Advantage Cubs: A Comprehensive Look at Section 6 of the Rooftop Contract

The protracted conflict between the Cubs and rooftop owners over the Wrigley Field renovation project appears to be coming to a head as the threat of litigation looms over the team’s recent application for a permit to install advertising signage behind the right field bleachers. At the heart of the dispute is the 2004 contract between the team and the rooftop owners, which requires the rooftop owners to pay 17% of their gross revenues to the Cubs in exchange for the right to sell rooftop tickets to Cub games. The rooftop owners have long claimed that the 2004 contract barred the Cubs from undertaking any ballpark renovations that would impair rooftop views into Wrigley Field. They claim that any advertising signage, as well as the proposed video scoreboard in left field, would violate the contract. Until recently, however, the precise language of the contract was unknown. Earlier this week, David Kaplan of CSN Chicago provided an exclusive look at the contract, giving us the opportunity to better assess the merits of both sides of the dispute. After examining the contract, it appears that the claims of the rooftop owners, as well as most media reports which routinely indicated the rooftop owners had the upper hand, may have been exaggerated.

The rooftop owner’s claims hinge on section 6.6 of the agreement, which provides:

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.

In an ideal world, contracts would be drafted in clear and unambiguous language, so that all parties knew where they stood and how disputes over the contract should be resolved. In the real world, however, contracts rarely live up to this ideal. In contract law, a provision is defined as ambiguous if it is reasonably susceptible to more than one interpretation. It would appear that section 6.6 fits the bill, as the phrase “windscreens or other barriers to obstruct the views of the Rooftops” is indeed susceptible to competing interpretations. Do we interpret this phrase to mean the Cubs are barred from erecting “windscreens” and other windscreen-like barriers? Or do we interpret the phrase to mean the Cubs cannot construct any type of structure that would “obstruct the views of the Rooftops”?  The rooftop owners’ arguments rest on their faith in the latter interpretation of this provision.

When contract disputes go before third parties for resolution, the third party (the judge or arbitrator) will look to assorted principles and canons of contract interpretation to resolve any ambiguities. The overarching principle of contract law is to determine the intent of the parties at the time the contract was made.  In other words, the third party will look at the meaning the contract provision would convey to a reasonable person having all the background knowledge available to the parties at the time they made the contract.  To determine the intent of the parties here concerning section 6.6 of the contract, a short history of the dispute between the parties is in order.

First and foremost, it is worth remembering that the 2004 agreement settled a federal lawsuit filed by the Cubs in December 2002, which claimed that the owners of the rooftop bars overlooking Wrigley Field unfairly profited from the team’s product. The Cubs argued that the rooftop operators violated copyright laws and improperly competed with the ballclub for ticket sales. The rooftop scene on Addison and Waveland Avenues was charming and quaint decades earlier when it was a few guys in lawn chairs taking in the game from an apartment building roof while grilling brats and drinking beer. But at some point in the late 1990s and early 2000s, the rooftops became big business. By 2002, the buildings were no longer primarily residences; rather, most of the buildings were commercial enterprises owned by various Wrigleyville bar owners and real estate investment groups. The commercial enterprise centered on selling tickets to Cubs games, albeit from buildings across the street from the ballpark.

The 2004 agreement followed several years of rancor between the team and rooftop owners which reached its zenith during the 2002 season when the Cubs installed windscreens on the fences behind the bleachers in right and left field, thereby blocking views from across the street. The team claimed the windscreens were installed for security reasons, noting that there were thousands of people on the rooftops with direct views into the ballpark over whom the Cubs had no control on game day. Less than a year after the World Trade Center bombings on September 11, 2001, this was not an entirely implausible claim. Led by Jim Murphy, the late owner of Murphy’s Bleachers, the rooftop owners nevertheless cried foul, claiming that security was a ruse. The real issue, according to the rooftop owners, was the Cubs’ efforts to relax the zoning requirements that prevented the team from expanding the bleachers. Whatever the motive for the windscreens, the Cubs made a peace gesture in the spring of 2003 when they announced they would not install them again during the 2003 baseball season. The Cubs had angered not just the rooftop owners, but the city officials whose good grace they needed in order to move forward with the bleacher expansion. The Cubs needed to make nice.

After the most memorable season at Wrigley Field in decades, the Cubs settled the lawsuit against the rooftop owners in January 2004. The product of that settlement is the contract at the core of the current controversy. With this background information, we are in a better position to understand what was on the minds of the parties when they entered into the agreement in January 2004. A few key facts stand out from our history: (1) the contract was the product of a settlement of a lawsuit that claimed rooftop owners were unfairly profiting from the ballgames being played at Wrigley Field; (2) the rooftop owners wanted continued “access” to their views of the ballpark, as their business models depended on these views; (3) the Cubs had engaged in “tactics” to interfere with the rooftop views by installing windscreens during the 2002 season; (4) the rooftops had become a big business by 2004 and were sophisticated commercial actors; and (5) the Cubs could not expand the bleachers without approval from the Chicago city council. Also in January 2004, against the Cubs’ wishes, the city council designated most of the architectural features of Wrigley Field with “landmark” status, which meant that the Landmarks Commission would now have the authority to review any future expansion of the bleachers.

