Cubs TV Deal Stuff

[David]

I don't think we have a thread for this, and we might as well.

 

http://www.chicagotribune.com/business/ct-biz-0219-cubs-20130219,0,7523734.story

 

The Cubs and WGN-TV have a broadcast partnership that dates to 1948 and a history that is inextricably linked. With baseball rights fees soaring in recent years, due in part to the creation of exclusive team cable channels, there is much at stake for both. Last month, the Los Angeles Dodgers launched their own cable sports network, striking a deal with Time Warner Cable that will pay the team a reported $7 billion to broadcast its games over 25 years.

 

The Cubs couldn't create their own cable channel until 2020.

 

For now, Cubs games are split between Comcast SportsNet Chicago and WGN-TV, earning the club about $60 million in annual broadcast rights fees combined, according to sources close to the situation. The CSN deal runs through 2019 and includes the White Sox, Bulls and Blackhawks as partners. Comcast owns about 30 percent of the network.

 

The Cubs get about $20 million to air 70 games each year on WGN. They have decided to exercise a renegotiation option with the Tribune Co.-owned station, seeking to boost those revenues for the 2015 season and beyond. WGN will have a chance to retain those rights, but other media players are likely to get a shot as well.

 

"WGN has the ability to retain those rights through 2019, provided that they're willing to pay fair market value," said Cubs spokesman Julian Green. "That's a discussion for WGN and the Cubs to have together."

 

Based on the $60 million revenue fee for combined broadcast rights, the Cubs get about $400,000 per game, far below the market value potentially set by the Dodgers. Under their reported new deal, the Dodgers will be getting about $280 million per year, or about $1.8 million per game.

 

"It doesn't surprise me that the Cubs are going to look at all available options out there, including Comcast and everybody else who might be interested in their rights," said Jim Corno, president of Comcast SportsNet Chicago. "Sports content is extremely valuable. It's DVR-proof. Not many people are going to DVR a Dodgers game or a Bulls game or a White Sox game if they can watch it live. The advertiser can buy spots knowing that the chances are very slim that people are not going to watch my commercials because they're going to fast-forward through them."

 

Experts say there are plenty of options to improve on the current deal, including the possibility of upfront payments that secure partial rights through 2019, and a full standalone network beginning in 2020.

 

In a statement, Tribune Co. signaled it was willing to consider competing to keep the Cubs on WGN.

 

"WGN-TV has enjoyed a tremendous relationship with the Cubs and their fans since 1948," Tribune Co. spokesman Gary Weitman said in a statement Monday. "It is a relationship that we are proud of, and one that brings Cubs baseball to fans throughout Chicago and across the country. We're looking forward not only to the upcoming 2013 season, but also to working with the Cubs on baseball broadcasts in the future."

 

Tribune Co. shows games on both WGN-Ch. 9 and the national cable channel WGN America. While Tribune Co., which is under new management, is looking at programming options for WGN America that include original shows, sources say the company is likely to want to keep the Cubs in its lineup.

 

Green said the Cubs plan to talk to different parties about where the slate of games currently broadcast by WGN will be seen.

 

"I think there are a number of options that will certainly present themselves as we talk about this with WGN and other partners throughout the year," the Cubs spokesman said. "But at the end of the day, any final result needs to be a result that benefits the organization and most importantly, the baseball team."

 

The rise in sports rights fees is being passed along to cable and satellite operators, who in turn are raising monthly fees for customers, whether they watch the games or not. There is some speculation that the Dodgers deal proves to be a tipping point in which cable operators rebel by threatening to drop those sports networks.

 

Not everyone agrees that the Dodgers deal represents the ceiling of what broadcast rights fees are worth. Corno said that if the Dodgers sale and the new deal for the team's baseball network seemed outrageously expensive now, they likely will seem in retrospect to have been fairly priced, or even a bargain.

 

"In 25 years, when this deal is up, people will not be talking about how expensive the Dodger deal is," he said. "Because somebody else will have cut a deal in a major market with a major team that will make this deal look like Time Warner got a heck of a deal."

 

I really hope they've explored buying themselves out of that CSN deal, although I can't even fathom how much that would cost. I can't imagine all of the things we've heard about them preparing for their own network is for 7 years down the road. In the last few days, I've read that they've gone as far as to have content filmed for a Cubs network (interviews or something with major former players).

 

I mean, ultimately, I guess I don't care how long it takes to get the Cubs network thing going (if at all) if they're getting much closer to fair market value in the meantime.

[MSG T]

Has Tunney approved a new TV deal?

 

 

 

I'm with you, I'd love to see them get their own network but as long as they can get market value in the meantime, I'm good with that.

[Proven Veteran]

I DVR pretty much any game I watch.

[Sammy Sofa]

I really hope they've explored buying themselves out of that CSN deal, although I can't even fathom how much that would cost.

