The Conference Realignment Vigil- Update: Terps to Big10?

[A-Tex Devil]

There are rumors that the handshake Big12 TV deal has an escalator for certain schools, in the $3-4 million range, and I'm sure Clemson and FSU are on that rumored list. If that's true, throw another 3-4 on the $20 million each Big12 team will likely get, and probably a couple more that a conference championship game brings, plus whatever each can get on their own Tier 3. Now, a lot of that is guessing, and I won't believe that ACC schools are looking around until it's been reported by someone more reliable. But if FSU really is borrowing money from donors to make payroll, you have to be nervous.


( Fyi, I believe KU pulled in $9 million this year from Tier 3. )

I saw that. I guess I'll believe it when I see it re: that escalator clause, but if it's true just add that to the difference. I hope that the ACC proves it is as strong as it was last year when the SEC seemed to have predatory eyes aimed at VaTech despite appearing to be valued as "lesser than" here by ESPN. But I do think the Big XII will eventually expand, probably starting with Louisville, and I don't think the 12th will be BYU or Cincy. So who would it be?

[Duvall]

I saw that. I guess I'll believe it when I see it re: that escalator clause, but if it's true just add that to the difference. I hope that the ACC proves it is as strong as it was last year when the SEC seemed to have predatory eyes aimed at VaTech despite appearing to be valued as lesse than here by ESPN. But I do think the Big XII will eventually expand, probably starting with Louisville, and I don't think the 12th will be BYU or Cincy. So who would it be?

BYU or Cincy.

[TexHawk]

The infamous Chip Brown is back. Of course, nothing firm with quotes from anybody, other than "After having conversations with people dialed into the administration at Florida State, there appears to be a sense that the board of trustees at FSU might be willing to explore all options."

[Class of '94]

There are rumors that the handshake Big12 TV deal has an escalator for certain schools, in the $3-4 million range, and I'm sure Clemson and FSU are on that rumored list. If that's true, throw another 3-4 on the $20 million each Big12 team will likely get, and probably a couple more that a conference championship game brings, plus whatever each can get on their own Tier 3. Now, a lot of that is guessing, and I won't believe that ACC schools are looking around until it's been reported by someone more reliable. But if FSU really is borrowing money from donors to make payroll, you have to be nervous.


( Fyi, I believe KU pulled in $9 million this year from Tier 3. )

Wouldn't it appear extremely shady on the part of ESPN if they did have an agreement with the Big 12 for an escalator clause if any team from the ACC left for the Big 12 considering the new deal ESPN has with the ACC?

[TexHawk]

But I do think the Big XII will eventually expand, probably starting with Louisville, and I don't think the 12th will be BYU or Cincy. So who would it be?

Louisville will only get an invite if the Big12 has another big fish on the line, and everyone else has said no. For example, if only FSU can come, Louisville gets an invite so they can hit 12. I agree that they will likely end up in the Big12 eventually, but there is no incentive to invite them right now. They will come running at the drop off a hat.

[Duvall]

The infamous Chip Brown is back. Of course, nothing firm with quotes from anybody, other than "After having conversations with people dialed into the administration at Florida State, there appears to be a sense that the board of trustees at FSU might be willing to explore all options."

That is certainly a meaningful statement that is not carefully constructed to give the appearance of news without any of the substance.

Wonder why Texas is having its puppet try to convince people that FSU is considering the Big XII. After all, if FSU were really interested, they could be talking to people in Big XII country - even Tallahassee has working phones. I wonder if this is an attempt to block movement towards a Louisville/X expansion by making it appear as though better options are imminent.

[msdukie]

That is certainly a meaningful statement that is not carefully constructed to give the appearance of news without any of the substance.

Wonder why Texas is having its puppet try to convince people that FSU is considering the Big XII. After all, if FSU were really interested, they could be talking to people in Big XII country - even Tallahassee has working phones. I wonder if this is an attempt to block movement towards a Louisville/X expansion by making it appear as though better options are imminent.

Don't overestimate Tallahassee's technological development. Besides, even if they had the phones, do you think they would know how to use them properly?

[A-Tex Devil]

The infamous Chip Brown is back. Of course, nothing firm with quotes from anybody, other than "After having conversations with people dialed into the administration at Florida State, there appears to be a sense that the board of trustees at FSU might be willing to explore all options."

Chip Brown was on target in 2010, but not so much in 2011, and this article could have been written by anyone with a rivals account and time on their hands. That doesn't make any of the facts he lays out untrue, but the conclusions that he draws or infers are certainly specious and premature. Still, the more and more I look at it, the ACC deal is pretty crappy, especially for FSU considering their potential third tier market and their financial issues. But there are huge gaps here, like, for instance, any reputable source saying FSU has indicated any interest in the Big XII whatsoever.

