Tuesday, April 19, 2011
Big 12's new TV deal set up unique future
By David Ubben
The Big 12 employs the legal firm Polsinelli Shugart for its legal counsel, specifically Kevin Sweeney, who has been heavily involved with the league for decades, especially with the tumultuous past year for the league.
Note: Small portions of this interview were edited for length.
What was your role in last summer’s realignment and these recent contract negotiations?
I’m the general outside counsel for the Big 12 Conference and I have been since its inception and I represented the Big 8 before that. So, I was in the middle of all the stuff in Dallas last June and I was the primary legal negotiator of the Fox deal this spring. So I worked hand in hand with Dan Beebe, with the TV consultants and we sat in rooms for about a week in LA and then before and after that, getting to the contractual language that the conference was able to announce with Fox this past Wednesday.
How would you characterize the negotiations? How much finagling did it take to get to this point?
The interesting thing about this contract, and I’ve done lots of these TV contracts, but in the second-tier rights contract, the TV partner always wants to take everything that isn’t in the primary tier, so you’ve got ABC/ESPN here having the first 18 games, and traditionally, Fox would say, "We want everything else. We’ll let the pay-per-view and everything come back, but we want everything else."
The challenge in this negotiation was that we started with the premise that our member institutions wanted to retain a package of rights that each of them separately could go commercialize. So, David, the interesting part of this was it took a lot of really good input from the schools, working closely with Fox and working closely with technology experts to project out 13 years and say, “How might a member institution want to take their specialized, focused programming out to their constituencies? And how can we carve that out of the Fox deal, while still allowing Fox to come in and take the stuff that applies across the member institutions and is of interest nationally, so they can maximize what they’re willing to pay for that?”
So that slicing and dicing, from delayed rights to live rights to replays and coaches shows, they deal with digital platforms, what will happen with convergence of all these streams of programming -- we used to have over the air and cable and those lines are kind of disappearaing -- we’ve got iPhones and iPads and we’ve got down the road there will be other new methods and it’ll all converge into one pipeline and how we sliced and diced that was, to me, the really interesting part of the negotiation of this contract.
This conference differentiates the approach the Big 12 is taking to commercialization of its rights from what most, if not all the other conferences are doing. And I think that’s one of the reasons why, this model where we allow our member institutions to go out and figure out the best way to commercialize their package of rights and take it to constituencies most interested in those rights -- because you can’t do that in the Big Ten, and we don’t think the Pac-10 is going to allow that -- was one of the issues that came to the front.
This is one of the differentiators that is one of the reasons why I am very optimistic about the future of the Big 12.
What was your role last summer?
As outside counsel to the conference, we were dealing with the application of the provisions in the bylaws that related to the withdrawal fees payable by withdrawing members, and we played that out with Nebraska and Colorado. The public numbers are out there, about 15 million in withdrawal fees which are far and away the largest withdrawal fees that have ever been paid by any institution. Also, a lot of corporate governance issues.
Did the Big 12 know a deal like this that could propel it back into the elite, at least in terms of strictly dollars, was coming? Or did this surpass even what you thought was possible back in June?
The Big 12 and the Pac-10 were the last two conferences to have their secondary deals come up for renewal, so last June we knew ours was coming up and we’d seen what other conferences, the SEC and Big Ten, had done. We knew that values were increasing, because years ago, we were concerned that there was only going to be one player in a monopolistic environment, ABC/ESPN.
Since that time, we knew the landscape was changing.
The Comcast/NBC deal was changing. Fox Sports was saying they wanted to take a larger role in college sports. Turner was stepping up to the plate, CBS College Sports. We knew that from a timing standpoint, we were positioned well for what was an undervalued contract, and get market value.
Even given that, David, I will have to say that this contract exceeded my personal expectation of where we might end up, while still being able to retain a significant package of rights for our member institutions to commercialize.
Back to the third-tier rights. Take schools like, say Iowa State and Kansas State, that don’t have the fan bases and resources of a school like Texas, who can put that third-tier programming on its own cable network versus others, who might stream it on the Internet. How much additional revenue can smaller schools expect from these third-tier rights?
I can’t quantify that right now in my mind, but I know there are opportunities. For example, [Texas A&M athletic director] Bill Byrne in your column this morning, was talking about different ways of packaging those rights. So is a K-State or Iowa State by itself able to maximize revenues? Or let’s say maybe you had a Kansas Network -- KU and K-State together. Or you took all the old Big 8 schools, or all the nine other Big 12 schools and package them together. Maybe it’s a cable deal. Maybe it’s not. Maybe it’s an internet deal that has a free tier and then a premium subscription for certain things. If you want all the extra basketball games or you want to watch women’s volleyball.
I can’t predict that these will rise to the level of what Texas is able to do, or even proportionate to that, but what we’ve done is created the flexibility with hopefully as good a vision as we can 13 years out, so that whatever opportunities arise, that we can create an opportunity for members to capitalize on them.
In part two later today, Sweeney talks about why he feels such a long-term deal can remain competitive, possible changes to withdrawal fees for teams leaving the Big 12, and plenty more.