Posted on: June 10, 2011 1:40 pm
Edited on: June 10, 2011 1:41 pm
WALNUT CREEK, Calif. -- The architect of the latest round of conference realignment says the earthshaking hasn't stopped.
Pac-12 commissioner Larry Scott told CBSSports.com that there could be more conference movement before 2020. Scott was named No. 1 Friday in CBSSports.com's college football top 100 for 2011.
"I don't see anything major on the horizon -- short term, a few years," Scott said. "I'd be surprised if in the second half of this decade, we don't see another major round."
What, he was asked, would set it off?
"It could be TV deals," he said. "It could be other politics and dynamics within the NCAA. If I had to guess I would say it would be economic. That's why I believed it made sense [to expand] and continues to make sense."
A marketplace starving for content and a bunch of major conferences coming up for rights fees renewal caused the latest shifts. Conference affiliation has become more about your rightsholder than your league partners. The leagues that have the most schools desirable to the networks make the most money. That's why we came close last year to ushering in the era of superconferences. Texas was seriously considering joining the Pac-10 a year ago.
It was last June when Scott narrowly missed shaking college athletics to its foundations with a bold play to lure half the Big 12 to the Pac-10 to form the Pac-16. The deal was all but done but ESPN and Fox intervened at the last minute making financial promises that essentially convinced Texas to stay in the Big 12.
Having to "settle" for expansion with Utah and Colorado, the Pac-12 still landed a record rights deal in May with the same two outlets. Fox and ESPN joined as partners in the Pac-12 deal to pay the league $3 billion over 12 years. What would a Pac-16 have been worth?
"It's hard to know," Scott said.
Given that a 12-team league that didn't include Texas was worth $3 billion, a 16-team conference with the Longhorns would have been worth at least $4.8 billion. That's a conservative estimate of $25 million per school multiplied by 12 years.
Would the Pac-12 still be interested in Texas? Any league would be interested in Texas. The Longhorns are happy for now, starting their own network within the framework of the now 10-team Big 12. But clearly the geographical challenges of flying from Austin to the West Coast didn't matter when Scott made his play last year.
"There was a 48-hour period during that week where it was close," said Chris Bevilacqua, the Pac-12 TV consultant.
Bevilacqua may be the first industry insider to admit that it was ESPN and Fox that saved the Big 12 a year ago. Neither network could afford for the Big 12 to go away so they both made financial promises in order to keep it together. Had the Big 12 broken up, that would have eliminated one BCS conference that accounts for 16 percent of the households in the middle of the country. With the Pac-10 going out to bid this year, there was a possibility that both ESPN and Fox would have been shut out of two BCS leagues.
The Big 12 recently signed a long-term deal with Fox for its secondary rights for $90 million per year.
"They [ESPN, Fox] conspired, of course they did," to save the Big 12, Bevilacqua said. "That's a fact."
Posted on: June 9, 2011 12:27 pm
Edited on: June 9, 2011 4:27 pm
Terrelle Pryor's attorney on Thursday called the latest allegations against the former Ohio State quarterback by ESPN "bogus", threatened legal action, and called the NCAA system a form of "slavery."
Columbus, Ohio, attorney Larry James made the comments Thursday morning while appearing on SiriusXM's "Jason & The GM" show on satellite radio. Thomas described himself as a local figure who had worked with Ohio State in the past and knew AD Gene Smith, president Gordon Gee and former coach Jim Tressel.
"It was probably good for Terrelle to meet persons like myself, African-American lawyers, very successful -- quote, unquote," James said.
James said he did not know that meeting would lead to his representation of the troubled former star. He went on to say that "most" of Pryor's wrongdoing is limited to the selling of memorabilia "when he was a freshman, 18 or 19 years old at the time".
Ohio State's problems seemed to escalate Tuesday when ESPN.com reported that Pryor had made $20,000-$40,000 selling memorabilia with the help of a local freelance photographer, Dennis Talbott. Talbott has denied the allegations.
"I know Dennis Talbott," James said. "I don't mean to belittle Dennis Talbott but Dennis Talbott is not a deep-pockets player. This is out of his league. He does not have this kind of cash. He is not one of those dealers that one would say D has the ability to neg-buying and selling of memorabilia. Dennis was a part-time photographer who knew a lot of players. He was known around town. He is harmless. He definitely did not have that kind of wherewithal to do that kind of stuff and that story is just bogus."
