kid-watching-tvUnless you’re new around these parts, you know that I tend to pay an inordinate amount of attention to the Chicago Cubs’ impending TV broadcast rights situation, as well as the impact of TV deals around baseball (and the shifting landscape for the cable TV model, and its implications for mega-TV contracts for baseball teams). The last two big market deals – in Los Angeles and Philadelphia – will pay the Dodgers and Phillies approximately $300 million and $100 million (plus equity stake) annually, respectively. They are enormous deals that completely change the financial outlook for those teams (which we’ve already seen in spades for the Dodgers). The hope is that the Cubs will eventually be able to cash in on a similar deal.

In a recent video on, a handful of sports/business/TV experts discussed the soon-expiring Cubs’ broadcast rights (WGN after 2014 for about 70 games, CSN after 2019 for the rest of the games). In that discussion, when comparing the anticipated Cubs TV deal to those secured by the Dodgers and Phillies, the head of JP Morgan Private Banking’s sports group, Scott Milleison, said that he thinks the Cubs’ situation actually looks more like the Dodgers’ than the Phillies’, thanks to the larger market and the better overall brand. Be still my heart.

The LA television market is considerably larger than the Chicago TV market (5.67 million TV homes versus 3.53 million TV homes, per Forbes), but the Chicago market is nearly 20% larger than the Philadelphia market (2.96 million TV homes). Expecting the Cubs to get more than the Phillies – at least post-2019 – is not unreasonable. Saying that the Cubs are closer to the Dodgers’ situation than the Phillies’? I don’t know if I agree, but, hey, this guy is the expert. Even splitting the baby between the Phillies’ approximately $100 million annual deal (plus equity stake) and the Dodgers’ approximately $300 million annual deal, you come up with $200 million. That’s nearly a $130 million increase in revenue over what the Cubs are getting today. Think about that. Be still your heart.

Something to keep in mind when considering these comments: it sounds to me like these gentleman are not speaking from a perspective of specific inside knowledge about the Cubs’ TV deal plans/negotiations/etc. That is not to say that their thoughts are not worth discussing, but you don’t want to take the “like the Dodgers” comment too far. But they do understand the market, and their thoughts in that regard are worthwhile (and exciting).

The really good news here – and it’s not specific to this analysis, but this serves as a reminder – is that the new TV deal is going to happen. This is not a matter of a prospect maybe becoming awesome or a game strategy maybe working. The Cubs are going to receive a significant infusion of found money, and the money available to be used on the baseball side is going to explode. Hell, the increase is likely to be so large that even if the Ricketts Family wants to keep some profit for themselves at that point, we’ll all be too happy to see them have it – because when the TV money is flowing, and the team is better (so the gate revenue is way up), and the Wrigley renovation is underway/completed, there’s going to be so much money coming in the doors that the Cubs won’t really be able to spend it all (as is the case with the other big boys around baseball). For my part, I just want to see the Cubs have enough revenue that they can spend up to the luxury tax cap ($189 million) if they want to. Having a huge TV deal as suggested by this Forbes piece will give the Cubs plenty of flexibility to do just that (and that’s just the TV deal).

If you perceive in me some giddiness there, you are correct. The TV deal (and the Wrigley Renovation) are, to me, the most squeal-worthy stories in the Cubs’ world – and that’s even after considering the fantastic stable of young prospects – because of their ability to change the Cubs’ long-term outlook so dramatically. Obviously there’s a couple catches here, as there always are with something good that might happen to the Cubs. First, the Cubs have to cash in before the TV rights bubble completely pops (though it seems likely to steadily deflate over the coming decade, rather than burst into nothingness). Second, the Cubs have to deal with their rights’ availability being staggered between two networks and split by five years.

On that latter point, I still strongly suspect that the reason we haven’t heard anything on the WGN rights front so far (most teams announce their deals way before a year in advance of the deal kicking in) is because the Cubs have been hard at work trying to negotiate a long-term deal with a partner whereby that partner will get the WGN games starting next year, and then the full slate after 2019. The Cubs, I’m guessing, would like to lock in that kind of deal now, rather than merely negotiating a bridge agreement for the five-year gap, and then having to cross their fingers that they can get something good in five years.

