On The Naming Rights to Wrigley Field

By JCB on Friday, March 28, 2008

If the question is whether the owner of Wrigley Field should sell its naming rights to a sponsor, there is no correct answer.

However, approaching it from any given perspective, it feels like there is a correct answer--sometimes yes, sometimes no, and sometimes the answer feels very strong. Unless we have some form of analysis to identify the proper perspective--and we don't, besides each person choosing her own--this means we're asking the wrong question.

The right question is much deeper. It encompasses the inherent tension between baseball as business and baseball as sport, as pastime, as tradition. It encompasses the tension between our past and our present, our legacy and our policy. It encompasses the tensions in our country's changing culture, especially regarding technology, media, and advertising.

It settles more directly on the tensions between winning and profiting. It's complicated further by the pressures from respecting and accommodating tradition, and the will of the fans. It's even more complicated when you distinguish winning between winning in the sense of in the short term, and in the sense of establishing a baseball team that is run the right way, and therefore has a good chance of being a winning club every season. The same can go for profiting, for that matter.

When it appears that something is necessary to improve profits, but this does nothing to (proportionately) improve your chances to win, what does a team do? To add another level of complication, if this decision in fact goes against the will of your fans and their sense of tradition, what does a team do? Or in another scenario, when it appears that something is necessary to improve your chances to win, but that will cut into profits, what does a team do? And so on, because you can tease out all sorts of situations in which these four interests align and combat in different variations.

It's not always simple--that's for sure. But for the most part, I think the tension between profits and winning will always be primary. Either one of these goals always has the potential to trump all of the others.

The real question, then, is this: How do we achieve the proper balance between the competing interests facing baseball teams, and the sport as a whole?

That's a question that it would take a book--and maybe a long book--to answer.

I have one idea, though: what if we bar certain conglomerate or publicly-traded parent corporations from owning professional baseball teams? It's a radical idea, but not as radical as it may seem at first. I think, on balance, it's an idea whose benefits far outweigh its drawbacks. And it certainly speaks to the question of naming rights to Wrigley Field, both as explanation of how we got here in the first place, and for how we might avoid at least a certain kind of unsolvable question in the future.

On the other hand, is it an idea that would ever gain traction with the powers that be? Probably not, but maybe. (And maybe it already has.) Still, it's worth thinking about, at least insofar as it helps us understand the competing tensions facing baseball, and where the scales may tip in the coming years.

 

* * *


Different Perspectives on Naming Rights Lead to Different Valid Conclusions

Let's start at the top, with Sam Zell. Zell's main objectives right now are clear. He has to make the Tribune Company annually profitable, and he has to significantly reduce its several billion dollar debt. To return the company to health, these are his general legal duties, even putting aside what's in it for him (admittedly, a lot). Selling the naming rights for Wrigley Field to a sponsor is practically a free $200- $400 million towards the latter. Unless someone comes up with a compelling reason to convince Zell and the other directors that this would be bad for the Tribune Company, if there's a buyer, they probably have to sell (or at the least, risk a lawsuit from the other shareholders for breach of fiduciary duty) besides the obvious point that they undoubtedly want to sell.

As for the Cubs organization, for the most part, the naming rights will make no difference to them. To these people, from the President and GM down to the players and down to the staff, Cubs baseball is a job. Not just a job, but a job that consumes their lives and concentration. Putting a new name on what's like their office building makes no difference. (This probably explains why Carrie Muskat, for example, while acknowledging the impetus comes from Zell, has taken a very matter-of-fact "get over it" tone in her mailbag columns all off-season. Example 1, Example 2, Example 3.)

For many fans, too, selling the naming rights will for the most part make no difference. I've heard some acknowledge that especially if it helps pay for necessary renovations, then it probably has to be done, and that's that. (Although, there's a problem here: the money can't go to both 1) pay down the Tribune Company's debt and 2) pay for renovations to Wrigley Field. You can surmise for yourself how it will actually play out.) Even without this concern, many figure they will still call it Wrigley Field, and still watch baseball players throw, hit and catch the ball for nine innings the same as ever. In other words: no big deal.

