Time for a reworked Big East TV Contract

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If the statements quoted below are accurate, the acceptance of UConn to the Big East (BE) will trigger revised/new contract negotiations with Fox Sports.  Excellent news as the old 2013 contract had grossly undervalued BE basketball and many segments of the sports world knew it.

 

Forbes Article: What's in a Name?... Mar 8, 2013; Patrick Riche  https://www.forbes.com/sites/prishe/2013/03/08/whats-in-a-name-try-history-brand-affinity-as-new-big-east-stands-shoulders-above-america-12/#723bbcb56355

In professional sports, sometimes players take less money in order to increase their odds of winning a championship (or) in order to enhance their long-term legacy.  LeBron James for example.

In this case from collegiate sports, (C7/Big East) a collection of schools with like-minded philosophical and academic missions have opted to leave money on the table and receive less media money initially in order to protect the long-term legacy of their brand value of their conference name.

And in the long run, they will profit from this wisdom.

 

BFieldHusky wrote:  I keep going back to the piece Kevin McNamara wrote when news broke we were joining. Word is he is very connected inside the Big East office. He got this info from a good source. I am not saying the number is right on, but this wasn’t just floated out of thin air. My guy has heard it as well.

Don’t listen when you hear Big East people say this isn’t about money. Expansion is always about money and after getting steamrolled for years by former football partners Boston College, Pittsburgh and Syracuse, everyone should know the score. UConn will pay an entry fee to the Big East ($3.5 million), but that’s usually deducted from future earnings. More importantly, TV partner Fox Sports certainly pushed for this. Word is the addition of UConn can trigger a clause in the Big East’s deal with Fox and re-open talks on a contract that has six years to run. This will mean a bump from the current $4 million or so per school TV payout; perhaps an additional $2 million per school.

In my short piece, Window of Opportunity on 24 June 19, I cited the following quote from Holyland of Hoops (HLOH).

 

Over on the Big East message board, HolylandofHoops.com, under the thread: Reputable Barnyard poster, Moderator Jet915 reposted an anonymous UConn member.  I found this post notable as this anonymous individual spelled out his ideas.  Notably his take on contract renegotiations was very interesting.

Postby Jet915 » Sun Jun 23, 2019 1:07 am

This is an interesting post:

I was an insider here many, many years ago. I haven’t posted here in over half a decade, but decided to check in on Friday, when I got word UConn was going to get an invite. And honestly, a lot of the responses/reactions are surprising. So I wanted to offer some feedback and maybe a ray of hope for those that feel this is the wrong move.

Just as an fyi, my clients are people at ABC/ESPN, Fox, CBS, inside the Big 12, SEC, ACC, and Big Ten (but not the Pac-12 or NBE). So while I’m not privy to every detail, I know & understand a lot of the mechanations of realignment.

First, for those believing UConn shouldn’t have given up the P5 dream..that dream was never going to come to fruition. Unfortunately, P5 realignment is all about dollars. And dollars are delivered by eye balls. Simply put, UConn doesn’t deliver the eye balls necessary to justify the paycheck they’d receive from a conference like the ACC or Big 12. The Big 12 vetted UConn heavily a number of years ago. What they learned was UConn’s value to their TV partners (ABC/ESPN/Fox) was well less than the paycheck they would have to pay UConn as an equal member. This is why the Big 12 came out and announced they were vetting schools, then opted to not expand. Point blank, their partner networks came back and said the per team payout would drop if they added UConn, UCF, USF, BYU, Houston, Cincy, or Memphis (the 7 schools they vetted). Networks run all kinds of numbers when it comes to TV…regional viewership, national viewership, cross-promotional viewership (i.e. fans of other teams that watch your games b/c they either hate you or your Ws/Ls impact their team), etc. UConn’s numbers are way too low, with very little prospect of ever getting them up. It’s just a small fan base where it counts (football). And in case anyone’s thinking the obvious, yes, I would imagine the ACC regrets some of their expansion decisions. The ACC makes less money today on a per member basis than it’d have made had they not expanded with BC, Syracuse and Pitt. Those were really poor additions and the TV numbers in their regions and within their fan bases has been abysmal.

