Rose Bowl broadcast deal could push playoff value past $600 million per year
Rose Bowl gets a reported 167 percent increase in its new broadcasting deal with ESPN.
|The Rose Bowl reportedly will get more than twice the money it got in its previous deal. (US Presswire)|
The worth of the playoff just got bigger.
A source told CBSSports.com that the Rose Bowl's new deal with ESPN essentially sets the price for the semifinals in the playoff that begins in 2014. Sports Business Journal reported on Monday that ESPN’s deal with the Rose Bowl was worth $80 million that could push the value of the playoff past $600 million.
Previous estimates had gone no higher than $500 million per year. A rise to $600 million would essentially quadruple the annual revenue ($155 million) of the current deal that expires after the 2013 season. It would push the total value of a playoff to $7.2 billion over the course of the 12-year deal.
The Rose Bowl deal represented a 167 percent increase in the previous deal ($30 million) according to SBJ. The $80 million could set the bar for bowls flowing through the semifinals.
“ … which means in a year that the Rose Bowl hosts the semifinals, whoever [network] owns the semifinals is going to have to get at least $80 million out of he semifinal,” said the source close to the playoff negotiations. “That $80 million, you can argue, has determined the price of a semifinal.”
That would suggest that’s the asking price of the SEC and Big 12 which is shopping its Champions Bowl to the highest bidder. If it gets Rose Bowl money, the Champions would be on the same level as the Granddaddy, at least in terms of revenue, without ever having played a game. The Rose and Champions bowls are still in the process of determining how often they want to be part of the playoff during the course of the 12-year deal -- for good reason.
The Rose, Champions and Orange are now known as “contract” bowls. The bowls’ conference partners will keep their money except in years when they participate in national semifinals. In that case, the revenue is shared with all the conferences.
The price of the playoff has escalated quickly. One source in the room said during the annual BCS meetings in April, the price went from “$360 million to $500 million” in a couple of days as different factors started to be discussed.
While the Rose, Champions and Orange have/will negotiate their own deals, CBSSports.com previously reported that the Fiesta, Sugar and playoff games (championship and semifinal) will be bundled together in a separate negotiation.
If you're counting, that's four different contracts. ESPN remains the favorite to win the bidding on them all despite expectations that Fox, NBC and Turner may show interest. ESPN gets an exclusive 30-day negotiating window this fall. If it gets that far, the commissioners are expected to let that window expire to least see how far the price can be driven up.
However, ESPN could be proactive and negotiate a new deal before the negotiating window even starts. It is in the process of doing just that with the Big 12. CBSSports.com reported in March that negotiations had begun on an extension with the league that would last to 2026.
To be determined is how the playoff money will be distributed to the current conferences. With the end of automatic qualifier designation, there is -- for starters -- a $24 million hunk of change up for grabs. That equals the 18 percent share the Big East is receiving as a BCS automatic qualifier. The league will earn at least that much through 2013 before a playoff is instituted in 2014.
It is assumed that newly labeled Big Five (ACC, Big 12, SEC, Big Ten, Pac-12), will want to keep their current 85 percent share of revenue. Currently, that 85 percent is distributed among the top six conferences (including the Big East).
Eighty-five percent of $600 million equals $510 million. That would leave $90 million for the Big East, MAC, Sun Belt, Mountain West and Conference USA. (It is assumed the WAC will dissolve beginning in 2014).
Is that fair?
" 'Fair' is a term we need to define,” Sun Belt commissioner Karl Benson said Monday at his league’s media day. “There will be a significant percentage increase [but] where does the Big East 18 percent go?
“If the SEC has been getting $30 million [per year] and everybody is guaranteed a 100 percent increase, then that share goes from $30 million to $60 million. Then the Sun Belt goes from [theoretically] $2.5 million to $5 million.”
In the current BCS structure, the so-called Group of Five (MAC, Sun Belt, Mountain West, Conference USA, WAC) split nine percent of the annual BCS revenue. They get another nine percent if one of their teams play in a BCS bowl. For the first time since the 2005 season a non-BCS school did not play in a BCS bowl in 2011.
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