But for many fans, to sell the naming rights to Wrigley Field is blasphemy. Blasphemy, as in disrespect for something sacred. And it's an intriguing position: if not Wrigley Field, is there nothing sacred? Must we not preserve such hallowed ground, name and all?

There's nothing wrong with any of these positions, or their reasoning. It all depends on your starting perspective, and it's impossible to favor one perspective over another except in the case one of them happens to be your own.

 

* * *


What Wrigley Field Represents to Many

I would suggest that for many, or even most of the fans who believe Wrigley Field is sacrosanct, the threat of naming rights demonstrates that the stadium must stand for more than just Wrigley Field as the Friendly Confines, home of the Chicago Cubs. As an isolated transaction, as we've said, tacking a sponsor on to the name will make very little difference to anyone's individual experience at the ballpark. This is undeniable.

But Wrigley Field has come to mean much more to people than even a baseball stadium, symbolizing something mythical and nostalgic and grand. Something so inherently good that its identity cannot possibly be for sale, that we cannot possibly do anything to seriously compromise it. In a sense, I think many see Wrigley Field as a general in the battle against the downsides of Progress (capital P). In large part, I think this is because it's unique among places--even among baseball stadiums--in creating such a personal relationship with each of its visitors. Such places that invoke such genuine passion are harder and harder to come by.

I think the threat of selling naming rights must threaten something deeper because it's only in my lifetime--I'm 27--the notion of Wrigley Field being sacred and its accompanying mythical status have spread widely. I also think the reasons for the rise of these emotions have much more to do with everything else in our lives than with Wrigley Field itself. It's because our culture and the sport of baseball have changed that Wrigley Field now stands out as a symbol, a reminder, and a beacon.

 

* * *

Changes in the Last 25 Years

It's not hard to paint the sea changes in our culture in broad strokes. Corporations and especially conglomerates are exponentially bigger and wealthier. Technology has transformed practically every aspect of our lives, especially with respect to the information we receive, and how we communicate; and more generally, how we spend our time. Related to this, the media has become much more concerned with itself as entertainment also, and advertising has become even more omnipresent and sophisticated.

Our cities have changed as well. What many would call the good neighborhoods in the great cities have become more cosmopolitan, but at the same time more expensive and exclusive. (Call it Convenient Cosmopolitanism, perhaps.) Taking Wrigleyville and others in Chicago as examples, the neighborhoods are no longer inhabited by Blue Collar workers, because homes are not affordable. Of course, blue collar jobs--at least in manufacturing--no longer drive the city's economy anyway.

All of this both for worse and for better, and this is not the forum to advance concerns, celebrations, or profundities about our culture. It's beyond complicated. Let's just say our lives are radically different, and leave tensions between for better and for worse alone.

The differences have been significant for baseball, though, and this matters fundamentally to the feelings we have about Wrigley Field, and its name. Across baseball, prices have soared--ticket prices, merchandising revenues, sponsorship and broadcasting deals, and as a result profits. So have salaries, of course--all this money has to go somewhere. For that matter, the last 15 years have seen a renaissance among the quality of baseball stadiums themselves.

Technology, media coverage, and advertising with respect to baseball have also changed. Our exposure to the sport is virtually limitless via technology, and media and advertisers try to capitalize on this increased exposure as much as they can. For better and worse, we see, think about, and feel about the game differently than we ever could have 25 years ago.

Considering fans as a whole, winning matters more than ever, because the stakes are higher than ever--not just in terms of correlative profits for teams, but for the peripheral media and advertisers who also draw on the increased attention a winning team merits. Winning also matters more than ever because it's easier to care more about a team than ever.

Baseball is distinct in our culture, though, for its tradition. For representing tradition. For preserving certain rhythms and patterns, certain emotions and conversations, across lives and across generations. For many of us, this tradition genuinely matters. A lot.

