Big 12 Gets Lucrative Cable Deal With Fox

by srr50 on Apr 14, 2011 12:00 PM CDT

The Big 12 dramatically increased its funding from media rights Wednesday by signing a 13-year agreement with Fox Sports Media for exclusive cable rights to conference athletics. The new pact, which will take effect with the 2012 football season, should guarantee the league close to $150 million from its network media contracts. The league touted the agreement as putting the conference at "the highest levels of college athletics" in revenue generation. The pact will assure that every Big 12 Conference controlled football game will be televised.

Under this agreement, ABC/ESPN gets first choice for 18 games per season. The ABC/ESPN contract runs through 2016, and the conference hopes to increase its media rights revenue when that is renegotiated. Fox is next in line and will select 40 games per year. There is a provision in the pact that will leave at least one game per season to individual teams to broadcast on their platforms. Oklahoma is working on putting together its own network, and the Big 12 has promised the other 8 members that they will form a Big 12 channel for the third tier rights of the other programs.

That $150 million figure dramatically increases the take for all teams and – at least temporarily – puts the league on almost equal footing with other BCS conferences. However, unlike other leagues, the Big 12 will not be sharing the money equally. Texas, Oklahoma and Texas A&M are expected to get $20 million a year from conference TV revenue as part of the deal made last summer that saved the Big 12. That would leave $90 million to be split among the other seven teams in the league, just under $13 million a year. The total would match what ACC teams are currently getting from their TV contracts, and it would lag behind other BCS conferences. At some point, Texas will be collecting $35 million in media revenue annually ($15 million from the Longhorn Network, $20 million from the league) – and that will be more than double what many of the other league members will be receiving.

Expansion from 10 teams seems to be off the table for the time being, and the uneven distribution of the revenue is a factor. There is no one out there (with the exception of Notre Dame) that could bring enough additional revenue with them to make it worthwhile. Some have thrown BYU around as a potential addition, but it is very unlikely. BYU would join Texas and OU as programs with their own networks. There is little or no upside for the other 8 members of the Big 12 to add yet another program that would probably demand $20 million a year while also not being a part of whatever channel the Big 12 puts together for its other members.

The increased revenue does put the Big 12 into a higher income bracket, but other BCS conferences are working on changing their numbers as well.

The BIG 10

Right now each team in the Big 10 receives roughly $22 million annually from the league -- $9 million from the ABC/ESPN contract, $9 million from the Big 10 Network, and the rest from licensing, bowl revenue and the NCAA basketball tournament. Nebraska’s inclusion should not dramatically decrease that amount, thanks to the Big 10 Network.

The league collects 70-80 cents per subscriber in the states where the league has member institutions. Outside its area of influence the charge is 10 cents. Right now the Big 10 Network is available in nearly 45 million homes, and advertising revenue was up 30% in 2010. Nebraska will only enhance those numbers. The Conference Championship game is expected to kick in an additional $15 million in revenue. Like the Big 12, the Big 10 contracts with the networks will be up in 2016.

The SEC

The 12 members of the SEC each received $18.2 million from the conference for 2009-10. The SEC deals with ESPN and CBS will pump in over $3 Billion to the league by the time they run out in 2023. The league’s top programs, (Alabama, Florida, Georgia, and Tennessee) added several million more to their coffers with local media rights. In fact, the 12 members of the SEC reported total athletic revenues of over 1 billion.

The PAC 12

The wildcard in this race for revenue is the Pac 12. With Colorado and Utah now in the fold, the league is currently seeking a new TV contract and they reportedly want at least $222 million a year. One factor in favor the Pac 12 is that it is a seller’s market. ESPN and Fox have a new competitor for sports programming – Comcast. Coming off its merger with NBC Universal, Comcast wants in on the Sports Regional Network platform, and the timing is perfect for the Pac 12 to open bidding. Conference officials are also exploring business arrangements so games would be available on mobile devices, including iPhones.

The Pac 12 wants to create its version of the Big 10 Network, and it is already offering some concessions to scheduling. The league is willing to play primetime games on Thursday night for its network. They will also alter how they schedule conference basketball games. Right now the format calls for a Thursday-Saturday schedule with travel partners. Arizona will play at Oregon on a Thursday and at Oregon State on Saturday. Arizona State would have the opposite schedule. Now the Pac 12 is willing to spread out conference games throughout the week, and teams will not travel in pairs.

One advantage the Pac 12 has in current negotiations is a factor that was the deal-breaker this past summer when Texas and other Big 12 members flirted with moving to that league. The current Pac 12 has bundled all media rights at the conference level. In other words, there is no third tier media for individual schools to package separately. The league can maximize its revenue and exposure because it holds the distribution rights over all conference content. Negotiations are expected to be wrapped up sometime this summer, and every other BCS conference will be paying close attention to see what kind of deal gets finalized.

The Big 12 contract with Fox will help all members with increased revenue. But in the quickly changing world of collegiate media rights, other BCS conferences are already plotting ways to further boost their revenue streams. The fact remains that the unequal revenue sharing in the Big 12 will make it harder for the bottom half to become more competitive, which in turn will make it harder to negotiate from a position of strength when the network contracts come up in 2015.

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Comments

More Dave Lapham!!!!

by Savage Henry on Apr 14, 2011 12:23 PM CDT reply actions

Lets hope we continue to demand unequal revenue. It is our biggest advantage both for winning and laughing at our conference mates.

by BigFunny on Apr 14, 2011 12:33 PM CDT reply actions

Oh, good. My affection and esteem for Dave Lapham know no bounds.

by Dmitri Kissov on Apr 14, 2011 12:34 PM CDT reply actions

Thank you, I love your TV breakdowns. Moar.

by nordberg on Apr 14, 2011 12:52 PM CDT reply actions

Thanks for providing the comparative benchmarks with the other leagues. Does anyone know more precisely how that breaks out?