  • jh03

    It’s always nice to have some good news, for a change.

  • OCCubFan

    Remind me: is it the Cubs or the Ricketts that own 25% of CSN. If the TV rights go to someone other than CSN, then the stake in CSN is worth much less. If the Ricketts, rather than the Cubs, owns the stake, then there might be a possible conflict of interest.

    • Patrick W.

      The Ricketts own 20% of CSN. Reinsdorff owns 40%, Rockey Wirtz owns 20% and NBC owns 20%.

      But there is no conflict of interest. No one person owns a majority stake, so any decisions are made by the board with representation as seen above.

      • JB88

        Let’s be clear, Reinsdorf doesn’t own 40%. The White Sox and Bulls are both owned by a number of investors, of whom Reinsdorf is one and is also the Chairman of each investor group for both the Sox and Bulls. The Bulls investment group and the Sox investgment group both own 20% stakes. Reinsdorf does not.

        • Patrick W.

          Jerry Reinsdorff is listed as the owner of a 40% stake in CSN Chicago as far as I can see. He owns a much higher stake of the White Sox than his 58% of the Bulls, but I’m not sure if it’s his own personal stake in CSN or not.

        • Rebuilding

          At this point whether the CSN stake is owned directly by Reinsdorf or not is a distinction without a difference. He makes the decisions for those investment groups without question. Those guys are all passive investors and he’s made them enough money to tell them to stick it

          • Patrick W.


  • Spriggs

    “If you perceive in my some giddiness there….”

    Brett, is that a fill-in the blank?

  • itzscott

    So let’s see here…

    Ricketts said that all revenue will be plowed back into the organization (team?).

    Saying that the deal is $200 million/yr, means that theoretically if all of that revenue goes to player salaries, that would be 10 players that could be paid $20 million/yr.

    Somehow with that young, prospect laden roster that’s supposed to be filtering in at just about all positions that aren’t nailed down currently over the next 5 years…. I have a hard time envisioning how that $200 million annually could be plowed back into the team.

    • SenorGato

      Each will be worth 20 million dollars, obvy. There’s even room for a 20 million dollar bench guy.

      OTOH if all that money goes to player salary BOY will I be pissed. Players getting paid just grinds my gears.

      • MattM

        I really hope you aren’t being serious. As with most things over the internet sarcasm is hard to read.

        If you are being serious….wow….

      • itzscott

        Gato’s missing the point either way…..

        A prospect laden roster with the bulk of their young players unable to reach arbitration or free agency in YEARS and with Castro & Rizzo locked up for the next 5(?) years…. it would be very difficult for the Cubs to spend an additional $200 million/year unless they decided to give their players some very generous Xmas bonus’

        • JB88

          There are other ways to invest in the team without it going to the roster. For example, a team jet (or another team jet) or improved facilities or increased real estate purchases by the team around Wrigley.

          I’m not saying that those things will happen, just that investing in the team doesn’t require it all to go into the roster.

          • itzscott

            Again, the point being that if any of these prospects fail to become what is envisioned of them, there will be no excuse for not signing the next Robinson Cano that hits free agency or the next Tanaka that comes out of Japan or somewhere else.

    • roz

      So now were complaining about the hypothetical situation where Ricketts’ has too much money to spend on the team?

  • SenorGato

    I am pretty damnable excited for the 2020s. I’m expecting a baseball superpower rivaled only by the Yankees at their best. I’m expecting it to be an international affair as well – huge Cuban and Japanese (coughShintaroFujinamiin2018/2019cough) – which…duh.

    Anyway, extremely optimistic but always have to throw in something corny to feign insecurity like “but they’re the Cubs ha ha.” I guffaw at 14something being the future cap some imagine – expecting some big time payrolls in the coming decade.

