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Tuesday, April 08, 2014

Crash Course in Finance Explains Why Cubs Will Suck Until 2020; But Not Tom Ricketts Dishonesty

Ballgame over! Cubs lose! Theeeeeee Cubs lose!

The Cubs suck.  Sad, but true.  Even worse, there is a reason for it that has no cure until the 2020 season, and it has nothing to do with profiteering by the Ricketts.  Whether you prefer to be pissed off by it, or tolerate it, the Cubs being noncompetitive is not going to change.

My process with understanding sports management operates in the following order – dissatisfaction, impatience, outrage, education, and finally acceptance.  It might be less emotionally taxing to start with education and skip the preliminaries, but what fun would that be?

...A Cubs blogger named Evan Altman recommended I read an exhaustively researched piece about the financial restrictions that came as part of the terms of sale when the Cubs were spun from the Tribune Company to the Ricketts in 2009.

I read and read and read.  The piece was 9,000 words, and was filled with the specifics that told the backstory of why the Cubs are terrible, and will remain so – not until 2016 as supposedly candid Cubs officials assert – but until 2020.  Then I sought more information about the ownership terms, and now I can add another entry to the continuum of my understanding sports management, which now is dissatisfaction, impatience, outrage, education, acceptance, and finally despondence.

Here is what the Cubs don’t tell us very often – that the Ricketts Family does not actually own the team.  In order to skirt paying the IRS taxes due for the revenue generated by the sale, the Tribune Company and Ricketts Family formed a partnership that acquired the team.  That partnership will last through the 2019 season, and comes with a lot of strings attached.

...The development of the kiddie corps will help, but Javy Baez, Jorge Soler, Kris Bryant, Albert Almora, and Arismendy Alcantara don’t pitch.  Arms aren’t cheap, and neither is filling holes that are created by injury and defection.

The lingering question for me is why the Ricketts don’t just come out and tell the truth.  It’s been 107 1/2 years since Frank Chance led the Cubs to a World Series title, so another six years isn’t difficult to handle.  At least the honesty would make fans part of the process and relieve the deranged Cubs fans (very close to the definition of redundant terminology) of the absurd notion of hope that creeps into their psyche every spring.

A few beers at the ballpark celebrating its 100th anniversary of a baseball cathedral filled with the ghosts of players both great and terrible, along with the memories of first games with dads, moms, brothers, and sons isn’t such a bad way to spend a spring or summer day.

I just don’t want to feel like the Ricketts are stealing from us.  The truth would help curb that uneasiness.

Repoz Posted: April 08, 2014 at 07:01 AM | 66 comment(s) Login to Bookmark
  Tags: cubs, history

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   1. Drexl Spivey Posted: April 08, 2014 at 07:52 AM (#4681660)
From the homepage of the linked-to article:

NCAA Tournament – Aaron & Andrew Harrison’s Kentucky Wildcats Will Win Program’s Ninth Crown Tonight


It's annoying as hell whenever someone uses "will suck" or "will win" in an article title. No one can predict sports with absolute certainty.

Edit: The author later used the phrase "or so I believe" in the Wildcats article to nullify the the title of his article. It's still dumb.
   2. Shooty Survived the Shutdown of '14! Posted: April 08, 2014 at 08:01 AM (#4681662)
This doesn't mean the Cubs have to suck but, yeah, they probably will. Baseball teams aren't baseball teams anymore but part of a portfolio of complicated equity assets. You need to go to Wharton to understand sports anymore.
   3. Harveys Wallbangers Posted: April 08, 2014 at 08:17 AM (#4681665)
as a cubs fan prior to the braves coming into my life it always bothers me a bit when the cubs struggle

   4. The Id of SugarBear Blanks Posted: April 08, 2014 at 08:25 AM (#4681666)
It's been crystal clear from virtually day one that the Ricketts family is undercapitalized. The "rebuilding" plan is a pure ruse -- a necessity, not a good faith strategy -- and always has been.

Selig probably likes it that way.
   5. Pops Freshenmeyer Posted: April 08, 2014 at 08:35 AM (#4681669)
Here is the underlying article discussed in the excerpt above.

The thrust of it is that Trib Corp. made a leveraged partnership a condition of the sale in order to delay tax consequences. As a consequence to the Cubs, the team ownership entity carries a paper debt load (so the IRS won't call it a sale and hit TribCorp. for the $1 billion in depreciation until later) and MLB rules require teams to show a certain EBITDA related to debt load. So under the CBA the Cubs have to show their daily operations are profitable per EBITDA but would be allowed to make one-time expenditures for the long term since those don't count against "profitability." Which possibly explains the timing of the spring training renovation, the Dominican Rep. camp renovation and the planned Wrigley renovations all kicking off during the partnership deal.

EDIT: per the author's estimates, the Cubs are unable to invest $45 - $60 million of their revenues into daily operations (like payroll).

I do wonder what the average MLB team looks like in this regard.
   6. Don Geovany Soto (chris h.) Posted: April 08, 2014 at 08:40 AM (#4681670)
EDIT: How'd I do that, anyway?
   7. Don Geovany Soto (chris h.) Posted: April 08, 2014 at 08:40 AM (#4681671)
The actual source article is a lot more interesting than the linked article, FYI.