 

Me neither, but given the insane numbers we've seen tossed out for the Dodgers and Rangers part of me thinks that whatever it would be would be really, really worth it.

[Guest]

I really hope they've explored buying themselves out of that CSN deal, although I can't even fathom how much that would cost.

 

Me neither, but given the insane numbers we've seen tossed out for the Dodgers and Rangers part of me thinks that whatever it would be would be really, really worth it.

 

But wouldn't CSN know that too, and therefore ask for the moon?

 

I really have little understanding of how this all works.

 

And since they own 25% of it, how does that work? Is this basically just Reinsdorf's call (since, I'm guessing, he owns 50% or so of it)?

[Derwood]

tl;dr Dodger money plz

[Sammy Sofa]

I really hope they've explored buying themselves out of that CSN deal, although I can't even fathom how much that would cost.

 

Me neither, but given the insane numbers we've seen tossed out for the Dodgers and Rangers part of me thinks that whatever it would be would be really, really worth it.

 

But wouldn't CSN know that too, and therefore ask for the moon?

 

I really have little understanding of how this all works.

 

And since they own 25% of it, how does that work? Is this basically just Reinsdorf's call (since, I'm guessing, he owns 50% or so of it)?

 

Well, sure, they could ask for something insane, but they obviously know there's a limit as to what they'd actually get. Whatever projected revenue they'd get off of the Cubs for the rest of the deal + whatever extra on top is negotiated. Maybe something like they'd get an annual small percentage of the Cubs' new media deal for a certain period of time? I'd have to imagine something like that would have some appeal since otherwise it's obvious the Cubs will just leave after 2019.

[crazycooter]

I assume that there is some sort of defined buyout clause in the agreement with CSN. Every contract I've ever seen has some form of a buyout. I can't imagine a multi-million dollar, multi-year agreement wouldn't.

 

The only question is how much money that clause awards to CSN if the Cubs pull the plug. There's no way to know, but if I make a couple of assumptions I could hazard a guess at a top end. So,

 

1. Using the dollar figures quoted above, assume the Cubs get $40 million/yr from CSN (every dollar that doesn't come from WGN, comes from CSN);

 

2. Assume that the dollar amount paid to the Cubs each year remains the same through the end of the deal.

 

That would leave about $210 million to be paid out by CSN on the deal. That figure would also represent the very top end on a buyout, IMO, but I'd put the likely figure at much less than that. "1:1" buyouts are not really that common in my experience, but my experience has nothing to do with MLB media rights.

[WrigleyField 22]

I really hope they've explored buying themselves out of that CSN deal, although I can't even fathom how much that would cost.

 

Me neither, but given the insane numbers we've seen tossed out for the Dodgers and Rangers part of me thinks that whatever it would be would be really, really worth it.

 

But wouldn't CSN know that too, and therefore ask for the moon?

 

I really have little understanding of how this all works.

 

And since they own 25% of it, how does that work? Is this basically just Reinsdorf's call (since, I'm guessing, he owns 50% or so of it)?

I thought each team has 20, so 40 for Reinsdorf (with Comcast having the final 20 although that article says they have about 30 so not sure.)

 

 

Sent from my iPhone using Tapatalk

[Guest]

I assume that there is some sort of defined buyout clause in the agreement with CSN. Every contract I've ever seen has some form of a buyout. I can't imagine a multi-million dollar, multi-year agreement wouldn't.

 

The only question is how much money that clause awards to CSN if the Cubs pull the plug. There's no way to know, but if I make a couple of assumptions I could hazard a guess at a top end. So,

 

1. Using the dollar figures quoted above, assume the Cubs get $40 million/yr from CSN (every dollar that doesn't come from WGN, comes from CSN);

 

2. Assume that the dollar amount paid to the Cubs each year remains the same through the end of the deal.

 

That would leave about $210 million to be paid out by CSN on the deal. That figure would also represent the very top end on a buyout, IMO, but I'd put the likely figure at much less than that. "1:1" buyouts are not really that common in my experience, but my experience has nothing to do with MLB media rights.

 

If $210m is correct, and the dodgers are getting 2m/game, that's about 10 games. It kind of seems like a no brainer.

[Sammy Sofa]

If $210m is correct, and the dodgers are getting 2m/game, that's about 10 games. It kind of seems like a no brainer.

 

Uhhhhhhhhhhh.

[jersey cubs fan]

whoa

[Guest]

LOL

[Sammys Boombox]

Please come work for my company as the person who writes my paychecks.

[Old Style]

That dude's calculator is broked.

[MSG T]

Impressive

[Cubswin11]

If $210m is correct, and the dodgers are getting 2m/game, that's about 10 games. It kind of seems like a no brainer.

 

Crane Kenney, is that you?

[SABR Gamer]

Guys, 10 or 105, it's basically the same thing.

