Pac-12 Television contracts

May 13th

“We thought it could be the best of all worlds”

The Sports Business Journal, which initially broke the story that ESPN and Fox had teamed up to outbid Comcast for the Pac-12 television rights, has put together a great article on the history of the negotiations.

Some of the highlights …

– As late as April 25th, it appeared that Comcast/Universal would be the winner in the negotiations with the Pac-12. Comcast was prepared to bid $225 million per year for the television rights, and neither ESPN nor Fox was prepared to match that offer. (As we discussed at the time … both ESPN and Fox were already well stocked with contracts to show college football. Neither network had enough air time, or “shelf space” as it is put in the article, to justify outbidding what Comcast had offered). NBC Sports executives had put together a presentation in New York in early April, and Pac-12 officials believed that Comcast would end up with the contract.

– Then Evolution Media’s Chris Bevilacqua, hereinafter referred to as “unsung hero”, proposed an idea to ESPN’s John Skipper: What if the two college football heavyweighs, ESPN and Fox, actually worked together to make a bid? Skipper, anxious to keep Comcast from picking up rights to a BCS conference, called Randy Freer, Fox Sports’ co-president. The two rivals agreed to meet on April 28th in Los Angeles. “Neither side looked at this as a way to try and do a land grab,” said ESPN executive vice president John Wildhack, who also was involved in the meetings. “Fairly quickly, both of us found that we had a lot more in common than not.”

– The two new partners agreed to put together a 12-year, $3 billion offer. The $250 million per year average far exceeded Comcast’s best offer of $235 million (Comcast’s Brian Richards told CNBC that the reason NBC lost out on the Pac-12 deal was because Comcast was “financially disciplined”). Despite the consolidation of efforts by two rival bidders, Pac-12 commissioner Larry Scott quickly saw the virtue of the move. “Normally, if you are a content owner, you’d be opposed to reducing the field of competitors,” said Scott. “But knowing the strength of this opportunity, we embraced it. We thought it could be the best of all worlds.”

– The contract would have been fantastic at $250 million per year alone. The Pac-12 would have had the two main college football networks showcasing its games, and would have been paid handsomely to do so. But Larry Scott was not content to stop there. The Pac-12 commissioner was able to obtain some concessions in addition to all of the money … 1) the Pac-12 was to be allowed to retain enough games to create its own channel; 2) the Pac-12 Network would have the first choice of games several times per year, a concession never before given by a network; 3) the conference games had to be on national over-the-air broadcasts and fully distributed cable channels, in order to assure maximum league exposure; 4) the Pac-12 Network would be 100% owned by the league; and 5) digital rights would also remain in hands of the conference. “Money was important, without question,” said Scott. “But there had to be a commitment to the platforms and exposure.”

– It took five days for a contract to go from concept to reality, with Larry Scott taking the signed contract with him to Phoenix for conference meetings. The timing was pure happenstance. “Originally, I thought the process would conclude sometime during the summer,” said Scott. “It was a very dynamic and competitive negotiation.”

The net result is a contract worth an average of $250 million per year, before the revenue from the Pac-12 Network is considered. While the Pac-12 Network may be a loss leader for several years as the league puts dollars into development and distribution, the likelihood is that, long-term, the retention of the rights Pac-12 Network may well prove the best part of the new contract.

Which, considering the celebrations afforded the ESPN/Fox contracts, is hard to believe …  

May 8th

Winners and losers from the new Pac-12 contracts

Winners – Arguably every team in the Pac-12. Every team will see a significant increase in television exposure, along with additional dollars to reduce debt. The fact that ESPN is part of the package makes the deal Christmas in May for the league. Larry Scott, the Pac-12 commissioner, is also a big winner. What he has been able to pull off in just two years as the head of the conference is nothing short of amazing. While Pac-12 teams are looking at contracts, they should be looking at Larry Scott’s – and making sure he is tied into the league for some time.

Losers – Other teams in western states in mid-major conferences. Teams in the Mountain West Conference and the Western Athletic Conference can only look on with bemusement and envy at the $3 billion contracts signed by the Pac-12 with ESPN and Fox. It was just a year ago some (where have you gone, Mr. Henderson from the Denver Post?) were lobbying for Colorado to take a step back and join the Mountain West conference, such talk now looks ridiculous. Colorado State, as a member of the MWC, will look to bring home $1.2 – $2.0 million in television revenue next year. Colorado will match that in 2011 – just from its league share of the added money from Fox for the additional inventory of games this fall, and for broadcast rights to the inaugural Pac-12 championship game.

Winner – Utah. A Mountain West team a year ago, the Utes have found the pot of gold at the end of the rainbow. As Bob Hille of the Sporting News put it, “Comparing Utah’s last payday from the Mountain West to the one it will eventually get from the Pac-12 brings one word to mind: Powerball.” While Utah will be easing its way into becoming a full-fledged member of the Pac-12 – $2 million in 2011 (from the Fox contract upgrade); $10.5 million in 2012-13; $15.75 million in 2013-14; to a full share of approximately $21 million in 2015-16 – the Utes are not complaining. “It’s not woe to us, that for sure,” said Utah athletic director Chris Hill. “But it’ll take us to the fourth year in the league to be fully receiving those funds. But we’ve come from such a small amount from the Mountain West that this will help us close the gap a little bit, and then we’ll work out at all the other aspects.”

Losers – USC and UCLA. Arguably, the Trojans and the Bruins could have held out for a bigger piece of the pie, a la Texas and the Big 12’s new contracts. USC and UCLA bring in the Los Angeles market (which is without an NFL franchise), as well as national followings. Instead, USC and UCLA decided to be team players. The only concession made to the Trojans and the Bruins by the other teams in the league was that the two Los Angeles schools would receive an additional $2 million if the television revenue for the league came in at under $170 million – and that didn’t happen. The 12-year, $3 billion deal averages out to $250 million per year, and, even with the graduated scale of payouts, the Pac-12 will receive over $180 million in 2012-13.

Could USC and UCLA have made their own separate arrangement to have its own network, like Texas? “We made a commitment to the conference and to remain a conference of solidarity,” said UCLA athletic director Dan Guerrero. “The other option (would have been) to take your ball and play somewhere else.” Instead, the Los Angeles schools will be an equal partner with the remainder of the league for the next 13 years.

