In the summer of 2008, Mike Slive negotiated and inked a pair of television contracts that opened eyes across the nation. The two 15-year deals the SEC signed with CBS and ESPN for a combined $3 billion did more than raise eyebrows, they helped kick off two straight offseasons filled with conference expansion and school realignment.
As we’ve stated before, when one record contract is signed, it’s only a matter of time before someone else tops it. That has happened in the SEC’s case as well.
It took a couple of years but the Big Ten Network became a money-maker and now Jim Delany’s league is believed to bring in more dough per school than the SEC. The Pac-12 — in the greatest smoke-and-mirrors sales job in history — zoomed past everyone with even bigger deals last May (and then followed those contracts up with one of the worst years of its worst basketball seasons ever).
In addition, the ACC — through the addition of Pittsburgh and Syracuse — should make enough through renegotiated TV pacts to gain each league member an additional $1-2 million per year. That may not be Bill Gates-style cash, but I don’t know many schools that would turn down an extra mil or two a year.
And now it appears that the Big 12 — yes, the same depleted, 10-team Big 12 that lost two schools to the SEC in recent months — will be the next conference to hit the jackpot.
According to SportsBusinessDaily.com, “The Big 12 is on the verge of a blockbuster TV contract that will put its media revenue among the top tier of college conferences.” The site reports that by signing an extension with ESPN, the league will stand to make $1.3 billion from the four-letter network and an addition $1.2 billion from Fox before both deals expire in 2025.
All that with a rejiggered lineup that features TCU instead of Texas A&M and West Virginia (with less than two million cable households in that state) in place of Missouri (about six million cable households in that state). It doesn’t take Will Hunting to read the writing on the blackboard and realize that the SEC is about to really hit the mother lode.
How do ya like them apples?
Texas A&M is a bigger brand with a bigger alumni base and a bigger national following than TCU. Missouri simply has a bigger population with more eyeballs than West Virginia. Now factor in the following Nielsen television ratings which we showed you late last month:
2011 Average TV Viewers for Football
1. SEC = 4.44 million
2. Big Ten = 3.26 million
3. ACC = 2.65 million
4. Big 12 = 2.34 million
5. Pac-12 = 2.10 million
6. Big East = 1.88 million
2011 Average TV Viewers for Basketball
1. Big Ten = 1.49 million
2. ACC = 1.24 million
3. SEC = 1.22 million
4. Big 12 = 1.06 million
5. Big East = 1.04 million
6. Pac-10 (pre-expansion) = .78 million
Add those averages up and the SEC sat at 5.66 million average viewers prior to gaining viewers in Missouri and Texas while the Big 12 topped out at 3.40 million average viewers… before downgrading in brand name and in cable households.
No wonder Mike Slive is currently holding discussions — or “look-ins” — with the SEC’s television partners. As he recently told The Birmingham News: “They know who we are and what we have. None of our schools will be hurt financially (in 2012-13). But that’s just today. It’s tomorrow that’s the real issue. The discussions are very important. They’re longterm. We’ll leave it at that.”
The SEC gets higher ratings for its television partners than any other conference. The league is synonymous with championships. It just added two new “name” brands to its roster of schools and tapped into the cable household-rich states of Missouri and Texas in the process.
Whether the league simply squeezes more cash — a lot more cash — out of CBS and ESPN or creates its very own network — something that we were the first to discuss right here back in the spring of 2010 — the Southeastern Conference is about to set the standard for television revenue again.
Bank on it.
(Correction: Above you’ll see that while writing a story about television dollars and cable households we slipped and used the term “cable households” when we were actually referring to overall population. Our bad. But when you write as much as we write in a day with zero time for proofreading, you get a brain fart every now and then.)
The SEC Is About To Get Even Richer
March 14th, 2012 02:54 PM║ Posted By: John Pennington ║ Permalink
║ Schools: Alabama, Arkansas, Auburn, Florida, Georgia, Kentucky, LSU, Mississippi State, Ole Miss, South Carolina, Tennessee, Vanderbilt
Tags: ACC, Big East, ESPN, SEC
24 comments
I was comparing SEC teams to B12 teams in terms of how I thought they would rank in value to a TV contract. I used a few rough markers in the ranking:
Texas is #1. The fact ESPN was willing to give them such a stupid deal for the LHN shows this.
Mizzou is more valuable than WV since the SEC picked them.
UK is more valuable than KU since its slightly more attractive in basketball and football.
When in doubt, use the number of in state TVs to break ties.
Here's the list:
Texas, Alabama, Florida, OU, LSU, GA, A&M, Tenn, UK, Auburn, Mizzou, Arkansas, SC, KU, WV, OK St, TTech, the rest.
I had a hard time ranking the bottom of the list so I didn't. I make no claims that the order above is correct, but a couple things seem clear to me. You can re-slot them as you like, but I think any reasonable person would agree that...
1) The SEC has 8 of the top 10 teams in 'TV worth'.
2) The SEC has 11 of the top 15 in 'TV worth'.
