Here’s the pitch
Tom Ricketts, AB’88, MBA’93, first sold his family on the idea of buying the Chicago Cubs. Then he delivered an $845-million deal during an economic crisis.
By Jon Greenberg, AM’07
Photography by Dan Dry
Like his team and his life, Tom Ricketts’s office at Wrigley Field is in transition. The 44-year-old chairman of the board of the Chicago Cubs has a couple of baseball pictures on the wall, a smattering of family-related frames behind his desk, and a director’s chair emblazoned with the logo of a local sports talk show in the corner. It’s a messy space, not at all imposing, the office of someone who just moved in and doesn’t worry about appearances.
On a round table in the small office is an autographed Ronaldinho jersey. The Brazilian soccer star threw out the first pitch at a recent Cubs game. “Aside from Michael Jordan, he’s probably the biggest star we’ve had out here,” said Ricketts, AB’88, MBA’93, a soccer fan who owns a minority share of English team Derby County and recently joined its board of directors. Buying an iconic American sports franchise has made Ricketts a bit of a celebrity himself. He is constantly in demand as he juggles his other business interests with his latest, biggest acquisition. Ricketts is busy at home too; he and his wife, Cecelia, a dermatologist, have five children.
The office isn’t set off from his staff. It’s in a narrow hall, a dozen steps from the lobby, next to Cubs’ minor-league boss Oneri Fleita. One staffer said he sometimes sees Ricketts actually running down the hall. “Right now, it’s about keeping up with the learning curve that I have,” said Ricketts, who led his family’s $845-million purchase of the Cubs, which was approved by Major League Baseball owners last October. “I never run out of things to do. It’s a lot right now, but all good.”
Tom and his three siblings, all of whom attended the University of Chicago, banded together behind a large investment from their parents—the founders of TD Ameritrade—to buy 95 percent of the team (the Tribune Company kept five percent for tax purposes), Wrigley Field, and 25 percent of a local sports channel that broadcasts games. The four siblings comprise the team board. Tom serves as chair, the face of the franchise, its leader and spokesman; he’s the only Ricketts sibling involved in the franchise’s day-to-day operations.
But it is a family business, and in a lot of ways, the acquisition process and ownership responsibilities have brought them closer together. “We all have different skill sets and perspectives, and it really creates a kind of synergy that works well together,” said Laura Ricketts, AB’95, who will be active in the team’s philanthropic and community outreach in addition to running an ecotourism travel agency she opened with younger brother Todd.
Their father, Joe Ricketts, started the Omaha, Nebraska-based TD Ameritrade in 1971 and took the company public in 1997. In 2007 Forbes listed Joe’s fortune at $2.3 billion. Now he mostly tends to his bison farm in Wyoming while his children run the new family venture—trading players, not stocks. Pete Ricketts, AB’86, MBA’91, is the only sibling who doesn’t live in Chicago, even though he began the family migration to the Windy City when he enrolled at the University.
Then came Tom and Laura, who went on to earn a JD from the University of Michigan. Youngest brother Todd went to Loyola University and nearly finished his MBA at Chicago Booth before dropping out to take a Wall Street job. “I guess I’m the rebellious sibling,” he said, laughing.
Laura also can claim the “rebellious” title. The lone Democrat among Republicans, she is believed to be the first openly gay owner in the four major American professional sports. Active in the past with Lambda Legal and President Obama’s LGBT campaign-finance committee, Laura now cochairs the Democratic National Committee’s LGBT Leadership Council and she has gotten involved with the University’s new LGBT alumni group. In May Laura gave birth to a daughter, Audrey, the first child for her and longtime partner Heidi Grathouse.
Despite her activism, she does not consider herself a professional-sports pioneer. “You know,” Laura said, “I have to tell you that all throughout the acquisition process that never occurred to me. I don’t even know if that’s true. I know I might be the most visible or the first openly gay owner, but I don’t think I’m the first gay owner. Maybe I’m more prominent and out there, and my family owns the team, rather than me being part of an ownership group.”
