solohawks
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RE: Big 12 expansion confirmation
(08-27-2021 11:30 AM)quo vadis Wrote: (08-27-2021 11:28 AM)solohawks Wrote: (08-27-2021 11:26 AM)quo vadis Wrote: (08-27-2021 08:04 AM)GTFletch Wrote: One thing to remember is that the BIG12 has data from the 2016 deep dive they took. The only reason they did not expand then is becuase both FOX and ESPN chucked a mental and threaten them. Why? Lets go back five years ago....
ESPN and Fox staged an extraordinary intervention in Big 12 expansion, going public with their displeasure over the potential addition of teams in the conference. It was a calculated Monday morning public attack on the Big 12’s plans to expand, the likes of which we have never before seen. ESPN and Fox both chose the Sports Business Journal, a widely respected high end publication for industry sources, to fire a shot across the Big 12’s bow on Monday morning, a time perfectly designed to attract wide media attention. This wasn’t just private disagreement, this was a public threat of war designed to send a clear message to the Big 12: expand at your own risk.
Most people already knew that the Big 12’s decision to expand was a naked cash grab designed to extort potential new members and take advantage of an existing clause in the TV contracts that guaranteed equal payment in the event of expansion. This represented a new, more desperate, move in college realignment. Whereas the SEC, Big Ten, ACC and Pac 12 all expanded to further conference network ambitions and strengthen the overall conference — that is, every team, new members and old members alike, would make more money through expansion — the Big 12’s expansion rationale is simple — sell Big 12 membership to desperate schools and have the ten existing schools pocket the added TV money owed under the contract. That’s a desperate strategy because a newly formatted Big 12 with 12, 14 or even more members isn’t worth any more money to the TV partners. Fox and ESPN’s ratings won’t increase, there’s no TV network lurking here to unlock new value, this is just an attempt to pocket more money between now and 2024-25, when the Big 12’s existing TV contract ends.
This is an extraordinary dispute because up until now we’ve never had a public fight between TV networks and a conference. Sure, there have been private disagreements — the SEC remains furious with CBS over the network’s refusal to increase its payments over the addition of Missouri and Texas A&M, an embittered posture that likely means the SEC won’t reup with CBS when its contract expires with the company — but those disagreements never went public before a new deal was reached. (NOTE: the SEC recently signed with ESPN leaving CBS over the dispute)
Here, Fox and ESPN, the two most powerful networks in college sports, are expressing their joint dismay, in public, with the Big 12’s plans for expansion. This just never happens. Why are Fox and ESPN so upset?
Because let’s say the Big 12 adds four teams: Houston, Cincinnati, Memphis and BYU. Each of these teams is worth either $20 million more a year right now and up to $25 million more a year at the end of the contract. Let’s round that up and say if all four of these schools come that eventually ends up costing Fox and ESPN an extra $100 million more a year.
What would these four schools, Houston, Cincinnati, Memphis, and BYU — sell their TV rights for on the open market right now if they were a standalone conference? Maybe $5 million total? At the absolute peak, they’d be worth $10 million a year, and that’s honestly way too much given present market conditions. (Ask Conference USA if you doubt me.) So this means the Big 12 is forcing Fox and ESPN to pay $90 million more a year than than these four schools would sell for on the open market. (That’s why I said the Big 12 wasn’t just exploiting the TV sports rights fee bubble, they were lighting it on fire.)
Over the life of the Big 12’s television deal that’s up to $800 million in total additional payments that Fox and ESPN would owe the Big 12. And, remarkably, that’s $700 million over the market rate those four schools would command, all based on an expansion clause in the Big 12’s contract.
So what happens now that this disagreement has gone public? We just saw it during CFP Expansion meeting swith SEC, TEXAS AD, ESPN and others Texas adn OU bolt... Not sure we can ever prove that ESPN wanted BIG12 L8 in AAC..
That's a great point I hadn't considered:
If that clause is still in the contracts that obligates FOX and ESPN to fork over $40m per year more for any school the B12 expands with, even if those schools aren't really worth nearly that much, then the B12 can expand right now "cost free" to itself, so to speak, for the next four years.
And since they stand to take a big haircut in 2025 anyway, their attitude might be "well who cares if this pisses off FOX and ESPN, they are going to sink us with low money then anyway".
With that in mind, this makes me think the B12 could very well vote to expand in the next coming weeks.
Great point!
Get as much as you can now
Yes, and the L8 could pocket extra money by "phasing in" any expandees B1G style, say pay them a half-rate for those four years, with the rest spread amongst the L8.
Anyone on the expansion list would still say "yes" in a minute, as that would still be a huge boost in pay for them.
Yup!
Plus you are joining an Autonomous conference
That in of itself with no pay raise is a big deal
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