Crane Kenney Talks Wrigley Field, Cubs Finances and Media Rights with Forbes

Crane Kenney sat down with Forbes’ Mike Ozanian while the Cubs were in New York playing the Yankees last month. The Cubs President of Business Operations discussed a variety of Cubs topics including the importance of Wrigley Field and the team’s media rights.

According to the report from Forbes, “the Cubs are also in the process of selling some shares in the team to investors – the new limited partners would likely own less than 25 percent combined – and want to use the proceeds to renovate Wrigley Field and develop nearby real estate.”

The interview with Crane Kenney aired on YES Network’s Forbes SportsMoney.

Lede: Chicago Cubs’ fans haven’t seen a World Series win since 1908. While various owners have tried to accomplish this feat over the years, none have been successful. But the current ownership group thinks it may have the answer. The game plan starts with the reconstruction of Wrigley Field, the second oldest Major League Park, which is celebrating its 100th Anniversary. Now, unfortunately 10 years ago Wrigley literally started falling apart and the battle to shape and finance the 21st Century version of this iconic home of the Cubs began in earnest.

At that time Crane Kenney was the President of the Cubs under Tribune Broadcasting Company ownership. But when Tribune went bankrupt and the Ricketts family bought the club, Kenney became President of Business Operations. It is his job to generate the revenue needed in order to generate wins.

Mike Ozanian: After the Ricketts family bought the Cubs, was it almost like rebooting the business model?

Crane Kenney: Yes, in particular because of the bankruptcy. It wasn’t just we went from corporate, public ownership to a family ownership. But we went from a cooperation that was in bankruptcy to family ownership. So it was a change and a welcome one. Yeah, you could say it was a reboot.

MO: What was your take on the business model in terms of, ‘Okay we are going to do this first, this second and this third to get this thing on track’ as far as making the business side as big as the brand?

CK: There were opportunities, seen by me as well as folks around me for years that we just couldn’t capitalize on because, really, the form of our corporate ownership. You think about it. You have a public company, managed quarter to quarter, every penny per share matters and large capital projects at Wrigley Field that aren’t going to generate any additional revenue. For instance, restrooms, improving steel, concrete … those don’t necessarily generate any short-term return. $150 million of our spend will be on infrastructure. It won’t create another seat, another club or any additional sales, but it needed to get done. Those investments weren’t going to be made with a public owner, especially one tied to the print industry, which was in decline. We were always in a contingency at Wrigley Field. There was very little ability to do long-term planning. So a group of us, in that organization, thought about what if we actually had resources? What would we do if we had an owner that would allow us to think long-term instead of quarter to quarter? We moth balled all of those ideas, sometimes for years. So when the family took over, one of the first things we did with Tom and his siblings, in particular Tom, we went offsite up to Northwestern University to get away from Wrigley Field and walked through about a dozen priorities. And my hope, not knowing Tom well, was that he would say yes to three or four of them. And instead he said, yes. And I said which of these? He said all of them. That’s our watershed moment. That’s a great moment as managers to come back and say we are going after every one of these.

MO: What were the ones at the top of that list?

CK: Rebuild Wrigley Field … was the number one. It is the revenue engine for us. If you think of our media rights, which may leapfrog our gate receipts in terms of overall size, our media rights in some ways depend on the stage we play on and the stage we play on is Wrigley Field. And so what we are monetizing at the ballpark, really is not a lot different than a broadcasting model, we’re monetizing eyeballs in attendance through various mediums: In person, on radio, on television, digitally. But the stage is Wrigley Field and it’s unique. That was the number one priority and obviously a quite expensive one.

MO: It is important to upgrade to get players excited?

CK: Yes, there’s no question. We have the worst facilities in for players at Wrigley Field. We actually think we now have the best facilities for players at Spring Training and in the Dominican because we’ve renovated those or built new facilities there. But when they come back to Wrigley, finally, which is their home, the place they spend the most time, it is really … it is decades behind. We will be at or above the league standard in every respect. Yesterday I was out touring Yankee Stadium to see what they’ve done with their clubhouse with Theo and Jed and a group on the baseball side and a group on my side. We are designing the amenities for the players now and trying to think about where will the game be in 10 years. How important will some of the things that aren’t really focused on today that much be important then? Like the mental part of the game.

MO: You mentioned the Dominican investment and others, you know as a percentage of overall revenue, it seems like the Cubs are investing more money in the minor leagues and in player development than they were before the Ricketts family bought the Cubs.