[Guest]

I assume that there is some sort of defined buyout clause in the agreement with CSN. Every contract I've ever seen has some form of a buyout. I can't imagine a multi-million dollar, multi-year agreement wouldn't.

 

The only question is how much money that clause awards to CSN if the Cubs pull the plug. There's no way to know, but if I make a couple of assumptions I could hazard a guess at a top end. So,

 

1. Using the dollar figures quoted above, assume the Cubs get $40 million/yr from CSN (every dollar that doesn't come from WGN, comes from CSN);

 

2. Assume that the dollar amount paid to the Cubs each year remains the same through the end of the deal.

 

That would leave about $210 million to be paid out by CSN on the deal. That figure would also represent the very top end on a buyout, IMO, but I'd put the likely figure at much less than that. "1:1" buyouts are not really that common in my experience, but my experience has nothing to do with MLB media rights.

 

If $210m is correct, and the dodgers are getting 2m/game, that's about 10 games. It kind of seems like a no brainer.

Sorry, forgot to carry, 100 games.

[WrigleyField 22]

Why are we using the hypothetical 210m as the buyout number? Isn't the value of the buyout for CSN the amount they can charge in additional ad revenue minus the 210? In the current landscape a Cubs game is worth 2M and they're currently paying about say 100k per game (or whatever the figures are) I think the buyout the network would want is closer to the 2m per game figure than the 100k. Maybe figure out what non-live sports programming is worth in ad revenue and factor that difference, but from the sounds of it, thats meaningless. What motivation do they have to give up the games at the old rate when they're set to make many times that in ad revenue by riding out the contract.

 

That is of course assuming thebuyout isn't pre-negotiated in the deal.

 

 

Sent from my iPhone using Tapatalk

[Guest]

Why are we using the hypothetical 210m as the buyout number? Isn't the value of the buyout for CSN the amount they can charge in additional ad revenue minus the 210? In the current landscape a Cubs game is worth 2M and they're currently paying about say 100k per game (or whatever the figures are) I think the buyout the network would want is closer to the 2m per game figure than the 100k. Maybe figure out what non-live sports programming is worth in ad revenue and factor that difference, but from the sounds of it, thats meaningless. What motivation do they have to give up the games at the old rate when they're set to make many times that in ad revenue by riding out the contract.

 

That is of course assuming thebuyout isn't pre-negotiated in the deal.

 

Sent from my iPhone using Tapatalk

 

That appears to be exactly what was implied in the post that brought up that number.

[Soul]

If $210m is correct, and the dodgers are getting 2m/game, that's about 10 games. It kind of seems like a no brainer.

Sorry, forgot to carry, 100 games.

 

Either that or Ricketts is running a buy 10, get 90 free deal :)

 

Can I get that on my Cubs tix, too?

[seanimal]

I assume that there is some sort of defined buyout clause in the agreement with CSN. Every contract I've ever seen has some form of a buyout. I can't imagine a multi-million dollar, multi-year agreement wouldn't.

 

The only question is how much money that clause awards to CSN if the Cubs pull the plug. There's no way to know, but if I make a couple of assumptions I could hazard a guess at a top end. So,

 

1. Using the dollar figures quoted above, assume the Cubs get $40 million/yr from CSN (every dollar that doesn't come from WGN, comes from CSN);

 

2. Assume that the dollar amount paid to the Cubs each year remains the same through the end of the deal.

 

That would leave about $210 million to be paid out by CSN on the deal. That figure would also represent the very top end on a buyout, IMO, but I'd put the likely figure at much less than that. "1:1" buyouts are not really that common in my experience, but my experience has nothing to do with MLB media rights.

 

If $210m is correct, and the dodgers are getting 2m/game, that's about 10 games. It kind of seems like a no brainer.

Sorry, forgot to carry, 100 games.

 

carry what?

[crazycooter]

Why are we using the hypothetical 210m as the buyout number? Isn't the value of the buyout for CSN the amount they can charge in additional ad revenue minus the 210? In the current landscape a Cubs game is worth 2M and they're currently paying about say 100k per game (or whatever the figures are) I think the buyout the network would want is closer to the 2m per game figure than the 100k. Maybe figure out what non-live sports programming is worth in ad revenue and factor that difference, but from the sounds of it, thats meaningless. What motivation do they have to give up the games at the old rate when they're set to make many times that in ad revenue by riding out the contract.

 

That is of course assuming thebuyout isn't pre-negotiated in the deal.

 

Sent from my iPhone using Tapatalk

 

That appears to be exactly what was implied in the post that brought up that number.

 

Right. I can't imagine that a contract on that level wouldn't have a pre-negotiated buyout. They're included in much, much smaller contracts as a routine item. Honestly, I'd consider the lack of a defined buyout to be legal malpractice (unless both parties explicitly asked for no buyout).

[radarluv1]

Since this is the TV thread, what # is the limit on games for WGN America, and why? Its an MLB rule correct?