Cubs Deal Being Complicated By Value Of Broadcast Contracts
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Cubs' Future Revenue Growth Depends
Largely On TV, Radio Contracts |
A dispute over the value of the Cubs' broadcast contracts has thrown Tribune Co.'s $900M deal to sell the team, Wrigley Field and a 25% stake in CSN Chicago to Tom Ricketts "into question and complicated a negotiation that many expected would be wrapped up by now," according to Sachdev & Oneal of the CHICAGO TRIBUNE. A source said that the Ricketts family is "planning to deliver a 'comprehensive package' to Tribune Co. later this week outlining its latest proposal and a long-awaited financing package." However, the family is claiming that the broadcast contracts "aren't worth as much as they originally thought," which has led the Ricketts "to seek concessions in the contract language or a [$40-50M] reduction in the sale price." The Cubs' future revenue growth "depends largely on getting the most out of [their] television and radio contracts," as most games are already sold out. WGN began televising Cubs games in '48 and radio broadcasts "long before that," and three former Tribune execs said that the team and WGN "have historically split advertising revenue 50-50." Sachdev & Oneal reported the Cubs' share "was probably less than the team might have gotten from an independent station." Sources said that putting a cap on the team's revenue "was always in Tribune Co.'s overall interest because it meant the team would not have to pay as much into baseball's revenue-sharing pool." However, the Ricketts "want to make sure they maximize the potential broadcast revenue," and sources said that there are a "number of potential areas of dispute, particularly because the Cubs and WGN have a revenue-sharing deal." Sachdev & Oneal noted being able to "count on future revenue growth is especially important for the Ricketts because the deal has become increasingly expensive" (CHICAGO TRIBUNE, 5/31).
MORE ISSUES TO BE IRONED OUT: Chicago Tribune reporter Phil Rogers addressed the snag in the Cubs' sale due to Tribune Co. Chair Sam Zell's request to have more of the deal financed rather than in cash. Rogers: "Clearly the two sides are at odds over something. The Zell quote that was … if the Ricketts deal doesn't get done there are going to be other deals. That to me sounds like a guy trying to put pressure on the other side." He added, "The Ricketts family has not commented on those (statements), and (that) probably is a smart posture." Rogers said it is "still likely that it works out with Ricketts, but there's clearly some behind-closed-door fireworks going on here before the deal gets closed" ("Chicago Tribune Live," CSN Chicago, 5/29).
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