The subsequent "Outside the Lines" report on ESPN, James said, "is close to being reckless and malice and over the line. This is something that Terrelle at the appropriate time may look at once he gets in the position to have the wherewithal to bring that lawsuit."
An unidentified former friend accused Pryor of taking the money in the ESPN reports.
James then went into detail describing Pryor's car situation that has come under scrutiny. With the NCAA curious about that situation, Pryor seemed to brashly drive to a team meeting Monday in a Nissan 350Z with temporary tags.
James explained that Pryor came to Columbus with a Hyundai Sonata purchased by his mother, Thomasina, when he was a senior in Jeanette, Pa. James said that after about a year, "that car practically dies," and Pryor's mother paid $11,000 for a Dodge Charger, again in Jeanette.
Over the next three years, the Charger was serviced "three or four" times requiring the use of a loaner car. At some point the Charger was traded in for the 350Z. The cars had the same approximate monthly payments, $298, according to James.
Six Ohio State players were cited by the NCAA in December for trading memorabilia for tattoos and other benefits late last year. Pryor was among those suspended for the first five games of 2011. However, Sports Illustrated last week quoted a source who witnessed nine other current players swap memorabilia or autographs for tattoos or money.
He then added of the nine new names published in SI, "They will be cleared. They will be cleared."
As for leaving the team when Pryor did, James said there is "division -- as you all know -- in the lockerroom among a lot folks."
"Terrelle looked at a situation where it was a hornet's test to try to continue to play football at Ohio State whether he was cleared or not."
He did not elaborate on that subject nor on the assertion that Pryor has had some "proposals" emailed from the Canadian Football League. James said he probably wouldn't negotiate any professional contract that Pryor would consider. There was no anger from Pryor, he said, after leaving the university.
"Irrespective of how harsh and idiotic we think some of the NCAA rules are, they are still on the books," James said. "They had slavery for all those years. Those rules are still on the books, and the courts uphold them."James then ranted about the NCAA and its enforcement process.
"You've got a captured system here in college football. It's mandated, dictated, the student-athletes have no rights. They have no relief. It's an archaic, draconian process by which you are basically financed for about 9 1/2 months of your school year and then you're to find the money for whatever else is left. You live in basically poverty throughout that period and you're making a million dollars for institutions."
James said he was not aware of any NCAA violations by Pryor, "over the last couple of years that we have uncovered."
James was questioned by hosts Jason Horowitz, a CBSSports.com contributor, and Steve Phillips, the Mets' former GM.
Posted on: May 26, 2011 3:02 pm
Edited on: May 26, 2011 3:04 pm
One industry analyst told CBSSports.com Thursday that the Pac-12 could eventually take in $400 million per year when all its rights are accounted for. That would be a 40 percent bump in the current payout of $250 per year that begins in 2012.
The analyst was reacting to Wednesday's blog post when commissioner Larry Scott said Pac-12 Media Enterprises could bring in an additional $1 billion over the next seven-to-10 year period. That would be over and above the 12-year, $3 billion deal the conference signed with Fox and ESPN.
When the deal starts next year, the 12 schools will begin to split that $250 million or $20.8 million per school each year, on average.
The extra income would come from the yet-to-be valued media arm of the conference that bundles the network, digital rights and sponsorship and licensing. At $400 million, the schools would average $27.7 million per year.
"We're only at halftime here," said the analyst who did not want to be identified but is familiar with the Pac-12 situation. "There's probably another $50 million to $100 million a year [out there] ... We're getting into the $400 million-a-year stratosphere."
The conference continues to develop its strategy launch a conference network.
Posted on: May 25, 2011 6:37 pm
Edited on: May 25, 2011 6:38 pm
WALNUT CREEK, Calif. -- The Pac-12's financial momentum isn't about to slow.
Commissioner Larry Scott said Tuesday that the league's media arm could earn the conference an additional $1 billion over a seven-to-10 period. The previously announced Pac-12 Media Enterprises is a kind of holding company, according to Scott, that would bundle the league's new network, the digital rights and the conference's sponsorship and licensing (Pac-12 Properties).