Winner – Washington State. Other than Utah, arguably no athletic department in the Pac-12 is more pleased with the new contracts than is Washington State. Under the previous Pac-10 contracts, the payouts were weighted by television appearances, and the Cougars routinely finished last in that category. For the 2010-11 fiscal year, for example, the Cougars are expecting a check of only about $4 million from television. That will change dramatically starting in 2012, when Washington State will become a full partner in revenues. With revenues from the new Pac-12 Network still to be determined, it is not a stretch to say that, in the not too distant future, the payout for each team could be $25-$30 million per year. That’s quite a number when you consider that Washington State’s athletic department budget this past year was about $30 million total. 

What’s more, Washington State is one of few athletic departments in the conference without notable debt to service. Proposed upgrades to the football stadium, along withe creation of a football-only training center, are no longer drawing board plans but plans in action. Refurbishment of the basketball arena and soccer and baseball facilities are also now on the to-do list.

Loser – Oregon. True, true. It is very hard to feel any sympathy for Nike U, but the fact is that Oregon has been ramping up its athletic department facilities for some time, banking on the new revenue coming in. The Ducks’ athletic department budget has nearly doubled in the past five years, going from $40 million to $75 million … with a net gain of only one extra sport. There are $227 million in bonds for the just-opened Matthew Knight Arena to pay off, and coaches’ salaries have gone through the roof. The new Pac-12 revenue was, in fact, being spent before the contracts were signed, all part of a six-year plan laid out by Oregon officials.  “The Pac-12 TV revenue was a key-part of that six-year plan,” OU athletic director Rob Mullens said at a teleconference after the contracts were signed this past week. “Nothing’s changed”.

Some of the Oregon money which will be coming in over the next six years will also have to be diverted to IMG College, with which the Ducks have a six-year contract for marketing and media rights. It was just this sort of deal that Pac-12 commissioner Larry Scott hopes to get away from. “The fact that we’re selling college sports in a fragmented way is sub-optimizing,” said Scott. “College sports, at a time of severe need, is under-performing.”

What Scott would like to see, rather, is the return of additional sports which have been eliminated by schools. Oregon, for example, cut wrestling in 2007, and has no current plans to bring it back. The Ducks did add baseball and competitive cheer (now called acrobatics and tumbling), but that’s as far as the Ducks, will all of Phil Knight’s money, is prepared to go. Oregon athletic director Mullens indicated this past week that adding new sports is not a part of the Ducks’ six-year plan.

Winner – Colorado. Like Utah and Washington State, the influx of additional revenue to the Colorado athletic department cannot be overstated. With the upgrade to the basketball facilities having already broken ground, the possibility of improving training and other facilities around campus is very tempting – and could soon become reality.

It can be argued that, as all of the teams in the Pac-12 will share equally in the new largess, anything schools like Utah, Washington State, and Colorado will do will only be trumped by what schools with significantly larger budgets, like Oregon, Stanford, and USC, will be able to do.

I would argue, though, that the Law of Diminishing Returns will kick in at some point when it comes to facilities. In economic terms, the Law of Diminishing Returns holds that: When increasing amounts of one factor of production are employed in production along with a fixed amount of some other production factor, after some point, the resulting increases in output of product become smaller and smaller. In football terms, once you have a players’ lounge with five big screen televisions, having a players’ lounge with 15 big screen televisions does not increase the value of that lounge three times over for any given college recruit.

The same would hold true with other aspects of the football program. Let’s say there is a five-star defensive lineman making the rounds, and that weight training is very important to this recruit. While seeing the acres and acres of facilities that a school like Nebraska provides has a certain “wow” factor, in practical terms, if the player’s basic needs can be met – he can only train on one Nautilis machine at a time – then the recruit might start utilizing other factors when making his decision.

Put another way, if Colorado can be on an even playing field with other Pac-12 schools when it comes to facilities – or at least more of an even playing field – then recruits can start to focus on other factors: How well do I get along with the coaches and other players? Does the type of schemes the team utilizes best fit my skills? Will this school help me get to the NFL? Will my parents be able to watch me on television every weekend?

If the Colorado coaching staff can get recruits to Boulder, and have facilities on par with the rest of the league, fans of the Buff Nation can be confident that this coaching staff can pull in some major talent.

And, at the end of the day, it is talent which wins most football games.

May 5th

Reactions to Pac-12 contracts – almost all positive

The response to the Pac-12’s $3 billion, 12-year contract with ESPN and Fox Sports has been almost universally upbeat.

Pac-12 coaches and administrators

– Colorado athletic director Mike Bohn: “It’s a great day for our fans, alumni, student-athletes, coaches and staff, as this represents the premier stage to enhance our national audience, utilizing more broadcast platforms and the newest technology … In addition to providing a much-needed injection of funds, the exposure for the entire conference, and thus each institution should enhance recruiting, not only student-athletes, but for all students.”

– California athletic director Sandy Barbour: “It’s fantastic news”, noting what Pac-12 commissioner Larry Scott accomplished was “exactly what he was hired to do”. As to the financial status of the Cal athletic department, which had to cut some programs (only to have some reinstated with an influx of private money): “We have not had the opportunity to put away reserves for facilities needs and long-term maintenance … This isn’t a silver bullet that’s going to solve all of our problems, but it’s an infusion of revenue that will be helpful.”

– Stanford coach David Shaw: “We’re still unlocking doors about the possibilities of what we can do, but from a recruiting standpoint, telling these recruits we are going to be able to televise every single game that they are going to play in their whole career is significant … For us, as a national recruiter, recruits won’t have to find us on different packages. They’ll find us on network TV”.

– Oregon State head coach Mike Riley – “It’s amazing. What Larry Scott and his team have done over a short period of time is absolutely phenomenal”.

– Washington athletic director Scott Woodward: “[The deal] exceeds my expectations but not overly so. I’ve been very bullish on how good our product is and how competitive we are.”

– Stanford athletic director Bob Bowlsby: “It’s unchartered territory from what we expected. It’s truly transformational for us.”

– UCLA head coach Rick Neuheisal – termed it “a monumental day”.

– USC athletic director Pat Haden: “Overall, this contract is terrific. It’s great for all the institutions; good for USC.”

