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BCB Interview: Cubs Chairman Tom Ricketts (Part II)

This part of the interview is going to be a little more contentious, I'm afraid, than yesterday's was -- and yesterday's had its points of contention.

Today's portion of the interview deals with the proposed renovations to Wrigley Field and the proposal that was made to use a portion of the amusement tax charged on Cubs tickets to finance parts of that renovation. Let me say right now that regardless of the numbers put forth and whether they match up or not, or cost the city and county (since it's a local tax, not a state tax; the state's involvement would be to float the bond issue) any money -- it does appear to be a very difficult time to be asking for public financing of a project like this. Tom Ricketts told me, and you will read, that they are asking for a public/private partnership that the Cubs say will create jobs and enough revenue generated to pay off the bonds.

Whether that is true or not is not something I can judge here; this is a difficult topic to open discussion on because, by its very nature, it is political and I don't want political discussion here. That said, this is a political issue involving our favorite baseball team and thus, a valid topic for discussion. I ask only that you not devolve into namecalling, personal attacks or extreme partisan positions.

The latest I have heard about this issue is that the Cubs are going to revisit it sometime this year. What form that will take is not yet known.

BCB: The first question regarding the ballpark is related to the bond funding proposal and the renovation. There have been people at BCB who have come out and said well in this era where states and cities are hurting and the tax revenues are down because the economy’s in tough shape and here are the Cubs asking for public money. What do you say to the people who say the Cubs should not be asking for public money in the current economic climate?

TR: I have two thoughts on that. First of all, these dollars that we’re talking about are dollars paid by season ticket holders being retained and being reinvested in the park.

BCB: It’s not just season ticket holders, it’s all ticket buyers, right?

TR: All ticket buyers, right. So it’s basically all tickets we sell have an amusement tax on them. Just the incremental increase from that over time is what we’re asking to keep back, which we can turn into a bond, which can be used to put dollars in the park today. And the concept is we bring the $200 million or so in from that bond, we add about $200 million from the family and then we can do everything we need to do at the park and make the economic developments we need just outside the park that not only enhance the game day experience, but raise the overall economic footprint of home games and hopefully all year round in the neighborhood.

So the answer to the first question is to the extent it’s the increment going forward on a relatively high tax, the second highest tax in all of baseball.

BCB: Amusement tax.

TR: Amusement tax. We pay the second most amusement taxes in all of baseball. The first is the Yankees and the Yankees have a brand new $1.3 billion publicly funded stadium. But regardless, the point is that it’s a tax on people who buy Cubs tickets, so I think that’s one thing people kind of forget. To the second part of your question, the fact is that the timing, I would suggest now is a good time to do a public/private partnership that generates a substantial amount of economic activity. And the reason is that right now, for a lot of people who would be impacted on the short end of this, a lot of people who would come in to do the construction jobs and a lot of other types of work around the stadium design, the stadium improvements and the private development outside are having a very, very difficult time. They’re looking at 30, 35, 40 percent unemployment in some trades. If you’re going to pick a time to be creative and to come up with a solution, why not do it now when the economy is going sideways. And if I understand on the timing, Wrigley’s been patched and painted for many, many, many years. No one’s gone in and said okay, what we have to do to restore and renovate and preserve for the next generation. And from our standpoint, from the family’s standpoint, we just want to take the bull by the horns and just address the issue, solve it and move on.

BCB: The amount of money that’s being retained, the incremental amount over the amount you’re guaranteeing the city and county is not enough to pay for all of the bonds, is that correct? The tax alone that won’t fund the bonds entirely.

TR: No, the tax increment does fund the bonds entirely. What we would probably need is a, depending on how it’s structured, but we would need a state backup which means not that they have to be out of pocket but unless something went wrong with the team, so we need to take out a credit enhancement so if the funds from the incremental amusement dollars are insufficient by the date the bonds are due, it would be a case, at least on the first proposal, borrow from the state and pay them back over time as the amusement tax dollars kept coming in.

BCB: So you’re looking for some sort of an insurance policy, really.

TR: Yeah. Well, it’s a backup.

BCB: Regarding the jobs that are going to be created. Of course there are construction jobs and then once the Triangle Building and the other projects are finished there will be other jobs that will be created by that. Some people say: those are only going to be minimum wage waitress jobs or jobs like that. What other kinds of jobs would be created by this project?

TR: Obviously on the front end it is the construction jobs, which are certainly not minimum wage jobs, so that’s good. It really depends on how we end up programming the Triangle Building. It depends on what kind of stuff we put in there and honestly it’s not determined yet. I’m sure there’ll be a wide range of different types of job opportunities in the development and I’ll also say to the extent that maybe some of them are on the lower end of the pay scale, at least they’re jobs.

BCB: What other kinds, in terms of the ballpark renovation itself, we’ve seen the renderings of what things might look like. What specifically is the portion of the ballpark renovation going to entail? What things are going to be done?

TR: We’re still working on that. We recently retained the architects and the people that worked on Fenway, so one of the things that – there’s a couple good analogies with Fenway. Obviously the age and the fact that they went in and as they improved the stadium they also made sure that it was preserved and basically they think they got another 50 years of useful life out of the park. They’re looking at those issues right now. We don’t have a full plan in place for what exactly it looks like at the end, but the thought is that if we know we have the resources to go forward with that, that we would spend from now until the end of this season getting that ready so that when the season ends in 2011 we can begin.

BCB: There was some talk about some underground clubhouses and that you were going to do some exploratory digging? Has that happened?

