Salary Cap Radio

In most major league sports, team owners have to work under the constraints of some kind of salary cap.

The term, I believe, is “capology”.

The motives on the part of the team owners are to keep salaries down and in essence prevent future George Steinbrenners from buying a championship while smaller market teams could not compete.

Of course the players reluctantly agreed to salary caps during labor negotiations but some agents have found ways to work around it.

What a perfect idea for the consolidated radio industry – I’m talking about you Clear Channel and Cumulus and Citadel.

In the case of these owners, there is no cap – just an ever shrinking budget which forces their minions to fire key talent and remove assets that wind up actually hurting their stations.

So how about a salary cap for radio – in particular these three companies – one of whom voluntarily filed for bankruptcy, another facing $18 billion in debt it can’t repay in two years and the third singing “It’s a Beautiful Day In the Neighborhood” while its debt piles up.

Are you with me?

Open minded?

Here is salary cap radio. I'm counting on you to weigh in a Facebook discussion to hone this thing. Dickey, Suleman and Hogan are listening.

1. Each market gets an annual budget for its local properties and like sports teams that get their cap limit from the league, the markets get it from their home office. Let's say, $30 million for a cluster of stations in Anytown, USA.

2. The market manager (if he or she hasn’t already been eliminated at which point corporate divvy's up the money) sees to it that the manager running each station gets to spend the allotted budget.

3. There has to be a manager for each station. Sorry, if you won’t do this, I’ll take my marbles and quit. Come on! You have to have a local manager. Just deal with it.

4. The manager gets to decide on how he or she wants to spend the money. That means if she wants to hire a morning team, she can do it. If she needs to run cheap on all-nights, then that is her decision. She has to work within the salary cap. (By the way, her salary is not in the salary cap – just as it is not in the salary cap of sports teams). Do you think Farid likes this yet?

5. Say a station manager wants to hire Dave & Geri for five years (as they should have done in Grand Rapids where they remain very popular), the structure of the contract can allow for the station to take a bigger cap “hit” in the early years of the contract and less in the later years. That’s why you need an on-the-scene manager – to know whether the station will be successful enough to grow the salary cap in ensuing years. In the case of Dave & Geri, local management let them get away and now their audience is following them on their podcast. Can any station afford that kind of listener defection?

6. You need a minor league just as sports teams have. Sometimes you are paying so much for key talent that you have to bring up a minor leaguer who has great potential for a look-see. Maybe you keep them for a while or send them back to another station. When I was a PD in Philly, I always had minor league stations from which to siphon talent – in upstate Pennsylvania. And they often became future big market stars at low prices (at first).

7. Sorry, your sales professionals and other employees including clerical (if any) must also be considered in your capology strategy. Don't forget sales, marketing and promotion. And, engineering when you divide the money up.

8. The difference between this and traditional budgeting is that budgeting involves cutting back whereas capology requires a deft hand at weighing which talents should get the most money to bring the best results.

9. Mobile, online and social networking must also be a cap expense. Some managers really do get the importance of online revenue growth and they are best suited to determine how fast and how much should be spent on new media. By keeping the decisions local, the money can be invested more wisely. If I’m running a local station, I’m looking to spend at least 25% of my budget on the future – or as I also call it – new media. The first year I may not have my morning talent signed to a ten-year contract yet but I can get those expenses under control.

If stations do well with their ratings and ad sales, then they get rewarded with a higher cap next year – the better to invest and shore up the local franchise.

Alright, maybe I’m no John Hogan but will you at least give this salary cap idea a try?

For those of you who would prefer to get Jerry's daily posts by email for FREE, please click here. Then look for a verifying email from FeedBurner to start service.
Thanks for forwarding my pieces to your friends and linking to your websites and boards.