    • woody

      I may be taking a dirt nap by the time the 2020’s come around. I became a Cubs fan in the late 1960’s so for me it has been 45 years of losing and frustration. If Ricketts wants to play small ball untill the CSN contract expires then I am screwed. I mean that has been the mantra that has emerged lately. When revenues come in we will improve the team. We’ll see what goes down with the renovation plan this summer, but to me it seems that having split the TV rights between broadcast entities with different termination dates is a hinderance that the Phillies and Dodgers didn’t have. I’m not sure what month that Ricketts bought the team in 2009, but it is now 2014. IMO this is going to be the last year they get a pass from the fans. All the eggs are in the prospect basket and the FO is punting on seasons before they ever start.

    • Funn Dave

      Wow. That’s beyond kool-aid. You’ve been drinking Tang.

  • Unlucky 13

    For those of us who don’t live anywhere near Chicago, what exactly does a Cubs Network, or the like, mean for us for watching the team play? If the games aren’t on WGN, does that mean we have no choice but to get Extra Innings to see them play, or could I buy the Cubs channel on its own from DirecTV to watch all 162?

    • SenorGato

      Is YES Network readily available for people outside the Tri-State?

    • spearman

      In my opinion WGN is worthless without the Cubs. Of course, I live in the south and have Dish network so Wgn was my only way to get games unless they were playing the Braves. I guess, I will have to get mlb package to watch them. WGN has slowly reduced the amount of games through the years.

      • Edwin

        I think WGN has been working on rebranding themselves, though, to try and become more like TBS/TNT. I think they’d rather be known as the station that plays popular TV shows back to back as opposed to the TV station that broadcasts chicago sports occationally.

      • Rebuilding

        WGN is far more interested in being the next TNT than carrying Cubs games. You can certainly debate the quality, but the WB stuff they carry is expanding. And the YES network is available on all major cable outlets

  • 1060Ivy

    Expecting the new TV deal for Cubs to be greatly influenced by the new CBA deal that the team will be operating under by the time existing TV deals expire.

    No clue what restrictions may be in place by that time but fully expecting Reinsdorf will be one of the primary architects.

  • Jason P

    If they get even $150 million from TV, they should at least double that with ticket/concession sales when they’re good (60 dollars per person in attendance * 40000 people in attendance * 81 home games = 194 million dollars). Then, with radio, stadium signage, merchandise, spring training revenue, and still some money from the rooftops, the Cubs could make upwards of 500 million in total revenue. A 189 million dollar payroll should be no problem.

    Or am I drastically miscalculating something?

    • CubFan Paul

      “Cubs could make upwards of 500 million in total revenue. A 189 million dollar payroll should be no problem…Or am I drastically miscalculating something?”

      Revenues now are $320-$350MM annually, but add in the completed renovation revenue in 4-6yrs and they’ll go over $600MM annually easy…

  • Jon

    More than likely they are keeping plenty of profit for themselves right now, even without the TV deal.

    • Cizzle

      Is this when we have the “should debt service payments be part of the baseball operations budget” argument again? Let’s just fast forward to the end: We disagree.

      • Jon

        the debt service is overstated

        *(Tom Ricketts words, not mine)

        • MattM

          I would almost guarantee that this tv contract coming up was one of the HUGE reasons why the Ricketts eventually agreed to the deal the way it is….

          They knew that after five years (even under the previous TV deals) they were going to get huge amounts of money….

        • Cizzle

          Don’t ever remember reading that quote, but if you have it handy, I’d like to read the whole thing.
          Have you read this article?:

          • Edwin

            Is it an article, or a blog post?

            • MattM

              That’s definately a blog post designed to somehow make it look like Ricketts isn’t cheap. He doesn’t include any revenue from consession or the other big money makers, and says that since in the end he pays more (3 mil) than the Cubs took in in ticket sales it means he’s not cheap. Again, it doesn’t factor in ANYTHING other than average ticket prices it makes no sense!

              The fact that he lowered the payroll and put a crappy team on the field IS WHY the Cubs aren’t selling tickets! That just doesn’t compute! This guy has no basis in reality!

