I know that Chicago Cubs President of Business Operations Crane Kenney catchers a lot of flack, but I will say this: if you’re into the Cubs’ business-related topics (read: a nerd like me), he is frequently surprisingly candid at large, Cubs fan events like today’s season ticket holder presentation. And I appreciate it.
As you know, the Chicago Cubs’ TV broadcast rights – something that could generate franchise-altering revenue – are currently staggered. Half of their games are available for bidding right now, starting on air in 2015, while as the other half are contracted to CSN through 2019. Most TV deals are signed more than a year in advance of their kick-off, but the Cubs’ situation is a little unique, given the staggering. We’ve been waiting for some time for a meaningful update on those “open” rights for 2015, and, although there has been plenty to discuss, we haven’t really gotten a clear update from the Cubs.
I won’t tell you that we got an expansive or definitive update today from Kenney, but we did get some very interesting new information. I expect that we may hear a little more on this in the coming days, but for now, here’s the gist of what I picked up today at the presentation:
- There is no done deal yet. The Cubs recognize the importance of getting this right, having twice before missed the really big bucks with their TV deals. There are still multiple suitors for the Cubs’ rights, according to Kenney, and they’d like to have a deal finalized by the end of the year.
- Here’s the really big one: some of those suitors are looking for a 15 to 30-year agreement. That means the suitors with whom the Cubs are presently still speaking are interested in the full slate of games – and the really big associated price tag, paid to the Cubs – after 2019. In other words, as Kenney said, there’s a chance that the Cubs will be able to coordinate their big bucks long-term deal right now with their short-term, half-of-the-games bridge deal from 2015 to 2019. This concept was thought dead for a little while now, but, we’ve discussed it before – and it comes with the possibility that the Cubs could see some of the big revenue (or at least locking it in) sooner than 2019.
- Kenney emphasized that the Cubs are keenly aware of the market right now for sports broadcast rights, and the implication was that the Cubs don’t want to wait until 2019 and risk missing the window to lock in an organization-changing deal. My head was spinning a bit as Kenney was saying these things, because they do stand in contrast to much of what we’ve been hearing over the past several months. I instantly felt like the only logical conclusion for why the Cubs have taken so long to partner up on the 2015 to 2019 half-slate of games is because they’ve been holding out hope for, and negotiating about, some kind of long-term deal for the full slate after 2019, which also contemplates what will happen with those 2015 to 2019 games. Kenney did not say that part. That’s just me connecting dots.
- What could that deal look like? Well, consider that we know the Cubs are thinking about starting their own network next year, using multicast channels. Consider that the most likely post-2019 structure would be the creation of a new regional sports network involving a partnership between a cable network and the Cubs (and maybe another sports team). Could the Cubs start their own network now, with an agreement in place that the network will be subsumed into the larger RSN come 2019? (Recall, the Cubs’ agreement with CSN involves cable exclusivity, which is why the Cubs can’t just partner up with another cable network right now. (Unless the Cubs were to be able to buy-out that exclusivity somehow.))
- This approach could give the Cubs some comfort in feeling like they won’t miss the huge rights window, and would also give them five years to perfect their network and develop expertise in running it. The risks depend on the agreement, and would necessarily involve the possibility that the Cubs don’t make much money these next five years. But at least they would know that the big money is definitely coming.
- Kenney did expressly leave open the possibility that they will not get a long-term deal done this year, and will instead just sign some kind of short-term deal – WGN? Fox? – for the 2015 to 2019 half-slate of games. He mentioned that, if it comes to that, at least the Cubs will have four years to get the next big deal right.
- Without having more information about the negotiations behind the scenes, it’s tough to nail down exactly how this is going to proceed. I find it super interesting that, even at this very late hour, the Cubs are still holding open the possibility that their 2015 to 2019 half-slate deal will somehow be tied to the post-2019 full-slate deal.
- For now, you’re still probably safest assuming that the big, franchise-changing TV bucks (when I say franchise-changing, I mean luxury tax level payroll spending) won’t be locked in as future revenue until 2017/2018 (though the revenue would not actually be kicking in until 2020, the guarantee could be enough to change the way the Cubs spend before then). But I was fascinated by Kenney’s comments suggesting an agreement sooner is not yet off the table.