CK: What we are doing today we could not have done with a corporate owner focused on improving ratings every year. When you think about Tribune Company as a media entity, one of the things the Cubs did for them is they locked up in perpetuity their radio and television rights. And then they monetized those rights and that was basically how they grew their earnings in one part. Obviously they owned a bunch of other properties. The idea that you could take the on field performance down in the short-term and take ratings down would have been an anathema. No one would have agreed with a strategy to focus on the long-term and plow resources into growing a really strong farm system, at the expense sometimes of the Major League club.

MO: Wasn’t this sort of risky in a sense that, here the new owners are basically becoming more dependent on gate receipts for overall revenue and they are taking the chance putting more money to develop the minor leagues to enhance the product in the future. Meanwhile, they had to buy this team with a mountain of debt and you don’t really know how the fans are going to react. Attendance has gone down the last few years. I mean they had to have your back.

CK: But it begins with their courage. My job is easy as long as the owner is there. And the plan as it evolved, and we really understood what we had from a player development perspective and the need to support it and grow it. Then the question is, we hit a high watermark in attendance in 2008, a playoff team. Won 97 games and we put 3.3 million people in the ballpark. Attendance has gone from 3.3 to 2.7, that’s a lot of fans that are choosing to wait or do something else with their discretionary dollars. That takes courage to say ‘We understand that’s going to happen’ and we would never tell people how to spend their money. If they think that this is not a product worthy right now, they can choose that. To say that is a smart investment on our part because of what’s going to happen down the road, obviously you have a long-term vision and you’ve got courage to withstand criticism along the way. It hasn’t been exactly a picnic as the team has not performed that well. Despite telling fans this is the plan and you’re going to have to trust us and stay with us and many have. It is amazing the support we have to put that many people in the ballpark on a yearly basis, when they know our best days may be a year away, and still they come and support us at that level, is tremendous. But it starts with the owners having a conviction around they’re doing and even with criticism say ‘I’m not going to do a short-term fix here. We could sign three players this off-season, and we’ll win 84 games. It will feel better on a day-to-day basis, but it’s not going to help us to get to the promise land which is a World Series.

Back from Break Lede: After the renovation of Wrigley Field and adjacent real estate, the Cubs have a second major generator of revenue, the radio and television rights. Sports media rights have been exploding and while television rights to the Cubs are somewhat complicated due to the fact there are currently two separate deals for two separate networks that expire in two separate years. The potential for a record-breaking, multi-billion dollar deal in the hottest sports media market the world has ever seen is none too far away.

MO: Your TV deals are a little bit tricky in the sense that the deal with WGN expires after this season and the CSN Chicago deal doesn’t expire until after 2019. What type of strategy can you employ to maximize your TV money?

CK: Well, there is a long-term strategy and then there is the short-term strategy. Again it’s a little bit of a jigsaw puzzle because we only get half of our games back in the present sense. In 2019 all of the games come back and there is no backend right for CSN, there is no matcher or right of first offer. So, we will be free agents in 2019 with all of our games. And that’s where you will see a big transaction, like the transformative ones you’ve seen in L.A. and Philadelphia and other places.

MO: Do you think it’s plausible that the Cubs, after 2019, will have the largest TV deal among any Major League team?

CK: Yes. I think that’s plausible. A question for all of us will be how people consume media at that time. Right now you look at cable; most teams look at either a cable or distributor as their partner. Partner with someone like Fox or you partner with someone like Time-Warner as the Dodgers did or Comcast. As you see the evolution of things and people going over the top, I think it’s not … it’s just a matter of when someone like Google says ‘We are going to go and be a bidder for rights because we are going to take these games to consumers in a different way.’ And you’re seeing that happen. I saw Yahoo announce they are going to get into original production streaming video. Apple is doing it. Obviously Netflix is creating their own proprietary content and sort of leapfrogging the entire ecosystem to go direct to consumer. By 2020, has that evolved in the sports field or not? We’ll find out.

MO: Possibly, could there be a Cubs RSN (Regional Sports Network)?

CK: Yes. I think that the Cubs are … There are a few brands that have that brand equity that can kind of carry their own channel and you’ve seen some fail and you’ve got some situations now in Houston for instance that are a little dicey. Our brand is big enough they can carry a channel on its own and that’s a likelihood I think.

MO: As one of the founders of CSN Chicago, along with Jerry Reinsdorf the owner of the White Sox and the Bulls, do you feel that’s given you a better understanding of what the media rights market is like, particularly for local television and cable?