She has been out to her family for about a decade and says they have always been very accepting despite their political differences on gay-rights issues. Laura’s brother Pete ran for the U.S. Senate in Nebraska in 2006 on a platform that included opposition to same-sex marriage, and the rest of her family members donate to Republican candidates and causes. While she differs with them politically, Laura said she counts her brothers among her best friends. “Pete is the most politically active in our family, aside from myself, and he’s very involved with the Republican Party, but our experiences aren’t so dramatically different,” Laura said. “We actually commiserate about the trials and tribulations of being involved with any kind of political activity. Peter is involved on one side, and I’m equally involved on the other side, so we tease each other that our efforts really cancel each other out.”
Joe Ricketts didn’t know much about the University of Chicago when he saw it high in a magazine’s rankings. He suggested to his oldest child, Pete, that maybe he should check it out. Pete enrolled as a freshman in 1982, two years before Tom. “I was the first and my siblings followed me,” Pete said. “I make that joke a lot. They think it’s funny too. They worship me.”
Pete eventually went to business school, and Tom did too, while working as a trader. Pete returned to Omaha to work for Ameritrade, but Tom stayed and worked at the Chicago Board Options Exchange.
According to Crain’s Chicago Business, Tom created the market for selling corporate bonds to individual investors, coining terms like “direct access notes” and products like “SmartNotes” while with Chicago Corp. He left in 1999 when the company, owned by ABN Amro Bank, merged with LaSalle Bank. He then founded InCapital LLC, and it turned into the leading underwriter of corporate bonds sold to individual investors. In 2008, as the Cubs deal was percolating, InCapital bought LaSalle Broker Dealer Services, increasing its hold in the retail corporate bond market.
Tom’s business interests had turned to baseball in 2006, when the Tribune Company was looking to sell to a private-equity firm. Tom wasn’t alone in realizing that, under those circumstances, the company, which had owned the Chicago Cubs since 1981, would have to get rid of the team and Wrigley Field. “When the Tribune was looking to sell to a private equity, it was likely it wouldn’t be able to keep the Cubs asset because the Cubs, and sports teams in general, don’t have a profile that lends itself well to private ownership,” Tom said. “There’s not a typically short-term payoff, a five- or seven-year payoff, and not a lot of cash flow. It doesn’t fit into a portfolio nicely. It was logical if the Tribune went to a private-equity firm, they would have to sell. There were no guarantees, but we had a hunch that wouldn’t fit. So we got all of our ducks in a row and got our bankers and lawyers and other advisers teed up and waited for it to come on the market.”
But before that, Tom had to convince his family, especially his father, Joe, that baseball was a good investment. He started dropping hints, bringing it up in conversation. Then he went for a little showmanship.
In August 2006 the Ricketts family rented several rooftops across from Wrigley Field to hold a birthday extravaganza for Tom, Todd, and Laura. Pete’s wife had thrown him a 40th birthday party on a rooftop, and Joe, not a big baseball fan, loved it and wanted to do it again.
This time Tom mixed charm with cold numbers as they looked toward a full house at Wrigley Field. “Tom said, ‘Dad look at this,’” Pete recounted. “And Dad said, ‘It’s a nice field.’ Tom said, ‘Dad, they sell out every game.’ And Dad realized, ‘Oh, this is a business.’”
Tom made it clear that he was serious about buying the Cubs a month later when he drove to a Nebraska football game with Pete and Joe. Pete was in the middle of a costly Senate race against Democratic incumbent Ben Nelson, in which he spent a reported $12 million of his own money and lost by 28 percentage points. “I was like, ‘Go ahead, crazy man. I’m busy right now, but do what you want to do,’” Pete recounted. Laura said she figured her family was an underdog. Todd was wary of the spotlight it could put on the family. “I’m a pretty private person,” he said. “Obviously everyone loves the Cubs and relishes the idea of walking around Wrigley Field and being a part of it. But I had some apprehensions about my private life,” although he said he’s happy now with the decision to buy the team.