Doesn’t the Longhorn Network pay us out at two rates, one for the first 2-3 years, then another higher rate for the remainder?

And how does the $35 million take for UT compare to what we had prior to these two deals? And does anyone know what revenue we bring in from licensing rights, etc., or is that now bundled into the LN deal with IMG?

by wethorn on Apr 14, 2011 12:53 PM CDT reply actions

Count me as disappointed that Fox has our games. I can’t stand them. Horrid announcers and frequent technical glitches. I was really hoping to dump the Fox regional sports pack from DirecTV, but I guess that won’t happen.

by wethorn on Apr 14, 2011 12:55 PM CDT reply actions

Does the contract require Fox to show a % of the games in HD? Their regular broadcasts are for shit.

by KilgoreTrout on Apr 14, 2011 1:12 PM CDT reply actions

You mentioned the “other” revenue for the Big Ten, but left this out of your discussion of the Big 12. Last year, the Big 12 distributed $139 million, with only about $80m of that being from football TV revenue. With that number increasing to $150m, the total conference revenue distributions should total around $200m, despite the loss of the championship game in JerryWorld.

So if the league is handing out $20m/team, the Greedy 3 (A&M, OU, and UT) should be happy. Assuming the Big 12 by laws haven’t changed, the half the revenue is divided equally and other half is divided based on TV appearances. If every game is on TV, then it would imply that the revenue will be distributed fairly equally.

by Logan on Apr 14, 2011 1:58 PM CDT reply actions

“If every game is on TV, then it would imply that the revenue will be distributed fairly equally.”

Except that the other half of the TV revenue is based on a formula weighting the games based on which channel, whether it’s a national broadcast, and whether it is a nonconference game.

by Texas Wahoo on Apr 14, 2011 2:10 PM CDT reply actions

wow…srr50. I just asked for this on your other article, "Longhorn Network: Closer To Reality’ and you knocked it out real quickly. I didnt realize I had that much influence. I could be dangerous now. hahaha

by soldierhorn on Apr 14, 2011 2:56 PM CDT reply actions

soldierhorn:

Great minds think alike.

by srr50 on Apr 14, 2011 3:00 PM CDT reply actions

Texas Wahoo,
Under the new TV deal, the top teams aren’t going to get any more games on national TV or on the over-the-air networks. The difference will be that the lower tier teams, like ISU and KSU, will potentially double their number of TV appearances. Without knowing the exact formula the Big 12 uses, I would think that this would narrow the revenue gap that exists today, at least on a percentage basis. So where a team today gets anywhere from 20% above to 20% under the league average, that may change to 10% over or 10% under. Like I said, "fairly" equal revenues, but not totally equal.

by Logan on Apr 14, 2011 3:13 PM CDT reply actions

Logan,

48% of the TV revenue is based on appearances on ABC, and 52% is based on appearances on Fox Sports. I imagine that without Nebraska, Texas, OU, and A&M will be getting more of those more lucrative ABC slots that would have gone to Nebraska in the past. That will likely increase the inequality for that segment. You are right that the inequality should decrease based on the Fox Sports segment as more games are broadcast. However, please not that the game must be broadcast live to at least 60 million households, and Fox College Sports is right on the cusp of that number.

by Texas Wahoo on Apr 14, 2011 3:21 PM CDT reply actions

But how many more times can UT, OU and A&M appear on ABC? The Big 12’s website says "no institution may appear in more than six games under Big 12 control per season on ABC". The loss of Nebraska would seem to benefit schools like Tech, OSU and MU.

by Logan on Apr 14, 2011 3:49 PM CDT reply actions

It is the non-conference home games where Texas, OU and A&M will make more money. You earn two credits for each non-conference home game – with the ABC/ESPN games being worth about twice as much as the Fox cable games. Those schools will have more non-conference home games at the higher pay rate.

by srr50 on Apr 14, 2011 3:59 PM CDT reply actions

Those schools will have more non-conference home games at the higher pay rate.

How do you get more? Texas typically gets one non-con ABC game per year as it is now, right? They aren’t going to start getting 2 ABC non-con games. ABC only gets Texas 6 times a year, they aren’t going to waste one on a home game against Rice or UTEP when they still have OU, A&M, OSU, Tech and Mizzou on the schedule.

by Logan on Apr 14, 2011 5:12 PM CDT reply actions

For the last three years Texas has appeared on ABC 5 times each season — and that is with Nebraska and Colorado on the schedule.

The two years since the national championship that we have been on ABC the full 6 was because of Ohio State. It’s why we have BYU, Mississippi, Notre Dame, Maryland and USC on future schedules — designed to have at least one of them at home every year.

It’s also why OU has Notre Dame, USC, Ohio State and Tennesse on their future schedule.

by srr50 on Apr 14, 2011 9:22 PM CDT reply actions

Buzz kill regarding the lack of expansion options. Stuck in a league with mostly boring teams and terrible travel venues.

by blair's cherry on Apr 14, 2011 9:35 PM CDT reply actions

An extra $8M to ISU or KSU goes a lot further than it would at UT or OU.

For example, ISU is adding large scoreboard this year and planning on bowling in the end zone after this year possibly. I think this will further separate the gap between BCS and non-BCS schools.

by Swampfox on Apr 15, 2011 8:36 AM CDT reply actions