Wednesday, December 26, 2012

College Football's Real God: Almighty TV

While the Big East scrambles to stave off its imminent collapse, whether it's by enticing Fresno State and UNLV to join up or begging UConn and Cincinnati to stay put, it can make no tangible promises because there's no TV dollars to back any such pledge.

Basically, the Big East blew it by not locking down a good TV deal when the going was good.

Television money is now the lifeblood of college sports - specifically college football, which has become the second-most valuable property to television networks after the NFL. With the advent of DVRs and streaming services, sports is about the only thing left that can still deliver huge live audiences that advertisers crave. And that, in turn, brings in big bucks.

The Los Angeles Lakers signed a 20-year, 3 billion exclusive deal with the fledgling Time Warner Sportsnet, which commands a whopping $4 per subscriber fee and won a staredown with DirecTV.
Just up the street, the Dodgers are expected to one-up that, with a new 25-year deal expected to be worth north of $6 billion. And then there's the mother of all monster deals - the NFL's next TV contract, scheduled to kick in for 2014, is worth about $5 billion annually.

College football certainly has gotten in on the act, with the five major conferences each inking billion-dollar deals in the past two years. The annual payouts roughly go like this:
  • Pac-12: $250 million ($20.83 million per school)
  • Big Ten: $248 million ($20.67 million)
  • Big 12: $200 million ($20 million)
  • ACC: $240 million ($17.14 million)
  • SEC: $205 million ($14.64 million)
  • Notre Dame: 15 million
(And please don't cry for the SEC, which is certain to renegotiate its current deal with CBS and ESPN before the next season and launch its own network by 2014. The new pact is expected to bring each SEC school more than $20 million per year.)

So who's missing here? Yep, the Big East, the erstwhile member of the big boys' club that's about to get tossed out on its ear after the 2013 season.

The Big East was essentially done in by its own greed. In April 2011, the much-maligned former commissioner John Marinatto had a nine-year, $1.17 billion deal with ESPN on the table, which would've paid its full members about $13.8 million per season and the basketball-only schools $2.5 million. While it wasn't Big Ten money, it was more than commensurate with what the Big East was worth.

But the Big East presidents, including the ones in the "Catholic 7," rejected the deal, thinking they would be able to squeeze more out of it. Turns out, it was a gargantuan miscalculation that left the Big East in today's mess.

The Big East's current TV deal expires after this basketball season and the next football season. With the mass defections this the past month, the value of that next contract is dwindling, and no network is all that eager to jump in to make a deal when more schools might abandon ship before long. The latest estimate has the conference getting about $40-$50 million per year - and that's assuming everybody stays put.

An optimistic model of $50 million yields a payout of about $4.17 million per year for the nine full members and $3.13 million per year for the four football-only schools (Boise State, San Diego State, East Carolina and Navy in 2015). It's dwarfed by the payouts in the major conferences, though it's still substantially more than what the Mountain West pays, which is around $1 million per school per year.

There is a tug-of-war between the remnants of the Big East and the MWC, vying to be the kingpin of the Group of Five in BCS 2.0. The Big East wants to continue to raid the MWC to pump up its value to potential TV suitors, while the MWC aims to lure Boise State and San Diego State back (though technically they haven't left yet). Both conferences would love to pick off BYU, but neither is likely to succeed because the Cougars are getting about $5-6 million per year from its own TV deal with ESPN as a football independent.

Without Boise State and San Diego State (and BYU), the Mountain West is unlikely to substantially improve on its current TV contract, which is set to expire after the 2014 season. There is much uncertainty surrounding the future of the MWC, with the Big East menacing it as an existential threat.

As for the Big East, being demoted in the new BCS landscape is the lesser of its problems, as it's at risk to further disintegrate from more defections the longer it takes to lock down a TV deal. And if the worst-case scenario should happen - UConn and Cincinnati find new homes while Boise State and San Diego State get cold feet before next July - the Big East becomes Conference USA Lite, circa 2004. In that case, it should expect not much more than Conference USA money.

How much is that? C-USA signed its most recent TV deal in early 2011 with FOX and CBS, worth $14 million per year, total.

(FULL ARTICLE @ SB NATION)

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