Slive Talks SEC Network, Reveals Little

December 20th, 2012 02:38 PM║ Posted By: John Pennington ║ Permalink ║ Schools: Alabama, Arkansas, Auburn, Florida, Georgia, Kentucky, LSU, Mississippi State, Missouri, Ole Miss, South Carolina, Tennessee, Texas A&M, Vanderbilt
Tags: ESPN, Kentucky South Carolina, SEC, Tennessee Vanderbilt

We already knew that an SEC Network was on the way. In fact, word had already leaked that it would be a partnership with — of course — ESPN. Also that it would launch shortly before the 2014 football season, most likely in August of that year.

So what new information did commissioner Mike Slive provide when he spoke with USA Today this week? See for yourself:

“Given the networks that have been developed, is there room for any more? And the answer is: ‘At least one.’”

Simply a cute way of stating that after much research the SEC’s network is on the way? Or could Slive have been suggesting there may be room for multiple SEC Networks, just as the Pac-12 has created seven different channels?

It’s possible that the SEC could launch eight channels with seven featuring content targeted toward two specific fanbases each (Alabama/Auburn, Arkansas/Missouri, LSU/Texas A&M, MSU/Ole Miss, Georgia/Florida, Kentucky/South Carolina, and Tennessee/Vanderbilt, for example) and the eighth serving as the SEC’s national network. We didn’t say it was likely — and we’ve heard very little to suggest that would be the league’s direction — but it is a possibility.

Back to reality, however, Slive added:

“We’ve been looking at all of our options since we added A&M and Missouri. As these conversations have evolved, we’ve not begun to focus clearly on what we think is the right way to go…

(There are) questions that need to be answered before final decisions are made. Obviously, we would not make the decision to go in that direction unless we believed we would be successful.”

There’s clearly not a lot of new that came from this interview. Everyone must still wait to see what the ownership split between SEC and ESPN will be, how much trouble the league will have getting cable and satellite carriage, how much the conference and ESPN will try to charge as a subscriber fee, and so on.

We’ve been told by an expert source on media rights from within the college sports industry that SEC schools will most likely bring in $30-35 million per year once the new Sugar Bowl partnership, college football playoff, SEC Network, and CBS and ESPN contract renegotiations are finalized. This past year, the average payout for the league’s schools was $20.1 million, for comparison. Not a bad bump if that’s indeed what it ends up being.

The commissioner said people could expect “an announcement within the next couple of months, if not sooner.” But one thing that could be slowing down the negotiations and renegotiations with television partners is the continued uncertainty surrounding conference realignment. It’s hard to plan a network — or networks — when it’s possible more schools could be joining the SEC in the coming years, months, weeks, days, minutes… you get the picture.

And even if the SEC stands pat with 14 schools, the value of other leagues’ television contracts will obviously have some bearing on what the SEC can grab from its TV partners. In that sense, the expansion plans of the ACC or Big East or Big Ten, etc., would have an impact even on a 14-school SEC.

Stay tuned…

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GatorBuc2

John these numbers don’t seem correct. or I am missing something “We’ve been told by an expert source on media rights from within the college sports industry that SEC schools will most likely bring in $30-35 million per year once the new Sugar Bowl partnership, college football playoff, SEC Network, and CBS and ESPN contract renegotiations are finalized. This past year, the average payout for the league’s schools was $20.1 million”.

UF gets:

- CBS and ESPN $20.1M

- TIER 3 $10M

- football playoff (would get anyway) $91M/14=$6.5M

- Sugar Bowl partnership (would get anyway) $40M/14=$2.85M

- Total $39.45M

I assume in the numbers provided to John that all schools roll their Tier 3 rights into the SEC network. Doesn’t sound like the SEC network is very lucrative.

JRsec

@GatorBuc2 I'm with you on these numbers. I've been told that our new ESPN contract would be closer to 27 million and that with the C.B.S. money (at the present number of 14 teams) would remain about the same per team somewhere just over 2.1 million each. We would be looking at 29 million minimum before we even considered the Sugar Bowl addition of the 2.85 million you list. The total payout for the playoff is $475 million split four ways. The SEC share with 1 spot in the 4 team playoff would be 118.75 million split 14 ways which equals 8.48 million each. By my calculations we are looking at 40.43 million per team with out any SEC Network revenue entering the picture.