This is especially true because there are fewer institutions that preserve rhythms and patterns the way that baseball does. There are fewer institutions that provide limitless material for good-natured arguments and debates. For drama that becomes part of our permanent memory. For catharsis. For knowing you were a tiny part of something much bigger--something that matters. In all of this, its influence and its ability to withstand time, for those of us who invest ourselves in the game, baseball truly is institution, not just entertainment.

For many Cubs fans, Wrigley Field embodies all this tradition, and does so more passionately every day as--and I'd suggest, because--it changes much, much less than the neighborhood, city, country and culture around it. It's a reminder of what's worth preserving from our past as so much of our culture is remade anew. It's also a sanctuary for the present, and a sign of hope that when our culture seems in decay, not everything that is good must suffer to the point of suffocation. The myth of Wrigley Field is relative to the world around it, then, but nevertheless very real--at least in the minds of those who stop and examine our world.

 

* * *

My Take on the Naming Rights

Personally, I fall somewhere between those fans who see the sale of naming rights as no big deal and those who see it as disrespectful.

I'm under no illusions about why Wrigley Field is held sacred, and why it became so in the last 25 years. The problem is not with preserving Wrigley Field; it's with finding ways to preserve in our culture those ideals Wrigley Field represents. Although preserving Wrigley Field is one great way of doing this. Still, frankly, I don't think selling naming rights seriously threatens Wrigley Field's status or stature. I'd gladly trade corporate sponsorship for a cell-phone ban (text messages OK), holding back a few thousand tickets for day of game sales, and fewer in-stadium advertisements.

But I also ask a simple question: Who benefits from the sale? The Tribune Company, first, and the sponsor, second. The Tribune Company will get pure profit it can use to pay off its debt, whether it sells the naming rights before it sells Wrigley Field, or if it sells Wrigley Field at a higher price to a buyer who knows it can turn and sell the naming rights to recoup part of its cost of purchase. Even if the money is earmarked for stadium improvements (unlikely) the stadium will be that much more valuable as a result of the improvements, so the profit stays about the same. The sponsor also benefits, for all the reasons companies always benefit from advertising. It's the team and the fans who definitely do not benefit.

(Although, if you're a cynic, you might ask: do companies really profit more than they spend on such a sponsorship via increased revenues? And if not, you might ask: so why do they do it? And you might wonder: is it because by law the company has to either spend much of the money they're sitting on for the good of the company, or give it to shareholders--and they get enough wiggle room with "for the good of the company" to spend on just about anything that might possibly help the company even a little bit? And: if the directors and officers happen to get benefits like access to a corporate suite for some prime Cubs games as a byproduct, is that actually a coincidence? But of course, that's only if you're a cynic. And who knows--maybe companies really do see huge revenue increases from the insane amounts of money they spend on advertising generally, and sponsorship in particular. Or maybe it helps them make deals with other companies whose leadership loves the Cubs--deals that otherwise would not be made. I have no idea. Just thinking aloud.)

Back to the matter at hand, is it OK for the ownership to profit if it doesn't help the team and the fans, even if it only--and arguably--harms the fans in some non-tangible and probably ephemeral sense?

In the case of naming rights for Wrigley Field, I think the point is moot: the deal will be done because Zell must make the sale. We're just lucky that something bigger than the naming rights of Wrigley Field isn't at stake, meaning that the team is just as likely to win whether the deal is made or not. In some deals--such as when pending free agent stars must be sold, let go, or traded for prospects or lower-salaried players--many teams are not so fortunate.

* * *


A Step Towards Avoiding Precarious Decisions Between Profits and Winning

It's those sort of deals, where teams must sacrifice something that will help them win, that concern me. It's important at the outset to distinguish between situations where teams must sacrifice an asset (but expense) to stay afloat, or in the interest of long-term development. There's no problem with this, other than it's unfortunate for the sport as a whole that some teams must always do this while others don't.