Both Tom and Todd clearly enjoy spending time at the park. For each home game, Tom has ten balls printed with the date and opponent and he strolls through the stadium, passing them out to kids. Todd likes to take his front-row tickets and exchange with fans sitting in the nosebleeds, just for fun.
Tom said the attention has been overwhelmingly positive, which is something considering how mediocre the team with the $145-million payroll played through the first two months of the season. “In the park and walking around in the neighborhood certainly, people walk up and say hello,” Tom said. “But also in the airport and places like that, where you’re kind of sitting around. You’ll end up meeting some people. They’re all very supportive. Typically, I think Chicagoans are pretty cool on that stuff. There hasn’t been single case where someone has annoyed us at dinner or anything.”
It has been a whirlwind going from relative unknown to team owner. Last year at this time, Tom Ricketts didn’t even have season tickets. “When it looked like he was going to get the team for sure, Tom decided he wanted to take two of his kids to a ball game,” said longtime friend and Cubs season ticket holder Curt Conklin, AB’89. They met when Tom hosted Conklin’s U of C campus visit and became roommates on and off campus. “But rather than calling the Cubs’ office and asking for a set to take them, he called me and asked if I could take him and his two sons to a game. Some people sitting around us recognized him and were like, ‘Why are you sitting up here with Curt?’”
Tom and Pete Ricketts said they started following the Cubs in Omaha, catching games on WGN, but it wasn’t until they moved to Chicago that they became emotionally attached. It’s easy to understand why, considering the timing of their move. The 1984 Cubs made the playoffs for the first time since 1945, turning a lot of people into Bleacher Bums.
That included Tom Ricketts, who met his wife in the bleachers and lived in an apartment above the Sports Corner across the street from Wrigley Field. His favorite player is still Andre Dawson, who will be inducted into the National Baseball Hall of Fame this summer. Even then, the idea of turning his passion into his profession seeped into his consciousness.
Just before the Cubs’ first game in the Ricketts era, Tom found a copy of his application essay to get into Chicago Booth. The question asked what his dream job was. His answer: own the Cubs. He got in, and started going nights at the downtown campus while still working in the Loop.
“He talks about that business-school essay, but I remember one day when we were living together above Sports Corner and Tom reading a story about finding out you could buy a pro hockey team for about $3 million,” Conklin said. “We didn’t have anything close to that. The four of us living there barely had $100 between us. But it wasn’t unreasonable to think in the next 20 years, we couldn’t scrape up enough money to do it.”
Ricketts had to scrape up a lot more than that to buy the Cubs. All $3 million buys you now is a backup infielder. While the franchise isn’t the most valuable in sports, the $845-millon sale price was the largest ever in North America, and it wasn’t easy to get the deal done. Tom has referred to it as “childbirth” more than a few times. Like childbirth, the joy that followed has made the pain a dim memory.
Popular choices to buy the team popped up as soon as the Tribune Co. officially put the Cubs on the market in December 2007. Mark Cuban, the brash billionaire owner of the Dallas Mavericks, immediately became the public’s top pick. John Canning, a Chicago businessman with a connection to Major League Baseball Commissioner Bud Selig, was considered the most likely candidate from the beginning. “We knew we were a dark horse,” Pete said. “We were not the favorite out of the chute.”
No one knew about the Ricketts family until July 2007, when a small news story appeared announcing their interest, and they didn’t know much about their competition. “I really had no idea who was in what group or what groups were applying,” Tom said. “In the end, I didn’t spend much energy trying to find out. It wasn’t about that. We went into it assuming it would be a fair and open bidding process and it really was. One advantage we had as just a family and not a group of businessmen was that it was easier for us than the other groups to stick together and just be patient.”
Ricketts had a dream team of advisers. Six months before the team was for sale Ricketts had hired Sal Galatioto from Galatioto Sports Partners, one of the industry’s premier dealmakers. This spring, Galatioto was working on a few others, including the sales of the Golden State Warriors and the Texas Rangers. He was approached by several groups bidding for the Cubs, but chose to work with the Ricketts family. “We wanted to pick the people with the best chance of being successful,” said Galatioto, who liked the family dynamic in the decision-making process. “We thought they were the right people to own the team from the get-go.”