As for Chip Brown being UTs puppet, I am not sure that was ever the case because he's reported too many negative things about the university over the years, including making a bigger deal out of the recent football player arrests than even the local paper did. I think UT feeds him stuff when it makes sense for UT because he is predictable. Puppet isn't quite the right word, though, because Chip will run with stuff that puts UT in a bad light if he has the sources.

[sagegrouse]

The infamous Chip Brown is back. Of course, nothing firm with quotes from anybody, other than "After having conversations with people dialed into the administration at Florida State, there appears to be a sense that the board of trustees at FSU might be willing to explore all options."

The article or, really, self-initiated rumor has no face validity. Having lost A&M, Mizzou and Nebraska to "better" leagues, the Big 12 will then attract Florida State, one of the premier athletic programs in the country, which is more than 800 miles away (road mileage) from the nearest other Big 12 school? Hunh? Lessee, ... the closest Big 12 teams to Tallahassee would be several states away in Morgantown, WVa and Waco, Tex. Boy, those would be exciting trips for the Seminole faithful in their RVs! And, of course, the AD and Prez would really love to travel around the state of Florida telling people how happy they are to be in a conference with Iowa State and TCU.

sagegrouse

[El_Diablo]

There are rumors that the handshake Big12 TV deal has an escalator for certain schools, in the $3-4 million range, and I'm sure Clemson and FSU are on that rumored list. If that's true, throw another 3-4 on the $20 million each Big12 team will likely get, and probably a couple more that a conference championship game brings, plus whatever each can get on their own Tier 3. Now, a lot of that is guessing, and I won't believe that ACC schools are looking around until it's been reported by someone more reliable. But if FSU really is borrowing money from donors to make payroll, you have to be nervous.


( Fyi, I believe KU pulled in $9 million this year from Tier 3. )

That escalator clause makes no business sense whatsoever for the networks. ESPN/Fox would essentially be paying an extra $53-64m per year ($23-24m for the new school, plus $30-40m per existing Big XII school to account for the "escalator") just to move FSU or Clemson from the ACC (to which ESPN already owns exclusive rights) to the Big XII. If the ACC already has exclusive access to a particular TV market...why on earth would it pay any part of an extra $53-64 million PER YEAR for that same market??? Over the course of a thirteen year deal, that would come to an extra $689-832 million on top of what is already been paid. Unless the networks are run by a bunch of utter buffoons, that unspoken escalator clause is nothing but a fantasy.

[bob blue devil]

i realize the answer to this is probably self evident to most on this thread, but why is it that the headline economics that keep getting tossed around for the Big10 and Big12 look so much better than the ACC? Is it because the ACC has a bunch of (relatively) small private schools?

[A-Tex Devil]

That escalator clause makes no business sense whatsoever for the networks. ESPN/Fox would essentially be paying an extra $53-64m per year ($23-24m for the new school, plus $30-40m per existing Big XII school to account for the "escalator") just to move FSU or Clemson from the ACC (to which ESPN already owns exclusive rights) to the Big XII. If the ACC already has exclusive access to a particular TV market...why on earth would it pay any part of an extra $53-64 million PER YEAR for that same market??? Over the course of a thirteen year deal, that would come to an extra $689-832 million on top of what is already been paid. Unless the networks are run by a bunch of utter buffoons, that unspoken escalator clause is nothing but a fantasy.

While I would disagree as to whether the escalator clause makes NO business sense, you definitely illustrate where the FSU to Big XII logic fails (right now), especially if ESPN is pulling the strings or has any semblance of influence on realignment.

ESPN just got the ACC on the cheap. Why would they encourage one of the ACC teams to leave to a conference they don't have exclusive rights over. Unless ESPN is running some kind of Game of Thrones type scheme none of us see coming, they would do everything they can to keep the ACC as is. The ACCis, after all, ESPNs biggest content provider.

Unless, of course, the new ACC deal was made with some future events in mind....


(don't know why a frown is at top. That was accident and can't seem to delete.)

[El_Diablo]

Just doing the math...since the new ACC deal kicks in this July, the current ACC schools would actually net $20m each for the first year unless Syracuse and Pitt join the league early.

This raises the question: Are Pitt and Syracuse now sufficiently incentivized to depart the Big East a year earlier such that we will be seeing them in the ACC this fall? The league would have to scramble a little bit in order to rework the football schedules, but I suppose it could be done if it came to that. It will be interesting to see if there's any movement on this front now.