AllTideUp

1 Like

@JRsec @GatorBuc2 There are always middle-men taking cuts here and there. A few million here and a few million there could add up.

I may be wrong, but I think the bigger projections for the SEC Network are based on the league getting teams in NC and VA(which would immediately become states #4 and #5 in terms of population size within the footprint).

I think the Big Ten figures we've been seeing thrown around lately are either inflated or take into account all of their new states. The Big Ten is just barely ahead of the SEC in TV revenue, but the difference is that they're already counting their league network money. This stream of revenue is untapped for the SEC right now.

AllTideUp

@JRsec @GatorBuc2 I haven't heard anything different and I wouldn't know as far as being an insider goes because I'm not one...lol. I do find it hard to believe though that the Big Ten's real numbers are that much higher than the SEC's. I believe they are in the $22-24 million range right now? Correct me if I'm wrong.

Adding MD and NJ certainly help fill the pot, but the other states are already being accounted for in their current figures I believe. I can't see how adding MD and NJ would represent a bump of an extra $20M for them.

JRsec

@AllTideUp @GatorBuc2 I have heard that the Big 10 presents the gross figures. The expenses for the Big 10 Network are shared by the schools and those figures must be subtracted to receive the NET income. The figures of between 42-45 million per team that were shown to Maryland were projections of future income. If you have heard something else let me know.

John at MrSEC moderator

@JRsec @GatorBuc2

Don't forget, gentlemen, the league office takes a full cut. There are 15 shares... not 14.

I stand by the estimates given to me by an someone in the college athletics industry who's experienced in cutting media deals for schools. Those numbers were then given a "yep, that's ballpark" by someone in the SEC office.

Infallible? No and things could always change based on what schools move where. But I'll stand by the numbers. They were presented to me by someone in the know and they were verified by someone in the league office.

Thanks for reading the site,

John

John at MrSEC moderator

@JRsec @GatorBuc2

It all depends on perspective, I would think. If a school was making about $20 million per year and then it saw that revenue nearly double to $35 million per year, I don't think there would be too many people in that school's administration who would call those numbers "disappointing."

As I noted above, these figures will rise and fall -- for each league -- as more shuffling plays out. The $30-$35 million figure was thrown out to me before the Big Ten added Maryland and Rutgers. Start the wheel of realignment and you never know who'll wind up where or how much TV contracts and league-owned networks will be impacted.

But my guess -- and it's an educated one as I've discussed it with TV folks and SEC people -- is that the Big Ten and SEC will wind up very much in the same ballpark with one another when all this stuff slows down. They have the two best brands and it's difficult to see the Pac-12 or Big XII catching them on a year-in, year-out basis. For now, the Big XII doesn't have to as they're splitting their revenue just 10 ways.

My point: I've not spoken to anyone anywhere who thinks the SEC will be disappointed when all this sorts itself out. The league's schools will be able to keep up with the Big Ten's schools (huge media markets, much bigger alumni bases) and should still be ahead of the other two or three big leagues' schools (depending on the ACC's survival or death). So there's really no need to start worrying about contract numbers that are still guesstimates at this point.

Again, many thanks,

John

JRsec

@John at MrSEC @GatorBuc2 Thank you John. I enjoy your articles and I find your information to be some of the most accurate and consistently accurate of the sites I read. Your right about the conference cut and I did not calculate that in. However if those numbers wind up being accurate then I must say they would be disappointing. We knew that CBS wasn't going to significantly up their payout, but the 25 million mark per team was consider the low estimate for ESPN's new contract and the 28 Million mark was considered being close to the ceiling of expectations. I would think the disappointment would have to reside in the ESPN figures if these are true.

Perhaps they are adjusted for network start up expenses. Let us know when you do.

GatorBuc2

This is an interesting idea I have also been considering.

