Legacy Sports Franchises Integrate Real Estate, Media, and Analytics

Key Quotes

"We have a little bit of property around the field, and I give Crane Kenney, our team president, credit for going out and purchasing a lot right across the street from there. We didn't really know what we were going to do. We just knew that we had to do something that was going to really make our game day better and really make life better for our neighbors, and then hopefully ultimately be economically valuable to us."

Tom Ricketts explains that the Chicago Cubs' approach to developing the area around Wrigley Field began with acquiring property without a fully formed plan. Ricketts highlights that the initial motivation was to improve the game day experience for fans and the quality of life for local residents, with economic value as a secondary, though hoped-for, outcome. This demonstrates the Cubs' strategy of prioritizing community and fan experience as a foundation for potential business growth.

"So I think one of the things that's happening as people get closer to the sports adjacent real estate market is we have to be very careful not to come up with cookie-cutter answers. Because I think if you have kind of a one-size-fits-all strategy, I think you're going to fail."

Tom Ricketts emphasizes the need for tailored strategies in sports-adjacent real estate development. Ricketts argues that a generic approach will not succeed because each team and location has unique circumstances. This highlights Ricketts' belief that successful development requires a deep understanding of specific contexts rather than applying a uniform model.

"I think one of the better decisions we made was to start our own network. I think it gives us the flexibility to try to meet the needs of our fans and our viewers in a way that it would be difficult to do if we had a lot of partners or other teams that we had to service."

Tom Ricketts discusses the strategic advantage of owning and operating their own regional sports network, Marquee Network. Ricketts explains that this decision provides the Chicago Cubs with the flexibility to directly address the needs of their fanbase. This demonstrates the Cubs' proactive adaptation to changing media consumption habits by controlling their content distribution.

"I think our valuation 16 years ago was just throw a number and hope it worked. But as people know, people that follow the industry know that historically sports teams trade on a multiple of revenue. That's just become the way that the mechanism that most people look at it. Over time, not only have revenues gone up, but that multiple's gone up."

Tom Ricketts reflects on the historical method of valuing sports franchises based on a multiple of revenue. Ricketts notes that this valuation metric has not only remained consistent but has also increased over time. This illustrates the growing financial attractiveness and market recognition of sports teams as investments.

"I think one place where baseball historically has underperformed is just in investing in international markets. Obviously, parts of Latin America, Japan, Korea, Taiwan, those are places where baseball is a big sport, and I think that we're making a lot of progress in those markets for sure."

Tom Ricketts identifies international markets as an area where baseball has historically underinvested but is now making significant progress. Ricketts points to regions like Latin America, Japan, Korea, and Taiwan as having strong existing baseball cultures. This highlights Ricketts' view that expanding investment in these established baseball nations presents a significant opportunity for growth.

"I think the joy never left baseball. Obviously, we're talking about all the tailwinds and the growing popularity of baseball. I think the rule changes were very important. I think the league did a really nice job of isolating a few things we could do just to get the same amount of action fit into 25 minutes less of game time, and I think people have responded very positively."

Tom Ricketts asserts that the fundamental joy of baseball has always been present, attributing recent positive sentiment to favorable market conditions and rule changes. Ricketts explains that the league's adjustments to game time have been well-received by fans. This indicates Ricketts' belief that strategic rule modifications can enhance the fan experience and contribute to the sport's popularity.