Since Tom Ricketts was announced as the final bidder for the Chicago Cubs, the common theme has been excitement. The notion that Ricketts, a self-avowed Cubs fan, would be willing and able to develop the franchise in a way that considers the fans first -- well, of course people are excited. The possibilities are endless. Win a World Series! Renovate Wrigley! Build new practice facilities! Lower ticket prices! There's no limit to what Cubs fans can imagine a benevolent Ricketts doing with his new pet franchise.
Reality isn't always so sunny. Crain's Chicago Business gave a second look to the financial details of the deal Monday (registration required) and concluded that it was unlikely Ricketts would be willing to overspend much in the first few years of his Cubs ownership transfer. Why? Because any extra spending would be his personal cash:
Mr. Ricketts and his family plan to borrow up to half the $900 million they have offered for the ball club in a deal that would set a record for a Major League franchise. Even if he finds willing lenders in the coming weeks amid tight credit markets, annual debt payments could soak up much of the team's cash flow — limiting his ability to invest significantly in the team or its ballpark. The amount Mr. Ricketts would be able to spend on Wrigley Field renovations or star players seems to depend on how much more of their own money he and his family are willing to sink into his baseball fantasy. Mr. Ricketts is likely to search for new revenue streams, but that will take time.
That's a long blockquote, and not exactly an easy one to absorb, so let's put it into simpler terms, if possible: Because the economy is so bad and lending is so difficult to obtain, it will be hard for Ricketts to borrow additional money in the first few years of his Cubs ownership. (Or however long this "recession" continues.) The team's cash flow was a certain amount ($31 million) last year. If Ricketts borrows half the deal, his annual debt payment will be $45 million. There isn't a lot of leftover cash there to, you know, undergo a massive Wrigley project, or buy the world a Coke, or whatever most Cubs fans want him to do.
If Ricketts is the fan he seems to be, he eventually fix the Cubs' needs ... but it won't be tomorrow and it won't be next year. It will require patience. Fortunately, Cubs fans are good at that sort of thing.