[El_Diablo]

Well, the real comparison is against a school like Kansas. Which is hurting in football right now (although they've had a few good to great years recently).

KU is going to gross $20MM under the new Tier 1 and Tier 2 agreements the Big XII has with Fox and ESPN. Add to that the link I posted before where KU got around $7MM for tier 3 rights in 2009-2010, a number I imagine is at least holding steady, and you see KU getting ~$27MM total going forward.

Compare that to, I dunno, UNC, who in 2009-2010 got $11M for third tier programming according to the link. This is (at least mostly) contributed to ESPN in these latest ESPN contracts where each school shares equally across all tiers, at first $13MM , and now $17MM per year.

I'll grant that there may be some things in that $11M UNC was receiving that haven't been given over to ESPN -- since "third tier" is still such a nebulous concept. But the main point is that all of ACC's TV has been given over to ESPN, and at a price per school that is less than what other conferences are getting for just the first and second tier rights. When you see what schools from Florida to Texas to Kansas are getting for third-tier rights, it definitely seems like a second class deal. Now that could all change with Notre Dame, or this could scare away Notre Dame altogether. ESPN is too smart not to adjust if ND truly becomes an option for the ACC, but this new contract just seems like ESPN got the ACC locked down even further on the cheap. Hopefully there are some escalators in there if ND ever becomes viable.

Where did you see that the ACC is ceding additional third tier rights to ESPN? I have seen no mention of that, but I might have missed it.

[A-Tex Devil]

Where did you see that the ACC is ceding additional third tier rights to ESPN? I have seen no mention of that, but I might have missed it.

This article explains it, but it's out there from other sources as well. This article does highlight that ACC gave up more for less than the Big XII is going to end up getting per school.

This is inarguably better for the ACC than before, but I will be interested to see where the SEC lands when their negotiations conclude.

[El_Diablo]

This article explains it, but it's out there from other sources as well. This article does highlight that ACC gave up more for less than the Big XII is going to end up getting per school.

This is inarguably better for the ACC than before, but I will be interested to see where the SEC lands when their negotiations conclude.

Yes, I saw that article already, but it doesn't really explain anything. The only reference is:

"The Big 12's latest deal is expected to pay $20 million to each school annually, in addition to each school being able to sell its own third-tier media rights, with $1 million to $10 million per year being a feasible eventual range for each of those. The ACC's deal doesn't appear to allow that."

But that article is otherwise just reposting the ESPN/ACC press release, which makes no explicit reference to third-tier rights one way or the other. My question is, how does, say, UNC go from getting $11 million per year in third tier rights to $0, based on the information available in the press release? In other words, what outside information supports the inference that Jason Kirk makes in that article you linked that the ACC has surrendered all third-tier rights? The press release basically just says that with the addition of two more schools, the ACC will be producing up to 14 more football games and 30 more basketball games every year. I agree with you that it would be a pretty bad deal for the ACC if that's the case, but I don't know how anyone can conclude that it's the case based on what has been announced.

EDIT: I've seen the Chip Brown piece too. Maybe I'm just missing a more fundamental piece of information that they both seem to be working with.

[A-Tex Devil]

Yes, I saw that article already, but it doesn't really explain anything. The only reference is:

"The Big 12's latest deal is expected to pay $20 million to each school annually, in addition to each school being able to sell its own third-tier media rights, with $1 million to $10 million per year being a feasible eventual range for each of those. The ACC's deal doesn't appear to allow that."

But that article is otherwise just reposting the ESPN/ACC press release, which makes no explicit reference to third-tier rights one way or the other. My question is, how does, say, UNC go from getting $11 million per year in third tier rights to $0, based on the information available in the press release? In other words, what outside information supports the inference that Jason Kirk makes in that article you linked that the ACC has surrendered all third-tier rights? The press release basically just says that with the addition of two more schools, the ACC will be producing up to 14 more football games and 30 more basketball games every year. I agree with you that it would be a pretty bad deal for the ACC if that's the case, but I don't know how anyone can conclude that it's the case based on what has been announced.

EDIT: I've seen the Chip Brown piece too. Maybe I'm just missing a more fundamental piece of information that they both seem to be working with.

As I mentioned above, third tier rights are a bit nebulous. In this context, we are talking about TV rights. UNC probably is making quite a bit on media rights on things like radio, maybe a coaches show, etc. So that $11MM has not gone down to zero. But the portion of that $11M which is related to airing football and basketball has been handed over to the ESPN contract (and not just yesterday's -- this was the case in the contract signed a couple of years ago too).

