Monday, March 14, 2011
How the new TV deal affects the Big 12
By David Ubben
Once the Big 12 held together over the summer, two things were a big threat to its future:
1. Another league proactively reviving the realignment discussion, and
2. The money in future TV contracts not satisfying its remaining 10 members.
The Sports Business Journal on Monday morning reported that the Big 12 was nearing a deal with Fox that was worth about $60 million annually, triple what the league's current eight-year deal is worth. By the time the deal is signed, it could be worth as much as $70 million.
Additionally, the eight teams other than Texas and Oklahoma were in formal talks about forming a Big 12 Network that would not provide a "financial windfall" but could aid schools in other ways, like recruiting.
So, what does the new deal mean? Well, there's a lot to it. Let's dig in.
Plenty was made over the summer about the Big 12's promise of $20 million annually to Texas, Oklahoma and Texas A&M, but remember, Texas and OU both said it wasn't necessary. Texas A&M is the only school, according to comments by Bill Byrne, that plans to hold the Big 12 to that promise, perhaps at the expense of other schools in the Big 12.
But combined with the new deal from Fox, Big 12 schools will split up $130 million between 10 teams. Even you non-mathematicians can figure out that comes out to about $13 million per school. With TV revenue and the Big 12's unequal revenue sharing agreement, I'll extrapolate the most recent available figures and guesstimate that the traditionally bottom-tier teams would be earning about $10-11 million and top-tier teams like Oklahoma, Texas and Texas A&M would be near $15-16 million, without the money from a Big 12 Network, which is a little too far from a reality just yet to start tossing out money figures. Again, factoring in the Fox deal, that's a rough estimate, so don't hold me to it. If A&M is going to get to $20 million by 2012-13 like it was promised, it could take some fancy footwork from the Big 12 to do it. Factoring in the money from the Big 12 Network would help get them pretty close, and at that point, we're talking about giving A&M a couple extra million at most to satisfy the $20 million demand. No official distribution strategy for Colorado and Nebraska's exit fees ($16.1 million combined) was ever publicized, so there's certainly money there that could be used. Another strategy could be to sandbag the Aggies and promise even more money when the league begins its negotiations with ESPN/ABC in 2015-16, which is an eight-year deal worth $480 million (or $60 million annually). Considering the success with the Fox negotiations, convincing any school that more money could be coming from ESPN would be much easier than it was this summer, and Dan Beebe and the Big 12 succeeded in doing it without any actual money in their hands.
Why would Fox pay triple the money for a league that looks like it'll have fewer marquee games without Nebraska in the fold? Well, that's a question I don't have an answer to, but for now, it doesn't matter.
It's important to note that the Fox deal isn't official yet, but it's hard to be too surprised by the numbers. The Big 12 played it coy all summer when discussing the actual figures, but the league said that television networks had indicated to them that future deals could make the league's members very happy, and happy enough to stay in the Big 12, specifically Texas and Texas A&M, the biggest threats to leave. That's no different than any other company.
Want to keep someone from looking elsewhere? Give them a raise. It won't fix everything, but it will make them more apt to stay.
Beebe indicated to me last month that the Pac-12 was the only conference without serious reservations about creating a conference with more than 12 teams, so the threat of Texas A&M leaving for the SEC is lowered significantly, considering that without others expanding, the SEC has no reason to add anyone past its 12 members.
"What I talk about with my colleagues is that the whole exploration this summer led everybody to believe that -- well, not everybody, because I think Larry Scott has a different view in the Pac-10 -- but the rest of us who have been around collegiate athletics for our whole careers think that if you get past 12, it really gets unwieldy and you run into all sorts of other problems," Beebe said. "Playing outside your region, stretching the fan base, stretching parents' ability to see their kids play and all that stuff. Nobody is really looking to do more than that in a football athletic conference. You've got the Big East, but you can't really consider it the same with eight of their members not playing football."
That's a legitimate point, and one that prevented further expansion in reaction to the Big Ten and Pac-12's moves last summer. If Texas had helped create the Pac-16, it could have vastly changed matters for the SEC and Big Ten, but for now, in part thanks to the new money from Fox, it's difficult to see the Pac-12 finding viable future members to grow beyond its current 12 teams and simultaneously force other conferences to consider their own expansion.
Beebe, Texas and Texas A&M all deserve some credit for saving the Big 12 this summer. Now, if this latest deal or something close to it ends up being officially signed, there's no doubt that the league is significantly strengthened.