Others

Chris Bevilacqua, a consultant with Evolution Media Capital, an affiliate of Creative Artists Agency: “Larry (Scott) was smart in consolidating all rights and getting the unanimous support of all 12 teams for equal revenue sharing, and also in creating premium content”.

Bryan Fischer, from CBSSports.com, in an article entitled “Scott bold to take Pac-12 where no conference has gone before” – “The SEC is still king on the field, winning the past five BCS national championships. Off the field though, the tables have been turned and the new Pac-12 deal gives the league a chance to become the conference everyone is talking about”.

David Carter, head of USC’s Sports Business Institute: “Commissioner Scott made sure they expanded so that the league delivered the biggest footprint of any conference in the country. You also have big media markets like L.A. and the Bay Area so that when you start to go through that check list, you pretty quickly recognize the opportunity at hand. Some have said the Pac-10 isn’t the SEC or the Big Ten but now I think everybody has to understand that it has the reach and the stature that advertisers and others have been looking for.”

Brian Floyd, writer for CougCenter: “While the sheer volume of revenue secured in the Pac-12 TV deal is astounding, there’s an underrated aspect of the contract that’s just as big a coup. The Pac-12 Network was not only a negotiating tactic, it was also an integral part in the record contract. And it may just be the biggest win of all. The Pac-12 Network will be far more than an afterthought meant to house non-revenue sports and a few minor games. In fact, it’s a cornerstone in the deal and has been carefully designed to maximize exposure and profits.”

With one naysayer

A.J. Maestas, President of Navigate Marketing, a Chicago-based firm, who believes that USC could have done much better than to agree to an equal revenue sharing plan. “If my client was USC, I would have asked for more money,” said Maestas. “The conference could not possibly get this kind of deal without USC as part of it. If you, as a school, are trying to maximize your revenue, UCLA and USC left a lot of money on the table with flat revenue sharing.”

May 4th

Historic contract with ESPN and Fox Sports guarantees Pac-12 a bright future

Colorado and the Pac-10 agreed to join hands last June. This May, the University of Colorado is reaping the benefits of the marriage.

The Pac-12 contract with ESPN and Fox Sports will prove to be a landmark event in the history of Colorado athletics. While it will be some time  before the athletic department pays off its debts, and some time after that before some ousted Olympic sports will return to Boulder … But it is no longer just a dream.

The contract

Larry Scott and his cohorts from ESPN and Fox did not specify numbers at the press conference this morning. Still, it is being widely reported that the 12-year contract will be for approximately $250 million per year. That number, though, is an average payout over the life of the contract. It was learned today that there is an escalator clause in the agreement. In Year One of the agreement – 2012-13 – the payout will be around $180 million, with the payout in Year Twelve to be considerably higher than $250 million.

This is actually good news on two fronts. First, the payout, even in the early years, exceeds $170 million, so UCLA and USC will not be receiving an extra $2 million payout from the other ten schools in the league. Second, while it would be nice to have all that extra money to spend upfront, having an escalator clause in the contract will allow conference teams to receive compensation well into the life of the contract which will be competitive with the rest of the BCS (when the other conferences have their current contracts expire, leading to even higher payouts for those schools).

Football broadcasts

The contract may be for all aspects of Pac-12 life, from academics to gymnastics, but the driving force, as everyone knows, is football (how’s it goin’ out there in Texas Network land, Jayhawk fans?). The details:

– 44 regular season football games televised annually on select ESPN and Fox broadcast or national cable networks, including ABC, ESPN, ESPN2, ESPNU, Fox and FX. Ten of those 44 games will be full national broadcasts, with most, if not all, in primetime. The other 34 regular season football games will be shown on national cable networks – FX, ESPN, ESPN2 and ESPNU.

– The remaining regular season football games, an average of three games per week, will be shown exclusively on the Pac-12 Network. As discussed at the press conference (below) the partners have agreed to a “draft-like” arrangement for choosing games during the season. It is interesting to note that, as part of the agreement, the Pac-12 Network will have the “first pick” in selection of football games during the season.  This all but guarantees that the Pac-12 Network will attract an audience and distributors.

– Before you leave this numbers … please note that almost half of the Pac-12 football games will be shown on the Pac-12 Network. Let that sink in a little … the $3 billion contract with ESPN and Fox is mostly about football, and almost half the football games the league will be playing over the next 12 years are still out there to be packaged and sold …

– The football championship game will be played on a Friday. Fox, which already has a contract for 2011, will also get the 2012 title game. After that, the game will alternate between Fox and ESPN.

– Four Thursday night and four Friday night football games will be played on Friday. As noted below, this was likely one of the main draws for ESPN, which already has a full slate of games to show on Saturday.

Basketball and Olympic sports

– Every men’s basketball game will be shown on either ESPN, Fox, or the Pac-12 Network.

– 68 regular season men’s basketball games will appear on ESPN, ESPN2, ESPNU and Fox Sports Net. 46 games for ESPN with as many as 28 on ESPNU, with the remaining 22 games on FSN. Games will be scheduled for Wednesdays, Thursdays, Saturdays and Sundays. Most of the ESPN games will begin at 11:00 p.m. ET.

– The remaining 120 regular season games will be featured exclusively on either the Pac-12 Network or the Pac-12 Digital Network.

– The conference men’s basketball tournament will be shown on ESPN/ESPN2 or Fox Sports/FX. The first Pac-12 tournament of the agreement (2012-13) will be on ESPN, and then rotate between the networks (Fox Sports Net will broadcast the 2011-12 tournament).

– Five women’s basketball games, including the Championship game of the Pac-12 women’s basketball tournament, plus 10 more Olympic sports events, will be shown on ESPN.

– The Pac-12 Network will exclusively feature approximately another 200 live Olympic sports telecasts across 30 men’s and women’s sports annually. The Pac-12 Digital Networks will feature several hundred other live Pac-12 athletic events.

Pac-12 Network

Larry Scott stated that there will be a “major announcement” in about 60 days concerning the Pac-12 Network, as many of the details are still be considered. The Pac-12 has not yet determined where the Pac-12 Network will be located, nor who will manage it (the same goes for management of the Pac-12 Media Enterprises). Both matters are contingent upon the production/distribution partners. Having great games on the Pac-12 Network “will minimize distribution fights,” said Larry Scott. “We have structured things in a very-distributor friendly” manner.