But it seems that the day is coming when ownership might look at its baseball club, and determine that while its club is profitable, profits will be higher by releasing an expense without regard to the team's winning, its fans, or its sense of tradition.

When we think about the slightly declining but still good veteran all-star on a team whose most likely hope seems to finish around .500 even with the veteran, perhaps we can see that this day, or a day close to it, has already come.

Let's say ownership has two options: pay a high salary--say, $12 million--for the team's veteran all-star who has played almost his entire career with the team and who will almost certainly put up good numbers, or another decent player who will put up alright numbers for $2 million. (In this example, there's no one else available to sign who will put up better numbers than the decent player.) To keep it simple, let's say that with the all-star, there's a 90% chance the team will still finish 81-81 or slightly worse, and because of the high salary, profits that go to the owner (after taking out enough to pad for next year's operations) will be about $32 million. There's a 10% chance the team will do better and make the playoffs, meaning profits will be about $52 million. On the other hand, with the decent player, there's a 90% chance the team will finish 75-87 or so, but profits will be about $40 million (say, -$2 million in lost merchandise revenue etc., and lost ticket sales at the very end of the season, but +$8 million from paying lower salary), and only a 1% chance the team will make the playoffs, where profits will be $60 million. These simplified numbers aren't too far from what a real decision might look like, I'd say, even if reality is always much more complicated with additional risks and factors.

Should ownership re-sign the all-star because of the player's place in history, the sentiment of the fans, or to try and finish 81-81 with a 10% chance of playoffs instead of 75-87 with a 1% chance of playoffs? It's not hard to see how the decision analysis plays out. Even if there's a loss of reputation and goodwill for releasing the all-star that's worth a few million dollars, the decision is clear. Since the 10% chance of making the playoffs is only worth an extra $20 million, meaning it's worth $2 million in decision analysis, there's no rational-economic reason to sign the all-star. On the other hand, if you approach it in terms of winning, or in terms of tradition, or in terms of the fans--in terms of baseball--it's clear you should sign the all-star and forsake the extra profits.

The problem is that certain corporations not only won't eschew going for extra profits, certain corporations in almost every case can't eschew the profits--namely, publicly traded corporations, conglomerates, parent corporations who own lots of large subsidiaries, and the like. Such corporations and their directors and officers have duties to their shareholders such that they must try and maximize profitability. This is why, back to the beginning, Zell must sell the naming rights. It's true that corporations have some leeway in deciding along these lines to preserve good will and so on; but if ever the corporation is hovering near the red, this leeway diminishes as mounting pressure from concerned shareholders increases.

This is why I think baseball should prevent such companies from owning baseball teams. This is the only practical way to avoid a situation where a corporation who owns a baseball team as a subsidiary corporation will not pressure or even force the baseball team's officers to make decisions in terms of profits instead of winning in circumstances where the two do not align. (For that matter, this is why it's a good thing that the Tribune Company, an at-risk corporation, is selling the Cubs.) The only other way to do this that I can think of would be to pass a law or a rule forbidding parent corporations who own baseball teams from influencing the directors and officers of the baseball team in a way that would compromise the integrity of the team--meaning you can't pressure or force them decide in favor of profits--and this invites a whole host of other issues.

There's nothing to say another kind of owner couldn't do the same thing. It's that another kind of owner has the choice. There's also the fact that it's easier to hold a traditional owner (or partnership) accountable for success or failure. Love em or hate em, it's easier for fans to hold people like George Steinbrenner or Marge Schott or Mike Illitch or Mark Cuban accountable. Such people also are much more likely to be willing to sacrifice extra money for the sake of winning--they know this going in, and approach owning the team not strictly in investment terms.

Make no mistake: most baseball teams are good investments, with steady profits, and the chance at a huge payout every once in a while. It's no wonder large corporations want to own (most of) them. The problem is that it's much harder to insulate the baseball teams from the pressures facing the owner, and in the case of certain corporations, at times the pressure from shareholders may be inescapable and insurmountable.

