Q&A with South Bend Cubs owner Andrew Berlin
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From law to baseball and most recently AI, Andrew Berlin, has done it all. A native of Glencoe, Illinois, and owner of the South Bend Cubs, Berlin’s foray into sports investing happened serendipitously.
After meeting a senator at the age of five, Berlin nursed the desire to get into politics. However, he soon realized how much compromise the profession involved and courted his love for business instead.
In this conversation, Berlin reminisced on his childhood, the values his parents instilled in him, the trial that soured his love for law, investing in sports clubs, running a company at 27, and what makes a good leader, among many other things.
This article has been edited for length and clarity.
Let’s talk about growing up. How was that? And where did you do that?
I grew up in a little town called Glencoe, just north of Chicago. I’m the youngest of three boys. My mother and father are from the Chicago area. They were secretly married when they were 17, told the family when they were 19 that they were already married, and the family forced them to have another wedding at 19. They were married for 73 years. My father passed about five years ago and my mom is still alive; she’s 95 years old. I grew up well north of Chicago but went into the city quite a bit when I was a little boy. Back then, it was a lot safer to go into the city and so at the age of seven, I used to take the train into the city for breakfast with my buddies. So I learned early on to be independent and to explore and have adventures.
It seems parents would be put in jail now if they let their seven year old go on a train into the city by themselves these days. But it was a different time back then, I grew up in a very happy, happy household.
What’s the biggest lesson that you think you got from watching your parents’ parent?
My parents gave their kids the resources. They encouraged us to have our adventures and to really seek out knowledge. If you were curious, you were encouraged to be curious and encouraged to find answers to questions, but we pretty much did it on our own. And of course, around the dinner table every night, there was a lot of conversation about politics, about business, how to be a good person, right and wrong and to know that as you go through life, you always want to do what honor dictates.
This is something that we talked about as a family and so you’re always faced with decisions in your life. And sometimes the easy path is not always the honest path. But I think at the end, you pay a price for being dishonest. And so I learned early on that being honorable was an easy path in the long run. And I think that served me well throughout my life.
What did you want to be when you were growing up?
Oh my gosh. From a very young age, I wanted to be a senator. There was a senator from Illinois, Senator Percy. I met him when I was about five years old. I’ll never forget this, my father and I were going to dinner and Senator Percy and his entourage were walking down the street. My dad stopped the senator and said, “Senator, thank you for being such a good senator. It’s a pleasure to meet you. I’d like you to meet my son, Andrew.” He bent over, got down on one knee on the sidewalk and said, “Son, I’m your senator too.” I was so impressed that he came down to my level, face to face. I started asking my dad at lunch that day, “what does a senator do?”
So I grew up wanting to go into politics, never really fully understanding that politics involves compromise and that in politics, it’s always a challenge to remain honorable. I see it in spades these days. I lost the fantasy of being a senator and realized I liked the idea of business more because my father was in business. He owned his own steel company. And I saw that when faced with decisions, a good leader in business needs to hear from all different kinds of people in the company, all different viewpoints. But at the end of the day, when you gather all that information, a CEO can make the decision and people follow it. Ideally, that’s the way leadership goes but in politics, it’s not quite that way. Sometimes you have to compromise so much that you’re compromising your own principles and what you know is right just to get something else done.
What did you do after college?
I went to Syracuse University for my undergraduate and I studied political science and history. After I got my degree, I really wanted to continue with military history in particular. I had a professor who was a great influence on me, David Bennett. He convinced me to continue studying military history. So I worked towards a master’s degree in military history at Boston College. After studying there, I thought being a lawyer might be interesting, so I attended Loyola University of Chicago Law School and became a lawyer.
I passed the bar in Illinois and went to work for a law firm as a commercial litigator. Another valuable lesson I learned there is that whoever has the law on their side doesn’t always win. It’s a whole collection of variables but I enjoyed litigation. I enjoyed the battle, I enjoyed the courtroom appearances, I enjoyed learning to be articulate. I liked the idea of changing minds and bringing a jury or a judge to my side.
I only had one case that went to a final jury and it had to do with collecting money from a man who had lost his wife. I represented the company that was trying to get money from this man and it was such a sad, hard thing to do. There were tears on the stand and here I was grilling this poor man about where the assets were and I just felt terrible about what I was doing. I ended up winning that trial but it was an empty win for me, because I felt, my gosh, if this is what being a litigator is all about, I don’t think I want to be a litigator anymore.
So I tried doing corporate deals and it was at that time, I was introduced to a deal that was being done in the law firm where a large conglomerate out of Pennsylvania was selling a small, troubled packaging company. My dad, who was in the steel business, had an interest in this company, so together the two of us bought this little company. I left the practice of law to help run that company and eventually became president after the first year.