I'm going make a SWAG based on this and say that the renogotiated SEC TV contract should be about 20 to 25% higher than the new B12 contract (for t1 and t2 only). That would make it around 25 to 27 million each. When the SEC Network comes, all the SEC teams should get around 0 million more. But that could take a while to iron out to ESPN and the big SEC school's satisfaction. Until then each school will just need to do its best to monetize its t3 content. I just saw where NC State signed a t3 deal for 5 million a year, so we can use that as a baseline.
@medloh There is no way your math works in reality. Look at the Pac 12, they just renegotiated their TV deal, their previous deal was nearly 10 years old, just like the current Big 12 contract. The SEC deal was just done 2 1/2 years ago. I do think the SEC is going to get more money per school than they are currently getting but they also have to divide it 14 ways as opposed to 12 ways. The numbers you mentioned would mean that only 2.5 years after a new deal was put in place the networks are going to double the TV revenue for the SEC simply because they added MU and aTm. You're not being logical, that would be 5.2 Billion over the remainder of the contract and that's not happening. You can spin your numbers and analyze all you want but if you do the math you will understand that it doesn't make sense.
How does Missouri have about 6 million cable households when there are only about 2.3 million actual households in the state?
I think the author meant viewers, rather than households, because the population of West Virginia is about 2 Million, while the population of Missouri is about 6 million. At least he was consistent, so it doesn't really change anything about his arguement, 6mil households=6million people, under 2 million households=under 2 million people.
There is a clause in the contract allowing the SEC to renogotiate for a higher amount based on expansion. However the assumption that this will be a blockbuster deal with unheard of dollars doesn't make sense, you need to look at the value of what was added and do the math, there is a point of diminishing returns. They added aTm and they will be rewarded for doing that but aTm doesn't guarantee that all eyes in Texas will be watching, they have a smaller share of the state than UT alone and way smaller share than UT, Baylor, TT, and TCU combined. So what is that value and how is that value impacted by the fact that the B12 and ESPN already have most of the eyse in that state? Does Missouri add $38m in annual value to ESPN? If they don't then aTm has to make up the difference, remember just to get to $20m annually per school the two newcomers need to add $76m in value annually. Just to maintain the current value of $17m per school the two newcomers will need to add $36m in value annually.
Leaked internal memos during Missouri's meetings about joining the SEC estimates from the SEC back in October suggested an anticipated $28M per school after renegotiation. These estimates likely came from either the SEC or expects who have studied the TV contracts. I think this number is a decent place to start in the near term. It might be a little higher or lower than that. And it may go much higher than that if the SEC network is successful.
Those number weren't actually used by Mizzou, those are the numbers that were used by the Pro-SEC faction within the Mizzou administration to try to convince the university to make the move, by showing the long term best case scenario.
@Aggie_in_SEC_Country You are exactly right. I think the $28-$30 million range is only accomplished by including tier 3 rights.
@Andy There's no way those numbers are accurate. I know what MU released but there is no way. That would mean that the network is willing to give the conference an additional $196m per year for simply adding two schools. That number simply isn't realistic. Just do the math, it's not that difficult. Multiply 14 x 28.
@Andy, then multiply that by 13 (years remaining on contract) and that equals $5.2 billion. That's not gonna happen.
The hate for one another among Texas's many universities runs long and deep, going back to the SWC heritage. It's not a question of the number of A&M fans (Although we do have the second largest contingent in that state, with Tech a very distant 3rd) that will watch A&M, it's a question of how many Texan College Football fans will watch A&M games.
A&M fans watch UT, TT, BU etc. just to see them lose, and in turn they all watch A&M games to see us lose. I think most of those fan-bases generally rooted for TCU to win, just because they were the little program that could, and most other major Texas football programs didn't compete with them directly (I doubt Baylor rooted for them en mass as they played one another fairly often) but I think that will change once they are in the Big 12.
Then there is a large contingent of Texans who don't have strong allegiances to any particular school, or their family allegiances are so widely split among many schools that they root for whoever has the best chance to represent the State on a national scale that year. I had a lot of friends who felt this way growing up, they still watched all the programs play on Saturday.
There will be plenty of eyes in Texas watching A&M as we compete in the SEC, the numbers will be there, don't you worry about that.
Let's hope you're right. Personally I would love to see an SEC Network in the same mold as BTN, I think that would do more to elevate the visibility and status of SEC Universities and their athletic programs than anything else. My Aggies will bring the viewers, Mizzou fans usually make a pretty good showing as well, all we need now is for the Commish to get a deal inked to net the cash. Thank God we finally have a proactive conference Commissioner worth his paycheck instead of a bumbling, powerless reactive figurehead (lookin' at you Beebe).
Gig 'Em Slive! Get it done, and make us all rich.
How do you think a semifinal featuring the future SEC rivals UK and Mizzou will impact this "look-in"?
John,
Have you been able to report on as close to exact as possible on what we have to work with here.