EDIT: Coke to Pops.
   8. PASTE Thinks This Trout Kid Might Be OK (Zeth) Posted: April 08, 2014 at 08:51 AM (#4681673)
It's been crystal clear from virtually day one that the Ricketts family is undercapitalized. The "rebuilding" plan is a pure ruse -- a necessity, not a good faith strategy -- and always has been.


Then why did Theo Epstein, probably the hottest GM commodity on the market, accept this job? Was he duped?
   9. jmurph Posted: April 08, 2014 at 08:56 AM (#4681677)
Then why did Theo Epstein, probably the hottest GM commodity on the market, accept this job? Was he duped?


Oh boy are you asking that question to the wrong guy.
   10. The Id of SugarBear Blanks Posted: April 08, 2014 at 09:04 AM (#4681682)
Then why did Theo Epstein, probably the hottest GM commodity on the market, accept this job? Was he duped?

He needed a job (*) and he might have been duped and his ego probably tells him he can outdraft everyone and doesn't need a big payroll to win.

The Cub farm system isn't even as good as their main rival's and their main rival is light years ahead on the major league level. It's not as though the other teams stop drafting and developing players as they wait for you to "rebuild."

(*) The guy had been fired from his previous job. Why wouldn't he take another job?
   11. Pops Freshenmeyer Posted: April 08, 2014 at 09:20 AM (#4681688)
I'm curious, who ranks the Cardinals' system ahead of the Cubs' farm system?
   12. The Id of SugarBear Blanks Posted: April 08, 2014 at 09:25 AM (#4681693)
I'm curious, who ranks the Cardinals' system ahead of the Cubs' farm system?

Street and Smith's, maybe USA Today Sports Weekly (don't remember).

Is that somehow a shock? The Cardinal farm system isn't just hope, either -- we know it's producing excellent major leaguers.
   13. Pops Freshenmeyer Posted: April 08, 2014 at 09:27 AM (#4681696)
Well, Baseball Prospectus, Baseball America, ESPN, Keith Law, and the Sporting News all prefer the Cubs so I reject the premise.
   14. PASTE Thinks This Trout Kid Might Be OK (Zeth) Posted: April 08, 2014 at 09:38 AM (#4681708)
Getting fired has surprisingly little impact on a man's value. Epstein easily could have landed a TV or consulting gig and lived off his fame for a year or two while holding out for a plush job, and he's plenty smart enough to know that. I find it hard to believe that he decided that (a) he had to find work right away, and (b) working for an undercapitalized and cheapskate owner for a team with a bare cupboard.
   15. a fatty cow that need two seats (cough, cough) Posted: April 08, 2014 at 09:52 AM (#4681723)
maybe USA Today Sports Weekly (don't remember)


evidence!! haha
   16. Hang down your head, Tom Foley Posted: April 08, 2014 at 09:55 AM (#4681725)
A year ago, the Red Sox were going to suck for a long time.
   17. Charles S. will not yield to this monkey court Posted: April 08, 2014 at 09:58 AM (#4681727)
A year ago, the Red Sox were going to suck for a long time.
Nothing improves a team quite as fast as firing Bobby Valentine. Too bad the Cubs can't do that.
   18. jacksone (AKA It's OK...) Posted: April 08, 2014 at 10:19 AM (#4681749)
(*) The guy had been fired from his previous job. Why wouldn't he take another job?


Didn't Epstein have a year left on his contract with the Red Sox? It's the reason the Cubs sent Chris Carpenter to the Sox. Not sure how you are claiming he was fired.
   19. snapper (history's 42nd greatest monster) Posted: April 08, 2014 at 10:25 AM (#4681757)
Didn't Epstein have a year left on his contract with the Red Sox? It's the reason the Cubs sent Chris Carpenter to the Sox. Not sure how you are claiming he was fired.

IIRC, it was clear Epstein wasn't going to be GM of the Red Sox. They still had to pay him, but he was removed as GM.
   20. zonk Posted: April 08, 2014 at 10:30 AM (#4681764)
Financial ruse or not - the rebuilding needed to happen.

The rotation was patchwork, the OF was old, the IF was two top prospects and flotsam, and the bullpen was headed up by an expensive sunset Armando Benitez clone.

Especially with hindsight, hard to regret missing Pujols... With the rest of the team where it is, I can't particularly say I regret Cano. I think they made a good faith effort at Sanchez - he just wanted to stay in Detroit (yikes!) and our consolation prize sucks.

The Cubs took their stab, came close - they probably were the best team in the NL in 2008 and had enough to sneak a flag if things had broken right in 2009, maybe even as late as 2010.

The Ricketts finances aren't going to bother me until it matters - for right now, they've gone over budget in the international FA market, they haven't taken the best available player in the drafts, and Thed has gotten pretty good ROI on his trades thus far.

The FA market has been pretty thin and most of the salary dumps on trading block are there for a reason.
   21. Scott Lange Posted: April 08, 2014 at 10:36 AM (#4681773)
Just want to echo #5 and #7- the underlying article on the Cubs' finances is fascinating, apparently very well researched, and far more BBTF-worthy than the one actually linked. Its bottom-line conclusion is that the rebuild is a long-term plan for which all the pieces (getting rid of the shell company, getting rid of the ongoing debt service, getting a new contract for the CSN half of the TV contract) are not going to be in place until 2019. It does NOT conclude that the Cubs are five years away from contending. Having read but not yet fully digested it, it generally makes me more confident that the Ricketts are approaching things the "right way" by focusing all efforts on creating a long-term, sustainable success. It remains to be seen how aggressively they will deploy their money once the pieces are in place, but I'm heartened that the "infrastructure" to be a consistent winner should all be in place.
   22. PASTE Thinks This Trout Kid Might Be OK (Zeth) Posted: April 08, 2014 at 10:38 AM (#4681778)
Obviously the Ricketts' financial restrictions do not preclude the team from competing; they still have more money to spend than the Pirates or Rays.
   23. zonk Posted: April 08, 2014 at 10:43 AM (#4681782)
Well, Baseball Prospectus, Baseball America, ESPN, Keith Law, and the Sporting News all prefer the Cubs so I reject the premise.


