Wednesday, April 13, 2011
What the Big 12's new TV deal means
By David Ubben
The Big 12 made the announcement official Wednesday afternoon: It has signed a 13-year deal with Fox Sports. The league wouldn't confirm the conditions of the deal, but both the Sports Business Journal and Lubbock Avalanche-Journal confirmed the details.
- $90 million annually, more than four times the $20 million Fox Sports pays now
- Minimum 40 games each year, and commissioner Dan Beebe said every Big 12 home game will now be televised
- The 13-year deal, worth $1.17 billion, goes into effect beginning with the 2012-13 school year
Which broaches two big questions:
- What does this do for the Big 12's long-term stability?
- Why is Fox paying so much more money for fewer teams and fewer nationally relevant games without Nebraska as a Big 12 member?
Let's tackle the first.
I've been moderately convinced over the past few months about the Big 12's stability, but now I'm completely sold. Barring further realignment developments, the Big 12 is stable. The league's members agreed unanimously to the deal, and in signing it, essentially put action to words written over the past summer.
"Today's announcement really validates why our media partners conveyed to us and encouraged us to stay together and committed to what we were doing," Oklahoma athletic director Joe Castliglione said. "Through this agreement, the Big 12 institutions will generate per-member revenues at the highest levels in college athletics."
Money heals plenty of wounds, and it looks like the Big 12 has plenty now.
Everyone in the league has to be cautious of landscape shifts, and the two most obvious cases would be Texas A&M being invited to join the SEC or Missouri invited to join the Big Ten. Notre Dame could force the Big Ten's hand, but there's no reason to believe that will happen.
Texas, with its now-boosted Big 12 conference revenue, and soon to come additional revenue from the Longhorn Network in conjunction with ESPN, isn't going anywhere. Other than Notre Dame ushering in an era of superconferences (Again: very, very doubtful), there's not a lot of dominoes in place that would cause the Big 12 to eventually fall.
Members can complain about Texas' money all they want. But it's not like Texas didn't earn it by winning and building a big-time program, and there's little anyone else in the Big 12 can do to change it.
For now, the Big 12 looks secure, and Fox Sports' clear commitment to the league and members' commitments to each other are the biggest reasons why.
So the other question: Why is Fox willing to pay more for fewer teams and a league without one of its best programs? Fox, it appears, is trying to get serious about college sports.
"College sports haven't been appropriately valued," Beebe said. "Based upon the viewership and meaning to cable networks and the passion, the meaning, college football has only grown in terms of its support at the gates and on TV and in the age of recordable TV, recordable content, sports don't lend itself to that. From our viewpoint, that's one of the determining factors. I'd like to think it's because of my charm, but that probably isn't the only factor here."
That sentiment is entirely accurate. Faithful followers of the blog may note my television quotes at the top of links posts. I'd say I watch my fair share of TV shows. I haven't watched a show live in years. That's solely because of DVR and there's no question television is trending that way. Sports, however? I can't recall the last time I watched one on delay. Considering how many people enjoy watching games and also keeping an eye on Twitter, doing so these days is near impossible and not nearly as enjoyable. The translation: Not as many eyes are on commercials during non-sporting events, rendering those spots less valuable. As such, market demand means commercial spots during sporting events, especially those with the passion and followings of college football, are much more valuable.
If college sports have truly been undervalued, they would have only been more so in the future. Fox is seeking to change that, and the Big 12, it would appear, is ahead of the curve in making sure college sports are fairly compensated for what they provide networks.
In short, Fox will have the rights to broadcast other sports online and be able to profit off advertising for those productions.
"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."
The Big 12, it would seem, looks like a bit of a trailblazer with this deal, which could provide another windfall for the Pac-12, which is set to negotiate with Fox for its first-tier rights soon.
Other notes and tidbits from the teleconference:
- Once again, no, the Big 12 is not exploring expansion, and has no plans to do so. It's been, by far, the question I've been asked the most over the past year, and the answer hasn't changed. In addition, they believe the lack of a championship game will be advantageous in the future. "We carefully considered all options, and I believe in the long term, we're going to be in the situation we're in right now," Beebe said. "The football championship game has always been somewhat controversial, and in fact, our teams were prevented from playing in the national championship three times when we've already tied for the most number of appearances in the national championship."
- As for the $20 million previously promised to Texas, Texas A&M and Oklahoma? The league should have plenty of money to cover that, as we previously talked about on the blog. "As much as we can project, with the revenue that is coming in, it looks like that will make that issue moot in 2012 and beyond," Beebe said.
- Could teams in the future leave? "Well, we still have significant withdrawal provisions that provided for one of the most historic withdrawal fees in any conference realignment situation. We'll take a look at all of that, but I don't want to get caught up in that discussion in announcing a television agreement." I've seen reports elsewhere that these numbers went up, but Beebe's comments don't at all reflect that. The money withheld from Colorado and Nebraska (16.1 million total) is already historic. When Beebe used that term, he was referencing last year's happenings, not any changes made to the policy since then.
- ESPN still holds the first-tier rights to Big 12 games, meaning the biggest games in the conference. Fox is open to changing that when ESPN's deal with the Big 12 expires in 2015-16.
- Unequal revenue distribution (way, way, way overblown in fans' minds, in my opinion) will remain unchanged. "We don't anticipate a change. We have a formula that's clear and specific," Beebe said. "This agreement is a little different, so we've got to get clarity on the application of the rules to this agreement, but it will work through that."