A couple of key points he made:
1. Just before the Tribune sold the team to Ricketts in 2009, it restructured the radio-TV deals with its affiliates, probably to increase the "value" i.e. broadcast revenues in order to get a higher sale price. It is estimated that the station pays $10 million per season, which is on the high end for MLB teams. Now this short term boost in fees is about to expire.
2. The Yankees recently renewed its radio broadcast deal for $15-20 million. That means that the Yankees receive approximately $123,000 per game for radio rights fees. For the broadcaster to break even, it would have to charge at least $6,000 per commercial break during the entire game cast (pre-and-post included).
Sherman reports that WGN is looking for a large discount from the Cubs on rights fees because a) the team has been dreadful the last two years, and b) ratings and revenue from broadcasts are way down. He states that WGN has been losing money on its Cub broadcasts.
This puts ownership in another partially self-inflicted bind. Another traditional revenue source, broadcast fees, is set to go down just like attendance. There is no other sports station in Chicago that can put the Cubs as a premier program. A move to an FM station would dramatically decrease the broadcast range and therefore produce lower overall ratings and ad revenues. The decline in the general public's interest in the Cubs, based upon their losing seasons, continues to effect all baseball operations.
Further, it is not a good time to try to increase broadcast revenue in Chicago. The metro-area still has not recovered from the collapse of the construction industry and home sales due to the fiscal cliff. Unemployment and underemployment are above national averages. Disposal income is tight. Corporate advertising in all local media is down. Ricketts bought the team at its peak during a financial bubble and now has to bail water in a sinking economic downturn.
FULL STORY
Losing: Sagging ratings, expensive right fees have WGN-AM looking to rework deal with Cubs
My latest Chicago Tribune column is on WGN-AM 720 and the Cubs.You also can access via my Twitter feed.
From the column.
*******
If the Cubs want to continue their long relationship with WGN-AM 720, dating back to 1925, they likely will have to do it at a reduced price.
Strapped with an expensive rights deal and sharply declining ratings because of the Cubs’ struggles on the field, WGN is exercising an option to re-open their contract with the team.
Broadcast sources say WGN is losing significant money on the Cubs broadcasts, with listeners and advertisers tuning out a team that has lost 197 games in the last two years.
Cubs games still will air on the station in 2014, but beyond that, the two sides will have to agree on a new deal.
WGN-AM President Jimmy de Castro declined to discuss any of the specifics of the situation. However, he stressed several times that he hopes the Cubs continue to be on WGN.
“Like any contract, there are periods where you do a business analysis,” de Castro said. “Both the Cubs and WGN are looking at it. We love our partnership and we hope it continues forever. The contract calls for us to take a look at it and we’re going to do that.”
In other words: Forever will end abruptly if the money isn’t right for WGN.
Broadcast insiders say the current contract calls for WGN to pay as much as $10 million per year to Cubs (“Maybe more,” said one source), making it one of the most expensive in Major League Baseball.
The Yankees recently signed a deal with WFAN in New York, calling for an annual payout estimated in the $15-20 million range.
The Cubs reportedly did a new contract with WGN in 2009 in advance of Tribune Co. selling the team to the Ricketts family. Back then, the Cubs were one year removed from back-to-back playoff appearances in 2007-08. They still were considered a hot commodity, attracting strong ratings on both TV and radio.
FULL STORY
Losing: Sagging ratings, expensive right fees have WGN-AM looking to rework deal with Cubs
My latest Chicago Tribune column is on WGN-AM 720 and the Cubs.You also can access via my Twitter feed.
From the column.
*******
If the Cubs want to continue their long relationship with WGN-AM 720, dating back to 1925, they likely will have to do it at a reduced price.
Strapped with an expensive rights deal and sharply declining ratings because of the Cubs’ struggles on the field, WGN is exercising an option to re-open their contract with the team.
Broadcast sources say WGN is losing significant money on the Cubs broadcasts, with listeners and advertisers tuning out a team that has lost 197 games in the last two years.
Cubs games still will air on the station in 2014, but beyond that, the two sides will have to agree on a new deal.
WGN-AM President Jimmy de Castro declined to discuss any of the specifics of the situation. However, he stressed several times that he hopes the Cubs continue to be on WGN.
“Like any contract, there are periods where you do a business analysis,” de Castro said. “Both the Cubs and WGN are looking at it. We love our partnership and we hope it continues forever. The contract calls for us to take a look at it and we’re going to do that.”
In other words: Forever will end abruptly if the money isn’t right for WGN.
Broadcast insiders say the current contract calls for WGN to pay as much as $10 million per year to Cubs (“Maybe more,” said one source), making it one of the most expensive in Major League Baseball.
The Yankees recently signed a deal with WFAN in New York, calling for an annual payout estimated in the $15-20 million range.
The Cubs reportedly did a new contract with WGN in 2009 in advance of Tribune Co. selling the team to the Ricketts family. Back then, the Cubs were one year removed from back-to-back playoff appearances in 2007-08. They still were considered a hot commodity, attracting strong ratings on both TV and radio.