We turned that company around and the idea was we could buy this company at a relatively small price, make it a little bit better company and then sell it for profit. We didn’t get around to selling it. Thirty-three years later, it’s become a multi-billion dollar company from the $11 million we spent to buy it. It was a fabulous success but it also became my life from the age of 27. I really wanted to hang on to it, but it really made sense to sell it when we did. A private equity firm came along and we monetized our investment. It changed my life, changed my father’s life, the entire family of five children. We were able to set up a structure in the family where I could always take care of my kids and my grandkids.
After selling that company, there was so much more I wanted to do. I was still too young to retire. So I started to venture out into other businesses. While I was the president and CEO of the packaging company, now called Berlin Packaging, I invested in the Chicago White Sox, which was my first baseball team. Then I invested in the South Bend team, which at that time was the South Bend Silver Hawks, an Arizona Diamondbacks affiliate. We were able to bring the Cubs here in 2014, and became a Cubs affiliate. That same year, I ended up buying part of the Chicago Cubs.
Major League Baseball made me divest myself of the White Sox, so my five children have a trust in the White Sox, while I have ownership of the Cubs and the South Bend Cubs. So I’m in the baseball business, but I also got into the food business. I’ve invested in the cosmetics business and also invested in the defense business. That’s where I’m pretty active right now, in a company called Shield AI. We’re a defense contractor and a tech company. We make autonomous artificial intelligence for things that fly, from fighter jets to drones to cruise missiles and everything in between. It’s a software and hardware company. We make cruise missiles and we write the software. It’s a growing company.
Given what’s going on in the world today, it seems to be the right industry to be in because I’m patriotic. I love my country, so the idea of protecting our country is something that appeals to me, but it’s also a product and a service that’s very much in need today. So commercially, it’s a pretty good company too.
Let’s back track a little. You buy the company with your dad for $11 million. You’re 27. How much did you have to put into that? How were you able to build sufficient credit by 27 for the banks to trust you?
We borrowed $10.5 million, and we only put in $500,000. It was an interesting time. This was in 1987 and there was something that had been invented prior to that called leveraged buyouts. Banks were loaning money at very, very, very high interest rates. The idea was, “Well, maybe it’s a risky loan but we’re going to make so much money on the interest, we’ll go ahead loan the money and then the assets of the company will become the collateral if things go south.”
A lot of leveraged buyouts failed. Not ours, but many did. Back in ‘87, the interest rate for the money I borrowed was about 16%. It was a crazy high interest rate but for that the banks were willing to loan a lot of money. But if I didn’t pay off that loan, they would pretty much own whatever assets that the company had. Ours worked because right from the beginning, we were able to make changes in the company that enabled the company to start throwing off some earnings and some cash and we quickly got rid of the debt, got rid of our commitments to the bank and got rid of that interest rate. For a few years after that we were off to the races, we just kept building and building and building with no debt.
Anybody who builds a company knows it’s not just about good ideas. Everybody who’s ever taken a shower has got a good idea. The tough part is executing that good idea through finding really smart, aggressive, hard working people that are loyal to you. That’s the hard part. The second hard part is, how do you keep them? How do you retain them? How do you train them over time? If you’re the kind of leader that can attract talent, keep talent and train talent, that kind of leader is going to be successful because even a mediocre idea can be successful. But if you combine a really great idea with being a good leader, then you’ve got something pretty special that you’re going to build. I see that in many, many businesses. I’ve studied a lot of businesses that we didn’t buy, some that we did buy, some that didn’t work. But I learned a lot of lessons over the years and I think, even at the age I’m at right now, I still work on being a good leader, I’m still honing my skills on leadership. That’s really the only way to build a company.
We can talk about the South Bend Cubs in particular, because that’s why we’re sitting here today. But we have amazing, amazing people that work here with extraordinary talent and thankfully they’ve stayed on. So the company just keeps growing and growing. This is just a perfect example of what I’m talking about. Berlin Packaging was that way too and still is.
What are some things founders can begin to do that will position them to be a company worth buying in the future?
I meet with a lot of entrepreneurs and unfortunately, a lot of them are looking for the quick dollar. They read about this amazing idea, usually a tech idea. Someone builds that company for a year, they sell it for a billion dollars and they’re looking for that quick hit. Yes, that happens. Yes, there are very quick billionaires out there but it’s a very, very rare occurrence. For every one you hear about, or read about, there are thousands that are not like that. This still requires a lot of sweat, a lot of work, a lot of luck.