When I presented this idea to KJM, he immediately retorted that this flies in the face of free trade--how can you tell a corporation what it can and cannot own?

This is true, but it's also unfair. The business of baseball--and other sports leagues--plays by different laws anyway. They are exempt from all sorts of anti-trust laws allowing them to collude with their competitors in lots of ways other companies can't, restrain competition, and so on. This is why baseball owners get the right to approve or deny new owners. And it's pretty clear that baseball needs these exemptions in order to thrive in its healthiest form.

But part of the deal could be to restrict ownership. Baseball could do this on its own, or the government could force it. Companies like Liberty Media (Braves, who were formerly owned by AOL Time Warner), Nintendo (Mariners), and Rogers Communications (Blue Jays), besides companies like the Tribune Company, could all face a situation where the pressure from shareholders translates into a squeeze on the operations of the baseball team. This, I think, must be avoided. The example of the sale of naming rights to Wrigley Field demonstrates how certain decisions in the realm of baseball will be decided in terms of profits, and we're just lucky it's profits vs. certain fan sentiment and tradition--most of which is circumstantial and not inherent anyway--and not profits vs. winning.

Maybe it would never play out that way. Maybe a huge corporation will always sell the team if it reaches the point where it needs to squeeze extra money out of the team. But why risk it?

It seems that MLB may be going that way in any case. NewsCorp used to own the Dodgers, and Disney used to own the Angels; now, both are back in the hands of non-corporate owners. So maybe MLB has figured this out, and won't let big corporate owners into the club. I hope so. But why not make it part of baseball's official policy?

Baseball will continue to face all sorts of problems resulting from the tensions between baseball as business and baseball as sport. Finding the balance is not going to be easy, but it's necessary. This is, I would suggest, a solid step in the right direction.

Back to the point, if you want to blame someone when the naming rights to Wrigley Field are sold, blame MLB, the owners, or anyone else you can pin it on for letting the Tribune Corporation own the Cubs in the first place. It was fine for a while, but as inevitable, the day is arriving when shareholder pressure will win, and the bottom line will dictate decision-making. Someone should have seen this coming a long time ago. Let's just be glad it didn't come in the form of letting some of the Cubs best players go to other teams, and focus on what we care about: the Cubs winning baseball games.

Posted Friday, March 28, 2008 by JCB
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3 Comments

First: Great comments. Enjoyable, as always.

Second: Interestingly, Zell is facing a similar situation, as is most of the media world, with the newspaper side of things: How to balance profitability with a responsibility to quality journalism. Shareholders want money, which means more fluff and "puppies" as Zell has said, and the thing that should matter -- engaging, objective reporting on issues that matter -- takes a backseat to what makes money. It's again the peril of public companies.

Any owner, of baseball team or newspaper, is going to want to make money; what reasonable person wouldn't? But each has a responsibility to something higher: For a newspaper, it's to good journalism, not just to what sells; for a baseball team, it's to winning. That's not to say that money should be entirely removed from decision-making, but that the organization's core mission should weigh heavier than its pocketbook.

Great point Phil. The similarities are strong. And, it's not just 'responsibility to something higher' in common (great way of putting it)--companies that profit by journalism also get to play by special rules because of the First Amendment, and the weight courts have given its protections over the centuries. The analogy isn't perfect, but the point stands that public companies potentially threaten the vitality and quality of cultural institutions when they must answer primarily to the bottom line instead of striking the proper balance.

Although, I think there's an easier chance at avoiding the pitfalls in baseball because its world is so much smaller -- there's only a couple dozen owners -- and only a few traded corporations currently at the helm. How to address the problem in the media world is a much more difficult challenge. Here's hoping some smart people start to figure out what to do soon, though.

After watching the entire All-Star game I had several views of Yankee Stadium. Although it is a great ballpark, it still can not compare to Wrigley Field. Just looking at these Wrigley Field Photos confirms my belief. This photographer also has some amazing Chicago Skyline Photos. A great city with an even better ballpark.

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