NEWSLETTER
Let me remind folks of something up front, as I have many times, but which seems to keep being lost by those looking to rip the Chicago Cubs for, well, anything: opting out of their deal with WGN last year was not solely or even primarily about increasing the money they make from the WGN games from 2015 to 2019. That deal with WGN ran through 2022. Had the Cubs not opted out when they did, the deal would have run its course, and the Cubs couldn’t take their full slate of games to market until 2023. By opting out, however, they can now line up a short-term deal for the WGN games, and then take the full slate to market after 2019, when the CSN deal ends. Do you see why the opt out was critical, regardless of how much more or less they make on the WGN games from 2015 to 2019?
Now, then. About that short-term deal. It looks like it’s going to be multiple short-term deals.
Yesterday, Matt Spiegel reported that the Cubs were in serious talks to return about 45 of their games to WGN-9 – the local WGN station – for the 2015 season, with it being uncertain what would happen to the remaining 15 to 25 games in that former WGN block (it used to be about 70 games, with the rest being on CSN).
Today, Robert Channick and Danny Ecker report separately via sources that the 25 games could be going to ABC-7. That combination of 25 and 45 games would yield you the 70ish that used to be on WGN, so this makes sense. CSN usually carries between 80 and 90 Cubs games, so there are still some games to fill in, but it’s possible those will simply slide over to CSN.
Neither report indicates the fees involved in the deal, though both reports indicate that the deal would be for 2015 through 2019 (as I would expect the WGN-9 deal to be, as well). My guess is that the fees in both deals will be largely the same, and will probably be flat, at best, from where the fees were last year, given the ratings declines. The Cubs, however, could build in some kind of revenue-sharing arrangement to take advantage of the fact that, if things proceed as it looks like they will on the baseball side, ratings are going to be exploding very soon. On the balance, I’m still going to guess that the Cubs do better between 2015 and 2019 than they would have on the old WGN deal (and that is, again, not including the fact that the real value of the opt out was being able to sync up their deals in 2019)
ABC-7 is another local Chicago station, which, like WGN-9, could present a problem for Cubs fans who don’t receive local Chicago channels in their area, but do fall within MLB’s designated “Chicago Cubs” viewing area, and are thus blacked out on MLB.tv (for one example, folks in Iowa). With games on ABC, the solution there seems pretty obvious – network affiliates in other areas may be permitted to pick up the games. On WGN, it’s a little trickier,* but there may yet be Tribune-affiliated stations in the area (CW channels, perhaps?) that will pick up the games. It’s in everyone’s interest to do that, especially if the Cubs are playing well, so I think it’ll probably happen. It may just take a little extra channel surfing.
*(Remember, we’re talking about local WGN-9 here, not cable WGN America. They are dumping Chicago sports next year in favor of becoming a full-on cable channel like TBS.)
So, assuming for the moment that most fans will be able to see most games next year in one way or another, let’s talk about the other thing that’s important: the money.
According to multiple reports over the past couple years – and I’ve never been told anything to dissuade me from believing this is accurate – the Cubs received about $250,000 per game from WGN, and about $350,000 to $500,000 per game from CSN (it has risen from 2009 to today). On the open market, the Cubs would receive a bare minimum of $1 million per game for their rights (and possibly approach $2 million), so their deals are both considerably under market right now. In 2014, the Cubs will have received just a bit over $60 million on their deals, combined. Other large market TV deals recently negotiated have been for two or three times that amount. Think the Cubs could make a little hay with an extra $60 to $120 million in revenue?
But will they see any new revenue before 2020?
The answer is something between “maybe” and “probably,” and there are two possible paths. One, these new deals could wind up netting the Cubs more money than they were getting previously, depending on the broadcast rate guarantee and any revenue sharing (and how the Cubs perform in the ratings). Even if not, Bruce Levine reports that the CSN deal increases to $650,000 per game in 2015, before escalating further and ultimately reaching $750,000 per game in 2019. That’s not a ton of added revenue, but, hey, that extra $150,000 per game in 2015 – if it was over, say, 80 games – is an added $12 million in revenue. That ain’t nothin’.
Path number two to seeing extra revenue before 2020 is the big one, though: hopefully the Cubs will have in their new deals some kind of out that lets them break away early to start their own network *if* they secure a long-term partner for the full slate of games (i.e., the mega deal). Actually doing this would also require the Cubs to sort out the CSN contract, which runs through 2019 (it’s possible all the Cubs would do is air the non-CSN portion of the games on their network in whatever years there are before 2020, and then the full slate after that). But if the Cubs could pull it off, they might be able to lock down their long-term deal and plan in, say, 2016 or 2017, and be assured that those huge dollars are definitely on the way (and some may also start to flow before 2020, depending on the contract structure). That affects planning, and is ultimately good for baseball operations.