Right -

It was true two years ago that the Cardinals and probably the Pirates had a better, deeper system... but the Cardinals have graduated an awful lot, as have the Pirates.

The Cubs system is a legitimate top 5 system, with a couple potential stars. The dearth of pitching is starting to fill out - they're still weak behind the plate, but I think I might be tempted to take the Cubs OF and IF prospects over anyone else's... Other teams, of course, have higher caliber potential stars -- but I think the Cubs OF and IF have better depth, and their share of high ceiling guys to boot.

The BA top 100 has two Cubs (Baez, Bryant) in the top 10, 5 in the top 50 and 7 in the top 100... Add to that, they went over budget and basically took the top two available international FAs last year -- plus another two that were generally thought to be among the top 30.

None of that matters, of course, if they don't pan out... but the cupboard is hardly bare.

   24. Greg Pope thinks the Cubs are reeking havoc Posted: April 08, 2014 at 11:01 AM (#4681815)
Obviously the Ricketts' financial restrictions do not preclude the team from competing; they still have more money to spend than the Pirates or Rays.

Right. The Cubs in theory could be spending like the Yankees/Red Sox. But if they have to spend like the Phillies instead for a 5-year period, there's nothing that says that they can't compete. Also, zonk's right in #20. The rebuilding had to happen anyway.
   25. Bring Me the Head of Alfredo Griffin (Vlad) Posted: April 08, 2014 at 11:01 AM (#4681816)
It was true two years ago that the Cardinals and probably the Pirates had a better, deeper system... but the Cardinals have graduated an awful lot, as have the Pirates.


Per BA, as of right now the Pirates have the best farm system in baseball.

The only significant guys who have graduated recently are Cole and Marte (though Polanco should be up later this year).
   26. villageidiom Posted: April 08, 2014 at 11:02 AM (#4681817)
Then why did Theo Epstein, probably the hottest GM commodity on the market, accept this job? Was he duped?
1. It was a promotion, one he likely would not get at his old employer, given that the person in the equivalent role (Lucchino) has an ownership stake.

2. Honestly, how often does a team president get fired? There's certainly more job security as Cubs President than there would have been as Red Sox GM.

3. It's entirely possible he was duped. I suppose it's possible he was fully informed, but I doubt it. Regardless of whether he was duped, because of both 1 and 2 above it was a good move for him. Whether it was a good move for the Cubs or not will be seen in the long run, and has a lot to do with what happens to the team off the field as well as on, given the things out of his control (like the ownership mess). I've no idea if he's well-suited to the task. A good GM does not necessarily make a good team president.


As an aside...
(*) The guy had been fired from his previous job.
This is false. Teams firing their front office personnel don't get to negotiate for compensation when they are hired elsewhere. If you want to flag "granted permission to interview for a promotion" as equivalent to "didn't want him any more" as equivalent to "fired him", good luck with that.
   27. The Id of SugarBear Blanks Posted: April 08, 2014 at 11:22 AM (#4681851)
If you want to flag "granted permission to interview for a promotion" as equivalent to "didn't want him any more" as equivalent to "fired him", good luck with that.

That's exactly what firing is in the senior white collar world. The Red Sox said "We don't want you around here anymore, but you can stick around until you find a job somewhere else."

Happens regularly in offices around the country.

   28. jmurph Posted: April 08, 2014 at 11:43 AM (#4681887)
"We don't want you around here anymore, but you can stick around until you find a job somewhere else."

Happens regularly in offices around the country.


Ha! "We don't want you here anymore but you can stick around and continue to have insights into our day to day operations while you wait to get hired by one of our competitors" is not a common thing, obviously.
   29. PASTE Thinks This Trout Kid Might Be OK (Zeth) Posted: April 08, 2014 at 11:51 AM (#4681903)
You're both partially right. It is fairly common for an executive to be informed, sometimes explicitly but more often implicitly, that the company no longer has any use for them, but they are kept around indefinitely anyway; their job is redefined so that they are no longer actually involved in doing anything and aren't invited to meetings where anything important is being discussed. Expressed or implied is the encouragement to seek other opportunities. This happens because executives usually have very generous severance plans.
   30. I am Ted F'ing Williams Posted: April 08, 2014 at 12:04 PM (#4681916)
Getting fired has surprisingly little impact on a man's value.


There's a lot of ex-GM's who never got another shot. Theo wanted to work again, maybe to prove he shouldn't have been fired. I'm sure there was some ego involved too in taking another championship-deprived franchise to the top.

And it isn't like he's working cheap just to have the job, he's making more than he did with Boston. Perhaps he tried the Bobby Hull trick of quoting a ridiculously high price for his services, only to see the Cubs actually agree to pay it. (This is how Hull signed with Winnipeg.)
   31. KT's Pot Arb Posted: April 08, 2014 at 01:26 PM (#4681994)
Luccino was as likely as to being fired as Theo. Truth is Theo hated Larry and the Red Sox team structure, John Henry did what he could to accommodate Theo but wasn't going to fire a part owner. Theo wanted more so Henry let him walk but clearly would have preferred Theo stay if he could have been happy.