So I would say the greatest percentage of success comes when someone who has a good idea is able to attract people who believe in their mission. Because it’s very hard to do it by yourself. I suppose if you’re an artist, it’s just you and your paint brushes, but you need marketing. It’s like winking at an attractive person in a dark room with no lights on. You might be interesting, but no one will see you. The tech industry does present a lot of opportunities but there are other opportunities, too. I’ve been in the fish business and I’ve been in the bottle business. I’ve been in the cosmetics business. In all of those industries, it’s very, very crowded. There are a lot of competitors.
In every one of those industries, the way I’ve been able to help my companies stand out and be profitable and grow has always been about being a good recruiter. I’ve really honed my skills in not only interviewing, but also probing on those things that are really most important in recruiting. When a candidate comes to me, usually the resume comes first and then the candidate shows up for our meeting. What the resume tells me is a little bit about their experiences, their skills but it tells me nothing about their traits. There’s a difference between traits and skills. I think of the candidate in terms of an iceberg. When they’re in the water you can only see about 10% of the iceberg above the waterline. The candidate who shows up in their suit or in their resume. All I see is what they’ve done in the past or the skills that they’ve learned along the way. I still don’t know whether or not they’re good at those skills, but the skills that they’ve practiced in the past, that’s the 10%. So if the majority of my interview is focused on just the resume and where they’ve been, who they worked for, and why they went to work there, those are all good questions. But the questions that I’m most interested in are the questions that have to do with their traits.
Are they ambitious? Are they creative? Are they imaginative? How do they get along with other people? Are they honest? Are they competitive, so much so that they hate losing? I want to hear examples of all of these personality traits. If someone tells me they’re honest, I say, “Tell me about the experiences you’ve had in your life where it would have been so much easier to shade the truth. Tell me about those experiences that you had that you decided not to shade the truth, and you paid a price for it, but you were honest, nonetheless.”
For example, in the baseball business, we want to learn about the traits of our players too. When we do background investigations on these players, sometimes we search for their former girlfriends, not current ones. We’d like to know how he broke up with her. Was he honest when he broke up? Was he a good person when he broke up? Maybe it wasn’t right for them? But was he honorable about it? Or was he not honorable? We like to sit in the living room in the house he grew up in, to speak to the parents and the siblings, because we want to see what that home was like, what was it like being there? What the mom and dad are like tells us a lot about how that baseball player is going to play in the future when they’re faced with adversity or faced with having a bad stretch.
It’s the same in building a company. I ask a lot of questions about where people come from, adversity, successes, what they’ve overcome in their lives, what frustrates them, what makes them unhappy, how they think about their family, etc. Again, you have to be careful about how you ask these questions. Recruiting is a skill set that I’m always working on. I’m always improving. Getting great at recruiting is essential in building a business.
The other part is human resource strategy; you also have to be a good trainer. It’s more than just throwing a big bunch of papers at someone and just saying, “read it.” You have to work with people, care about them and invest in them. Lastly, you have to be really good at retention. Because if these intellectual assets walk out the door, you’ve got to start at ground zero again and that’s tough on a business. Businesses that have high turnover, usually don’t do well. Businesses that hire just for resumes usually don’t do well. People who don’t have good training and skill development in their companies, those companies don’t do well. You have to be really, really good at those three things.
Is there any company that you think of as the one that got away?
There have been companies that got away, usually competitors that I really wanted to buy. We did a lot of acquisitions in the packaging industry. I’m nice when it comes to family and friends but when it came to competitors, I was fierce. I dedicated myself to their demise. I wanted my competitors out of business and that’s how I went to market. Then when I show up to buy the company, I’m the last person they want to sell it to. As I got older, I learned how to be a little bit more of a diplomat but still very competitive. When I first got into business, I was 27 years old as a president. My competitors were trying to put me out of business. The things that they did early on, I could fill another podcast with that. They misbehaved so badly that I dedicated myself to their demise. I did things they’d never seen before and it got to the point where they stopped doing things to me and my company, because they didn’t want to get the wrath of my reaction. But when it came to acquisitions, they weren’t going to sell to me. If there’s a lesson I learned, there needs to be a decent balance of how you treat competitors because sometimes there’s going to be future acquisitions. So there were a few that got away.
How did your first sports investment opportunity come about?
It was serendipity. My oldest daughter, Alex, one of her girlfriends’ grandfather was one of the original owners of the White Sox, part of the partnership with Jerry Reinsdorf. He was getting up in years and losing his eyesight and got to the point where he wasn’t really going to the games anymore and wanted to monetize his investment.