CK: Yeah, I mean my background was in media. So I was media lawyer before I kinda started into the baseball side. And we did Fox Sports Chicago together, Jerry and I before Comcast, so it kinda predates all of that, but it’s an incredible look at the pace of change that has occurred in sort of media consumption and trends. So if you think about it, the last four or five years if you’re a fan of … pick a show that’s on ABC, like Scandal. Today that show airs on ABC. Then Comcast is going to air that show in an on demand format, and you’ll pay extra to have the on demand. Then that show will be on Netflix to get prior seasons and then, like the third season, you are going to go to iTunes to buy. There are now five revenue streams that have been created just through technology for one show. And then it will go into backend production and you will sell it in syndicated market. The same thing is going to happen with sports. So streaming is really important right now. Fans expect to take their games with them. If I can’t be home to watch my Cub game but I’m going to my son’s little league game, I want to take the Cubs with me on my iPad or on my phone. That wasn’t an opportunity for us five, six years ago. I think the world has gone completely mobile. And, so the media, the pace of change in the media space is going to create great opportunities for all of us. Yeah, being on the Comcast Sports board has been really helpful and its’ been a really strong board and Comcast has been a great partner. I’m really excited about what’s going to happen in the next generation.

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  • endy

    First of all, i am no fan of crane kenney, I met him at season ticket holder event in 2010 and he was super rude to me. I was ripping hendry and he pretty much said I don’t know anything, but did what I suggested when we got Theo, and that was more than I expected.

    So, for the most part I have to agree with this article and the long term baseball and business plan. I don’t like it one bit that we stink again this year and the team was built to more or less lose, but if we look at what’s going on in Aa and Aaa it is sort of working. I’m sure in 2016 we will be happier we have kris Bryant, and the next 2 #1 picks over whoever else if we won 76 ball games. Other factors will be international pool dollars as well. I still say payroll is overrated, as the A’s, rays, cards are winning with lower and mid tier payroll. If anyone analyzed the farm system over the years, it was completely bare with not only talent but a philosophy. Realistically it will take 4 years to fix it.

  • Ripsnorter1

    More sad news:

    Carlos Marmol DFA’d by the Marlins.

    • Ripsnorter1

      Marmol needs to go to the Yanks and let Mr. Rothschild fix him up.
      Or the ChiSox, where Don Cooper knows how to get the most from the least.

    • Tony_H

      Not sure how it is sad news. He is 31 years old, had one of the most dominant time frames a reliever has ever had (that I will remember him for) and has made over $23M in his career.

      Sounds like a great success story for a young 16 year old kid signed out of the Dominican.

      • Ripsnorter1

        Sad? He’s not done with MLB. Some team will grab him. That is what I am lamenting….lol.

        No, the real sad news is that he wasn’t a success in FL.

        • Tony_H

          The end of most careers is sad. Teams will keep giving guys chances that have had success and they hit on it every so often and catch a good one.

      • Ripsnorter1

        How about this idea: Marmol signs with the Yanks to be their middle man. CC pitches like only he can pitch these days–you know, the #1 slot for the Yanks, with #7 starter results…so CC loads the bases, and Marmol comes in and walks the first 3 hitters, strikes out the next guy, and then gives up a grand slam. That would make baseball exciting in NY again, wouldn’t it?

  • Tony_H

    “And my hope, not knowing Tom well, was that he would say yes to three or four of them. And instead he said, yes. And I said which of these? He said all of them. ”

    I know so many are wanting faster short term results, or say that it doesn’t have to be this way, but as Kenney talks about here, this team was all about short term results to help their corporate owner. The amount of deferred maintenance on the facilities and the way the farm system was run and used was all about the now and band-aide fixes.

    Now they have a long term outlook and from the beginning it was about doing what is right, not based on next week or next month, but what is the right way to do things.

    • Ripsnorter1

      More sad news…..wait until next decade.

      • Ripsnorter1

        But wait, are you really saying, “Wait until next century?”
        lol

      • Tony_H

        If you don’t check back until 2020, you will be sorry.

        • JasonOfTheBurbs

          is that a guarantee?
          What was the stat thrown out the other day…only 8% of 1st rounders make an impact on mlb club?

          That is 8 out of 100. So we have to draft 100 1st rounders before we field a team of 8 position players, and then we still haven’t gotten to pitching.

