Why expanding Wrigley Field has left Cubs battling Rooftop owners

Published 13 August 2014 By: Jonathan Gordon

Wrigley_Field_Cubs_Stadium
Wrigley Field, home to the Chicago Cubs, is surrounded by rooftops on the neighboring streets of Waveland Avenue and Sheffield Avenue. These rooftops, much to the delight of their owners, offer an unrestricted and arguably unparalleled view of the ballpark and the Cubs’ home games. The rooftops, which include restaurants and bars, provide their owners with a lucrative business model; the owners charge fans to sit on their rooftops in exchange for a unique viewing experience.
However, in 2010, the Cubs announced a proposal to expand Wrigley Field. The proposed expansion, due to commence this October 2014, includes erecting various large signs above the outfield bleachers seats (outfield stadium seating), which would obstruct the neighboring rooftops views of the stadium.
 
The rooftop owners claim that the Cubs are violating a twenty-year agreement that the two parties entered into in January 2004 governing their viewing rights over the ballpark. The Cubs, on the other hand, are of the view that the proposed expansion is permitted under the terms of the agreement.
 
This article examines the related contractual dispute between the Cubs and rooftop owners, with special focus on the parties’ agreement and how its terms may apply if formal dispute resolution proceedings were commenced.
 

Background

In 2002, the Chicago Cubs filed a copyright infringement lawsuit against various neighboring bar and restaurant owners who charged customers to watch games from their rooftops with a clear view of the ballpark.1 The team claimed that thirteen rooftop owners were breaching the Cubs’ intellectual property rights by allowing views of Wrigley Field, generating huge profits in the process, while bearing none of the associated park or team costs.
 
However, the parties ultimately resolved the claim with a negotiated settlement that was documented in an agreement dated 27 January 2004 (the “Agreement” - part of which was obtained by Comcast SportsNet Chicago and can be seen here2). 
 
The Agreement, at a headline level, provides that the rooftops owners pay a 17% annual royalty fee to the Cubs in exchange for viewing rights through to December 2023, subject to certain caveats (more on which below). The Cubs also agreed to drop the copyright claim against the rooftop owners, and the two parties agreed to undertake cross-promotional and marketing efforts.
 
Ten years later, the Agreement is the subject of heated disputes between the two parties.
 
In 2010, Tom Ricketts, owner and chairman of the Chicago Cubs, announced plans to renovate Wrigley Field.3 Among other things, Ricketts proposed the erection of two outfield signs that would obstruct the rooftop views of the ballpark.
 
Because Wrigley Field is a federal landmark, the Cubs needed governmental approval for any renovations, which the Commission on Chicago Landmarks granted them in 2013.4
 
The team stated it would proceed with the expansion provided the rooftop owners agreed to not sue them under the Agreement. However, the rooftop owners refused to agree, contending that the proposed expansion plans violate the terms of the Agreement by restricting their views.
 
Subsequently, Ricketts and the Cubs decided to move forward with a revised development proposal, which included five additional signs, bringing the total to seven. This exasperated the problem, with MLB.com reporting that: ‘the rooftop owners…have threatened to sue if their views are blocked -- which is all but guaranteed now with the additional signage.5
 

 

In July 2014, the Cubs obtained city approval for the revised proposal, and since declared that, notwithstanding the threats of a lawsuit, they are no longer waiting for agreement from the rooftops owners and intend to proceed with construction. 6
 
While Chicago Mayor Raum Emmanuel has encouraged the parties to continue to negotiate, a legal action appears imminent.
 
Ryan McLaughlin, spokesman for the Wrigleyville Rooftops Association commented:
 
Rooftop owners believe a blockage of our views violates the contract we have with the owners of the Cubs. We have instructed our legal team to proceed accordingly.7
 

The agreement 

Section 6 of the Agreement, entitled Wrigley Field bleacher expansion, sets out how the parties are to proceed should “the Cubs expand the Wrigley Field bleacher seating and such expansion so impairs the view from any Rooftop into Wrigley Field.8
 
The bleacher seating itself is not an issue; the expanded seating would not obstruct the views from the rooftops. Rather, the signs above the seating are problematic. Section 6.6 of the Agreement states:9
 
"The Cubs shall not erect windscreens or other barriers to obstruct the views of the Rooftops, provided however that temporary items such as banners, flags and decorations for special occasions, shall not be considered as having been erected to obstruct views of the Rooftops. Any expansion of Wrigley Field approved by governmental authorities shall not be a violation of this
Agreement, including this section."
 
This appears to be the key Section to the dispute; we will return to it below.
 
Should the dispute escalates and fail to be resolved by negotiation, Section 9 of the Agreement states:10
 
All disputes arising under this Agreement shall be arbitrated according to the rules of the American Arbitration Association (or such other organization as the parties agree upon), except as noted in this Section.
 