Second, the NBE has outperformed their TV contract handily. And not only have their TV #s been way better than forecast, they’ve won 2 National Championships in the last 4 years. So the conference’s contract is way under-valued. The problem is, they signed a long-term contract that doesn’t expire until spring 2026. The only way their contract can be opened back up for revaluation by Fox, is if there is a change in their membership. Adding UConn allows the Big East to bring their contract up to market value based on the Big East’s performance on TV the past 5-6 years + UConn’s value. So that contract is going to seriously, seriously jump in value. And, UConn is going to provide a significantly greater boon to the NBE’s TV payout than they ever would have in the ACC or Big 12, simply b/c if you look at the historical ratings for basketball, the highest annual TV rating (b-ball) for most programs in the OBE was against UConn. The NBE adding UConn for basketball would be a poor man’s version of the Big Ten adding Notre Dame for football. There’s so much history & bad blood there, the ratings will be outstanding. So if you’re looking at the current AAC payout and comparing it to the current NBE payout, and thinking “this sucks, what the **** are they thinking?!?!…..when the dust settles, UConn will make MORE money in the NBE (+ whatever they do for football) than they were making in the AAC. 

 

Both ESPN and Fox, particularly Fox have escalated contract payouts in recent years…the Pac12 and B12 in 2012-13, and the B1G in 2017.  The combined B1G contract was approx $2.64 Billion/6 years combined with the 2 carriers.  An average of $440 million annually over the next six years.  The agreement nearly triples the (B1G) conference’s annual broadcast revenues. According to the SBJ report, Fox and ESPN will (each) broadcast roughly 25 football games and 50 basketball games each season.  https://www.freep.com/story/sports/college/2016/06/20/big-ten-tv-fox-espn/86135546/  Football, while the major factor, is not a $2 billion factor. Current payouts should reflect the current inflationary costs and per game payout levels.  Therefore the current market value for basketball, while not saying that basketball is equal to football, has increased substantially.

GW11’s (HolylandofHoops.com) $400K a game estimate of current market value for basketball tallys out to 330 games/year @$400k = $132Million x 10 years =$1.320 Billion. $12M/school/yr.  That is quite the jump from the BE’s original (current) $140k x 300 games, $42M x 12yrs=$504M or $4.2M/school/yr.

 

$100k/gm x 330gms = $33Million ($330M over 10 years) or $3M/school/yr
$150k/gm x 330 = $49.5Million ($495m over 10 years) or $4.5M/school/yr ($4.125M/yr over 12 years)
$200k/gm x 330 = $66Million ($660M over 10 years) or $6M/school/yr
$300K/gm x 330 = $99Million ($990M over 10 years) or $9M/school/yr
$400K/gm x 330 = $132Million ($1.32Billion over 10 years) or $12M/school/yr
At $500k/game $165Million ($1.65 Billion over 10 years) or $15M/school/yr

 

From the 2013 contract view, $500M/12yrs, it appears as though the Big East (BE) was getting around $140k/gm. In looking at the BFieldHusky/Kevin McNamara quote above, even their guestimate of $200k/game or $66 million a year/$660M over 10 years, or $6M/school/yr seems a low figure.

I am not trying to place the BE as an equal to a football five conference.  I am saying that based on an excellent track record of achievement, the Big East deserves to get current fair market value for its content.  Even our bottom tier is showing well – St Johns made the NCAAs and DePaul finished over .500 and made a postseason run.  If the current fair market, per game value is in GW11’s ballpark ($300-400K/game), the BE conference will at least double its TV revenues.

If talking $300K/gm x 330 games; $595M over 6 years or $990M over 10 years – $9M/yr/school.  Or if the figure is $400K/gm x 330 games; $792M over 6 years or $1.32 Billion over 10 years – $12M/ yr/school.  With this level of respectable tv revenues, the Big East can continue to compete at the highest levels…for now.

Fox Sports makes it’s money off advertising…I’ll take a wild guess that their rates have climbed over the last 6 years along with their ratings. They have made a killing off sports and when you add in the early lowballing of contract bids, like ours, their network earnings look like Uncle Scrooge’s vault.

 

Image
Courtesy Walt Disney Productions

It’s about time for a financial course correction for the Big East.

 

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