The expanded conference is just beginning to realize its total worth as it seeks to start its own network. The $1 billion would be separate from the 12-year, $3 billion rights fees deal the Pac -12 finalized with ESPN and Fox earlier this month.
"I can tell you this, based on offers people have made to us we've got at least a billion-dollar business we're sitting on," Scott told CBSSports.com. "That's just Pac-12 Media Enterprises."
He later added: "That is a broad figure that has been thrown out to us by media investors. That's a potential minimum value over a seven-to-10 year period."
Dividing $1 billion among 12 schools could mean an additional $83 million is gross revenue total per school. Depending the on length of the deal, that means Pac-12 Media Enterprises alone could produce an additional $8.3 million-$11.9 million per year for each school. The schools already are guaranteed an average of $21 million per school in the ESPN-Fox deal.
Stanford AD Bob Bowlsby seemed to confirm another pending windfall for the conference telling CBSSports.com that the network and digital rights "may be worth well into eight figures per year." He added, "Time will tell on that. We may know something in the next 90 days."
Scott called Pac-12 Media Enterprises a "for-profit subsidiary of the conference."
"I'm not running from it," he added, "but I don't want to leave the impression that our primary focus is financial."
Scott, as well as industry insiders, is anxious to see the possibilities of the conference's network. The commissioner consulted with -- and gives a lot of credit to -- his peers at the Big Ten and SEC (Jim Delany and Mike Slive) who previously started similar ventures. All parties know the road to network profitability can be a long, hard slog. It took the Big Ten more than two years to realize a profit with its network. That was relatively fast for a start-up but no one knew in the beginning when that profit would come.
The Pac-12 is seemingly better positioned because Scott negotiated rights to first-tier games in football and basketball for his network. In other words, the Pac-12 Network (or whatever it is called) will have first choice of the best games for its air.
That situation will help with potential partners, distributors and advertisers. Scott said the league is still deciding how to deploy the network. First reports were that the Pac-12 would own it alone. That approach would maximize profits instead of having to share them with a partner. But Scott said several business models are still on the table.
Scott even foresees a situation where the Pac-12 Network could be shown on an existing channel. He used the example of the Oprah Winfrey Network (OWN) replacing what used to be Discovery Health.
The digital possibilities, he continues to say, are limitless. There are 2,700 Pac-12 "events" available for broadcast each year according to Pac-12 TV consultant Chris Bevilacqua. To date, only 131 of those have been sold. Scott wants Pac-12 content on every device imaginable. There already have been discussions with Google as a possible partner.
"It's hard to imagine now but I wouldn't be surprised that five-to-seven years from now we've got more fans on different devices other than TVs," Scott said.
Posted on: May 8, 2011 5:45 pm
Proving once again there are no offseasons ever in any sport, these bombs dropped during my vacation last week. Each one deserves a response from this space's department of justice ...
The Bomb: Pac-12 agrees to a 12-year, $3 billion deal with ESPN and Fox.
The Response: The first thing that came to mind: Larry Scott is gold. The commissioner was hired to drag the sleepy Pac-10 out of its past and rocket it toward a lucrative future. In less than two years, he delivered big time. As of right now, Scott can pretty much write his own ticket as a sports CEO. I'm talking about commissioner of baseball, the NFL, head of the U.S. Olympics, maybe even the next president of the NCAA. (More on that later in the week).
Scott delivered because these commissioner jobs have evolved into giant fundraising endeavors. Sure, every once in a while a commish has to suspend or fine someone but that's small stuff. The commissioners' mandate from the presidents they serve is to make as much money as possible for the schools. Mike Slive and Jim Delany, two powerful guys with powerful NCAA backgrounds, had been the best at it -- until now. In less than two years Scott reshaped and repackaged his conference in such a way that it became the most lucrative league television property in history. Remember, this is a guy who sees profit centers in China for UCLA gear.
The question now becomes what the Pac-12 schools do with their windfall. You can be sure that most of it won't be spent adding sports. There's a reason that only 10 or so schools out of 120 in I-A are turning a profit. The cash will go to the bottom line -- existing facilities, recruiting and coaching salaries. Adding non-revenue sports adds nothing to the bottom line.