              • MattM

                In addition to all of that this clown tries to paint a picture that the Cubs have somehow spent the SAME through non payroll spending as they did when they spent on payroll.

                Even in his own twisted statistical analysis this guy has to admit that the Cubs are 48 million dollars under what they TOTALLY spent in 2010.

                This analysis is crap!

          • Jon

            The 22 million/year is lost attendance is their own damn fault!

            There are consequences to tanking your ball club, whether people want to admit it or not.

            • miggy80


        • hansman

          all revenues are going back into baseball operations

          Tom Ricketts words, not mine

          • Jon


          • Kyle

            He says … a lot of things.

            • hansman

              That he does…

          • woody

            And Forbes has this team listed as one of the more profitable teams in baseball. To me Theo’s admission that the the team had abandoned the dual front approach and put all resourses into the rebuild is disturbing. I know we have been down this road before, but the implication is that we will not field a true major league quality ballclub untill our prospects arrive. And parallel to that we won’t have money to sign FA’s untill revenues come online.

            • Edwin

              Forbes has the Cubs having one of the highest EBITDA. That’s different than profitable.

      • Orval Overall

        This is a Tragedy, in Four Acts:

        Act One, mega-wealthy family tries to buy the Cubs outright, and has the money to do so.

        Act Two, the team’s then-owner insists that any buyer’s use a complex form of debt financing because it will minimize his taxable gains at the time of sale.

        Act Three, mega-wealthy family reluctantly agrees to these terms, taking on debt instead of just paying cash for the team.

        Act Four, new owners behave as if they and their team are impoverished, drastically slash payroll, and convince gullible fans the world over this is because of their “debt.”

        As the current starts to draw, our lead says to Horatio: If thou didst ever hold the team in thy heart, / Absent thee from felicity a while, / And in this harsh world draw thy breath in pain / To tell me what the f*** happened to the money they were going to use to buy it outright in the first place?

        • Orval Overall

          * curtain. Jesus

        • Pat

          There’s no indication they ever tried to buy the team outright. They may have wanted to do more traditional financing, but they were never going to drop 850 million in cash. As it was, they had to sell some Ameritrade stock to make the purchase. There’s no way Joe Ricketts was going to sell what would have amounted to controlling interest in his company to buy his kids a baseball team.

          • Orval Overall

            No indication?

            “Multiple sources with intimate knowledge of the sale have confirmed to me that when Sam Zell and the Tribune Company decided to sell the franchise, there were several bidders who were looking to buy the team with a minimum of long-term financing needed to make the purchase. That included the Ricketts family, who multiple sources have confirmed to me wanted to use much more cash in their offer than Zell would accept due to tax implications on the transaction.”


            • Pat

              Wow, there’s a huge area between buying the team outright and how much cash Zell wanted used.

              • Orval Overall

                Yes. That’s the point. The amount Zell wanted used is the minimal amount that actually was used.

                The amount Ricketts and several other suitors wanted to use was the reverse, mostly cash except for a “minimum of long-term financing.”

                So again, what happened to the cash they wanted to use but didn’t? Did they burn it for warmth during the long Chicago winter?

                • Pat

                  I’m guessing they liquidated less Ameritrade stock than originally planned (assuming they really did want to put more down – that’s an awfully easy thing to say after the fact).

                  Weren’t they also trying to sell minority non-voting shares to celebrities at one point? Maybe they cancelled that since it wasn’t needed (although it’s more likely the interest wasn’t there).

            • Pat

              And that article mentions nothing about buying the team outright. So unless you have something else, there’s still no indication they attempted to do so.

              • Orval Overall

                Wow, way to quibble around the margins and miss the entire point. They wanted to buy it with drastically more cash and less debt finance. Would you prefer I call that “primarily self-financed” rather than “primarily debt-financed”? Consider that substitution made in everything I wrote above.

                Same question: what happened to the remaining cash they didn’t spend? Because that would seem to be a likely source for retiring the debt they didn’t want to take in the first place.

                • Pat

                  The fact that said cash is nowhere to be found is part of the reason I don’t necessarily believe they wanted to fund the majority of the purchase outright.