Also Theo clearly knew the bold strokes of the financial plan when he accepted, the Cubs willingness to do a full tear down was likely a big incentive that helped them land Theo, that it was his plan from the day he walked in.

And the Cardinals farm system ranking is likely skewed too high because of their backwards looking over-compensation by analysts. Observers are assuming that the Cardinals Way will magically enhance this eras crop of farmhands, because it made analysts look bad for much of the last decade underestimating the Cardinals system. The myth built around the Cardinals Way and seemingly poor draft positions ignores that overall they had a substantially higher volume of comp picks than virtually any other teams and only below average positions, no where near as bad as the Yankees, for example. The effect of the Cardinals Way/developmental coaching is likely overstated, they took an above average volume of first/comp picks and got a bit lucky on how it developed.

You see these things in business every day, everyone copying the leaders without insight into the actual drivers of their success. Or talented executives leaving poorly managed organizations where lines of authority aren't respected and entrenched execs run personal campaigns to harass others. What you don't see very often is a very public business committing to long term investment instead of short term projects, and it clearly drives observers so nuts they say very silly things. What the Ricketts are doing would be similar to a public CEO saying he doesn't care about today's stock price, only the companies future value. Analysts also would write hit pieces on that CEO all day long.
   32. I am Ted F'ing Williams Posted: April 08, 2014 at 01:41 PM (#4682007)
The link from #7 is great, but it only reinforces what I think most people thought at the time: Ricketts overpaid.

At the time, people were thinking the Cubs would fetch close to $1 Billion. It seemed like Ricketts was willing to pay that until he discovered the terms of sale (expressed in the article) and he lowered the offer to $850 million.

Most new ownerships want to boost payroll right away. Imagine how much Mark Cuban would discount those terms of sale in order to boost payroll by 20%. I think the consensus from the few groups that were looking into buying the team was $700 million tops with the sale restrictions. Some offered no more than 650. Tribune Company need to raise cash and were a motivated seller. Offering 2005 prices during the 07-08 crash was foolish.

But there are several rose-colored glasses statements in the article. I'll use one as an example:

When the Cubs return to a modestly competitive state, considering the history of the fan base, attendance is likely to swing upwards again.


We know the Cubs will sell out when the team is great, that's true of just about every team. The problem is not selling out when the team is .500. This is the #1 problem the Cubs have right now. In fact, if one remembers the Cubs prior to the Tribune ownership, sellouts were few and far between even in the late 60's.

Nobody seems to want to propose that the Tribune held back a lot of tickets during their ownership as giveaways to clients, employees, etc. thus having fewer tickets in the actual marketplace and thus creating a sort of artificial scarcity which created its own demand. (Not to mention the fact that alcoholics flock together and their biggest enabler/ringleader was Harry Caray; anyone who remembers Comiskey Park in the 70's knows how alive that park was compared to Wrigley, and both teams were as terrible then as they are today.)

I think a lot of people are counting on the days of 38K attendance for a .500 team that is simply not going to happen. Attendance always lags actual on-field performance and a .500 season in 201x still won't put 38K in the seats in 201x+1. Get to the NLCS and THEN you can realistically count on 38K per game the following year. The 25-year old Wrigleyville resident in 1991 had 12K in student loans and a decent job; the 25-year old Wrigleyville resident today has 80K in student loans and a part time job, they can't afford the luxury of Cubs games like they used to no matter how good or bad the team is; they can barely afford their rent.
   33. Fernigal McGunnigle has become a merry hat Posted: April 08, 2014 at 02:00 PM (#4682018)
Anecdote time: On Saturday I was on the Red Line heading towards Wrigley before the Cubs-Philles game and heading away from Wrigley afterwards. I've shared train cars with disgruntled Cubs fans on dozens of occasions, but this is the first time that 100% of the grumbling I heard was directed at ownership. My impression is that the rank-and-file are fully aware of the team's self-inflicted money woes, and aren't at all happy about it.
   34. zonk Posted: April 08, 2014 at 02:14 PM (#4682027)

I think a lot of people are counting on the days of 38K attendance for a .500 team that is simply not going to happen. Attendance always lags actual on-field performance and a .500 season in 201x still won't put 38K in the seats in 201x+1. Get to the NLCS and THEN you can realistically count on 38K per game the following year. The 25-year old Wrigleyville resident in 1991 had 12K in student loans and a decent job; the 25-year old Wrigleyville resident today has 80K in student loans and a part time job, they can't afford the luxury of Cubs games like they used to no matter how good or bad the team is; they can barely afford their rent.


True this... Though, the Cubs are still well over their previous low water marks. They first drew 2 million plus in 1984 -- dipping below two million only in 1994 (strike shortened) and then also 1986 (by which point the '84 hangover was in full effect). 2004 was the first of an 8-year run of 3 million+... dipping to 2.8 million in 2012 and 2.6 million last year.

I was wondering about Fri-Sat trying to score some cheap seats -- was only really interested in going below face value, and didn't end up getting there... but still - opening weekend, so wasn't that surprised (and while the weather wasn't great - especially Friday - it wasn't as bad opening weekend can generally be).