Procedurally then, the parties would present before a three-person panel, whose decision would be final and binding. To select the panel, both the Cubs and rooftop owners would list three proposed arbitrators. Each party would then select one arbitrator from the other’s list. These two arbitrators would then “meet and choose a third arbitrator to complete the panel”.11
 

Section 6.6  - Does the cubs’ revised proposal constitute an expansion?

 
David Kaplan of CSN Chicago and others believe that12 the caveat contained in the final sentence of Section 6.6 of the Agreement is likely applicable to the Cubs’ revised proposals:
 
“Any expansion of Wrigley Field approved by governmental authorities shall not be a violation of this Agreement, including this section [emphasis added].
 
The Commission on Chicago Landmarks (the “governmental authority”) has approved the Cubs’ proposal to add seven outfield signs (among other plans). This governmental approval would seemingly obviate the Cubs from any breach of contract.
 
However, one element of the equation remains in contention: are the outfield signs an expansion?
On its Wrigley Field website, the Cubs outline the “Expansion Plan” and provide “Expansion Updates”. Yet, the site also makes several references to a “restoration,” including statements such as:13
 
After more than a year of robust dialogue with community stakeholders and city officials while gaining several of the required approvals to begin the historic restoration and expansion of Wrigley Field…
 
As we begin this historic restoration and expansion
 
In approving the Cubs’ original proposal, the City noted that the proposed changes are integral to the expansion and renovation of Wrigley Field.
 
When looked at generally, the Cubs’ proposal is both a restoration and an expansion. Some areas will be renovated (such as the clubhouse and batting cages), while others expanded (such as the bleacher seating). But what about the signs?
 
Despite the Cubs’ efforts to brand the changes as an expansion, the issue will likely be determined by an examination of the literal definition and general usage of the word “expansion.
 

Interpreting the word “expansion”

As things presently stand, the Cubs have announced plans to start construction at the end of the season (October 2014). The rooftops owners have not yet commenced arbitral proceedings; but, if they do so, one would envisage that a key point the arbitrators would be required to decide was whether the erection of the outfield signs, in the wider context of the works, constitute an “expansion”.
 
The principles of contract interpretation” in arbitration14, as explained by Professor Jay Grenig of Marquette Law School, include “giving meaning to the words used by the parties.15 A word’s meaning can be determined by a variety of methods. One way is to examine the word’s “ordinary and popular meaning.16 This is arguably the most appropriate way for the word in question.
 
Determining a word’s “ordinary and popular meaning” involves considering how the word is generally used and understood. The Restatement of Contracts is a legal treatise stating general principles of common contract law.17 It states that “in the absence of some contrary indication, therefore, English words are read as having the meaning given them by general usage, if there is one.18 Grenig also explains that arbitrators may frequently rely upon dictionary definitions of words in determining “the ordinary and popular meaning.19 
 
Merriam-Webster Dictionary defines “expand” as “to increase the extent, number, volume, or scope of.Oxford Dictionary defines the word as “to become or make larger or more extensive”.
 
These definitions appear to be favorable for the Cubs. The Cubs could argue that they are expanding the spaces available for advertisements by adding more billboards. Furthermore, the team could claim that they are expanding the stadium, albeit in a vertical direction.
 
The rooftop owners could argue, however, that each new sign is not an expansion in itself and may claim instead that there was no video board to begin with and thus, the video board is an “addition.” They may argue that the Cubs are adding signs, not expanding.
 

Conclusion

Almost four years after owner Tom Ricketts initially proposed the Wrigley Field renovation, the Chicago Cubs are finally set to begin the expansion, much to the disapproval of neighboring rooftop owners. The proposed expansion includes seven outfield signs that will obstruct the views from the rooftops. This expansion – and subsequent obstruction – threatens the business model of the rooftops.
 
The owners claim this expansion violates the parties’ 2004 Agreement. If the owners do choose to commence arbitral proceedings against the Cubs for breach of contract, an arbitration panel will determine the final ruling. Any arbitration decision will likely rest on whether or not the governmental-approved signs are or are not deemed to be an “expansion.
We await the parties’ next moves with interest.
 

Update

It has just been announced  that eight of the rooftop owners have filed a complaint against the City of Chicago and the Commission on Chicago Landmarks. The owners are asking a judge to revoke the City’s approval of the Cubs’ expansion plan. They claim that the approval violates the 2004 landmark ordinance the City established to protect specific Wrigley Field features. The Chicago Cubs are not named defendants in the complaint.  A full copy of the suit is available here.21

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Jonathan Gordon

Jonathan Gordon

Jonathan Gordon is a Finance student at the University of Notre Dame's top-ranked Mendoza College of Business. He is the founder of Sports Analytics Blog, a leading resource on the big data and analytics industry within sports. Jonathan has previously worked with an NFL agent and did freelance research for Couchmans LLP during his semester abroad in London. His work has also been featured on: Sports Agent Blog, Sports Law Chat, Ruling Sports, the Legal Blitz, and in the Academy of Legal Studies in Business’ 2014 National Proceedings.
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