                  • Orval Overall

                    As between the two competing theories — (1) they have the cash, but are using “debt service” as a convenient excuse not to spend it; and (2) they never had the cash in the first place and it’s a good thing Zell insisted on debt finance because they couldn’t have bought the team otherwise — I know which one I think is infinitely more likely. Agree to disagree.

                    • Pat

                      I’ll agree to disagree, but I think infinitely more likely is pushing it. If they had the cash in the first place, they wouldn’t have needed to sell 34 million shares to buy the team (this covers the downpayment as well as the money to the trust to be borrowed against). They certainly had the assets, no question – it’s just how much they were wiling to liquidate.

              • Rebuilding

                When you say “buy the team outright” what exactly do you mean? A purchaser would have been a fool to not finance a portion given the low interest rate environment of the time

                • Pat

                  I took it to mean pay cash. Perhaps I misunderstood. Yes it makes perfect sense to finance as much as possible, which is why I’m not sure I believe the Ricketts really wanted to put as much down in cash as possible. However at that time, while interest rates were low, downpayment requirements went up. It looks like the Ricketts’ put about 20 percent down. 5 years earlier they probably could have gotten away with less than 10.

                • Orval Overall

                  I agree that a smart buyer would probably have found it cheaper to finance some part of it, and I’m not ruling that out. What I’m saying is that if you read the reports on this, they wanted to put substantially more cash into the deal than they ultimately did, with correspondingly smaller debt loads. They might have debt-financed some of it anyway, but not to an extent that people actually took at face value the idea that they have these massive “debt service” obligations that are preventing us from fielding a competitive lineup. My basic point is that there was a lot more money available to them 4 years ago that didn’t get spent, so whatever level of debt shows up on the balance sheet ought to have a pretty substantial corresponding asset (cash, stock, other commercial paper) that they wanted to but didn’t use in acquiring the team.

                  Aside from the reporting, that judgment is reinforced by the fact that MLB has pretty strict debt limits which Selig waived in our case, and more or less said the reason he did so is the debt isn’t a true reflection of the state of the team’s finances.

  • MattM

    I don’t think these deals are solely related to just the local market though. I’m pretty sure the YES network is available for purchase over cable in other areas than the tri state area.

    I would assume that the Cubs have a MUCH bigger viewership outside of Chicago than the Dodgers do outside of Los Angeles.

    We Cubs fans are like cock roaches! We pop up everywhere!

  • Fastball

    Still don’t understand why the Network Providers whom the Cubs are dealing with wouldn’t just buyout the CSN contract and take the full scedule of games. If I was Ricketts I would sell my stake in CSN and then give all the games to say FOX and be done with it. I have to believe that a new network Provider would want all the games starting next season. If the Cubs don’t have an early termination clause in the CSN contract the lawyers who agreed on the T&C’s in that contract should be taken out by firing squad. :)

  • Fastball

    Brett, no offense intended about the firing squad and the Lawyers comment. :)

  • MattM

    Hey Brett I do have one question for you. You mention that at 200 million that’s almost 130 million over what the Cubs currently get.

    I think I read somewhere that the Cubs get 20 million a year from WGN. Does that mean the the CSN deal gives them an additional 50 million?

    If so until 2019 they could sign a contract that gives the other network the 70 games WGN got and still get ATLEAST 80 million a year from that. That’s 60 million right there until 2019 when it would probably be upped to 150….

    They really are in for some money. That 60 million is what i would consider the lowest most god aweful number they could get! Given today’s market it’s probably closer to 100 million just for the 70 games! Amazing! I can’t wait!

    • Pat

      There’s a couple of problems with that scenario. The biggest is the CSN contract reportedly prohibits them from airing those WGN games over a dedicated cable station. That pretty much limits the possibilities to WGN, Fox 32, and WCIU. WGN has indicated they want to change their broadcast structure and doesn’t seem to really want those games. Fox 32 has syndicated programming they probably won’t want to disrupt – and certainly won’t pay a premium to do so. WCIU most likely doesn’t have the kind of money we’re talking about (1 million per game). I actually would not be at all surprised if the 5 year bridge contract is not much of an increase at all over the WGN amount they are currently getting.