One thing that piqued my ears is that I also heard some people suggesting for the first time that maybe they should move to the suburbs... I think that would be a mistake - I think the Cubs cachet is tied to their environs, like it or not... and even 2.6 million is a pretty damn good number for a team that last saw .500 five years ago -- and isn't likely to see it this year, either.

A Cubs team with its 'aura' can be plenty profitable if it just blips up into content every 10 years or so...
   35. KT's Pot Arb Posted: April 08, 2014 at 02:22 PM (#4682036)
The link from #7 is great, but it only reinforces what I think most people thought at the time: Ricketts overpaid.


If you read the source article, the Cubs are nearly a lock to reach close to $500M in annual revenues by the end of the decade. By that time they will be able to operate with a $150M payroll and still dividend at least $100M a year into their pockets. In 2020 it's likely the team will be able to borrow enough to repay the Ricketts 100% of their investment, while still dividending over $50M/year.

Any deal where you get your money back in a little over 10 years and get a long term stream of dividends until you sell the asset for $2B+ is a great deal. In no way shape or form can their purchase of the Cubs & Wrigley be viewed as anything but a success.

The convoluted structure required by Zell/Tribune actually worked to their advantage, it reduced the sale price substantially, with the only cost forcing the Ricketts to be patient in building the team. But they had to be patient anyways, with the moving parts of the stadium rehab, TV rights renewals, and team rebuild.

Sure if they could have gotten it for $700M, even better. But it's far better to be the winning bidder at $850M than a losing bidder.
   36. SouthSideRyan Posted: April 08, 2014 at 02:40 PM (#4682052)
Ricketts overpaid, given that no other potential owner wanted anything to do with the terms of the sale, but he wanted the team, so this works out perfectly for him. Finance the purchase of the team through its own revenues while being able to shrug his shoulders and say it's not his fault.

Beyond that, I think he came into this with all sorts of ignorance about the franchise expecting both:

A. The city to finance a large portion of the renovations.
B. Fans to show up regardless of the product on the field

Payroll has dropped 60M from his first season as owner, and while debt load is a part of it, the bigger catalyst is that attendance is primed to have dropped a million from when he took over. (The attendance drop happening to coincide with not even attempting to put a competitive roster on the field the past few seasons, spending 5 days above .500 in 4+ years)

Even putting the debt load at 50M a year, somebody's going to have to explain to me how the Cubs, with the 5th highest revenue in the sport(according to the team at the Convention) can't sustain a payroll at the level of the Royals or the Brewers.
   37. SouthSideRyan Posted: April 08, 2014 at 02:51 PM (#4682071)
That's not to say Brett didn't do a fantastic job with his piece on the finances, it's worlds better than any beat guy or columnist has done, but he's trended more and more towards an owner apologist, and I just think he's gotten too close to the situation to view it for what it is.
   38. Pops Freshenmeyer Posted: April 08, 2014 at 03:07 PM (#4682095)
SSR: did you disagree with his numbers? It's an honest question as I have no idea how close they are to reality.

As far as his contention that ownership is plausibly pouring all revenues back into the team I'm hesitant to accept that right now. I think the proof will be what is happening when the Wrigley renovation costs come to reality.
   39. AROM Posted: April 08, 2014 at 04:33 PM (#4682158)
The effect of the Cardinals Way/developmental coaching is likely overstated, they took an above average volume of first/comp picks and got a bit lucky on how it developed.


Too soon to judge the last few drafts. Starting back from 2010:

2010 - 2 comp picks, but an unimpressive draft, nobody has made a big league impact or looks highly promising
2009 - no comp picks, but wow. Shelby Miller in the first round, but also:
3 - Joe Kelly
13 - Matt Carpenter
21 - Rosenthal
23 - Matt Adams.

2008 - Comp pick is Lance Lynn. #1 pick is Brett Wallace, Kevin Siegrist taken in 41st.
2007 - Pete Kozma was a first round pick? I would have guessed he was a 20th rounder who scrapped his way up. Also Descalso and Adron Chambers. This is the definition of major league replacement level draft - 13 players have made the bigs, nobody above 1 WAR, and the total WAR to date is exactly zero. They had one comp pick.
2006 - 2 comp picks, a bunch of players made it, and several decent ones - Jon Jay, Chris Perez, Luke Gregerson, Allen Craig
2005 - Rasmus (comp from Red Sox), Jaime Garcia (22nd round), not much else, 3 comp picks didn't pan out.

Looks like a combination of comp picks and good finds in the lower rounds.
   40. SouthSideRyan Posted: April 08, 2014 at 05:10 PM (#4682223)
Pops, I'd say it's a general lack of trust in MLB Franchise's books more than anything else. I used the Royals as an example because I have a very difficult time seeing Glass operating at a loss in any given year, and they're easily more than 50M behind the Cubs in terms of revenues.
   41. SouthSideRyan Posted: April 08, 2014 at 05:28 PM (#4682253)
Since AROM brought up drafts, I feel the need to reiterate why the Cubs were in the place they were when Epstein came in, and it's not from overspending in FA like every screaming head will tell you.