There are several options for the Network. One is to start from scratch, which is estimated to have a pricetag of about $100 million. Another option is to take over an existing network (Fox College Sports is an example, though the network being assimilated doesn’t necessarily have to come from a Fox-owned channel). 

Pac-12/ESPN/Fox Press Conference: Pac-12 television contracts considered a “landmark agreement”

The Pac-12 media contracts with ESPN and Fox Sports were introduced at a press conference in Phoenix this morning. Present were Pac-12 commissioner Larry Scott, Burke Magnus from ESPN, and Randy Freer, President of Fox Sports.

While the three did not discuss specifics of the contract, some general themes were discussed. Larry Scott introduced “Pac-12 Media Enterprises“, which will consist of: 1) the Pac-12 Network; 2) a Pac-12 digital network; and 3) Pac-12 Properties. The Pac-12 network will show football games and men’s basketball games which are not picked up by ESPN or Fox, as well as women’s basketball games and Olympic sports.

There are approximately 80 football games per year, Larry Scott explained. ESPN and Fox to show 44 of those games, with the Pac-12 Network to show the other 36 games. How those games will be divided up will be determined each season once the schedules are finalized. Larry Scott indicated that the partners will have “our own version of the draft” each season when it comes to deciding which network will show which games, with a “certain heirarchy of picks”. Scott did state that ESPN will have a number of games in primetime, either on ESPN or ABC, and that some games will be shown at primetime (at least on the east coast) on one of the Fox networks.

Scott discussed how the league had three goals going into the negotiations – 1) to increase revenues for the Pac-12 schools; 2) improve national exposure for the teams in the conference; and 3) launch a Pac-12 Network – and that all three goals had been met. 

With the increased revenues, Scott expressed hope that there would be “less stress” on the institutions and their athletic departments, and that he hoped that some schools would be able to “add back” other sports which had previously been cut.  

As to an increased national presence, Scott indicated that he was pleased that the Pac-12 had held true to its promise to have televised every football game and every men’s basketball game, to go with “a significant increase in national exposure”. ESPN’s Burke Magnus echoed Scott’s statement, stating that ESPN was excited to “extend and enhance our partnership with the conference”. For ESPN, a “significant part of the deal” was that the network would be able to televise men’s basketball games.

Pac-12 Media Enterprises, as noted above, will consist of the Pac-12 Network as well as the Pac-12 Digital Network and Pac-12 Properties. Scott spoke of the Pac-12 being part of the “land of innovation” when it came to advancing technologies, and so the Pac-12 Digitial Network would be on the cutting edge of getting exposure of the Pac-12 out to the nation (Pac-12 “App”, anyone?). The Pac-12 Digital Network would also focus on promoting academics, with well-known speakers being “well showcased”.

Pac-12 Properties, meanwhile, will be responsible for dealing with promotion of conference tournaments, as well as extending sponsorship rights and other conference promotions.  

For its part, the Colorado athletic department is very excited about its future as a member of the Pac-12. “I believe any time that you’re a part of significant progress and on the leading edge of your industry that certainly bodes well not only for our program but our student-athletes and our fans and the entire institution,” CU athletic director Mike Bohn told the Boulder Daily Camera. “That is one of the reasons we were so excited to be able to join the Pac-12 is because of their leadership across many spectrums. Larry Scott is delivering in a big way.

“It’s just the beginning of some major opportunities for us at the University of Colorado and the entire league.”

Bohn called the deal “a landmark agreement” that will utilize “multiple platforms and the newest and most modern technology.” He emphasized that it could still be months before he and his staff know for sure how much money the department will be able to count on in the future from the Pac-12. He said how the department uses the increased revenue will be decided over time and only after knowing with more certainty what the actual budget impact will be.

“There are many aspects that are yet to be revealed and developed but the innovation and the leadership of Larry Scott is recognized by our entire campus as exemplary,” Bohn said.

“Commissioner Scott has done an exceptional job in seeing the negotiations through and providing significantly greater exposure for the athletic teams at all of our Pac-12 universities, as well as greatly enhancing the revenue from the media to support those programs,” Washington interim president Phyllis Wise said in a statement. “It’s a good day for the conference and the great universities that comprise it.”

Amen.

May 3rd

Pac-12 contract with ESPN and Fox to be worth $250 million per year

UPDATE: Here’s the latest … The Associated Press is reporting that the deal will be worth about $3 billion dollars over 12 years, or about $250 million dollars per year. The contract will guarantee each team about $21 million per year, with the formal contract terms to be announced Wednesday at a press conference in Phoenix. The press conference, with Pac-12 commissioner Larry Scott, FSN Regional Networks President Randy Freer, and ESPN Vice President of College Sports Burke Magnus will be held at 9:00 a.m. MT. (and yes, I’ll be watching it for you). If you want to tune in yourself, the press conference will be streamed live on the Pac-12 website.

The contract will be with ESPN and Fox, which will split the rights to college football games. ESPN will air its games on cable, with some games to be shown in primetime on ABC. Fox will show its games on its broadcast network, basic cable network FX (in over 100 million homes) and on the Fox Sports Net. Men’s basketbal games will be split between ESPN and Fox Sports Net, with ESPN also agreeing to show some women’s basketball games and Olympic sports (most likely to be aired on ESPNU).

It is also being reported that ESPN, as part of its contract, will have the rights to four Thursday night and four Friday night football games per year (so get used to Friday Night Lights, Buff fans – the CU/USC game this fall is just a prelude!). This part of the contract may help explain why ESPN was a partner with Fox on the contract. Over the past few months, the understanding was that Fox was up against Comcast/Universal in the bidding wars, with ESPN and Turner on the outside. The logic was that ESPN, which already has a full inventory of games with its existing contracts with the Big Ten and Big 12 (and, to a lesser extent, the Big East, the ACC, and the SEC) just couldn’t justify putting out large sums for the Pac-12 conference when it would not be able to show enough games to recoup its bid. Now, with the Pac-12 being shown on the mother ship on Thursday and Friday nights for eight weeks a season, the participation of ESPN makes a bit more sense.

