By Joshua Green and Eric Chemi, Businessweek
Since the Supreme Court’s 2010 Citizens United decision eased restrictions on campaign finance, a stream of rich Republicans have set up super PACs to oust liberal politicians and advance conservative goals. These “freelance billionaires” tend to be reclusive types who have earned or inherited enormous wealth and are accustomed to having their way: Think Charles and David Koch, proprietors of Koch Industries, one of the largest privately held companies. With more money than Scrooge McDuck—and no public shareholders to object—these donors are trying to influence politics directly, rather than through the GOP establishment, as they would have in years past.
Among these private billionaires, the Ricketts family stands out. Its members have a highly public perch by virtue of owning the Chicago Cubs baseball team. Since 2010, the family’s Ending Spending Super PAC, established by TD Ameritrade(AMTD) founder Joe Ricketts, has raised and spent $25 million on Republican candidates.
Now, as Bloomberg’s Julie Bykowicz reports, Ricketts’s youngest son, Todd, has taken over the operation with an eye toward dramatically expanding its scope. He told Bykowicz that he regards the Koch brothers as “great heroes who stood up and wanted to make a difference.” The latest Federal Election Commission filings show that Ending Spending has already elicited mid-six-figure donations from hedge-funders Paul Singer (Elliott Management) and Seth Klarman (Baupost Group) and from wrestling impresario Linda McMahon.
Such high-profile political activity is something prominent public figures in the sports world usually avoid. A more famous Chicagoan, Michael Jordan, once famously said he didn’t get involved in politics because “Republicans buy sneakers, too,” meaning he didn’t want to alienate fans and hurt his pocketbook. This hasn’t stopped the Ricketts family, whose aggressive foray into right-wing politics will serve as an experiment in whether the advocacy Jordan eschewed will hurt the Cubs’ bottom line—and with it, the team’s ability to win. The political views of Chicago Cubs fans suggest it might.
Revenue is a critical factor in a team’s competitiveness. A big revenue stream helped the Boston Red Sox win three World Series titles in the last decade. The New York Yankees’ enormous earnings allowed them to spend half a billion dollars last winter to catch up. The woeful Cubs, currently in the midst of a major rebuild, are also betting on serious revenue growth to turn the team into winners. Recently, Cubs President Theo Epstein publicly fantasized about his team’s “large market plans,”telling NBC Sports’ Joe Posnanski, “Once we sign a TV deal and renovate Wrigley, we’re going to have the payroll flexibility to, let’s be honest, do whatever we want.”
Whether they’re in the bleachers or glued to the TV, fans are the prime source of baseball revenue. And a study of Cubs fans conducted for Bloomberg Businessweekby Resonate Insights, an analytics firm that studies consumers’ motivations, provides evidence that the Ricketts family’s political crusade could alienate them and thwart Epstein’s ambitions.
Resonate conducts a monthly survey of 15,000 people it says are representative of the national online adult population. The company tested the political views of baseball fans nationally and compared them with Cubs fans in the three Chicago-area congressional districts (IL-4, IL-5, and IL-9) where they are most concentrated. The results tell a clear story.
At first blush, that story looks good for the Ricketts family. Baseball fans skew more Republican than the general population:
But Cubs fans do not. They are less Republican and more Democratic than other baseball fans and the generation population:
On both fiscal and social issues, Cubs fans are more liberal than people elsewhere in the country:
Right now, the Cubs are in a precarious spot, locked in a contentious battle with the city of Chicago to expand Wrigley Field and boost team revenue. The Ricketts family’s political activism could further complicate this quest. (They’ve been singed before: In 2012, Joe Ricketts commissioned a $10 million ad proposal attacking Obama for his connections to the racially charged sermons of Reverend Jeremiah Wright Jr.; he dropped the proposal in the face of public outrage.) Nevertheless, the family appears not to believe that the Cubs will pay any price. With midterm elections approaching and a presidential election to follow, it is forging ahead.
Measuring what effect this has on the team’s fortunes won’t be easy because the revenue of major league teams is a closely held secret. Still, falling attendance and television ratings offer some guidance. Average attendance has dropped in each of the last five years, drifting down by a total of about 15 percent.
That’s probably attributable to the Cubs’ losing record. Those numbers should climb as the team improves. But as the Los Angeles Clippers recently discovered, public controversy can quickly become economically perilous. If the Ricketts family’s Super PAC sparks an episode like that of the Jeremiah Wright proposal, it could risk a backlash, even a boycott, by the Cubs’ liberal fan base. That could certainly affect the team’s revenue and—in the long term—its ability to win.