  • Featherstone

    I actually have a question that I have been mulling over in my head for quite some time.

    At the end of this all, once the TV contract, renovations, and signage have been put into place. Does anyone expect the Cubs to be a luxury tax payer? I dont have a side in this, I am just wondering what people’s expectations are 5-10 years from now.

    • Edwin

      I’m thinking they’ll come close some years, but I think overall they’ll settle in short of wherever the luxury tax is. I think the real question is where will they rank in terms of spending power. I’d imagine that other than the Yankees, the Cubs would be right up there with Boston and LA.

      • Featherstone

        Im not sure if you mean the Angels or not because the Dodgers are deep in the luxury tax right there with the Yankees.

        • Edwin

          Either LA team, really. The Dodgers are over the luxury tax now, but that could change. Team Payrolls can cycle up and down for a variety of reasons. Either way, I expect the Cubs to be somewhere in the top 5 in spending power.

          • Featherstone

            That’s fair. Although I expect the Dodger to be a perennial luxury tax payer like the Yankees simply because to them, “The luxury tax isn’t even a concern.”

            I think if the Cubs were top 5 I would feel like they are investing enough into the team.

  • Mr CubFan

    seems to me there is only 2 stations that are flexible enough to broadcast free tv Cubs games and they are already partnered, the Chicago market is not over loaded with over the ait broadcast stations like the LA Market … never been to Philly so I can’t comment..

    It’s a lot of greed to take all the money, but in reality the normal everyday Cubs fan can’t afford to go sit in the Ivy Covered Beer Garden and many can’t afford a Cable TV package beyond basic, I personally Love the Cubs, but can’t afford to go to games and haven’t bought a ticket since 1994. Cubs Nation was built on, day baseball, The Friendly Confines, and WGN TV & Radio and easy broadcast access. Today access is not easy spread between 2 local, 1 cable and 3 network channels and Radio, Cubs are fielding bad teams Attendance is going down, even in a great park/beer garden winning is everything. Lose free access to Cubs games and they are heading back to the 60’s & 70’s with less than 10000 fans in the seats. With all the money the Ricketts family has spent and is willing to spend they are also slowly becoming the Grinch that stole the Cubs. The Cubs organization deserves fair compensation for the Broadcast rights, but even without open negotiations it seems average Joe Fan is already left in the dust… Good Luck when the Fair Weather Fans pull the plug.

  • Jason Powers

    Brett: “I just want to see the Cubs have enough revenue that they can spend up to the luxury tax cap ($189 million) if they want to. Having a huge TV deal as suggested by this Forbes piece will give the Cubs plenty of flexibility to do just that (and that’s just the TV deal).

    If you perceive in me some giddiness there, you are correct.”

    1) The Cubs are very unlikely to approach the luxury cap. Once you are accustom to spend X dollars (90M) it is very unlikely you would come close to spending 2X dollars. Maybe more like 1.25X (112.5M).
    2) The available players that would be driving up payroll are the same ones we don’t think are a “good investment” for 3 year contracts, the over 30 types, since the well under 30 types are not available on the market – or rarely are.
    3) The extensions of the young talents (Baez, Bryant) will be made only at comparable rates – team friendly. Not going to set precedent and offer an extension that creeps into FA range of monies.
    4) First rule of ownership: pay yourself first.
    5) Ricketts is much more like a Stuart Sternberg than a Stan Kasten & Mark Walter at Guggenheim.

  • Steve

    Would it be too foolish…to mortgage the 2015-2018 seasons based on that prediction and just go ape $hit crazy on the pieces that we need to compete???
    Even if things go somewhat wrong will we still be getting a huge infusion of cash….so, as JD Wentworth says on his commercials, ‘Its our money, we want it now!!!!”

    (Sorry if someone has asked this, I just scrolled to the bottom to post)

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