She came home and said, “Daddy, do you think you’d have an interest in this?” I said, “Yeah, actually, I would.” My dad used to take me to White Sox games. My daughter, who’s very commercially oriented, has her own business. She came home and said that this might be a decent investment. She was right. It was and still is a great investment. The White Sox were valued at a very low number in 2007, right after they had won the World Series. Their value was going up and the value in baseball clubs were going up as well and still going up. It’s about supply and demand. There’s only 30 Major League Baseball teams and there are more billionaires in the United States than ever before. Being a billionaire, there’s a certain vanity required to buy assets that look good, feel good and are public. So people are paying a lot for baseball teams these days. I got in at a relatively low number and the White Sox are worth a lot more today. But like I said, I transferred the ownership of the White Sox to my five kids in a trust for them. The idea is to leave it behind in a thoughtful way, so no one can really spend it all. You want to leave your kids if you can in a better spot than you had.
And how did you get into the Chicago Cubs?
The Chicago Cubs was a combination of factors. I had been running the packaging business and that was very successful. That provided some of the financial wherewithal to make more investments. Like I said, I had the South Bend team, a Diamondbacks affiliate and the problem was there are very few Arizona Diamondback fans in Arizona and even fewer in Indiana. No one had an emotional connection with the Diamondbacks. It’s a snake. It’s not cuddly like a little cubby bear, so it just never caught on as one of the newer teams in baseball and just didn’t have the following the Chicago Cubs have because of WGN TV. In the early years of cable, WGN was broadcast all over the country to communities that didn’t have Major League Baseball teams. So there are Cubs fans all over the United States from coast to coast; that was the only team that they could watch on TV. Indiana doesn’t have a Major League Baseball team, but we’re relatively close to Chicago, so there’s many Cubs fans in Indiana, especially in northern Indiana.
When I heard that the Cubs were looking for an investor, primarily because there was in excess of a billion dollar investment that needed to be made to renovate Wrigley Field. Me and a few others ended up joining the Cubs as owners and it was important to me that if I was going to invest in the Chicago Cubs, I wanted the Cubs to take a look at South Bend as a possibility to move here and the Diamondbacks would move elsewhere. As it turns out, it worked out. The Cubs did want to come to South Bend and the rest is history. South Bend and the surrounding areas have been delighted with the arrival of the Cubs and we’ve never looked back.
With plans underway to renovate Four Winds Field, when you envision the South Bend Cubs future, what do you see?
Well, the stadium is gonna be twice the size with the two offseasons we have coming up. We wish we could get it all done in one offseason, but there’s just too much construction. We’re going up, expanding out in all directions and we couldn’t have done it if we weren’t in Indiana. This is not just a gratuitous pat on the back for the state of Indiana, but Indiana runs at a surplus, unlike many other states. The state of Indiana has done such a good job and per legal requirements in Indiana, if it goes over a certain amount of money in surplus, they have to give rebates to the citizens. We ended up getting $100 million from the state of Indiana over a period of 20 years. We had to bond that in order to get most of the money today. So we lose a little bit of that 100 million in the bonding process but we’re able to do an amazing rebuild for Four Winds Field. The economic impact presently is about $24 million dollars positive impact on South Bend with a larger stadium which probably has 50% more capacity but also more amenities within the ballpark to attract more people and have more full stadiums over a period of time.
I think we could probably come close to doubling our attendance. Maybe after the economic impact over the next three years, we do another study, it could be double that or significantly more than that. Everybody wins, the team wins, South Bend wins, the residents win, it’s really just one of those rare moments where everybody wins. The state of Indiana is a very well run state and together, we’re building something that is going to be special. We have about 750,000 people living within a 40-minute driving radius around our home plate. If you stretch that out to a one-hour driving radius, you’re up over a million people. So we definitely have the crowds, we will have the seats and Indiana will have a jewel that belongs in South Bend.
Berlin speaks about the upcoming renovations to Four Winds Field, the economic impact and the role the state has played in facilitating the investment.
Is there anything that I’ve not asked about that you wanted to mention?
I think all of us need to know we’re not going to be here forever. As a young person, it’s silly to even think about how long you’re going to be here. I’m in the last third of my life. The first two thirds were fantastic and I think eventually what you do learn and it sounds almost trite to say it because a lot of people say it in my generation, that it really comes down to how much love you have in your life. It’s not just your relatives, it’s the friends and the people you keep company with.
I feel like I got a lot of love in my life. Not just familial love or romantic love but also the respect and kindness of people around you. Being in the baseball business and doing I think a relatively good job at it, my experience in South Bend has been wonderful. Not just for the commercial reasons but for the relationships I’ve made here. If you can listen to an older guy, give a little piece of advice, sometimes you’ve got to pause, step away from what you’re doing, look upon yourself, look at those around you and take stock of what you’ve achieved. I think most of us achieved much more than we give ourselves credit for. It’s worth it to give yourself a pat on the back and say, “I’ve worked hard and I’ve gotten to this point. I know I want to go further but I’m taking stock of where I am right now and I’m gonna say Attaboy.”