Gap between Cubs’ resources, spending could lengthen rebuild
BY GORDON WITTENMYER Staff Reporter January 19, 2014 9:10PM
Updated: January 20, 2014 9:30AM
When Cubs business president Crane Kenney stood before a roomful of Cubs fans Saturday and described the relationship between spending and winning as a “chicken-and-egg” question, he unwittingly summed up everything potentially wrong and dangerous in the business approach to the team’s rebuilding plan.
At the very least, he summed up the message delivered by management during a 42-hour Cubs Convention devoid of buzz, optimism or straight answers: That this process might take longer than many envision — perhaps lasting until the end of the decade.
As baseball and business executives touted their big-name Class A players and bragged about their new $6 million Dominican academy and a publicly funded new spring facility, it became increasingly apparent there exists a sizable gap between available resources and baseball spending that could help assure the success of the rebuild.
“One of the things we were smart about was not to put a timetable on it,” baseball president Theo Epstein said as the convention opened Friday, acknowledging unforeseen delays in some of the business-related parts of the plan.
When asked about specifics, Epstein refused to talk about his budgets, any of the team’s other internal resources and decisions or the perceived disconnect between the business and baseball operations — except to suggest they’re on the same page.
But based on what was said by team officials during the convention, the team’s actions in recent years and conversations with more than a dozen major-league sources, a picture emerges of a wealthy team pinching baseball pennies to compete even within its rebuilding plan.
◆ Chairman Tom Ricketts has asserted since the family took ownership that all profits would be invested back into the team. But the payroll budget has declined to a low of just under $100 million this year, while revenues in the game have increased to industry-record levels.
◆ Kenney boasted Saturday about the Cubs’ fifth-highest revenue in the game, and the Cubs are ranked first in profitability by Forbes. But Epstein told fans Saturday that a big reason for a quiet winter is that he reserved payroll for a run at one big move (read: Masahiro Tanaka). If he doesn’t get him, he said he might roll the savings into next year’s budget — an eyebrow-raising admission considering the resource deficit it suggests. Especially for a team in need of players just to field a representative big-league club and the rarity of a practice that wasn’t allowed with the previous regime.
So where’s the money going if it’s not going to baseball?
The team’s major-league-high debt requires more than $30 million annually to service, and bank covenants restrict some levels of spending based on revenue. But Ricketts told fans the debt is only part of the financial puzzle, “not as big a piece of the puzzle as you think.” And he told the Sun-Times last fall that the family is allowed to spend what it chooses.
If Forbes is to be believed — and sources say Kenney had boasted around the office of the Cubs’ top rank in profitability before Forbes’ 2012 ranking was released — then it’s obvious some of the money that could be going to baseball is being taken in profits.
The promise is that spending will flow when new TV and stadium money start to flow. But one source cautioned against expecting the TV money to come next year. The big flows won’t start until the currently split deals can be consolidated after 2019.
“We still have a very strong baseball budget,” Ricketts told fans. “It is sufficient.”
NOTE: Despite reports that continue to call the Cubs front-runners for Masahiro Tanaka, signing the 25-year-old right-hander is a long shot for the team, which remains skeptical of its chances even with an aggressive effort.