The family also hired public-relations expert Dennis Culloton and the law firm Foley & Lardner to represent them. “He started early and got great advisers early on,” Pete said. “He made connections to put our team in a situation where we out-homeworked the other side.”
The negotiations were long and drawn out. Sam Zell, the notorious “grave dancer” who bought the Tribune Co. in 2007 and accumulated mounds of debt, even talked about selling the Cubs and Wrigley separately, a deal-breaker for almost anyone. “There were certain conditions where the economics wouldn’t work,” Tom said. “In any deal there has to be a point where you’re ready to walk away.”
Economic conditions almost pushed them away when the credit markets cratered in the fall of 2008. Even though the precepts of the sale were established by then, the Ricketts family was having problems getting a bank to finance it. “No one knew how bad it was going to get or if the banking market would be there,” Galatioto said. “When the economy went south, everyone was concerned.”
Tom’s expertise in the debt markets turned out to be an essential tool in saving the purchase. “The process of negotiating with the Tribune for ownership of the team was very involved and took a lot of effort,” he said. “Then the process of negotiating and understanding how you’re going to pay for it was pretty complicated also. A capital markets background, who’d have thunk it?”
As markets stabilized and banks felt comfortable loaning money, the process proceeded with few hiccups. Joe and his wife sold $403 million in Ameritrade stock to help close the deal.
The Cubs’ payroll is third-highest in baseball, and Tom said he expects the team to stay competitive in that regard, though an improved minor-league system should help them cut costs as expensive contracts start to expire this season. “The deal is extremely well-structured,” Galatioto said. “Financially they’re in good shape. That’s not going to be a problem. They want to be competitive.”
After their formal announcement as owners last October, the Ricketts family embarked on a plan to rehab Wrigley Field. The team spent about $10 million on amenities, including new bathrooms, a socializing area under the bleachers, and a new private club in the small skybox area. “The vast majority of that money has no ROI,” Tom said. “That’s just bathrooms and cement. I mean, someone asks me what my favorite renovation is, I’m like, ‘Oh, the new concrete in section 35.’” Todd spurred on the hiring of a nutritionist, who emptied the clubhouse of junk food and instituted healthier meal choices at home and on the road. They also added a players’ lounge to the cramped, spartan clubhouse.
One change is especially visible—and controversial—to fans. A new red, illuminated Toyota sign, worth an estimated $2.5 million a year, was erected above the bleachers in June after a protracted approval process. Because Wrigley Field is a landmark, the team had to negotiate with the local alderman on changes. Chicago Tribune architecture critic Blair Kamin, who lives near Tom in Wilmette, gave the sign a scathing review, echoing some fans who prefer the ballpark uncluttered. To win city approval for the Toyota sign, the Cubs agreed to a four-year moratorium on any other advertising that rises above the bleachers.
Tom has mostly maintained his patience in the swirl of attention and contentious politics surrounding the Cubs. He joked that he would heckle Kamin’s copper gutters in response to the negative review, but he took a hard line in pushing for the sign’s approval. Emphasizing the family’s commitment to preserving Wrigley Field’s atmosphere, Tom suggested that his largesse might not extend into the neighborhood if City Hall choked off the potential new revenue stream. “I have a lot of other dollars that can be invested in Wrigleyville, or not,” he said in a Tribune story in April.
Tom said he wasn’t surprised how long seemingly minor decisions take to implement. “When you go through some decisions, they’re not completely unilateral,” he said. “There are things you have to work through. It’s a political process and just the way of the world.”
Changes on the field have been slow too—not surprising in the haunted history of the Cubs, who last won the World Series in 1908—but the family did not expect immediate gratification. They made a long-term personal and professional investment. “We expect to own the team for the next 100 years,” Pete Ricketts said, preferably a better century for the franchise than the one just passed.