In other words, the Pac-12 just became a player for the likes of Urban Meyer. I'm not saying Meyer will be hired in the Pac-12, I’m saying that the Pac-12 can now afford coaches of his stature. UCLA, not exactly Fort Knox when it comes to paying coaches, now has the ability, if it chooses, to pay Meyer if it fires Rick Neuheisel. The question is not whether it will, the reality is that it can make that call without getting hung up on.
The Bomb: The Department of Justice writes the NCAA and asks, "What's up?" about a playoff.
The Response: First, I'm not even sure Justice sent the letter to the right person. Mark Emmert and the NCAA he oversees has minimal control over college football in general and almost none over postseason football. Emmert's answer should be short and to the point: The reason we don't have a playoff is because the membership doesn't want it.
Never mind that the NCAA technically isn't responsible, the commissioners seemingly have a way of diffusing any coming legal challenge.
"We never could have believed the regular season would have grown over the last 15 years like it has grown," said Delany, the Big Ten commissioner. "I think that's due, in part, to the BCS. We did what we set out to do, which is [stage] a 1-2 game, preserve the bowl system and grow the regular season ... We feel like we're on good [legal] ground. We never know about what a judge or jury could do, [but] we feel like we've got good representation."
I talked to noted anti-trust attorney Tom Rhodes about this issue last week. He isn't concerned for the BCS, calling the letter a political issue, not a legal issue, adding that assistant attorney general Christine Varney's interest is a "war dance" not a "war." Rhodes also intimates that Justice is a political animal that serves a president who made populist statements about a playoff while trying to get elected.
"It's important to understand what the letter does not say," Rhodes told me. "It doesn't say, 'You're in violation of the anti-trust laws.' ... Second thing is, if she [Varney] thought she had a case she wanted to bring she'd have brought it already. The third observation I would make is that the Department of Justice often has to be responsive to the political realities of the world. A political reality here is [Republican Utah Senator] Orrin Hatch is important to the administration.
Hatch has been a constant critic of the BCS but you wonder who his constituency is at this point. Utah is now in the BCS club. BYU, by its own choosing, went independent electing to join Navy and Army in having the worst BCS access in I-A. Those three schools will be considered if any finish in the top 14 of the BCS, but they are assured of a BCS berth only if they finish 1 or 2 in the final standings.
"People who are going to go to war usually don't spend a bunch of time jumping up and down with a war dance," Rhodes added. "This letter is consistent with the idea that Justice can do a war dance and if the BCS then makes a change, the [Obama] administration can claim, 'Look what we've done.' "
Think of it this way: The BCS has been called in for questioning but no one is ready to make an arrest.
The Bomb: Ohio State will investigate the sale of cars to Buckeye players and their relatives at two local dealerships.
The Response: I think I speak for everyone when I say there are few people in this world more trustworthy than used-car salesmen. Yeah, right. Those 14 magic words have, at some point, rung in all of our ears: "What's it going to take for me to put you in this car today?"
Next thing you know you're meeting the finance manager and making chit chat about how much you make a year. Having jaw surgery is more pleasant. Yep, something smells about the school now investigating 50 sales to determine whether players or relatives received price breaks (translation: extra benefits). My dad was a car salesman. Never once did he mention that cash-poor college kids were an untapped customer base.
So now the case goes to the Ohio State compliance department which is the collegiate equivalent of those used-car salesmen. This is the crack group that forgot to tell the Buckeye Five that selling their gear to a tattoo-parlor owner was against the rules. This is the sharp-minded department that decided to check Jim Tressel's computer after it was way too late. Yep, they're the ones you want searching for the truth with the program potentially eligible for the death penalty.
"I have nothing to believe a violation has occurred," Doug Archie, head of Ohio State compliance, told the Columbus Dispatch.
Sorry, but we've heard it before: Pay no attention to that man behind the curtain.
If this case has legs -- or rather, keys -- greasy car salesmen will be the least of Gene Smith's problems. Ohio State could be looking at lack of institutional control and a postseason ban, two penalties it has so-far dodged. But, damn, the Buckeyes will still have a badass set of wheels.
Posted on: May 3, 2011 11:28 am
Edited on: May 4, 2011 10:09 am
The Pac-12 will announce the largest television rights fees deal in college conference history on Wednesday CBSSports.com has learned.
