Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Wrigley rooftop owners charge Chicago Cubs with attempted monopolization, breach of contract, (Jan 21, 2015)

By Linda O’Brien, J.D., LL.M.

The Chicago Cubs baseball club and team chairman Tom Ricketts have attempted to monopolize the live game-watching experience at Wrigley Field in order to increase ticket prices and have violated the terms of a revenue-sharing contract by planning the installation of outfield signage at Wrigley Field that would block views from neighboring rooftop businesses, according to a complaint filed in the federal district court in Chicago by owners of those rooftop businesses (Right Field Rooftops, LLC v. Chicago Baseball Holdings, LLC, January 20, 2015).

Wrigley Field was constructed in 1914 in Chicago, Illinois and serves as the home of the Chicago Cubs professional baseball team. Since the stadium’s construction, several apartment buildings existed across from Wrigley Field on both Sheffield and Waveland Avenues from which spectators could view events taking place inside Wrigley Field from the rooftops. Right Field Properties and Rooftop Acquisition own two properties on Sheffield Avenue. Right Field Rooftops and 3633 Rooftop Management lease those properties where they sell food, beverages, and the ability to view baseball games and other events at Wrigley Field to consumers.

The complaint states that, in 1980, Sheffield property owners gradually transformed their flat-top roofs into bleacher style grandstands and formed businesses to serve the market for viewing Cubs games and other Wrigley Field events from the rooftops. In 1998, the City of Chicago enacted an ordinance authorizing rooftop businesses to operate as special clubs under city license. By 2002, eleven rooftop businesses were operating under club licenses.

In 2001, the Tribune Company, the prior owner of the Cubs, erected a large windscreen above the outfield bleacher section at Wrigley Field, affecting views from the rooftop businesses. After the businesses filed suit, the Cubs and the rooftop businesses reached a settlement and entered into a rooftop license agreement in 2004. Under the agreement, which was for a period of 20 years, the Cubs agreed not to erect barriers that would block the rooftop businesses’ views in return for a percentage of each rooftop’s gross revenues, the complaint alleges.

According to the complaint, in 2009, the Ricketts family purchased the Chicago Cubs and Wrigley Field from the Tribune Company, subject to the rooftop license agreement. Shortly after acquiring the Cubs and Wrigley Field, the Cubs organization took steps to acquire ownership of all of the rooftop businesses and underlying real estate with a goal of eliminating competition for selling tickets to watch live Cubs games and other Wrigley Field events. The Cubs organization was able to acquire one rooftop business on Sheffield Avenue; however, efforts to acquire other rooftop businesses were initially unsuccessful.

In May 2012, a meeting took place between Tom Ricketts, other members of the Cubs organization, and rooftop business owners, during which Cubs executives complained that the rooftop license agreement was a bad deal for the Cubs and the sale of discounted tickets by the rooftop businesses reduced the demand for Wrigley Field tickets. The executives demanded that the businesses agree to set coordinated, minimum ticket prices and threatened to block rooftop views unless they agreed to the price fixing scheme. The rooftop businesses refused to participate in the scheme and, in January 2013, the Cubs announced plans to renovate Wrigley Field, including the installation of new outfield signage, the complaint states.

Without regard to its contractual obligations under the rooftop license agreement, the Cubs organization pressed the City Landmarks Commission to approve its signage plans. The Cubs organization also began a media campaign to convince consumers to stop patronizing the rooftop businesses by falsely stating that the businesses cause the organization to lose revenue that was needed to field a competitive baseball team. Additionally, the Cubs announced changes to its signage plans after reaching deals to acquire three more rooftop businesses. The proposed large advertising signs and video board would substantially block the plaintiff rooftop businesses while leaving the four Cubs-owned rooftop businesses unobstructed.

There are no reasonable substitutes for tickets to live Cubs games. Tickets to other sporting events are not reasonable substitutes because consumers are generally fans of specific teams and unlikely to patronize another team’s live games, even if those tickets are less expensive. Moreover, significant barriers to entry exist in the retail market for live Cubs games tickets. There are only three parcels on Sheffield Avenue that do not presently have rooftop businesses, the city permit process is complex, the construction cost is high, and the Cubs organization refuses to enter into new rooftop license agreements, the complaint charges.

The plaintiffs assert claims for breach of contract, defamation, false light, attempted monopolization, and violations of Section 2 of the Sherman Act, Illinois Uniform Deceptive Trade Practices Act, and Illinois Consumer Fraud and Deceptive Business Practices Act. The action seeks injunctive relief, actual and treble damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 1:15-cv-00551.

Attorneys: Thomas M. Lombardo and Abraham E. Brustein (DiMonte & Lizak) for Right Field Rooftops, LLC, Right Field Properties, LLC, 3633 Rooftop Management, LLC, and Rooftop Acquisition, LLC.

Companies: Right Field Rooftops, LLC; Right Field Properties, LLC; 3633 Rooftop Management, LLC; Rooftop Acquisition, LLC; Chicago Baseball Holdings, LLC; Chicago Cubs Baseball Club, LLC; Wrigley Field Holdings, LLC

News: Antitrust IllinoisNews