The two entities would alternate showing the Pac-12 championship game in football, and the men’s basketball tournament. Fox, which already has a contract for the inaugural Pac-12 title game this fall, would also have the rights to the 2012 championship game, with ESPN to have the rights to the Pac-12 basketball tournament.

Despite the huge numbers, the Pac-12 did not sell all of its rights, retaining some “premium property” (including some rivalry football and basketball games) the conference can use for its own Pac-12 Network, which will focus primarily on Olympic sports. The Pac-12 Network will be 100% owned by the conference (compared to a 49% ownership of the Big Ten Network by the Big Ten). The retention of the Pac-12 Network rights may prove costly in the beginning, as the conference will bear the start up costs, and will have to find its way onto cable and satellite systems. The move, however, could very likely prove to be very lucrative in the future, especially as Larry Scott, the Pac-12 commissioner, is eyeing expansion into the Pacific Rim, where Olympic sports are more popular.

Comparing contracts … The Big Ten is getting $220 million from its latest contract; the SEC $205 million. The latest Big 12 deal – which was just for the cable rights – was $130 million (bringing the total television contract to around $195 million per year), while the ACC must find a way to get along with $155 million per year.

Remember back in the day … say, three weeks ago … when it was reported that the Pac-12 might get a contract worth $220 million per year, and we thought that that amount, if received, would be amazing?

Welcome to $250 million per year, fellow Buff fans!

——-

From this morning ….

SportsBusinessDaily is reporting that the Pac-12 has agreed to a media rights deal with Fox and ESPN which will be worth $2.7 billion over the next 12 years, or an average of over $225 million per year. The report goes on to state that Comcast/NBC was a bidder on the contract, but pulled out last week. Jon Wilner of the San Jose Mercury News is reporting the same numbers.

According to the SportsBusinessDaily report, ESPN will have football and basketball rights, plus rights to a package of Olympic sports. ESPN will also commit to an unknown number of football games in primetime on ABC.

Fox, for its part, would be the primary carrier for football games, to be carried on its Fox channels and on FX, with basketball games to be carried on FSN. ESPN and Fox would rotate coverage of the Pac-12’s basketball tournament and football championship game.

But wait, there’s more. While the contract would more than triple the existing Pac-10 media contracts, the conference is also holding some rights back it hopes to use for a dedicated “Pac-12 channel”, which – in the long term – could also be a significant source of revenue for the conference.

A formal announcement of the contract, according to the report, could be announced as early as Wednesday. The league is holding its spring meetings in Phoenix starting Wednesday, so that might be the appropriate time and place for such an announcement.

Such a contract would more than double the media revenue currently coming to the University of Colorado. As a member of the Big 12, the Buffs annually took in between $7 and $9 million from media contracts. This new contract, even without the revenue from a Pac-12 Network, could exceed $18 million per year.

Doubling media revenue will be a huge boost to the athletic department (at least it will be – after paying off Dan Hawkins and living through a deficit this year due to the withheld funds from the Big 12 for leaving a year early). To have ESPN be a part of the contract makes a good deal a great deal for CU and the Buff Nation!

Stay tuned … this could be a very big week for the athletic department at the University of Colorado!!

UPDATE: The same reporters who first reported the $2.7 billion deal are now reporting that it will be a $3 billion deal.

What’s an extra $300 million between friends?

May 2nd

Pac-12 contract getting closer

Jon Wilner of the San Jose Mercury News, the best source of news concerning the Pac-12 contract negotiations, is tweeting that a deal may be close …

One tweet: “Got a text msg from source: The Pac-12 is close to finalizing its TV deal. Could be signed and sealed within a week/10 days.”

Another: “Don’t know $$ amount or network, but I’m guessing it’s $230+ million and either Fox or Comcast.”

And then there is this: “This much I’m sure of: Some element of the Pac-12 deal will be unprecedented in college sports. These guys are creative and aggressive.”

And this: “Based on what I’ve heard in past 2 weeks, no reason to think that Scott won’t make good on promise to get every fball and bball game on TV.”

Bring it on, Larry Scott!!

April 19th

Deals being made … but not with the Pac-12 … yet

Partnerships are being formed, alliances are being made, and checkbooks are being opened.

But not for the Pac-12 … yet.

The NHL, one of the few remaining big fish out there to be had in the media’s rush to obtain broadcast rights, will be staying with NBC and Versus for the next ten years. The NHL had drawn interest from ESPN, Turner and Fox Sports, but decided to stay with its partner for the past six years.

“When we looked at the entire package and the relationship, it was clear we were going to stay with the incumbent,” said NHL commissioner Gary Bettman said. “But it’s nice to go out and find you’re pretty.”

The package, which will run for ten seasons, will bring in about $200 million to the league, which far exceeds the $75 million or so the league was paying under the existing contract.

What does the NBC/NHL contract mean to Colorado and the Pac-12?

It’s not totally unexpected, and really doesn’t change the playing field all that much. In a perfect world, ESPN or Turner would have obtained the rights to the NHL, which would have made NBC/Comcast all the more desperate to sign on with the Pac-12. NBC/Comcast, seen as the main competitor for the Pac-12 contract with Fox Sports, now has a contract – and programming – in its back pocket. Will NBC/Comcast be satisfied with a seasonal sport which rarely registers in the national consciousness? Probably not.

But they may be just a little less willing to break the bank to get the Pac-12.

Meanwhile … back at the Mother ship …

ESPN, according to SportsBusinessJournal, is looking to extend its contracts for football and basketball with the Big East. The current contract doesn’t expire until the end of the 2013 football season, but ESPN is looking to lock up its longtime partner into a long-term contract.

The current contract with ESPN nets the Big East $36 million per year, almost an insult under the current climate. The new deal is reportedly going to be in the $110-$130 million range. Significantly higher, but also significantly less than what the Pac-12 would be looking for.

What does the ESPN/Big East contract talk mean to Colorado and the Pac-12?

Does ESPN”s willingness to extend its contract with the Big East mean that ABC/ESPN is not interested in the Pac-12? No more than was the case before. With a significant inventory of college football games already under contract with the Big Ten, the Big 12, and the ACC, ESPN was not likely to be a primary bidder for the Pac-12, anyway. If ESPN does participate in the new Pac-12 contract, it will likely only be to purchase a certain number of games from the winner of the Fox/Comcast battle.