Initial reports Tuesday that the league would announce a 12-year, $2.7 billion agreement with ESPN and Fox were low, according to a person familiar with the negotiations. Instead, the new deal will make the Pac-12 No. 1 among all conferences in an age where rights fees are skyrocketing. The 12-year, $3 billion deal will be worth an average of more than $20 million per school each year over the course of the agreement. The final numbers could be staggering considering that the Pac-12 is going to announce a broadcast and cable deal only at this time. There is the digitial (phone/Internet) and network component still out there.
In the reports that surfaced Tuesday Pac-12 teams would average $18.75 million per year per school. That figure alone would double the current take of Pac-10 schools. The New York Times also reported the deal Tuesday morning.
How a sleepy league that was routinely No. 4 rights fees could shoot up to to No. 1 is explained here.
The announcement should mark the ultimate payoff for commissioner Larry Scott. The former CEO of the Women's Tennis Association has been on the job less than two years. Already he has shaken up not only his league but also college sports. He nearly succeeded last year in a raid of the Big 12 in expanding the Pac-10 from 10 to 16 teams. Falling short of that, the league invited Utah and Colorado and instituted a championship game beginning this year.
Scott already is on record intending to market the Pac-12 in Pacific Rim countries, including China.
NBC-Universal dropped out of the Pac-12 idding last week according to the Sports Business Journal. The conference will be part of a Saturday night primetime package on ESPN also according to SBJ.
The league has scheduled a Wednesday morning press conference at the Arizona Biltmore Hotel in Phoenix, meaning Arizona State will be the "host" school of the largest TV deal in college history.
Posted on: April 15, 2011 4:55 pm
Edited on: April 15, 2011 6:35 pm
Through an epic financial collapse, through historic scandals, despite the confounding BCS, college sports have prospered in this age.
Television and the accompanying platforms -- phones, internet and cable -- have followed along.
Wednesday's announcement that the Big 12 was the latest conference to hit the rights fees jackpot raised the question again. Why? Why are media companies in these tough times willing and able to pay out the wazoo for properties that, in this case, include outposts in Ames, Iowa; Waco, Texas and Manhattan, Kan.
What I'll try to do here is explain why we are witnessing an unprecedented growth in right fees -- and subsequently college revenue. The growth outstrips even that of the nation's highest paying coaches. For example, if Nick Saban had enjoyed a raise parallel to the Big 12's windfall, his salary would have jumped from $4 million to near $16 million per year.
So why is this happening? One industry analyst summed it up this way: "There is a value to limiting uncertainty." Sports have become one of the safest and highest-grossing buys for media companies. There are no coked-up, petulant stars to deal with. Well, at least not a lot of them. The only "winning" is done on the field. Sports are somewhat cheap to produce. Sports are true reality television, almost immune to being DVRed. Advertisers love that. There is a built-in following whose interest doesn't wane with time. Even the strongest TV series are cancelled. Try taking Alabama-Auburn off the air.
Since the advent of TV, sports have become the foundation of the medium -- largely immune to viewer trends or changing mores. College sports, in the last 25 years, have taken it to a new level.
"I think we're all making a bet on the future where we believe that college sports and sports in general is one of the leading lights generating large audiences," said Randy Freer, Fox Sports Networks president.
The biggest reason for these increases is competition. Simple supply and demand. There aren't many college sports properties available in coming years. Until 2013, it's basically the Pac-12 and NHL rights that are going to be available on the market. Newbies such as NBCUniversal and Turner are showing a willingness to get into sports in a big way.
That's why the Big 12 hit it big on Wednesday. That's why the Pac-12 could hit it even bigger next year (See below).
The SEC and Big Ten have set the bar, for now. Those conferences' schools each earn approximately $22 million per year, give or take. The SEC finalized a 15-year, $3 billion deal with ESPN and CBS a couple of years ago. The Big Ten is in the middle of a 20-year deal, partnering with News Corp. (parent of Fox) to produce the Big Ten Network in a deal that could be worth $2.8 billion. That's without mentioning the Big Ten's primary deal with ABC/ESPN. Seeing what the Big Ten had done with its network, ESPN moved to get the SEC using its multiple platforms as the equivalent to a "network."
CBS has the SEC's over-the-air rights.