          This is the point that the people hyping the “plan” aren’t reconciling, which is ironic considering those people are typically advanced stats/numbers guys. Follow the numbers:

          How many of Cubs current prospects will make it?
          Do they need to fill every position and P spot with a prospect? No. But what is their threshold before utilizing FA or trading prospects for current mlb-quality players? Do they start spending their money when we have 5 players under 27 that are from farm or trades?

          Rizzo, Castro, for argument sake assume Olt, Castillo. That is 4.

          On pitching side you have Shark (possibly resigned) and Wood. One of our RP’s probably sticks.

          So how many more prospects have to stick before we open the pocketbook? What if Baez is a bust? Who else besides Bryant looks like a “sure thing”?

          This “plan” has no guarantee. But I can guarantee you that this current mlb roster won’t win any playoff games.

          • Tony_H

            Yep, Guaranteed, because everything in life is guaranteed.

          • triple

            I can guarantee that our past 2 playoff rosters could not win a playoff game either. How much money was spent on those rosters?

          • JasonOfTheBurbs

            I don’t get that argument…as if the enjoyment or experience of a competitive (above .500) 162 game / 6-month regular season is pointless if playoff games aren’t won. Maybe NFL I get that…but if they can provide entertaining and competitive teams to watch over 162 games, then I take playoffs as gravy.

          • Tony_H

            I am so glad that Theo isn’t trying to appease you then. All you want is a team that is fun to watch, playoffs are just gravy. Sorry, but getting a team that can win a World Series and ultimately winning the World Series is all that matters to me.

          • Ripsnorter1

            The Cubs have no dough for FAs. Not right now at least.

          • Tony_H

            That is just not true. They have the money if a FA makes sense for them.

      • cubtex

        Cmon Rip. 2019 they might be playoff bound. Don’t miss that opportunity :) In the meantime….this team is unwatchable. No talent. Baez struggling. Theo sitting on his hands acting like he has to keep the entire outfield “fluid” (can’t stand those Theoisms) Fluid, Linear, etc. Give me the 2000′s right now again when we made the playoffs 3 times. This decade could be zero….but one day….one day….we could be like the Pirates. Be patient!

        • Ripsnorter1

          Baez:

          Not the first prospect to hit the wall at AAA. Bryant is hot, too, but he’s at AA. I expect good things from him, and I expect Baez will eventually succeed as well. But gotta get those K’s in line.

          • TheWrongGuy

            I have been saying this about Baez since last season even during his hot streak, that he needs to get his strike out under control. Everyone laughed at me and said “he’ll be fine all big hitter strike out a lot” Now I believe everyone see’s what I was talking about. He has very low plate discipline and super big free swing mode at the plate. I do remember Hoyer saying that the Cubs might trade one of the prospects. I doubt it happens now though with the struggles happening in the minors as they are.
            And for the record I like Baez a lot. He has tons of potential. It seems he has played baseball to this point on talent alone now he needs to use his skills more than his talent. Talent can only take you so far.

          • Ripsnorter1

            I agree.

            Last week I posted a scout’s report that says Baez has the highest ceiling of any player in MiL baseball, except for the Twins’ Buxton, but there are deep concerns with the high K numbers.

            We shall see. It is still very early, and this is his first real bump in the road. Perhaps it will have a humbling effect upon him, and thus, be a real aid to his success. I hope so.

            Certainly he’ll have to use his skills now.

        • Ripsnorter1

          Like the Pirates?

          Like the Pirates!

          A last place team! After one year of a pseudo-playoff run, they return to the hole from whence they came!

          Like the Pirates, indeed!

          Bah! Humbug!

  • Bryan

    Well, certainly from the head of Business Operations you get the typical and anticipated Cubs marketing spin. So, an offsite early on at Northwestern yields that the priority for the management team is the renovation of Wrigley Field. So, if we can’t put a quality product on the field, at least we can pretty-up the ‘ol joint for the tourists to come enjoy. Then our second hope is that we’ll have this windfall of money in 2019, yes 2019, when the Comcast deal ends. Just 5 more years folks…so don’t worry.

    And I love the commentary about our Wrigley clubhouse. Does anyone really think that any player (or free agent) is going to say that they don’t want to play for the Cubs because of the outdated facilities. Really? What about the nostalgia, the charm that draws every person to the appeal of Wrigley? I believe it’s about the money being spent on the actual players!