What if the SEC partnered with the departing Big East Catholic schools? Also, if they can retain the Big East name then the league has instant recognition. The SEC network would then have a presence in Chicago, Philadelphia, Milwaukee, New York, New Jersey, DC and Rhode Island. If this new conference were to add Dayton, Xavier and Butler then the Ohio and Indiana markets are included. Their men’s soccer and Lacrosse teams could enable the SEC to sanction these sports which would provide additional content for the network. With the assumption of adding UNC, Duke and UVA along with Georgetown the SEC could be a dominant men’s lacrosse league.

This could also be used a selling point to UNC, Duke and UVA for their Olympic sports. Providence, Villanova and Georgetown have woman’s field hockey so this arrangement would also provide a home for that sport.

With all above said, I think the Big East basketball would have to be a totally autonomous entity for basketball since the football integration is why they left the Big East. An agreement could be put in place for the Big East to play at least two SEC basketball games which would be shown on the SEC network.

This arrangement could allow these schools to make significantly more money than in the past while creating a win-win for both parties.

AllTideUp

I'm going to throw out another crazy idea in my long line of crazy ideas. If content and market share are indeed valuable in terms of these conference networks then wouldn't it be beneficial to partner with a smaller league in order to bolster both?

For example, the smaller leagues(CUSA, Big East, MWC) can't get big money from the major networks because the overall quality is low and market presence is low. However, if the SEC is interested in a market presence in some locales where it would not otherwise be as well as a higher quality content for the cupcake football games, basketball, and the olympic sports then it would make sense to have some sort of agreement in place with one of these leagues. The rebuilt Big East for example will have some market overlap, but also greater saturation in large markets like Texas(SMU & Houston), Florida(USF & UCF), and North Carolina(ECU). Considering the addition of schools in markets outside the Southeast(Cincinnati, UConn, Temple, and maybe the Western schools), it would also tap fan bases that otherwise wouldn't be worth full inclusion into the conference. It would create the same effect in smaller markets as well(Tulane & Memphis and maybe others before it's all said and done), but would encourage fans of these smaller schools to pay attention if not encourage higher subscription rates.

An SEC/Big East partnership of some kind? Thoughts?

JRsec

@AllTideUp That's the reasoning I used in suggesting what we discussed the other day about the SEC having a second conference for the smaller less football oriented schools with great academics. Instead of picking a conference like the Big East you would build a conference out of the best schools. Rice, S.M.U., Tulsa, Tulane, Wake Forest, Duke, and the service academies. They could be be fully integrated into the SEC for all sports other than football and yet have the SEC negotiate their own football contract. They would share equally in all other sports and only be differentiated by the football contracts and revenue differences. The tenth school could be Miami, or T.C.U., or whoever doesn't make it into the final upper tier of college football.

That way the SEC could actually hold an Eastern Division and Western Division Basketball tournament in two different cities like Kansas City and Charlotte with the final four played in Atlanta and Dallas on alternate years and do something similar for baseball with the final 8 teams going to Hoover. The women's sports would be able to do the same. It would increase exposure of the Conference by holding events in different cities, increase public participation by making some of the minor sports tournaments more regional and help to land better television dollars for the finals by having the less competitive games weeded out in the regional tournaments (which would be great material for the SEC network channels.)

Also by adding these schools for those sports you cut down on much of the travel expense by keeping regional groupings intact.

Then perhaps we could form a research grant consortium much like that of the Big 10.

AllTideUp

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@JRsec I'm looking at this a little differently though. For one, recruiting members to enter a 'junior' conference, if you will, might be difficult because it will be asking some schools to permanently abandon the idea of competing at the highest levels of football. Schools like Duke, if they really are moving in this realignment business, are probably going to be full members wherever they land. For others like Tulane and Wake Forest, I'm not sure they add the necessary value to make their inclusion in other sports a good financial decision. In addition, adding only 6-9 schools under this sort of umbrella doesn't really enhance market share in any significant way. The schools we're talking about don't really have large fan bases outside of Duke.

What I'm getting at is a minority partnership of sorts in the SEC Network itself where the Big East shares in the overall profit being generated by the new channel. They obtain this revenue by 1) entering a scheduling agreement in football to provide some higher quality games for the network outside of your traditional cupcakes(this applies to other sports as well especially basketball), 2) increasing market saturation in large states like TX, FL, and NC without actually gaining any sort of full or even junior membership status, 3) increasing viewership in current SEC states by broadening the audience, and 4) helping to get the SEC Network into markets it might not otherwise be in...in places like OH, PA, CT, and maybe some Western states assuming the current Big East stays intact as planned.