The Big Ten and SEC have the most rabid following and/or are in the biggest markets. But in the last year, even the ACC doubled its annual rights fees to $155 million per year in a new deal with ESPN for the next 12 years. Because the ACC has become a diminished league in both main sports (football and basketball) since expansion, there was natural wonder why ESPN would pony up so much cash. It is essentially paying for Florida State and Miami on the come -- both have slumped since expansion -- and a couple of North Carolina-Duke basketball games every season.
Once again: supply and demand. Fox finished a close second and had all that money available for the Big 12.
The league got a 350 percent increase for its secondary rights with Fox (an average of $90 million annually). That's after losing Nebraska and Colorado in last year's conference realignment.
This is where it gets complicated. Pac-10 commissioner Larry Scott was the wild card almost convincing Texas and five other Big 12 schools to join his league last year. When it became clear that Scott was serious, Fox and ESPN stepped in to make financial promises. Fox delivered what you saw happen this week, but at the time that's all it was -- a promise. ESPN did not alter its existing contract, despite the loss of the two schools, as a show of good faith.
In the end, Fox and ESPN had to make those promises. Neither could afford for the Big 12 to go away. That would have eliminated one BCS conference that accounts for 16 percent of the households in the middle of the country. With the Pac-10 going out to bid on its latest rights fees -- which it officially did on April 1 -- there was a chance that both ESPN and Fox would have been shut out of two BCS leagues.
That's a lot inventory (games) and advertising that would have disappeared into the ether. Desperation had literally set in. Cable giant Comcast, which recently bought NBC, was taking over the Rockets and Astros telecasts in Houston. Fox had to have a presence in Texas. Houston is the largest market in the state and a top five or six market in the country.
Big 12 commissioner Dan Beebe got a lot of credit this week for "saving" the Big 12 that almost fallen apart 10 months ago. What's more likely is that Beebe happened to be the man in charge when these market forces collided. He gets credit for guiding the ship through choppy waters, but the ship was going to sail on after Texas re-committed to the Big 12 no matter who was in charge.
In short: Texas knew how the episode was going to end before it started. Yes, the school is that flush with cash, power and influence. It came through a rocky period with more money, a leaner, meaner conference and its own network (Longhorn Network).
"Obviously, Fox decided [they'd] rather have a piece of both these leagues than leave one die," said an industry analyst.
The latest round of conference realignment proved that it's less about what league you're in and more about who's your television partner. Utah happened to be in the right place and the right time when Scott's power play failed. It then received a life-changing invite from the Pac-10. The Big East was suddenly willing to fly halfway across the country to invite TCU. Its teams begin flying halfway across the country to play games against the Horned Frogs in 2012.
Did Fox overpay for the Big 12? It's likely. But it wouldn't be the first time for a rightsholder. Part of eliminating that uncertainty sometimes is paying more for something than it is worth. The length of the deals keeps leagues out of the market for long periods of time. And what most analyses haven't included is that virtually all these deals are backloaded. While Big 12 schools will receive an average of $9 million per year from Fox, a large portion of that money will be owed toward the end of the 13-year deal.
That's the reason you saw CBS have to reach out to Turner to share the rights for the NCAA tournament beginning this year. Industry sources have indicated that the back end of the deal was getting too expensive.
League rights fees are unique in that there are only a finite number of big-time conferences/leagues out there. The Big 12 deal was no doubt helped by the fact that the only other major conferences opening up in upcoming years are the Pac-12 (2012) and Big East (2013). There is already speculation that the Pac-12 may meet or surpass SEC/Big Ten numbers. The Wall Street Journal reported Friday that the league is seeking $220 million per year for its new deal. That's $18.3 million per year per school for you non-math majors.
Colorado and Utah brought little value to the Pac-10 in the big picture. But expanding allowed the league to stage a conference championship game beginning this season. Fox paid $25 million in a one-year deal to telecast the first Pac-12 title game in 2011. That's $2.5 million per team that the conference never had. Scott also is reportedly determined to launch a conference network along the lines of the Big Ten. That would be more found money for the once-sleepy league. NBCUniversal, Fox and either ESPN or Turner (perhaps both) are said to be interested.
All this further explains what happened to the Big 12 and what is about to happen to the Pac-12. Texas and California are still among the most valued television markets. The two leagues combined have Dallas, Houston, Los Angeles and San Francisco. That starts to explain why the leagues almost go together.
