The SEC can't break their contract unless they change their membership. If the SEC was to add a member or 2 then they could renegotiate. Considering that ESPN broadcast the ACC, Big 10, PAC12 and SEC, how valuable would the SEC and maybe Texas A&M be to say NBC who currently only broadcast Notre Dame. How good at recruiting is Mr. Slive?
Yesterday, word leaked that the Pac-12 — we’re going ahead and calling it by its July 1st name — was on the verge of announcing a new $2.7 billion television deal with ESPN and Fox that would put it in the same ballpark revenue-wise with the Big Ten and SEC. The Sports Business Journal has now updated that story to say that the Pac-12′s deal will be worth $3 billion. But what’s $300 million between friends?
The New York Times is also reporting that the Pac-12 will launch its own television network — like the Big Ten — but that it will control that entity all by its lonesome. Fox owns 49% of the Big Ten Network.
The news that the Pac-12 will be making more per year than the SEC in its own TV pacts with ESPN and CBS set off a wave of hang-wringing across the Southeast yesterday. I was asked repeatedly on radio stations if the SEC could or should try to renegotiate its own deals now that the Left Coasters have somehow passed them. My answer: It’s doubtful the SEC can tear up two 15-year contracts simply because someone cut a slightly better one they did. And there would be little reason to do so, even if the league could.
* The SEC set the market
When the SEC negotiated its own deals with ESPN ($2.25 billion over 15 years) and CBS ($825 million over 15 years), the league set the market. The Big Ten Network had struggled to that point. So while the Big Ten owned its own channel and got a pretty penny from ESPN/ABC, at that point it did not equal the SEC in cash flow. The SEC was the clear #1 as the new deals went into effect in the fall of 2009.
But like most contracts, the SEC’s has now been passed. The fact that it took two years to pass — and even then just barely — shows the strength of the SEC’s initial deals.
To put this in perspective, consider professional athletes. Last summer NFL quarterback Tom Brady signed the richest contract in pro football. At some point this year it’s expected Peyton Manning will jump Brady and take over the top slot. At some point, Manning will then be passed.
The first contract sets the market and gives the next guy something to shoot for… which the Pac-12 has done very effectively.
* Local rights fees
The Big Ten Network has turned a financial corner since the SEC’s twin TV deals launched. Partnering with Fox certainly helped the net when it came to distribution. Yet the Big Ten schools had to turn over their local media rights to the league in exchange for launching the network.
In the SEC, each school can still negotiate its own media money locally. So while other leagues have a fixed number coming in for each school — the Pac-12 projects about $21 million per school per year when its network’s revenue is factored in — the SEC’s numbers — closer to $17-18 million per school — do not include those local dollars. That’s great news for schools like Florida, Alabama and Georgia… but it ain’t too shabby for schools like Ole Miss, Mississippi State and even Vanderbilt, either.
* Looking for time-killers
A quick show of hands: How many of you have watched more ESPNU due to SEC games being shown on that network than you ever had previously? And that’s the value of college athletics. ESPN and Fox are attempting to buy up as much college sports programming as possible to feed their various networks. Heading toward a world where television and the internet become one big pipeline, it’s not hard to imagine ESPN and Fox creating even more networks which would create the demand for even more programming.
A few radio hosts asked me yesterday how the Pac-12 — the Pac-12? — could possibly equal the SEC in terms of product. My response: It doesn’t have to.
In case you haven’t noticed, ESPN now has deals in place with the Big Ten, the SEC, the ACC, the Pac-12, etc, etc. They don’t view the situation as one league versus another league… they view it all as one large content pool. “We’ll put the SEC over here at this time and the Pac-12 over here at this time” and so on.
Plus, let’s not forget that when it comes to television markets, the SEC lags behind the Big Ten’s huge midwestern markets and the Pac-12 which dominates the entire West Coast (Denver, Seattle, Portland, San Francisco, San Diego, Phoenix and Los Angeles). Whether the league’s football is on par with the SEC’s is moot. A lot of eyes will tune in to watch the Pac-12′s games.
* There’s more change to come
The Big 12 figures to be the next league to get a huge revenue boost. Now with only 10 teams, that league’s per-school dollars should really boom when their primary media rights go on the market in four years. With Fox planning to put football on its main Fox network channel, you can bet a league that brings in all the Texas markets plus Kansas City, Oklahoma City, St. Louis, etc, will get an enormous bounce.
Already the Big 12 was able to negotiate a $90 million annual deal with Fox over 13 years. That’s thanks in part to ESPN’s desire to keep that league together last summer. Network executives promised the league that it would not cut the money it was paying the Big 12 if it could hold together as a 10-team league. For ESPN, the worst case scenario would have been for the Big 12 to crumble. If the SEC, Big Ten and ACC had been impacted by a wave of expansion set off by the Big 12′s demise, ESPN would have faced renegotiations with everyone at once.
So in a roundabout way, the SEC’s large contract with ESPN helped to make more money for the Big 12.
* Summary observations
The SEC’s cash flow is still just as large as it was when its deals with CBS and ESPN kicked into play. The league’s schools still maintain their own local media rights as well.
Yes, the Pac-12 and Big Ten now make more money per year from their network partners — barely — than the SEC, but not to the point that SEC schools should be put at any real disadvantage on the field.
In other words, there’s no reason to panic in the South today.
However, the Pac-12′s breakthrough does go to prove two things that we wrote last summer during Expansionpalooza:
1. Pac-12 commissioner Larry Scott is a vibrant, young, forward-thinking commish with a media background. That bodes well for his league. From marketing the Pac-12 to Asian markets to cutting massive new TV deals for its member institutions, Scott is — in this site’s opinion — the most forward-thinking commissioner on the scene today. Laugh if you like, he will make the Pac-12 a much bigger player on the national scene. Heck, he already has.
2. Just because the SEC is powerful today, it doesn’t mean the league shouldn’t be thinking about the future. Anti-expansioners beat the “we’ve got the most money, we’ve got the best football” drum all last summer. At the time, we wrote that those things could change quickly.
The SEC is still a dominant figure on the college sports landscape. Despite the Pac-12s new media deals, if you ask the average sports fan what the best league in America is, he’ll likely reply by saying “the SEC” or “the Big Ten.” That’s a great situation. But it doesn’t mean the SEC can or should rest on its laurels.
With that in mind we ask, “What’s next Mike Slive?”