Should the ESPN/Big East contract projections – $110 – $130 million per year – mean that the speculation that the Pac-12 contract may go as high as $220 million per year is out of line? Probably not. Remember, football is the fuel which drives the television bus (remember that from last summer, Jayhawk fans?). The Big East, while a power in basketball, is a secondary power in football. There are large media markets targeted by the league, with hopes that the addition of TCU will bring in fans from the Southwest, but the Big East is not as powerful a draw as the Pac-12. (Quick test: Name the football teams in the Big East. Go ahead, I’ll wait …. Now name the teams in the Big Ten or SEC …. A lot easeir, isn’t it?

Television exectuives think so, too.

April 15th

“There is upward pressure in the value of college sports rights”

The next few weeks could be very interesting – and very lucrative – for the University of Colorado.

While most experts are still betting that Fox Sports will become the first Pac-12 television partner, the Wall Street Journal is reporting that Comcast, which controls NBCUniversal, is making a “big push” for the Pac-12’s television rights.

Steve Burke, the new CEO of NBCU, is “interested in building a more viable competitor to Walt Disney Co.’s ESPN.” The problem for Mr. Burke is that there is little sports inventory out there for which Comcast might place a bid. Other than the Pac-12, the Big East is the only major conference with college football media rights available before 2016 (when the Big 12’s contract with ABC/ESPN expires).

As a result, Comcast has three sporting contracts options to pursue – the NHL, the Olympics … and the Pac-12.

Versus/NBC currently has the contract with the NHL, with the league currently receiving $77.5 million per year from Versus. ESPN and Turner might also be bidding. Fox is reportedly not interested in the NHL (which could mean that the league is holding onto cash in order to pay for its Pac-12 bid – not a bad thing).

Every Olympics this century have been shown on NBC, and it is likely that NBCU will make a bid for the next set of Olympics, with the International Olympic Committee hopes to award in June. The problem for Burke and Comcast/NBC is losing money on the Olympics (the 2010 Vancouver games lost $223 million despite being in a decent time zone – as compared to Syndey or even London, the site of the 2012 Summer Games). Keeping the Games is important to NBC, but a two-week show every two years is not exactly going to allow the network to dominate sports programming … and the Games come with red ink attached.

College football, meanwhile, is a cash-cow for cable networks who can raise their fees for having the extra programming. As Jon Wilmer of the San Jose Mercury News put it: “Let’s say, as a very basic example, that the ($90 million) Big 12 deal allows Fox to charge $.10 more per subscriber for FX. Multiply 100 cable households (oops: 100 MILLION cable households) x $.10 fee increase x 12 months … and you have $120,000,000 in additional annual revenue.” So, for every dime added to every cable bill which carries FX, Fox Sports can generate an extra $120 million. Simply put, sports programming, with its “carriage fees” available with cable contracts, is where the smart money is going. College football has never been more popular.

And the Pac-12 contract is the only game in town for the next four years …

Fox Sports Network president Randy Freer, at the press conference announcing the network’s contract with the Big 12 (see below), had some great quotes:

College football provides a place “advertisers can count on for a mass audience”;

College sports “is undervalued compared to other content in the marketplace”; and

College sports in general and college football in particular have “a great deal of value going forward”.

It’s a great time to be a Buff. The $170 million hoped for annual contract (to avoid having to pay USC and UCLA a surcharge of $2 million apiece) seems all but assured. Last week, the number $220 million annually was put out as a projection – and no one laughed. Now the Big 12, which is ten teams and has restrictions on what Texas and Oklahoma content can be shown, has signed a $90 million per year contract just for the cable rights. And they negotiated their contract through Big 12 commissioner Dan Beebe, not exactly a commissioner held in high esteem by Colorado fans.

The Pac-12 just happens to have Larry Scott as its commissioner. Scott has been just this side of brillant in his first two years as the league’s head man.

Could it be?? Deficit spending a thing of the past for the Colorado athletic department … ??

April 13th

Big 12 announces television deal with Fox Sports

The Big 12 has announced a 13-year agreement with Fox Sports Media for exclusive cable rights to 40 football games per season.

The new pact, which takes affect in 2012, grants Fox Sports the exclusive cable rights for a minimum of 40 regular season games – double the number under its current agreement. There will be options for three Thursday games, one Labor Day Sunday game, and one Thanksgiving Friday contest each season. Most of the games will be shown on FSN, with several other games on FX. Fox also has a similar exclusive contract for a minimum of 40 Olympic sports events, including Conference championship events and up to 25 women’s basketball games. The contract is reportedly for $90 million per season – over four times what the league was receiving previously from Fox Sports. The new agreement guarantees that every Big 12 home game will now be televised, with Fox picking up what ABC and ESPN pass on.

The current ABC/ESPN contract provides for: 18 football games per season, 95 men’s basketball games per season (including the conference championship), and six women’s basketball games per season. This agreement, which has precedence over the Fox Sports agreement with the 10-team league, still has four years left to run.

What does this mean for the Pac-12’s negotiations?

“When you look at the transition that we’re all going through in this video world, sports is one of the only things that drives the adaptation of technology,” said Fox president Randy Freer. “Sports rights are still somewhat manageable as it relates to your ability to put content out digitally. 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 rights generating large audiences in a way that advertisers can connect with. … That’s what you’re seeing drive up college sports’ cost to the values where they are today.”

It could be a very lucrative summer for the University of Colorado and its Pac-12 partners …

April 8th

Larry Scott targeting Pacific Rim

The latest installment from Jon Wilner of the San Jose Mercury News talks about how Pac-12 commissioner Larry Scott is already looking past the negotiations for the domestic market.

The Pac-12 will be a global network.

A planned media company will oversee the league’s broadcasting and digital/mobile rights which could expand the network into China, Japan, South Korea, India, and beyond. The new company will have to partner up with the Pac-12’s domestic partner (an “in” for Fox Sports – Fox already has existing relationships with cable operators in the Pacific rim). There might not be a great deal of money for the league – at least initially – but the move will certainly expand the league’s presence, with a potential windfall on the marketing and sponsorship fronts.

