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The Chicago Cubs are Facing Tough Financial Times Amid COVID-19

photo by Jamie Squire/Getty Images

Many MLB franchises could be facing financial difficulties and some big-market teams could see “nine-figure losses” due to the economic fallout of the coronavirus pandemic. One of these teams is the Chicago Cubs.

The Associated Press, citing an MLB document on the financial ramifications of paying pro-rated player salaries during an 82-game season in empty ballparks, reported the Cubs potential losses could be $199 million, which would be the fourth-worst after the Yankees ($312 million), Dodgers ($232 million) and Mets ($214 million). The player’s union disputes these numbers and has asked MLB to open their books.

The Cubs may have added to their financial issues with their investments in Wrigleyville, their new startup Marquee Sports Network, and purchasing all of the rooftop seating around Wrigley Field. In what months ago may have seen like smart investments, they are now adding to the financial difficulties that have been compounded by the pandemic. While they receive a share of MLB’s national broadcast contracts, the Cubs’ local revenues are generated primarily through a mix of media and gameday income, something their own Marquee Sports Network was supposed to help with.

In addition, some of the other investments made by the Ricketts family, owner of the Cubs, is also suffering due to the pandemic. The Hotel Zachary, a few restaurants and another building built by their real estate partner, Hickory Street Capital, are either empty or only in partial use because of Illinois’ shutdown order. Gallagher Way, their profitable gathering spot next to Wrigley, is closed, as are the 11 rooftop clubs the Cubs bought to gain control on the rooftop business. This is ironic as it might be the only place that people can watch games as they have the capacity to hold ten people or less in each rooftop section. This is all, of course, dependant on state and local restrictions at the time MLB can resume play.

The financial situation is going to hurt them on the field as well. Even before the shutdown, the Cubs were facing at least two huge financial matters, getting Javier Baez and/or Kris Bryant signed to long-term contracts. The pandemic and their previous financial struggles beg the question: how much money can the Cubs afford to pay Baez and Bryant with the new norms faced by baseball and society, especially if nobody can predict how ballparks will be able to provide fans with a safe environment anytime in the near future?

The Cubs claim that 70% of their revenue comes from ticket sales, concessions, parking, and in-house corporate partnerships, which is much bigger than MLBs reported average of about 40% in those areas for the other teams in the league.

The Cubs have not publically commented on the AP report, but many experts had said the club would be financially better off if the season was canceled than if their players received pro-rated salaries combining for more than $100 million.

Like many other businesses across the country, all their best-laid plans have been ambushed by the pandemic, and now the future of baseball will be in the hands of the owners and the MLBPA.

 

 

 

 

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