Billion Dollar Bevo, Part I: Inside the UT/ESPN Longhorn Network Deal

I honor your late-night post with this response.

Serious whip-out. Is that what Cleavon Little had in Blazing Saddles?

Fantastic work W.W. I’d noticed the “minimum annual guaranteed royalty” language and wondered how much higher it could go. Can’t wait for the next installment.

I’m presuming that one of the potentially lucrative parts of going independent would be already having a network deal in place to play as many as 6 or 7 games on LHN (the rest on ESPN/ABC) and get a huuuuge chunk of money – enough to fund the athletic department in perpetuity and give a ginormous chunk to the academic side as well. But do you think ESPN would prefer that over using Texas to get in bed with the Pac 14/16? Since their network deal is directly with distributors, it’d make sense for ESPN to want a piece of the production action over there and get guaranteed basic tier airtime. I’m presuming your take on this question is coming, but I wanted to put it out there.

Thanks for that lucid, insightful explanation.

Sure hope ComCast carries it in Florida.

And as for the future, I noticed that DeLoss has brought up Notre Dame several times during the whole A&M garbage. Even if it’s said off-handedly, he wouldn’t be mentioning it if the two schools hadn’t at least talked about it.

And if Notre Dame enters the Big (used-to-be) 12, I think that would change things considerably.Although things could get tricky. Texas has a contract with ESPN, a sister company of ABC in the Walt Disney Corporation’s universe. Notre Dame has a TV contract with NBC,

But If ND doesn’t join, and the Big-12 brings in small conference additions like UH, I think UT could go independent. And it would be a good thing.

Impressive work. My $9.95 is in the mail.

A couple of questions that popped into my head:

Is A & M leaving because they realized that UT and ESPN have a massive interest in the demise of the Big XII?

What is the SEC’s play?

sweet read, very informative. I’m starting to believe more and more we will be going independent in the near future.

It seems that regardless of what A&M does, Deloss and ESPN have already anticipated it, made contingency plans for it, and ultimately don’t really care what the Ags do.

Notre Dame will NOT be joining the Big Whatever. The near term demise of the Big W as anticipated by the deal ensures that. But an alliance with a potentially independent Texas is a win for both schools as a marquee matchup and a big money maker.

Macky Velli had nothing on Dodds and Espin. The sheer brilliant audacity of it all is awesome.

Youing Williams

With respect to serious whip-out, the author is channeling some Billy Clyde Puckett.

Great article, thanks.

Is DirecTV a party to any negotiations at this time? I assume not, but wonder why not?

Awesome work, WWM.

And you nailed the lodestone: ESPN hitching its wagon to wherever Texas ends up in future realignment.

"…depending on how successful ESPN is at negotiating the carriage agreements, UT stands to earn a hell of a lot more than the minimum royalty payments."

Well, that sure begs the question, doesn’t it? But since you’ve teased us into Part II, I’ll wait for answers there.

Nice article, W.W.; very informative.

And one final note: DeLoss Dodds is, simply put, a 24-carat swing dick. If this entire thing was primarily his machination, I’m in awe.

Billion is the new million, and I’m glad we’re leading the charge.

Hook ’em!

Oh, and someone thank Greg Davis for turning Vince loose and allowing him to lead the 2005 team to the NC. Not that all of this wouldn’t be possible without that 4th and 5 play, but it sure made it all a little easier.

2nd oh (which is appropriate), I am going to enjoy watching UT volleyball multiple times this season…very nice!

$300 million dollars isn’t cool. You know what’s cool? A billion dollars.

It has seemed obvious throughout this conference reorg process that Texas would want to maximize autonomy, flexibility, and retention of commercial rights to their own intellectual property. It has always seemed that a unique institution such as the U of Texas would be best served by a relatively loose collaboration (a virtual conference organized just for football) with other schools (such as ND and BYU) that want to push their own product/networks rather than be a cog under the thumb of a super conference Machiavelli such as Larry Scott (PAC) or Jim Delaney (Big 10) and split the fruits of Texas labors evenly with other conference members.

So Texas will encourage aggy to blow up the Big 12 so that UT reclaims its TV rights (when the Big 12 disintegrates, thus voiding the Big 12 TV contracts with ESPN and Fox). Neither UT nor ESPN want to be seen openly facilitating the destruction of the Big 12 because they want to avoid legal peril.

Outstanding work, W.W. I really look forward to the rest of the series.

I smile whenver I read others wondering why in the world ESPN would spend $300 million on a single University network. It is pretty simple math.

Right now ESPN is paying more for the NFL Monday Night Football package than any other network for any other part of the NFL package — more than NBC is paying for Sunday Night Football, more than Fox and CBS are for their afternoon packages. And ESPN is shut out of any playoff games. They don’t mind — for one basic reason.

The vast majority of cable network revenue – and vast in this case means about 90% – is generated by the wholesale subscriber rates charged by the networks to the providers (like Time Warner, Cox or Comcast) who pass the cost through to their customers. When it comes to negotiating carriage agreements, suffice it to say that ESPN is blessed with more leverage than Galavision.