Other tidbits from the Wilner article …

– While most analysts believe that the Pac-12 negotiations will come down to a bidding war between Comcast and Fox, “multiple industry sources” believe ESPN and Turner will “poke around and come to the table.” For those hoping to generate the most $$$ for the league, one source said “Game theory of negotiations says you’ll get the best price if there are at least three serious bidders.”

– Another source said, “The next holy grail for (Turner) is college football”.

– It is likely that any new contract the league signs will have a contingency for future expansion (see comments section, below).

– While the new number we’re all waiting to hear – $220 million per year – is not guaranteed, even a contract for $190 million would more than triple the league’s current income.

April 5th

“The deal they sign will eclipse all others”

In order to avoid having to pay USC and UCLA an extra $2 million apiece, the new Pac-12 television contract must garner over $170 million per year. The guarantee was built into the league agreement, in part to off-set the potential lost revenue due to splitting the southern California schools from the northern California schools when the Pac-12 divisions were created.

$170 million per year?

Okay, how’s about $220 million per year?

As the Pac-12, behind dynamic commissioner Larry Scott, negotiates its new television contract, Jon Wilner from the San Jose Mercury News is quickly becoming my favorite journalist.

In his latest update about the Pac-12 television negotiations, there are so many superlatives that it’s hard to know where to start.

A  few months ago, AJ Maestas of Navigate Marketing, which has done media rights schools for teams like Arizona State and Ohio State, estimated six months ago that the Pac-12 television package would be worth about $175 million per year. Not quite in the league of the $205 million annual deal signed by the SEC with CBS and ESPN, but much more than any member school was used to seeing.

Now, Maestas has revised his estimate for the Pac-12 up to around $220 million per year.

Why the huge increase?

“This is the best possible time for the conference – they’ve caught lightning in a bottle,” explained Maestas. “The rest of the economy is tough, but the media world is booming.” The perfect storm for the Pac-12 is a combination of a lack of other options for media outlets – the ACC, Big Ten, SEC, and Big East are tied into long-term deals – and several competitiors anxious to expand their live sports footprint.

Turner Broadcasting and ESPN are potential network partners, but the betting money remains on either Fox or Comcast. Fox is quite clearly interested in expanding its sports inventory. Witness the recent $90 million deal Fox recently made with the Big 12, which has ten schools – two of which (Texas and Oklahoma) which will have their own networks. “It makes no sense economically,” one analyst said of the Fox/Big 12 deal. “It’s all about Fox’s national push with FX and subscriber fees … But it’s all good for the Pac-12.” Fox’s chief rival, Comcast, recently merged with NBC/Universal, and is also looking to expand its inventory of programming.

There are several aspects to any new deal which has Pac-12 fans ripe with anticipation. First, as we’ve discussed before, the Pac-12 presidents last fall gave the league commissioner, Larry Scott, permission to negotiate a deal for the entire league package. Every other deal in the country leaves some games uncovered if no television partner picks up the game, and the home team can’t find a local outlet willing to pay for the broadcast. Now, every game will be shown, either by the corporate sponsors’ networks, or on the Pac-12 Network.

Oh, yeah, about the Pac-12 Network.

It will be coming to a cable/satellite provider near you in August, 2012, the analysts all seem to agree. In addition to football and basketball games not picked up by the network sponsor would be shown on the Pac-12 Network. In addition, the “League of Champions” would finally have an outlet for all of those Olympic sports the league keeps dominating. “We have some of the best amateur athletes in the world, and people aren’t able to see them because we don’t have a platform,” said Larry Scott.

With the new deal will also come some concessions. Thursday and Friday night football games will not be uncommon, but those changes will pale in comparison with what will happen with the basketball schedule. “We’re at a crucial point,” said Arizona coach Sean Miller. “For the conference to be the best it can be, there has to be significant change in televisions across the nation being able to watch Pac-1o basketball.”

How will this be accomplished? Travel partners will go the way of the Southwest Conference, as instead of a Thursday/Saturday weekend in Washington state for travel partners Arizona and Arizona State, games will be spread out throughout the schedule – and throughout the week. “We’re going to spread out the nights they play – like every other BCS conference,” said Scott. In order to help minimize the time away from campus, the league might use chartered flights (you can do that with $220 million rights fees).

The other interesting aspect of the negotiations is the league’s push to get its games on mobile networks. Right now, you can’t watch college sports on your iPhone, but, if Larry Scott has his way, you will soon be able to do just that. “We have a lot of alums and students who are very technologically savvy,” said Scott, “and we’re planning to make a big commitment to distribute our content through mobile networks.” The league might even create its own media company to control the digital and mobile programming.

“This deal they sign will eclipse all others,” said Maestas, the media advisor, “and that’s shocking to me because the league was always the least pro-active, and the least liberal with its scheduling policies.

“But it’s a new regime.”

Indeed it is.

March 31st

April 1st marks opening day for television negotiations

Jon Wilner, who writes for the San Jose Mercury, has been the most up-to-date on keeping tabs on the future television deals which the Pac-12 might be making this spring. In his latest blog entry, Wilner discusses why April 1st is a big day for Pac-12 fans.

And, no, not because it’s April Fool’s Day.

On March 31st, the exclusive window for Fox to negotiate a new television contract elapses, and it is no surprise that the deadline has come and gone all-but unnoticed. The Pac-12 has no reason to worry about the end of the negotiating window, as the league is very interested in seeing wants to get the best offer possible, while Fox wants to see what networks will be its competition.

Wilner calls the Pac-12 package available “unprecedented”, as, for the first time, the league is taking control of all of the media rights. Previously, if a game was not picked up for broadcast, it was left to the schools to sell those rights to local media outlets. When the schools could not find a local partner, the game went untelevised, and potential revenue was lost. Now, as the Pac-12 teams have all signed on to be part of a package deal, there is significant inventory – some 2,700 events in all – to be included in a television package.

Plus, as Wilner points out, the SEC, ACC, and Big Ten are currently under long-term contracts, so the Pac-12 is the only option for a broadcast network looking to expand its college footprint.

Handicapping the contenders …

Fox Sports – the leader out of the gate, and, for now at least, the likely favorite to win the competition. Fox has recently purchased the Pac-12 and Big Ten championship games, and has signed onto a $90 million deal with the diluted Big 12 (even without the Texas Network and the soon-to-be Oklahoma Network). Fox also has the channels in place (like FX) and has the backing (and dollars) from Cablevision.