    So what’s really happening here. Tom has invested in a new ST and Dominican facility (check box 1). Investing in Wrigley upgrades (check box 2)….in a few years will have a new lucrative marketing deal (check box 3), and then he will sell the franchise. And even if he doesn’t this sure looks more and more like a 10+ year rebuild v. the mindset of every season being sacred.

    It’s never about the product on the field. Let’s not kid ourselves. (Just an opinion here).

    • Tony_H

      I sure hope that Crane Kenney isn’t talking about the product on the field and that is something I believe you agree with me on.

      And yes, I can see some players not wanting to play for the Cubs because of the clubhouse and facilities for the players at Wrigley. They are way behind in this area and it is extremely important in today’s game to get this done.

    • SuzyS

      It is about the product on the field…and the hope of the product on the field. Without the promise of a good on-field product…there is no reason to follow the team.
      I buy that you have to have a good minor league system to feed the mlb team. I buy that you have to have a “modernized, safe and fundamentally sound structure for the fans and players to use comfortably…it is the engine that drives the economics of the sport.
      At some point, if the product on the field isn’t truly competitive…there will be no perceived value to the franchise…with the exception of empty real estate.

    • John_CC

      “And I love the commentary about our Wrigley clubhouse. Does anyone really think that any player (or free agent) is gceiling, say that they don’t want to play for the Cubs because of the outdated facilities. Really? What about the nostalgia, the charm that draws every person to the appeal of Wrigley? I believe it’s about the money being spent on the actual players”

      Bryan I absolutely think that the facilities at Wrigley deter players. Older vets that just want somewhere nostalgic to play for the last couple years of their career would love to play in Wrigley. But younger guys, no way. They go around and visit other clubhouses decked out with a lounge, hot tubs, media room, etc and then go under the charming field into what everyone describes as the crappiest clubhouse facility in the ML. It matters.

  • Tony_H

    “When you start drafting for need in baseball, given the fact these players aren’t going to be here for a few years, you can make a lot of mistakes.”

    http://articles.chicagotribune.com/2014-05-08/sports/ct-baseball-draft-bits-cubs-spt-0509-20140509_1_brady-aiken-jed-hoyer-kolek

    And another item in this article, that is exactly how I feel every team works, constant communication and collaboration.

    “I talk to (manager Rick Renteria) every day about pitcher usage, bullpen usage and starter usage,” Hoyer said. “Our conversation after that outing wasn’t much different. And I think all three of us said individually, when asked about 126 pitches, Jeff said, ‘am I going to do that every time out? Hell no.’

  • gary3411

    Is Stephen Bruno becoming a legit top prospect? He has done NOTHING BUT KILL THE BALL in his entire professional career and still young enough. What was his injury again last year? I can’t find it. Also, any video of him out there?

    • Tom U

      Bruno dealt with both knee and shoulder issues last year, but now appears to nearing 100%.

      One of the scouts I talked to last season said that he felt Bruno projected best at third base defensively. However, his game is not built around the power that you usually see playing there.

      In order to get his bat in the lineup for the playoffs in 2012, Boise worked him as a corner outfielder. That is where I see Bruno eventually ending up. His defense on the infield is passable considering his offense, but players like that eventually end up getting shipped out to the outfield.

      • gary3411

        Too bad. He’s really only a true potential “starter” prospect at 2B IMO, but it doesn’t sound like that is a possibility. Oh well, thanks a lot Tom.

  • John_CC

    I hates this interview. Crane Kenney has no business being employed by the Cubs anymore.

    “It is his job to generate the revenue needed to generate wins.”

    Even those that hate Epstien, does anyone not believe that the big problem here is that the lack of revenue? The Cubs are under two separate contracts that end 5 years apart for the TV rights because Kenney helped create the CSN! The rooftop owners are holding all expanded revenue generating signage – within the stadium that they own! – because of Kenney’s contractual work!! Get creative and fix some problems Mr. President of Business Operations! Seriously, what has he done positive for the Cubs since Ricketts promoted him?

    • Tony_H

      John – Not to defend Kenney and that I don’t get why so many dislike the guy, but when he did those deals, he worked for the Tribune and did what was best for the Tribune at the time (short term thinking). He can’t change any of those deals right now and is now getting to think long term and as he said, Ricketts approved everything they wanted to do that the Tribune never would of agreed to with their #1 concern being short term profit.

      His make or break will be the new radio and tv deals he negotiates for the team.

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  • JB

    “We could sign three players this off-season, and we’ll win 84 games.”
    Really Crane. Can you name those players?