Could Cubs Be Getting a Substantial Rate Increase in the ABC TV Rights Deal?

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Could Cubs Be Getting a Substantial Rate Increase in the ABC TV Rights Deal?

Chicago Cubs

MoneyA little over a week ago, the Chicago Cubs announced that 25 of their available games next year – and each year through 2019 – would be going to ABC-7 in Chicago. That leaves about 45 to 50 games without a home for next season, though a deal on that end will likely be announced soon.

When you have to chop up your TV deals like that – thanks to a flukey arrangement when a certain previous team owner contracted part of the games at a below-market rate to an affiliated company – you can’t expect to get top dollar for a small section of your games. Part of the value in having the broadcast rights for a particular team is exclusively having those rights. Further, you can’t expect to get top dollar when all you can offer is five years’ worth of games. Part of the value in having a teams’ broadcast rights is also having the certainty that you’ve got them for a long period of time.

So, that is all to say, I don’t think you could have any realistic expectation that the Cubs would be getting market rate for these 25 games from ABC-7. The previous deal with WGN paid the Cubs $250,000 per game, and I would have pegged a reasonable hope for a new deal at something like $500,000 per game, or an arrangement for much less than that, but a share of the advertising revenue generated by the games.

I was, then, very intrigued to see this from Darren Rovell when the deal was announced:

Let’s be quite clear that Rovell technically does not say there that the Cubs are receiving $750,000 per game in the deal. That may be what he meant (I asked him to clarify, but did not get a response), or he may have meant only that’s what the Cubs should be getting in the deal.

On the one hand, $750,000 is well below full market value for Cubs games right now, and I think Rovell knows that. But you’d expect the market value of a mere 25 games on a mere five-year deal to be well below full market value for the reasons stated at the outset of this piece. I think Rovell knows that, too, which is why his “market value” number for this deal is what it is. It’s been reported that the price for the games on CSN reaches $750,000 per game by 2019, for what that’s worth. So, maybe $750,000 per game on this short-term, small-handful-of-games deal makes sense.

On the other hand … that would be a huge increase from where the Cubs were before on these games (triple!), and far more than anyone who speculates on these kinds of things thought the dollars would land in recent weeks.

I reached out to the Cubs, but they understandably declined to comment on their rights fees.

We’ll just have to stick in the hypothetical world, then, and think about what it could mean if the Cubs did get $750,000 per game in this ABC deal.

To put it into context: if the Cubs netted $500,000 more per game for these 25 games in 2015, that’s an additional $12.5 million in revenue. Given that it’s just 25 games on a short-term deal, that’s a really significant chunk of added revenue.

We’ll see if the value of the deal eventually comes out – I’d imagine it will – and if it’s close to $750,000 per game, in terms of the guarantee. If so, this is a pretty clear win. Heck, it doesn’t even have to be that much to be a great move for the organization.


[Aside: I’ve seen folks discussing the ABC/Disney/ESPN angle of the new agreement with ABC in the comments and on Twitter, so I’ll offer a little something. Obviously ABC and ESPN are both Disney companies, so there is a relationship there – and the Cubs are now tied into it, ever-so-slightly. Is it plausible that this deal sets up a possible future where ESPN gets into the baseball RSN market and becomes the Cubs’ TV partner on a new network? I’m sure the Cubs would love that possible exposure, but it’s not something ESPN has done in the baseball space before. They have, however, been willing to do it with the SEC and the University of Texas. So, it’s conceivable. There were rumors earlier this year that the Cubs could use a local TV deal with a FOX affiliate as a springboard to a partnership on a new network down the road, and, in a way, this is kind of like that. But FOX has partnered with MLB teams on new RSNs before, and ESPN/ABC has not.

In the end, you have to remember that this is technically just a deal with an ABC affiliate station in Chicago. There doesn’t necessarily have to be any broader, longer-term implications. And if Rovell is correct about how much the Cubs might be getting in this deal, then that may have been all the incentive the Cubs needed.]

Author: Brett Taylor

Brett Taylor is the Editor and Lead Cubs Writer at Bleacher Nation, and you can find him on Twitter at @BleacherNation and @Brett_A_Taylor.