Hayden Simpson
Brett Jackson
Andrew Cashner
Ryan Flaherty
Josh Vitters
Josh Donaldson
Tyler Colvin
Mark Pawelek
Ryan Harvey
Bobby Brownlie
Luke Hagerty
Chadd Blasko
Matt Clanton

Reggie Golden
DJ Lemehiau
Aaron Shafer
Donnie Veal
Grant Johnson
Brian Dopirak
Justin Jones

Micah Gibbs
Austin Kirk
Chris Carpenter(a bad one)
Tony Thomas
Mark Holliman
Mike Billek
Mark Reed
Jake Fox
Billy Petrick
Matt Craig

Those are the first 3 round draft picks by the Cubs from 2002-2010(All drafts I attribute to Hendry as GM - 2002 was just before he was promoted to GM, but the word was Hendry was doing the legwork, as MacPhail slowly phased himself out. 2011 - He was in the draft room, but had already been fired)

These players accumulated -1.4 bWAR in Cubs uniforms. Cashner was dealt for Rizzo, Donaldson was one of 4 dealt for Harden(was heralded heading into that season, but was OPSing 625 as a 22 year old in A ball at the time of the deal), Justin Jones was one of 4 dealt for Nomar/Murton(Jones actually went to Minnesota who gave Boston Mientkiewicz, but Minnesota was supposed to get another player, so call him 2/3 of 1/3 a season of Mink)

And that's it. Just a comical return on 9 years worth of upper round draft picks.
   42. McCoy Posted: April 08, 2014 at 06:30 PM (#4682320)
As KT Pot Arb already stated so well the Ricketts didn't overpay. They were the top bidder but it wasn't like the next closest bidder was offering 500 million dollars. Furthermore the Tribune Co were not motivated sellers and I think the length of time it took them to sell the Cubs should have made that clear for all. They wanted to sell the Cubs a certain way and at a certain price. Yeah, there were buyers who couldn't buy it the way the Tribune wanted to buy them but that doesn't mean the person who eventually did buy the team overpaid. If you remove the stipulations the team probably goes for a billion dollars or more.
   43. SouthSideRyan Posted: April 08, 2014 at 06:40 PM (#4682334)
It easily clears a billion dollars. Cuban I believe was rumored around 1.3B It's why Ricketts's "all money is going back into the team" is shell game bunk. He got the team on an installment plan and the final 300M of installments is coming out of team revenue.
   44. McCoy Posted: April 08, 2014 at 06:43 PM (#4682336)
Since AROM brought up drafts, I feel the need to reiterate why the Cubs were in the place they were when Epstein came in, and it's not from overspending in FA like every screaming head will tell you.

Well, Alfonso Soriano was a huge mistake on their part which backed the team into a corner when the team hit the peak of their success cycle. Thus forcing moves like signing Milton Bradley or flipping him for Carlos Silva instead of seeking real long term solutions that weren't high risk/middling reward. And yes having a failed farm system certainly put a bullet in their head but the Cubs should have been able to keep on being good even without a good farm system for far longer than they actually did.

Carlos Zambrano flamed out, Mark Prior couldn't stay healthy, for like ever and then the next wave of guys in the rotation couldn't pull it together either. Harden couldn't stay healhty and Hill flopped. Surprisingly Lilly and Marquis were rather good for the Cubs but the Cubs had to trade off Marquis to make room for a bat they needed because . . . .

The Cubs FA bats largely flopped. Soriano was for the most part a rickety bust, Fukudome was all flash in the pan, Byrd was "eh", and Bradley was a psycho.

Like I said above, obviously if the Cubs had a few more prospects develop and maintain the ability to hold a starting job at the major league level back in the years 2006 to 2012 or so the Cubs could have papered over a lot of mistakes but it was the failure Henrdy's acquisitions that really doomed the Cubs both in not fixing the holes and preventing the Cubs from fixing those mistakes because he maxed out his payroll.
   45. cardsfanboy Posted: April 08, 2014 at 07:03 PM (#4682348)
Too soon to judge the last few drafts. Starting back from 2010:


Not to mention Wacha and Piscotty as comp picks for Pujols in 2012. :) (both should see playing time in the majors this year, Wacha obviously, but Piscotty has leap frogged Taveras as the first call up if an outfielder is needed)
   46. snapper (history's 42nd greatest monster) Posted: April 08, 2014 at 07:11 PM (#4682351)
Well, Alfonso Soriano was a huge mistake on their part which backed the team into a corner when the team hit the peak of their success cycle. Thus forcing moves like signing Milton Bradley or flipping him for Carlos Silva instead of seeking real long term solutions that weren't high risk/middling reward.

That's ridiculous. The Cubs were only constrained by their desire to keep healthy dividends flowing to the Tribune.

No reason an $18M FA bust should have prevented the Cubs from acquiring anyone.
   47. McCoy Posted: April 08, 2014 at 07:17 PM (#4682356)
Yeah, how dare they!
   48. SouthSideRyan Posted: April 08, 2014 at 07:19 PM (#4682357)
Byrd signed for 3/16, he was not a flop. Soriano was far from the albatross everyone wanted him to be, same for Zambrano. No idea how you just gloss over 9 years of producing absolutely nothing from the farm as a footnote to why the Cubs started to suck.
   49. McCoy Posted: April 08, 2014 at 07:38 PM (#4682367)
Mighty big foot note then, considering I said the farm system put a bullet in their head.

They spent over 55 million dollars to get one decent season out of Carlos. They spent 75 million dollars to have a replacement level left fielders and then spent millions more to make him go away.