TR: Yeah. As a matter of fact we have looked into that and the thought is obviously on a very small footprint trying to find space. We’ve got our clubhouse facilities are less than 50 percent what the average ballpark is now. Obviously we know we don’t have batting tunnels, we have smaller training, we have smaller weight training rooms. We don’t have some of the other types of facilities other teams have. So, in order to find space for those, we’re considering the concept of going underneath the field.

BCB: You said you’ve got architects who did Fenway. There are going to be people who say: isn’t this a little too much Boston? It’s one thing to want to model it after what was done in Boston, but some people I’m hearing are saying: you can’t turn the Cubs into the Red Sox.

TR: There’s no intention of turning the Cubs into the Red Sox or turning Wrigley into Fenway, but the fact is just the experience of taking a comparable stadium situation and making the kind of improvements and things that they did there, it’s just a great experience for them to have. Obviously we have to make sure that whatever happens to Wrigley or however we change Wrigley is consistent with the way we look at what Wrigley means to us and what it means to Cub fans. So, there’s a lot of experience there and that should be something we should be able to leverage. And that goes not just for having taken an older park and extending its useful life but also for being able to do this in successive seasons without closing. One of the challenges that I hope people understand is that to renovate without closing is going to be just challenging and to the extent that these guys have lived through that already we think that’s a huge net plus.

BCB: Any more plans for in park or near park advertising signs?

TR: No. (laughing) No. As of the now, the signs you see are the signs we have. I’m sure there will be a few tweaks but you were kind of joking when you refer to the Toyota sign but, it’s like I said then, there’s not like there are a lot of places in the park where we think a sign fits, but currently, no, there’s no plan.

BCB: All these questions seem to revolve around money somehow. Let’s talk about the ticket price increases. You now have new tiers for ticket pricing and different pricing for bleachers and the rest of the ballpark, based on what you saw last year, a lot of empty seats and a fair number of unsold tickets. Although the average cost of a season ticket for most people stayed fairly flat, some of the games are priced quite a bit higher than they were last year. Granted that there are quite a larger number of the value dates, as well, do you think that some of these prices are too high and will keep people away?

TR: It’s always been a goal and remains a goal to get new people in the park, get families in the park, and always make sure that there’s enough affordable games for people. I don’t have the ticket pricing stats in front of me but I think there’s something like 70 percent more games that are kind of in the lowest bracket in terms of the costs. So we dramatically increased the number of the least expensive tickets. Now in order to make it balance out from a math perspective, what we have done is we have raised the highest prices for some of the marquee games. And the fact is, like you said, season ticket holders, prices are flat. They’re not necessarily impacted by these pricing decisions, but for the single ticket buyers who will end up paying a little bit of a premium to see the Yankees or White Sox, in some respects those dollars help make available the lower price tiers. So our overall pricing perspective, and this was our first round at it, we spent a lot of time and energy studying all of our pricing both what we’ve sold and whatever we can get from the secondary market, what information we have to try to understand what happens with the pricing and try to optimize it. It’s our first stab at it. We want to make sure that as many seats as possible are full and we want to make sure that people realize that -- get over the perception that Wrigley’s too expensive to bring their families to.

BCB: Do you have any figures or numbers on percentage of season ticket renewals?

TR: I don’t have them in front of me, but I know they went very well. I think we’re in pretty good shape. I think on the second front, on the Wrigley Field side, obviously we put a lot of extra money into the park last year. We’re going to put a lot of money into the park this year, but in not as obvious ways. We’re going to go back and do more infrastructure type of stuff. Once again painting, patching, repairs, whatever we have to do. But I think on the second one, I think that hopefully people have realized our commitment to the field and just initiating this discussion with our public officials is a big part of that. We’re not going to hide from the fact that we have a big job in front of us and we really have to just address it. I think we’ve had, I mean the Tribune did a fine job of maintaining the park, but nobody ever said okay, what do we have to do to make this good for the next generation. So we’re attacking that really head on.

On the third front, the fact is what I said a year ago was: we’re a ballpark in a neighborhood and a neighborhood in a city and the fact is that we have to be better at reaching out and we’ve made some strides on that front. We did give away a lot of grants and both cash and in-kind donations to various charities last year. We’re looking right now for a person to help Mike Lufrano lead that effort next year and keep it growing. And we’ve got some ideas on how to just grow the amount of money that we have to give back to the community. And it’s not just money. We want to get more players involved, we want to get coaches more involved and just be more out there and just representing the brand more extensively.

So, I think on all three fronts we’ve pushed forward and there isn’t a day that that doesn’t go by that I don’t think of all three of those things.

BCB: And what about all the brouhaha in Mesa?

TR: Well, I guess you’d call that a surprise. The first few months in Mesa were a little choppy and then we kind of got our head around the issue and came back with a proposal that worked for everyone. The first few months were obviously kind of frustrating and it just took a little bit to understand all the issue we had. I have to say that the last six months in working with the city and working with the mayor have been terrific. We finally went with a good answer, we worked on it together, it’s a great win-win and we’re really excited that we have a solution in place.

BCB: And your target date is?

TR: It takes 18 months and we can probably start next summer, so what is that? 2013? And the good news is that the building season is a little bit longer down there and there’s a lot of on the ground expertise from all the other recent facilities that have been built. And furthermore I think that because the economy’s not as strong there as, we’ll the economy’s not strong anywhere, but it’s also going to be a really good time to get some people to work and I think there’ll be a lot of resources available to do the work.