ESPN – the favorite of most fans, and likely most coaches and players. ESPN already has a number of commitments in place, and the Pacific time zone hurts the Pac-12’s chances for a big score from the “mother ship”. However, ESPN could partner up with another network (Turner Sports?) to create a package so that ESPN would still retain rights to Saturday night games from the Pac-12. Turner Sports, which worked with CBS during the NCAA basketball tournament, has been described as being “as hungry as anyone” when it comes to wanting to expand more into college football.

Comcast – the largest cable operator in the country … and one of the most unpopular. Comcast has merged with NBC, and has the money, the production experience, and the infrastructure to make a significant bid for the Pac-12’s services. Comcast may want to become a major player in college sports, and use the Pac-12 as a vehicle to make its mark.

It’s going to be an interesting spring … and perhaps summer … of negotiations.

While most Buff fans would likely rather see their team on ESPN, the smart money still appears to be on Fox.

Stay tuned …

March 29th

Buffs on Sunday?

Pac-12 commissioner Larry Scott is always thinking outside the box.

From expanding the Pac-10 to 12 (or even 16) to the Pac-12 Network to expanding the league’s presence in the Pacific islands and Asia, Larry Scott is always in the news when there is a chance to gain greater exposure for the new league.

Now, with the NFL players locked out, and the possibility of there being no football on Sundays this fall, Scott is exploring the idea of having the Pac-12 move some of its games to Sundays for the 2011 season. “We certainly are monitoring the situation,” said Scott. “We have no plans in place at this time, but you want to be prepared and consider all options.”

“We haven’t made any alternative programming plans right now,” said Sean McManus, president of CBS News and CBS Sports. “When presented with whatever scenario develops, we will adjust. But right now, we’re not making any contingency plans or any thoughts of next season without football.”

The major problem for the Pac-12 teams, of course, is that a move to a Sunday game would cause logistical problems for the home team. Fans coming from out of state often make their arrangements for travel and lodging months in advance, and the lockout issue is likely to drag on throughout the summer.

“Thursday night football hasn’t been around forever, but we adjusted to that,” said Arizona athletic director Greg Byrne. “Sunday is a day a lot of people look to watch football. You would get good exposure.

“But Sunday games would be something we would have to think long and hard about before we jumped into.”

The main problem would be that, for the Sunday college games to work, there would have to be enough lead time for the schools and the fans to adjust. However, a significant lead time is the one thing that the networks might not be able to provide.

“From the network’s perspective, I’m sure they would welcome the programming opportunity if they knew the NFL was not going to play,” said Patrick Rishe, founder of Sportsimpacts.com, a sports consulting firm. “(But) it’s not as though you can announce these things months in advance, because, as we have seen, the NFL and the NFLPA could resolve their dispute at the last minute.”

March 14th

Big 12 close to new television deal with Fox

According to a Sporting News report, the Big 12 is nearing a deal with Fox Sports which could triple the conference’s revenue over its current contract.

The new deal, if true, would pay the league more than $60 million per year, a considerable raise from the $20 million received under the existing agreement. Fox is also in discussion with eight of the league’s schools about establishing a conference specific channel along the lines of what the University of Texas has already negotiated (in case you are wondering about the math – Oklahoma wants its own network).

(One area which would need to be clarified – would it be the “Big 12 Network” if only eight teams participate?).

The two arrangements – Fox’s cable deal and the potential league network – are separate conversations. The Big 12’s cable contract with Fox runs through 2011-12, and will pay the league $20 million during the upcoming year. The ABC/ESPN contract, which covers most of the football and some of the basketball games, runs through 2016. The network and cable deals would bring in an average of $130 million per year, to be divided amongst the ten teams. This is only slightly behind the ACC deal with ESPN, which made a deal for $155 million a year (divided amongst 12 teams.

Ten teams – geographically challenged, and with no conference championship game?

This all bodes well for the Pac-12 negotiations. The new league is getting $14.5 million for the 2011 Pac-12 championship game, so there are extra dollars right there that was not part of the Big 12 negotiations. There is also the fact that Fox is willing to pay about $60 million per year for what is, in essence, eight teams – and, the Kansas basketball team notwithstanding – are not the cream of the crop in terms of national Q rating.

Time to shift into overdrive, Larry Scott!

Side Note … While not related to the above, it is interesting to note that at the same time the Big 12 is negotiating a big new cable deal, that it is bailing out one of its “haves”.

Oklahoma was not able to pay for all of its tickets for the 2011 Fiesta Bowl against Connecticut, so the league, according to a Sporting News report, paid for 10,403 tickets, to the tune of $1.9 million. Oklahoma bought 1,530 unsold tickets, at a cost of $335,000, in order to wind up with a net gain of $9,350 for the trip.

The payoff only came to life after it was disclosed that Connecticut lost better than $1.6 million on the game, with the Big East not picking up the tab.

March 10th

Pac-12 looking for more television exposure

There will be a pot of gold at the end of the rainbow, but it may take a few more months to make the journey.

Pac-12 commissioner Larry Scott says that he is “laser-focused” on negotiating a new television contract for the new league. “We’re determined to get a lot more national exposure for basketball and football than what we’ve been getting,” said Scott.

“There’s a sense that the Pac-10 has fallen behind. We’re fifth among the BCS conferences right now in TV revenue, and that’s not satisfactory to our leadership,” said Scott. “We’ve fallen behind in terms of national exposure as well as revenues.”

Scott is also determined to create a “Pac-12 Network”, and has been working with Hollywood’s Creative Artists Agency to develop the network. “We’re determined to get broader exposure four our Olympic sports and women’s sports, which the Pac-10 excels at, and we’re determined to get every football game and basketball game on the air and not have any of those games dark,” he said.

Brings a smile to my face every time I read a story about this guy …

Tags: Big 12, Bob Bowlsby, David Shaw, ESPN, Fox Sports, Jon Wilner, Larry Scott, Mike Bohn, Mike Riley, Pac-12 Media Enterprises, Pac-12 Network, Pac-12 Properties, Pat Haden, Rick Neuheisel, Sandy Barbour, Scott Woodward, Sporting News
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