In the ACC, ESPN has the right to air every single ACC football and basketball game. Now, sometimes they will sell the rights to a syndicated network like Raycom or the ACC Network. But if ESPN doesn't have the room to air the game, and can't sell the game, the school has no rights to air it otherwise. So while this helps the ACC because it offers more national slots to air football and basketball games across all of ESPN's channels, it also hurts because if there isn't room or there is no demand to pick the game up, the game doesn't get aired, and the school isn't allowed to work out a deal to do it themselves.

Conversely, in the SEC, if CBS and ESPN decide not to air a game, the school can run it through pay per view or whatever method they deem best. Alabama did this last year. Of course, they certainly had the demand for it.

In the Big XII, each school can do whatever they want with third tier rights as well. In the event a Texas home football game or basketball game doesn't get picked up by ESPN on the first tier or Fox on the second, Texas, under the LHN contract, airs it on the LHN. If a KU basketball game isn't picked up by ESPN or Fox, KU can air it regionally through its own broadcasts. Obviously, the schools that have the demand to market their own third tier rights (say like Duke basketball) are the ones that are usually getting picked up by the first and second tier carriers in the first place. And again, in the Big XII and SEC model, a school like Iowa St. or Mississippi St. that doesn't have a ton of demand may see some of its games not aired AND not get to share in the third tier revenue of other schools -- so there is that. At least in the ACC/ESPN model, even if a Duke game isn't aired, Duke is still sharing equally on every ACC game aired on the ESPN networks with the rest of the ACC schools. But this is where a school like FSU might get a little irritable if they think they can market and sell their games not otherwise aired by ESPN.

So there are good and bad sides to each of these philosophies on how to treat third tier TV rights. But to the larger point -- yes, the ACC has given over all of its TV rights to ESPN.

Edited --- Chip Brown's article is a digest of message board rumor and innuendo tied to the facts of contracts and athletic department budgets (just like a lot of this thread, where I think it's fine). They were pimping it on the air in Austin this morning on his morning show, and it's just a joke that they pretend it is breaking any news. The only significance is that Chip WAS out in front in 2010. So now he has a following, and people that haven't been aware of the FSU/Clemson rumors now think there is something to them. I defended Chip in 2010 and a little in 2011, but he's mostly selling his name now and calling it a breaking story because he knows most of the people reading him are hearing it first from him.

[El_Diablo]

Ah, okay. So it was part of the 2010 deal that has yet to go into effect, and everyone's basically assuming it carries over to the new deal as well because we haven't been given any other specifics (and one would rationally assume that the ACC would already be touting its ability to market third tier rights if it had in fact retained any). That certainly makes sense, in the absence of any contrary information. I was just wondering if there that was explicit on this point because I had heard the ACC was supposedly pursuing a model similar to the PAC 12 deal. I have known about the $3.6 billion figure for a little over a month now, but I was not aware of any specifics beyond that and was hoping that the ACC would retain some residual broadcast rights. Guess not.

[A-Tex Devil]

Ah, okay. So it was part of the 2010 deal that has yet to go into effect, and everyone's basically assuming it carries over to the new deal as well because we haven't been given any other specifics (and one would rationally assume that the ACC would already be touting its ability to market third tier rights if it had in fact retained any). That certainly makes sense, in the absence of any contrary information. I was just wondering if there that was explicit on this point because I had heard the ACC was supposedly pursuing a model similar to the PAC 12 deal. I have known about the $3.6 billion figure for a little over a month now, but I was not aware of any specifics beyond that and was hoping that the ACC would retain some residual broadcast rights. Guess not.

The PAC 12 schools handed over all of their TV rights to the networks and the conference channel. So in a sense, other than not (yet) having a conference network, it is the same deal as the PAC 12 cut. It's just that one entity owns the rights to everything (ESPN) instead of 3 entities (ESPN, FOX, Pac 12 Networks (which is fully owned by the conference))

Another angle to look at this is that if the ACC *were* to have a conference network, based on the current contract, it would likely be part of the ESPN family of networks. Just like LHN.

[Duvall]

The PAC 12 schools handed over all of their TV rights to the networks and the conference channel. So in a sense, other than not (yet) having a conference network, it is the same deal as the PAC 12 cut. It's just that one entity owns the rights to everything (ESPN) instead of 3 entities (ESPN, FOX, Pac 12 Networks (which is fully owned by the conference))

Another angle to look at this is that if the ACC *were* to have a conference network, based on the current contract, it would likely be part of the ESPN family of networks. Just like LHN.

And to be clear, if ESPN and the ACC were to develop an ACC Network, the contract would be restructured to increase revenue to the ACC.