College sports are undervalued: Delany began realizing that fact in the last decade. Even though ESPN was featuring his league, he felt there was more potential. The Big Ten has a large, passionate fan base (25 percent of the U.S. population). After a long, expensive fight, the Big Ten Network gained a foothold with cables systems. Salesmen literally had to go to from cable company to cable company to sell something that had never been tried before.
"We were on ESPN for 10 years but they weren't being very aggressive with us," Delany said more than a year ago when it was becoming evident that the BTN was turning the corner.
Now network has become must-see viewing for those rabid Big Ten fans find who find the league's second- and third-level football and basketball games. Its original programming is slick and engaging. Now the Big 12 and Pac-12 want to follow in Delany's network footsteps.
Pay TV is blowing up: Those high cable bills you pay? Thank what are called "sub fees" -- subscription fees for cable networks. ESPN is at the top of the heap getting approximately $5 per subscriber per month. By comparison, The Big Ten Network, outside of its natural footprint, reportedly gets a dime per subscriber.
Any kind of programming that increases those sub fees is attractive to a network. In the new deal, Fox is dumping a lot of Big 12 content on FX. The network has been the home of several successful drama series, but sports are seen as a way to make it more valuable. Let's say FX gets 15 cents per month in sub fees. Let's also say that the addition of Big 12 sports bumps that fee up to 22 cents. That's seven cents X 100 million FX households which equals $7 million per month. Multiply that by 12 months and you've got an extra $84 million per year on FX alone.
Cable operators are willing to charge it because viewers demand it. That's why niche networks like the Golf Channel, Comedy Central and Nat Geo are successful. Cable TV is able to reach specific audiences -- and their money.
Televised sports are a leader in technology: Sports have pushed along the development of both cell phone technology as well as HD and 3D.
A friend was getting a game on his phone recently. He was driving so he couldn't watch it, but he turned up the telecast so he could hear it. Without new technology that wouldn't be possible.
The next wave is Internet TV. Delany saw that wave coming approximately 13 years ago. That's a big reason he wanted to create the Big Ten Network. So-called "convergence" technology will allow us to watch from our computers, our phones, our IPads as well as enhanced televisions. Imagine having a spreadsheet for work open in one corner of your TV and the NCAA tournament in other portion of the screen.
Some of this is already hitting the market -- MLB.TV, ESPN3, March Madness On Demand. It's coming and we're all going to want it. That's how conferences will make and their rights holders will pay even more money.
Posted on: April 13, 2011 2:21 pm
Edited on: April 13, 2011 3:37 pm
The Big 12 is expected to announce a deal with Fox this afternoon for the reconstituted league's secondary television rights. The league has scheduled a 4 pm ET conference call with commissioner Dan Beebe.
The 13-to-15-year deal is expected to approach $90 million annually. It would be worth more than $1 billion in total. ESPN/ABC still hold primary basketball and football rights through 2015-16.
The latest announcement is the upshot of Texas keeping the league together last summer after turning down an offer to join the Pac-10. The new number is expected to a be 350 percent increase in the current rights fees paid by Fox despite the loss of Nebraska and Colorado.
Texas turned down the Pac-10 offer after Fox and ESPN, according to reports, promised rights fees that in the end could be worth $20 million per school per year. Fox reportedly promised a significant increase while ESPN said it would continue its current payouts to the Big 12 despite the loss of Nebraska and Colorado.
The average fan might wonder where the money is coming from. Ultimately, it will come from them in their cable bill. Sports is seen as the ultimate reality show. Because results are immediately available, sports are unlikely to be DVRed which is attractive to advertisers. The ACC doubled its takes in its latest deal with ESPN. Fox finished a close second in that deal. The money left over may be going to the Big 12. There are reports that the new Pac 12 deal may approach the annual take of the SEC and Big Ten. Each of those schools receive a reported $22.2 million per year in rights fees.
The Big 12 broadcast "footprint" represents approximately 16 percent of the nation's TV households. It was worth it for ESPN and Fox to keep the league alive. The alternative could have meant the loss to two BCS leagues for both networks. The Big 12 would have ceased to exist while the new Pac 12 is, as speculated, going out for bid on the open market.