Against these facts it seems increasingly obvious that in 2004, when they settled the lawsuit and signed the agreement, the rooftop owners were concerned principally with “windscreens” blocking their views into the ballpark. The rooftop owners understood the Cubs could install windscreens without approval from a governmental authority, so they wanted contractual protection against such barriers. It was a reasonable position to take in light of the fact the rooftop owners would now be sharing revenue with the team, and the Cubs readily agreed. The rooftop owners also knew that no bleacher expansion could take place without approval from the city council (because it would entail encroachment on public land) and now the Landmarks Commission (charged with preserving the historical integrity of the ballpark). Indeed, the parties contemplated the potential for bleacher expansion and provided specific remedies for any harm that expansion would bring about.

Section 6 of the agreement is entitled “Wrigley Field bleacher expansion,” and contains a number of provisions that provide remedies to the rooftop owners if bleacher expansion impairs their views into the ballpark.  For example, section 6.1 provides that the Cubs are required to reimburse the rooftop owners for certain construction costs if bleacher expansion impairs rooftop views in such a manner that could be remedied by reconstructing rooftop seating. Section 6.2 outlines damages that the Cubs were required to pay in cases where bleacher expansion rendered a rooftop business “no longer viable.” Significantly, this provision had an expiration date of January 2012 and is now moot. Section 6.4 provides that a rooftop can seek a reduction in the 17% royalty rate if rooftop revenues drop due to expansion. The parties thus contemplated and provided remedies for any Wrigley Field renovations that resulted in the obstruction of the rooftop’s sight lines and any resulting costs or loss of revenue.

With this context, we are now in a position to understand what a reasonable party would have understood section 6.6 to mean.  “The Cubs shall not erect windscreens or other barriers to obstruct the views of the Rooftops, ….” The most reasonable interpretation is that the parties were contemplating windscreens and similar barriers when they agreed to this provision – not advertising signs and video boards.  At the risk of getting even deeper into the weeds of contract interpretation, the prepositional phrase “to obstruct the views of the Rooftops” modifies the verb “to erect,” which further undermines the rooftop owners’ position. This modification of the verb suggests that the parties were contracting against the possibility that the Cubs would erect barriers for the purpose of obstruction, as Jim Murphy and other rooftop owners had suspected the Cubs had done back in 2002 when the team installed the windscreens.  Again, because of the parties’ recent history of acrimonious relations, this was a reasonable position for the rooftop owners to take. Clearly, the purpose of the current project is not to obstruct the rooftop views; rather, the purpose of the project is to fortify the organization with increased revenues and better player and fan amenities. The planned renovations are a critical feature of the Cubs’ business and baseball operations plans in the coming decades.

The rooftop owners knew their views could be obstructed by means other than the erection of “windscreens and other barriers,” and the parties created a comprehensive contractual scheme for dealing with this possibility in section 6 of the contract. In response to the Cubs’ recent permit application to install the right field advertising, a spokesman for the Wrigleyville Rooftops Association released this statement: “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.”  The rooftop owners’ position, however, is plainly a vast oversimplification of the contract. The entire premise of section 6 is that the parties foresaw that rooftop views could be diminished by bleacher expansion. The parties planned and accounted for the “blockage” of views; far from being a violation of the contract, it was a fully anticipated feature of the future dealings between the parties. Ultimately, the fact that the parties took such pains and created such a comprehensive scheme to deal with the foreseeable consequences of bleacher expansion will cut against the rooftop owners’ position should the dispute go before a third party.

The final sentence of section 6 reflects the Cubs longstanding position that it was Wrigley Field’s landmark status – not the rooftop contract – that prevented the team from expanding the bleachers and erecting the Jumbotron and advertising signs. “Any expansion of Wrigley Field approved by governmental authorities shall not be a violation of this Agreement, including this section.”  The Commission on Landmarks approved the Cubs’ expansion plans last summer, thereby paving the way for the bleacher renovations, including the installation of the Jumbotron and other advertising. For their part, the rooftop owners still have the benefits of the protections provided in section 6 should any rooftop views be impaired by the project.

There are no absolutes in contract law. Ultimately, a contract means either what the parties agree that it means or what a judge or arbitrator says it means. On questions of contract law, it appears that the Cubs have a decided advantage in the present dispute. Nevertheless, there are still many reasons for both sides to reach a negotiated settlement. The Cubs have a lot to gain by getting the uncertainty behind them and starting the Wrigley Field renovation project in earnest as soon as possible. The team also has a lot to lose if they cannot erect the video board or advertising signs, for example if the rooftop owners can convince a court to enjoin construction or installation of the advertising signs pending the outcome of potential arbitration proceedings, which could conceivably last into 2015. The rooftop owners, for their part, also have a lot to lose. They currently have a $20 million dollar per year business, but the rooftop businesses are a declining asset set to expire in 10 years when their contract with the Cubs runs out. It would seem that they would have an interest in continuing, on some level, a mutually agreeable relationship with the Cubs. They have lost the battle on expansion and there are no longer any political barriers to the Cubs’ renovation plans, including the plans for the left field video scoreboard and right field advertising. The legal system, ultimately, should push the parties toward the most economically efficient resolution possible. The rooftop owners’ self-interested arguments cut against sound principles of contract law and the public good, giving the Cubs the upper hand in the present dispute.

Photo: HDR Wrigley Field / leath / CC BY-SA 2.0 / Alteration: cropped edges

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