Cubs TV strategy next on club's menu

Cubs opting out of deal with WGN after 2014, and there are number of scenarios on tap

Cubs pitcher Carlos Villanueva on the team's "heartbreaking" loss to the Brewers.

Now that the Wrigley Field package has been approved, the Cubs can turn their attention to another deal that will have dramatic implications for the financial future of the franchise.

Negotiations are expected to heat up between the Cubs and WGN-Ch. 9. Technically, their pact runs through 2022, but the Cubs are exercising a clause to opt out after the 2014 season. At stake for the Cubs is a chance to cash in on exploding local TV rights fees. The Dodgers, Angels, Rangers and Mariners recently have signed long-term rights deals in the billions. Yes, billions.

By comparison, the current value of the Cubs package with WGN-Ch. 9, estimated at $20 million per year for 70 games, feels like utility infielder money. Some projections have the Cubs receiving as much as $80 million annually for those games. The team's other games will be on CSN through at least 2019.

Yet before Chairman Tom Ricketts starts counting the additional TV cash, there are real questions about whether the Cubs are positioned to receive a windfall of their own; the possibility that WGN might end a relationship that dates back to 1948; and if the team will begin to lay the foundation for its own network.

Nobody from the Cubs or WGN is willing to comment, mainly because there are too many things to figure out.

"At this point, it is really complicated," said a source close to the situation. "No option has been eliminated."

Here are some of the issues:

•Still super? There is a provision in the contract that allows WGN to extend the Cubs rights by paying "fair market value." However, that seems difficult to determine because there isn't a comparable arrangement in baseball. The other recent deals were for cable, while WGN operates as a free, over-the-air signal in Chicago.

This relationship has defined both the Cubs and WGN. Everything, though, comes to an end.

There is speculation that WGN might go the route of TNT and TBS (which formerly aired Braves games) and become a complete national outlet featuring mainly entertainment programming.

"You could produce a lot of shows for $80 million (per year)," said one source familiar with the network's stance.

Meanwhile, would the Cubs forsake the exposure of being in 75 million homes through WGN America? The superstation helped the Cubs make millions during the heyday of Harry Caray. However, a proliferation of Major League Baseball games available on various cable outlets has blunted the novelty of the Cubs going coast-to-coast.

Experts believe the Cubs would leave WGN if they could get more money elsewhere. Exposure won't buy high-priced free agents.

•Leverage problem: The mega Dodgers deal ($7 billion over 25 years) stemmed from having multiple suitors. Time Warner eventually won a heated battle over Fox Sports' regional station in Los Angeles.

A similar situation doesn't appear to exist in Chicago. And don't say: What about moving the WGN games to CSN? There's no room at the inn at CSN, which has a full slate of White Sox, Bulls and Blackhawks games. According to sources, the network isn't interested in having more scheduling conflicts that would cause spillover games to air on CSN Plus, where they traditionally do much weaker ratings.

So where is the leverage for the Cubs here? There had been some speculation that Fox could become a player, airing games on WFLD-Ch. 32 and WPWR-Ch. 50. However, sources indicate the network hasn't jumped into the fray yet.

Obviously, that could change, but for now, there appears to be only one network in the race. If that's the case, what would compel WGN to give the Cubs a big rights increase?

•Cubs network: Forget about the recent sagging ratings. TV observers say the Cubs have enough of a fan base to follow the lead of the Yankees and Red Sox and start their own network.

"When they get good, their ratings are going to explode," said a source.

The Cubs, though, can't go on board with their own network until their CSN deal runs out in 2019. However, they could use this current negotiation to lay the foundation for a Cubs channel beginning in 2020.

One source said the Cubs could do a short-term deal with Tribune Co. or Fox for the "free TV" games through 2019. Then one of those two could form a partnership with the Cubs for a new cable outlet.

The Cubs also could be the catalyst for a second CSN channel in Chicago, with all the local teams' games being taken off of free TV, beginning in 2020.

That would bring Comcast into the current Cubs TV talks, adding another dimension that would affect the White Sox, Bulls and Blackhawks, who have an ownership stake in CSN. Sox and Bulls Chairman Jerry Reinsdorf and Hawks Chairman Rocky Wirtz might be motivated to have the Cubs continue as a TV partner and not a competitor on cable in the 2020s.

•Long or short: The length of any potential deal poses an interesting question for the Cubs. If they lock themselves in a long-term arrangement, they risk missing out on potential changes that might alter the TV landscape dramatically, creating new and more lucrative revenue streams.

However, if the Cubs go short with WGN, as in five years, they risk not cashing in when the market is red hot for sports programming. There are numerous predictions that the sports TV bubble will burst sooner rather than later. If it does, the teams with long-term deals such as the Dodgers will be pleased they have their money in the bank. to here

What's going to happen? The best bet is that the Cubs will do a short-term deal with WGN for five years through 2019, syncing up their entire package with the games they have on cable. The deal makes sense for WGN, giving the network some time to plan its next steps.

Then it seems likely the Cubs will move exclusively to cable in 2020 either with their own network or on a second CSN.

However, the situation is very fluid. Don't discount the possibility of an "out-of-the-box" deal that could go in many directions.

All in all, it bears watching where you will be watching the Cubs in 2015.

Special contributor Ed Sherman writes at shermanreport.com. Follow him @Sherman Report

CHICAGO

More