My understanding is that ESPN owns all content not sold to CBS. How can we start the SEC network if ESPN owns the content and can show the games without our input (minus the 1 game per team per year football exclusion).
Second, do we know what these "look-ins" entail.
I 1000% agree the SEC has more value (by 50%) than the other conferences, but what is going to force Disney to pay more if they already own the content and we are under contract for 12 more years?
RussH...
There's now more content. A lot more content.
Deals are worked and re-worked. ESPN will re-up with the SEC before its current deal runs out because it will see that there's even more money to be made. Ratings continue to go up. There's now more content for ESPN to show and sell-off.
People who believe the SEC added Texas A&M and Missouri without knowing full well that their schools are going to each get a revenue boost simply don't understand the current sports landscape, the television industry or both. I've worked in one for 20 years and covered the other for nearly as long.
The SEC will get a deal worth more per team than the Pac-12's when all is said and done. Could be through a new SEC-ESPN network or through re-worked deals or by selling off new content created by adding MU and A&M's football and basketball games, but more money is coming.
Thanks for reading,
John
@John at MrSEC That is a bit of a straw man argument John. "People who believe the SEC added Texas A&M and Missouri without knowing full well that their schools are going to each get a revenue boost simply don't understand the current sports landscape, the television industry or both. I've worked in one for 20 years and covered the other for nearly as long."
No one is claiming the SEC is going to lose money on this. People are questioning those who think the current contracts are essentially scrapped because the SEC added two teams. People are questing whether or not the SEC can launch a network without ESPN right now. And if you had to cut ESPN into the network is it more beneficial to launch it now, or wait until 2024 and do what Larry Scott did.
Who says that ESPN will not be the partner in the network. If the SEC had their own channel to funnel second level game onto instead of ESPN2/U, it would free up for over the air space for ESPN to meet all of the obligations that they have to other conferences. Right now ESPN is backed into a corner. If you look at all of the TV deals that they have, they are at the point where it will be difficult to meet all of the obligations for prime time programming. One of the easiest outs for ABC/ESPN is to dedicate a channel to the SEC, this will free up a lot of air time to full fill the other contracts and reward the SEC with the easiest way to line the pockets of the conference.
@RussH That is another one of the huge red flags in all of this. ESPN paid a premium in this contract to keep the SEC from starting a network. It seems like a far assumption the contract is written in such away that any inventory not covered by CBS or the school's one retained game a year belongs to ESPN. This is fairly typical. The Big XII always did this with Fox, Big Ten did it with ESPN until this last contract where they started the network, etc. If that is the case, the additional inventory from expansion is ESPN's by default.
You need to remember that the SEC just did a new deal 3 years ago where the other conferences had not done new deals so the bump for the SEC is going to be inline with the other conferences. While the SEC is inline for more money it's important to do the math and when you do it, it doesn't add up. In order for the SEC to get to $20 million per school that would mean that aTm and MU would need to add an additional value of $76 ($38m per school) million per year. If they are hoping to get to the $22 million per school mark then those two schools will have had to add a value of $106 ($53m per school) million per year. aTm may be worth a value somewhere between the two because of the state of Texas but Missouri isn't.
You are not taking market value into account with this argument, this seems to be lost on everyone. Yes the other conferences had older deals and hadn't negotiated as recently, but they were only able to get what they did based on the market value of the SEC contract. As of today the SEC still has far and away the most ratings of all conferences, even before adding new teams. So just as the PAC and Big 12 benefitted by better deals by virtue of the SEC's last deal, so too will the SEC be able to re-up based on their recent deals as they bring the leverage of providing the best ROI currently.
The problem is The Big 12 just extended an expiring deal early. The SEC deal doesn't expire until 2024. The SEC is due for a big pay day, but that day may not come until 2024.
1 Like
I don't know if anyone knows the exact wording of the contract. But everyone has been assuming it's worded so that changes can be made if say other schools join the conference. I doubt the SEC would have tied itself to a strict hardline contract till 2024 without such clauses.
Correct we don't know the exact wording of the contract. However we have seen ESPN's language with Conference-USA as that contract became public during discovery in the ESPN-FOX-C-USA lawsuit. In that contract ESPN had to engage in good-faith negotiations. With no arbitration in that case, good-faith is whatever ESPN says good-faith is. We saw the Big Ten add Nebraska. We know they got a bit of cash from ABC, a bit of cash from Fox, ABC eliminating their exclusive afternoon window (allowing BTN to televise 3:30 eastern games), and the conference got paid for a championship game. We know the ACC is going to come out ahead by about $1 to $2 million per school for adding two teams.
"I doubt the SEC would have tied itself to a strict hardline contract till 2024 without such clauses."
I fully expect the SEC to at a minimum have the members be financially whole for expansion and very likely come out slightly ahead in the near-term. Just based on what we know though, I don't think this will be the financial windfall many have made it to be in the near-term. And if you are the SEC you are fine with that. Expansion paid for itself right now and you head into 2024 in a very strong negotiating position.
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