title Tuesday night with a 7-2 victory over the Oakland Athletics. They are third team to win at least eight straight division titles, joining the Atlanta Braves (14 straight from 1991-2005) and New York Yankees (nine straight from 1998-2006).

“To fast forward a couple months and be crowned NL West champs is a credit to everyone. It should never be taken for granted,” Roberts said. “Truth be told a lot of guys didn’t know we could clinch. We were responsible but I let it know that it has to be appreciated.”

The Dodgers, who own the best record in the majors at 39-16, were the first team in the majors to clinch a playoff berth on Sept. 16. They will open postseason play on Sept. 30 by hosting every game in a best-of-three series against the No. 8 seed.

Los Angeles came into the day with a magic number of two and got help with the Angels’ 4-2 victory over the San Diego Padres.

Instead of a wild celebration on the mound after Jake McGee struck out Sean Murphy for the final out, players briskly walked out of the dugout to celebrate with teammates. Everyone grabbed a division clinching shirt and cap before heading to the mound for a group photo.

The clubhouse celebration was also muted. Champagne was still involved, but it was players toasting each other with a glass instead of being showered in it.

“We talked about it instead of dumping stuff on people. It’s a moment you need to celebrate and we did,” said Corey Seager, who had three hits and one of Los Angeles’ four home runs, “It stinks not being able to do champagne and beer showers because some of the younger guys haven’t been able to experience that.”

Max Muncy, Chris Taylor and AJ Pollock also went deep for Los Angeles, which leads the majors with 104 home runs.

“This whole year has been weird. There’s no other way to describe it,” Muncy said. “It’s sad not to be celebrate as usual but we know there is a lot more at stake.”

Dustin May (2-1) went five innings and allowed two runs on three hits. The 22-year-old red-headed righty set a team record by not allowing more than three earned runs in his first 13 career starts, which include 10 this season.

Robbie Grossman homered for Oakland, which clinched its first AL West crown in seven years on Monday during a day off. The Athletics, in the postseason for the third straight year, currently are the AL’s No. 3 seed.

Mark Canha had two of Oakland’s five hits.

Seager tied it at 1 in the first with an RBI single and then led off the fifth with a drive to center off T.J. McFarland to extend LA’s lead to 6-2.

Muncy gave the Dodgers a 3-2 lead in the third inning with a two-run homer. Taylor and Pollock extended it with solo shots in the fourth off Oakland starter Frankie Montas (3-5).

Grossman quickly gave Oakland a 1-0 lead when he homered off the left-field pole in the first inning. Sean Murphy briefly gave the Athletics a 2-1 advantage when he led off the third with a walk and scored on a wild pitch by May with two outs.

Montas, who allowed only four home runs in his first seven starts, has given up six in his past three. The right-hander went four innings and yielded five runs on seven hits with a walk and three strikeouts.

“They’re a pretty good team that when you make mistakes, they make you pay,” Oakland manager Bob Melvin said. “They’re pretty good laying off and making you throw it over the plate. They made Montas pay, unfortunately.”

Cody Bellinger added two hits for the Dodgers, including an RBI single with the bases loaded in the seventh.


The A’s have a team text thread they used to celebrate clinching their first AL West title since 2013 during their off day Monday, when the Mariners beat Houston.

“We didn’t really celebrate too much yet. It’s exciting,” Chad Pinder said. “We wanted to do it on our own terms. We still won the division and that was our goal. It’s nice to know we’ll be playing home for the series.”


Athletics: INF/OF Pinder (strained right hamstring) planned to run at Dodger Stadium and test his leg with hopes of still playing before the conclusion of the regular season. …. RHP Daniel Mengden has cleared waivers and been outrighted to Triple-A Las Vegas. He was designated for assignment after being medically cleared and reinstated from the COVID-19 injured list following a positive test from Aug. 28.

Dodgers: 3B Justin Turner was scratched from the lineup less than an hour before first pitch due to left hamstring discomfort He came off the injured list on Sept. 15 and has not played in the field since Aug. 28. … Joc Pederson was in the lineup at DH after missing five games while on the family emergency medical list. Roberts said before the game that he wasn’t sure if Pederson will remain with the team during the entire postseason.


Athletics: LHP Sean Manaea (4-3, 4.50) is 4-1 with a 2.25 ERA over his last five starts dating to Aug. 20.

Dodgers: LHP Julio Urias (3-0, 3.49) will make his team-leading 11th start.

AP Baseball Writer Janie McCauley in San Francisco contributed to this story.

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