If the Big East is sharing in the overall profit of the SEC Network while at the same time providing additional market access that the channel might not otherwise have then you've created a situation where(possibly) these Big East schools come away with a greater profit than they could get otherwise...the Big East TV contract isn't looking so hot these days. If the numbers are right the SEC will still make more through the additional market access and viewership, but won't have to put out the funds that would come with a full or junior membership status. I'm not even sure the SEC would be willing to consider some sort of junior membership status.

This type of arrangement would, in theory, still allow these current Big East schools the opportunity to move up into major college football one day whereas the SECAC league would permanently relegate them to a lower-tier status.

JRsec

@AllTideUp It is a varied package of endowments, trusts, and grants. The AAU is the avenue to the Federal Grant money. Tulane, Texas, Kansas, Iowa State, Duke, North Carolina, Pitt, Virginia, and Georgia Tech are all AAU members. The reason the Big 10 is insistent upon those credentials is because they want to maintain a stranglehold on controlling the membership of AAU. If they do that they can predetermine a good portion of the grant money. They currently have 13 AAU members counting Maryland and Rutgers. They have an eye on the additions Slive is adding. Florida, Vanderbilt, Missouri, and Texas A&M are in, Georgia is applying. By taking Virginia and Tech they are reducing the number of AAU members that we could take within our own footprint or boundary states.

Theoretically we could have added Pitt, Duke, North Carolina, Virginia, Georgia Tech, and Tulane and have gotten to 10 AAU members. That would have been the greatest challenge to the Big 10 control of those member schools. There are 6 in the PAC and 3 in the Big 12 (Kansas, Iowa State, Texas). I believe Rice is also AAU. By taking Maryland and Rutgers they essentially found a way to hold off the SEC's growing presence in the organization. The additions of two more ACC AAU schools locks them down for future control of the largest voting block in the AAU.

AllTideUp

@JRsec Meant to say I'm NOT terribly familiar with the CIC.

AllTideUp

@JRsec The academic component is worth pursuing, but the Big Ten is a different animal in their make-up. They rely on large state universities to create the sort of academic clout they've obtained and the SEC does the same thing, but would need to add a large number of smaller private schools with little market presence to achieve this sort of goal. I'm not sure the money works out to make it happen in this fashion. I do agree though the population and the economic strength is trending ever Southward and that will pay dividends in the long run.

I'm terribly familiar with the CIC on all levels. Doesn't that organization rely on some commonly held endowments as well? I thought that was where the bulk of their research dollars came from?

JRsec

@AllTideUp I like your idea, but the purpose of the SECAC would be to garner enough research universities to permit the SEC to form its own version of the Big 10's CIC. Sharing grants, research projects, permitting particular classes to be open to other member institutions' students, and lobbying as a group for more of the Federal grant money that the individual schools of the ACC sought while the Big 10 pooled its political clout to land a lion's share. Grant money dwarfs income from sports. That is the only allure the Big 10 presently has over the SEC. With a consortium of research universities in the South (a South that is growing in congressional representation) we could steer larger shares of that revenue stream our way in the future. In fact it is very fair to say that many of the Northern schools are essentially subsidized by this income stream. That fat pinata needs to be busted! The prizes inside belong to all 50 states. The AAU has been an instrument in steering that cash their way. They have more member and so outvote our candidates for membership. That could turn with some organization building on our part.

As to Big East basketball your suggestion could take root if ESPN gets behind it. If however NBC or Fox go after that new basketball league it will be a different story.

JRsec

1 Like

If we wind up with 4 divisions of either 4 or 5 teams the network should only need 5 channels. One channel for each division with each school featured on a different weekday with all programming interspersed with live events especially during baseball and basketball season. Then the central SEC Network channel could provide round the clock news, scores, updates, and special features like the tournament games in the minor sports. The multiplier of advertising both regional and national for each channel could prove to be lucrative, especially regional advertising.

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