The multimillion-dollar bidding war to secure radio rights to Red Sox baseball is virtually certain to pump more money into the team at a time when stations in other cities are refusing to increase payments for play-by-play broadcasts.
The battle between Boston's dominant sports station, WEEI-AM, and the owner of radio station WBOS-FM over which will walk away with the right to air Sox games once again demonstrates the enormous marketing power of the team. WEEI's contract with the team expires this year, and the Sox have taken bids from radio stations for several months, but they have no deal yet.
In their new contract, the terms of which are still being worked out, the Sox are likely to earn at least $12 million a year -- nearly as much as the $13 million paid annually to the Atlanta Braves, and more than the New York Yankees' current $10 million deal, though that is expiring this year. (The information about the Sox's negotiations was described to the Globe by executives briefed on the situation; the trade publication Sports Business Journal has published details of radio deals in other cities.)
Radio stations across the country are balking at pricey sports deals. The Chicago White Sox, despite winning the World Series last year, recently moved to a radio station that will pay the team $1 million less per year than its former deal, according to the Chicago Tribune. The St. Louis Cardinals, which lost to the Red Sox in the 2004 World Series, left the team's radio partner of more than 50 years after the station wanted to lower the price. The Cardinals fled to another station, where they took an ownership stake.
Play-by-play radio consultant Bob Snyder has one word to describe the current radio rights environment: horrible.
''For every profitable radio rights play-by-play deal, there are probably 10 that are not," said Snyder, who owns Beason Broadcast Partners outside Chicago. Across all sports leagues, the soaring rights fees paid to teams over the last decade have caught up to the radio stations, and many are now drawing the line. The stations' financial losses ''used to be a justifiable expense," he said. Now, he said the losses have gotten so large that ''it's no longer justifiable."
In addition, local radio stations' traditional monopolies are fragmenting with the rise of satellite radio, cellphone downloads, and the Internet. Corporations are allocating their advertising dollars over more types of media, leaving less money for local radio.
The Boston radio market is facing all these challenges as well, but the Red Sox appear immune to them. The Sox's proposed radio deals go beyond the annual payments of $12 million or more: If the team signs with WBOS, it could take a 25 percent ownership stake in the station, allowing the Sox to share in the upside if the station does well.
Meanwhile, Entercom Communications Corp., which owns WEEI, has upped the ante. It put in a counteroffer after the Globe published a story detailing the WBOS negotiations last month. The details of the proposal are not available, but Entercom previously has offered to let the Sox buy up to 10 percent of stations in the team's radio network, excluding flagship WEEI, and would likely increase its equity offer to remain competitive. At one point, Entercom offered to move the Sox to another Boston station, WRKO, which Entercom also owns.
Red Sox chief operating officer Mike Dee declined to comment for this story. Greater Media, owner of WBOS, previously confirmed its interest in the Sox. A spokeswoman said this week that there is nothing new to add. Julie Kahn, vice president and New England market manager for Entercom, said negotiations slowed down amid preparations for opening day, but she expects them to heat up again. ''We're hopeful we can keep our partnership going," she said. (The New York Times Co., owner of The Boston Globe, holds a 17 percent stake in the Red Sox.)
Snyder, the play-by-play consultant, said the passion of Boston's fans and corporations' eagerness to associate themselves with the team are driving up the value of Sox radio rights.
''They're the ones who are making the decision of whether to allocate hundreds of thousands of dollars to whoever has the rights," he said. ''They're a very influential group."
Locally, two CBS Radio stations in Boston, WBZ-AM and WBCN-FM, put in bids for the Red Sox, but as of late March, their offers were the lowest by far. That is not surprising considering that CBS Radio, formerly Infinity Broadcasting Corp., has led the national backlash against pricey sports deals.
CBS Radio chief executive Joel Hollander has publicly criticized Major League Baseball's decision to sign a deal with XM Satellite Radio, saying it diluted the value of baseball's existing radio contracts. He also attacked another deal with Cingular Wireless to let baseball fans download local radio feeds into their cellphones. ''It's another slap in the face" for local radio stations, he told the New York Daily News last year. He has publicly vowed never to do another unprofitable rights deal.
Across all sports leagues, much of the turnover has come after the local CBS Radio station declined to pay high prices for the contracts. The Baltimore Ravens in the National Football League recently left the local CBS station after it declined to match a better offer.
The changing economics are one big reason that many teams -- from St. Louis to the Angels in California -- are buying radio stations or taking stakes in them. For the Red Sox, the idea has appeal as well, especially as the team wrestles with what is the best way to take advantage of the changing radio landscape, while minimizing the risks.
''The radio business has been a changing business: you have satellite radio and you have digital radio coming on board," Dee, the Sox's chief operating officer, said in an interview earlier this year. ''We're going to go into the process with open eyes and look to do something that's in the best interest of the Red Sox."
Sasha Talcott can be reached at email@example.com.