The Cubs, WGN, TV Rights And The 'Bubble'

A couple of days ago, Yahoo's Jeff Passan summed up the current state of local baseball TV rights deals and looked at what some teams have either done recently with new deals, or might be looking for in the near future.

This, though, ought to give the Cubs pause regarding some of the big-dollar TV-rights contracts that have recently been signed, quoting an executive who has been in on some of those negotiations:

"It's not just local. It's national," the executive said. "The amount of rights being paid are getting passed to consumers. I'm worried there is going to be a bubble. It seems like there's a lot of money going out. We don't want to be dependent on the bulk of our revenue coming through local rights-fee deals."

This is the dilemma for the Cubs. They need more revenue. Teams have been raking in the big bucks over the last couple of years. But will that rights-fee bubble burst before the Cubs can get in on it?

Here's Passan's take on the Cubs' current rights-fee situation:

Already one of the game's financial giants – they made a major league-high $32.1 million last season, according to Forbes' annual valuations – they're about to get the double boost of a stadium renovation and new TV contract.

Updating Wrigley Field is the bigger-impact move, as only a portion of the Cubs' TV deal expires following the 2O14 season. It's the iconic part, of course – WGN, the last of the superstations broadcasting baseball – and the one baseball business is almost certainly going to leave behind.

WGN will televise 67 Cubs games this season. One analyst believes that package is worth at least $8O million a year to Fox or Comcast – and that could be on the low end. Another possibility: Comcast, which owns the rest of the Cubs' broadcast rights through 2O19, rips up that contract and renegotiates a megadeal somewhere in the $2OO million-a-year range in hopes that it will be the network that finally gets to broadcast the Cubs the season in which they win the World Series.

Or the Cubs could sign a short-term deal for its outstanding games, spend the next five years drawing up plans for its own RSN ...

$80 million a year for 67 games would be about $1.2 million per game, far more than the (approximately) $400,000 per game that WGN now pays, but less than the $1.6 million per game that the Dodgers are getting from their new deal. That doesn't sound too far off, though maybe $1 million a game would be a little closer to reality. Remember the "bubble" -- the economy is still not hitting on all cylinders and with many people migrating away from cable and satellite, do RSNs really have this kind of money? Does WGN? Would it be worth it to WGN to sign up with an $80-million-a-year contract?

Passan says baseball is going to "leave the superstation business behind" and he's probably right. But then there's the "iconic" part of it; WGN has broadcast Cubs games for longer than any other local station in baseball history. It's been a synergistic relationship that far predates Tribune Company's ownership of the team; I've written here before about the fact that WGN's superstation coverage of the Cubs is one of the reasons for the team's national fanbase. You can keep that fanbase if you win, but right now, the Cubs aren't in that position. I believe that Cubs baseball on WGN and WGN America gives the channel an identity it wouldn't otherwise have.

Passan further writes that Wrigley renovations are the "bigger-impact move", but in the short term, especially with those renovations not yet approved nor started, a long-term contract renewal signed by WGN for somewhere close to that $80-million-a-year figure is probably the best for both the station and the team. It will help them be competitive in the short run -- even half of that $80 million added to the baseball budget would be a huge boost -- and help keep the fanbase engaged in the long run.