If Hendry was a better negotiator and acquirer of talent then the Cubs are in a lot better shape from 2009 to 2012. A large revenue team like the Cubs could certainly have won games while getting very little out of their top 3 draft picks. They didn't which of course means that failing to turn draft picks into usable MLB players was killer but it also means that failing to sign good FA was killer as well as making bad trades was killer as well. Hendry doomed the Cubs and he did it in many different ways.
   50. KT's Pot Arb Posted: April 08, 2014 at 07:42 PM (#4682368)
That's not to say Brett didn't do a fantastic job with his piece on the finances, it's worlds better than any beat guy or columnist has done, but he's trended more and more towards an owner apologist, and I just think he's gotten too close to the situation to view it for what it is.


Haven't read his other stuff, but this piece was super matter of fact reporting. You can use it to defend or criticize the Ricketts as you want. Despite the constraints of the sale and MLB debt limits, clearly the Ricketts could spend more on payroll now. They tried with some free agents, question is how hard. No fan should be happy if they wait till 2020 so their gusher of cash flow can become a geyser, and I can see the point of fans unhappy with such a huge tear down approach to the rebuild.

But as a businessman, I can't help but admire the approach. They picked up a premier asset at a discount, and are willing to be patient and let their constraints expire and use it as a reason to rebuild the the most efficient and effective manner possible. Theo didn't overpay for free agents, they would rather keep top draft positions without giving up picks. They've unloaded a megaton of bad contracts, invested extra internationally, etc. And their payoff in 2020 will be the ability to carry a Yankees sized payroll while still having a good farm system. And they've taken virtually zero financial risk.
   51. KT's Pot Arb Posted: April 08, 2014 at 07:48 PM (#4682373)
Ricketts overpaid, given that no other potential owner wanted anything to do with the terms of the sale, but he wanted the team, so this works out perfectly for him. Finance the purchase of the team through its own revenues while being able to shrug his shoulders and say it's not his fault.


You can't overpay by purchasing an asset for a substantial discount to its value, that's Warren Buffett 101. If they were $100m over the next bidder, well those bidders screwed up bad. The Ricketts likely got a 30% discount at the cost of being forced to hold off on big payrolls and dividending team profits for a few years, but they clearly wanted to do both anyways.
   52. McCoy Posted: April 08, 2014 at 07:50 PM (#4682376)
The beauty of bad contracts is that they end no matter what. The Cubs didn't pull a Carl Crawford or something to get out from under bad contracts. Basically they paid almost full price to rid themselves of the players or simply let the contract expire. That didn't require a lot of deep thinking to pull off.
   53. Greg Pope thinks the Cubs are reeking havoc Posted: April 08, 2014 at 08:07 PM (#4682382)
If they were $100m over the next bidder, well those bidders screwed up bad.

Or weren't allowed to bid (Mark Cuban). This wasn't a free market situation.
   54. SteveM. Posted: April 08, 2014 at 08:38 PM (#4682405)
I have never bought into the you have to hit rock bottom first approach to rebuilding. You killing your fan base by continuing to put dreck on the field. The stands look over half empty for tonight's game. The big offseason signing was Jose Veras. Yeah, there hitting prospects on the way but no pitching. I am a sadomasochist as I will keep watching. But there are times I feel like a child abuser for passing along my love of the Cubs to my son.
   55. zonk Posted: April 08, 2014 at 08:44 PM (#4682409)

Well, Alfonso Soriano was a huge mistake on their part which backed the team into a corner when the team hit the peak of their success cycle. Thus forcing moves like signing Milton Bradley or flipping him for Carlos Silva instead of seeking real long term solutions that weren't high risk/middling reward. And yes having a failed farm system certainly put a bullet in their head but the Cubs should have been able to keep on being good even without a good farm system for far longer than they actually did.

Carlos Zambrano flamed out, Mark Prior couldn't stay healthy, for like ever and then the next wave of guys in the rotation couldn't pull it together either. Harden couldn't stay healhty and Hill flopped. Surprisingly Lilly and Marquis were rather good for the Cubs but the Cubs had to trade off Marquis to make room for a bat they needed because . . . .

The Cubs FA bats largely flopped. Soriano was for the most part a rickety bust, Fukudome was all flash in the pan, Byrd was "eh", and Bradley was a psycho.

Like I said above, obviously if the Cubs had a few more prospects develop and maintain the ability to hold a starting job at the major league level back in the years 2006 to 2012 or so the Cubs could have papered over a lot of mistakes but it was the failure Henrdy's acquisitions that really doomed the Cubs both in not fixing the holes and preventing the Cubs from fixing those mistakes because he maxed out his payroll.


I think that's a bit of revisionist history on Soriano --

The 2006 Cubs lost ~95 games, yes - but 2006 was a bit like 1985 in that everything went wrong.... some - Prior, for instance, would never go right again... But - the Cubs still had Aramis Rameriz who had pretty much elevated himself to stardom. They had Derek Lee coming off a MVP type season followed by an injury plagued season. They had Carlos Zambrano, who had developed into a horse and at least a near ace... That team was a tweener -- you could say rebuild, but then, do you do a small rebuild (keeping A-Ram and Z, flipping a coin on Lee), do you do a tear-down? Obviously, Hendry decided to swing for his job. The Cubs also brought in Ted Lilly that offseason to shore up the rotation.

They came close - 2008 would have been a perfectly reasonable year for it to happen. Everybody went cold at the wrong time and Manny got hot. Even in 2009, they were still good enough to maybe sneak a WC run.

I'm not sure if I'd have signed Soriano at the time, but they backed it with the right other moves and came close.
   56. zonk Posted: April 08, 2014 at 08:50 PM (#4682418)
I have never bought into the you have to hit rock bottom first approach to rebuilding. You killing your fan base by continuing to put dreck on the field. The stands look over half empty for tonight's game. The big offseason signing was Jose Veras. Yeah, there hitting prospects on the way but no pitching. I am a sadomasochist as I will keep watching. But there are times I feel like a child abuser for passing along my love of the Cubs to my son.


CJ Edwards is a top 30 guy and Pierce Johnson also made the top 100. Granted, there's no Mark Prior or Stephen Strasburg around, but those guys are rare anyway. The depth isn't there yet, but there are more than a few arms now -- I like Kyle Hendricks and I think Eric Jokisch has a chance at being back of the rotation cromulent.

The problem is that when you reach for the ring in the manner the late aught Cubs did - the downside is that you often do hit rock bottom, whether you wanted to or not. You end up with a lot of aging contracts you acquired for the run that didn't work. Branch Rickey's old maxim - better a year too early than too late - is true, but very few GMs follow it because it's harder than it sounds and you don't usually get two rebuilds unless you put a WS title flag in between them.
   57. The Yankee Clapper Posted: April 08, 2014 at 08:53 PM (#4682424)
Then why did Theo Epstein, probably the hottest GM commodity on the market, accept this job? Was he duped?

Epstein got a big raise and a long-term contract, Ricketts got cover to keep the fans at bay during the "rebuilding" and a potential fall guy if he wants to go that route. Win - Win, and everyone knew what they were doing, no one was duped.
   58. Slivers of Maranville descends into chaos (SdeB) Posted: April 08, 2014 at 09:02 PM (#4682434)
True or False: Theo Epstein will be Cubs President the next time the team makes the playoffs?
   59. zonk Posted: April 08, 2014 at 09:13 PM (#4682446)
True or False: Theo Epstein will be Cubs President the next time the team makes the playoffs?


True.

Sink or swim with the kids. AAA and AA both have some talent we ought to see before the year is out. Get a not out-of-the-question bounceback from Rizzo and Castro, maybe Castillo does a Soto impersonation.

   60. McCoy Posted: April 08, 2014 at 09:13 PM (#4682447)
I think that's a bit of revisionist history on Soriano --

I have no idea what that means as it relates to what I wrote.
   61. Walt Davis Posted: April 08, 2014 at 09:15 PM (#4682450)
Now hold on ... lord knows Hendry had a million faults but the 2008 Cubs did win 97 games, leading the NL by 5 games. Soriano's contract certainly didn't hamstring the team.

Hendry did continue the Cubs' traditional problem in FA signings -- sitting out the big players while (usually) paying full price for the mediocre. Soriano is the only truly big FA flop ... and the only truly big FA signing and he wasn't worthy of that designation. They've generally made decent-to-good decisions on long-term star extensions. It's the endless string of mid-tier flops and the lack of minors production that kills the Cubs.
   62. McCoy Posted: April 08, 2014 at 09:24 PM (#4682457)
Now hold on ... lord knows Hendry had a million faults but the 2008 Cubs did win 97 games, leading the NL by 5 games. Soriano's contract certainly didn't hamstring the team.

In 2008? No and that wasn't the contention. In fact most people viewed his acquisition as a move to help now (2007 and such) but would eventually he would become an albatross. He was getting paid 14 million for that year as opposed to the 17 to 19 million a year he following that season and he got paid 10 million for his first season in Chicago.
   63. Dan Posted: April 08, 2014 at 09:50 PM (#4682481)
I know the discussion has mostly moved on from this subtopic, but Theo Epstein was not fired and saying he was is 100% untrue. The Red Sox tried to sign Theo to a contract extension before they let him interview with the Cubs, but he let them know he wasn't really interested. It was only after he made it clear that he was probably not coming back after that additional year that the Red Sox reluctantly allowed him to interview with the Cubs. In an interview around that time, Henry basically said they would have made Epstein GM for life if he had wanted to be, but that Theo didn't seem like he was going to be happy to stay in Boston past his current contract.
   64. SteveM. Posted: April 08, 2014 at 11:20 PM (#4682552)
My son just called to plan our summer vacation together around the Cubs playing in Philly. I have warped that poor kid.
   65. Jim Kaat on a hot Gene Roof Posted: April 09, 2014 at 01:32 AM (#4682615)
there are times I feel like a child abuser for passing along my love of the Cubs to my son.


"They #### you up, your mum and dad...."

I am a sadomasochist as I will keep watching.


Naturally. I've been saying the same thing about Cubs fans for years, but somehow I'm an a$$hole for it. People are funny.
   66. villageidiom Posted: April 09, 2014 at 06:44 AM (#4682629)
That's exactly what firing is in the senior white collar world. The Red Sox said "We don't want you around here anymore, but you can stick around until you find a job somewhere else."

Happens regularly in offices around the country.
No, firing in the white collar world is "He is leaving to pursue other opportunities" or the more fun "he is leaving to spend more time with his family". What you describe doesn't happen without the person's former authority, if not title, being clearly transferred to someone else before he leaves. You have no evidence this happened here.

The "happens all the time" ruse is nice. Ryan Braun struck out three times against the Phillies yesterday; we know it was 3 Ks and not 3 HRs because 3 Ks happen all the time in baseball.

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