When UT first did due dilgence on the LHN, they projected $3-5 million per year. Fox was the leader in the clubhouse to be the home of the LHN. Then ESPN came in and blew the doors off of any other offer, from money to production to marketing.

ESPN owns the rights to all but one College Bowl game, and they own several of them outright. They have multiple contracts with the BCS conferences, They are paying a helluva lot of money for the BCS series — and they will dictate when/if ever we have a +1 system or a playoff.

ESPN may have to share the NFL with others, but they have decided that they don’t want to share college football with anyone.

Great analysis. Love the incepcion line. Glad the aggy brain is so easy to infiltrate.

Great read, I’m looking forward to the next installment!

For ESPN, the ultimate utility of the LHN is market leverage if/when the Big 12 is euthanized.

Actually, isn’t the FOX contract with the Big XII void if the conference drops down to fewer than ten teams?

If that’s the case, ESPN could move in on the Big XII if the conferences pulls a Hotblack Desiato. amu leaves, the Big XII “spends a year dead for tax purposes,” and ESPN picks up the pieces.

Old #88 thinks that WW McClyde is the humminest son of a bitch that ever fingered a keyboard.

Nice read, thank you. Like others, I’m eagerly awaiting the final parts. I’ve always maintained Texas has a plan and will be ok regardless of what happens with the Big XII. Seems I might have been wrong. Instead, this teases that we have a lot to earn if A&M does the dirty work.

It’s always nice to be able to plant a large plentiful garden… and not even have to get your own hands dirty.

I don’t see Texas wanting to go independent. No BCS tie – ins (or any bowls), too difficult for the other sports.

I do think Texas could survive a year or two as an independent, meaning we don’t have to hold the B12 together, and can be picky about where we land if the B12 collapses.

A conference is little more than a convenient scheduling pool. Without a conference, you have to set your own schedule. So if the Big 12 goes kaput, I guess we’ll have to find a way to schedule some attractive football games.

Say, can someone remind me what Dave Brown’s job was before he started running the LHN?

My guess is this turns into a loss leader for ESPN that forces other schools to the table to get their own networks at bargain rates. We’re just lucky enough to be the beneficiary.

Just read a few of the comments from the Statesman’s article about the LHN today…are the heads of all folks in centex really filled with mush?

@uthookem:

You mean like this:

UT football finally looks now that they have spent millions and millions of our tax dollars to get some of the best football coaching in the country. That does excite me because I’m sick of watching mack brown right, mack brown left, and mack brown up the middle completely predictable offense and defense that UT has had for the past 5 or 6 years.

That’s the kind of stupid that has to hurt.

very insightful, thank you.

Or maybe you were thinking of this one:

It should be a premium cable channel. There is a reason NBC, CBS and even ESPN to some extent do not broadcast olympic sports. They don’t make money!

LHN is like Obamacare. No one really knows what it is, some like it, some don’t, but it is being shoved down our throats regrardless. [sic]

The mind boggles.

I do have a test today. That wasn’t bullshit. It’s on European socialism. I mean, really, what’s the point? I’m not European. I don’t plan on being European. So who gives a crap if they’re socialists? They could be fascist anarchists. It still doesn’t change the fact that I don’t get the Longhorn Network.

Thanks for this, W.W.

I’ll point out only that we used to use pursue to talk about someone chasing a quarterback, cheerleader, or coaching hire. Now we are full shyster with “pursuant to the statutory exemption for confidential business information.” It’s definitely a new era.

http://www.youtube.com/watch?v=SzfiBMRDc5Y

Random musings…The problem comes because ESPN’s interests aren’t totally aligned with Texas’. Texas is still a public educational institution first, and has obligations to the state and to its student athletes which ESPN does not have. (This seems to be the part that A&M is forgetting – it is a public institution of the state of Texas and is obligated thereto.) Texas has an obligation not to skirt the spirit of NCAA rules to win; ESPN could care less about this – in fact the more controversy the better for them. And Mack is finding out that ESPN isn’t as interested as Mack is in himself and players pending all their time on football and school. So the interests are overlapping but not completely so. And the pressure on Texas to feed the billion dollar monster will only increase. The next coach will, like Mack, need to have a very unique skill set to succeed.

W.W. – one question I have thought about in recent weeks is this: If UT suddenly starts making dumptrucks full of cash above and beyond what most other schools make around the country, what is the end game?

Since we dont want to get into $EC recruiting shenanigans, using the money for a slush fund is out, and you can only have so many state of the art facilities for UT’s sports, at some point does the Athletic Department simply write out checks in the tens of millions of dollars each year back to the Academic Department since they will have more money than they can reasonably spend?

As noted in comments, Verizon FIOS has inked a deal with LHN. While not that helpful for the locals, for we in the Longhorn diaspora it is a godsend.

My chat with “Tawney” on the FIOS website [aka Chandra Singh in the call center] indicated that the LHN will be availible on the Ultimate HD tier of channels starting September 1st, at least in Northern Virginia.

One possible unanticipated marketing hurdle for the Billion Dollar Baby: in the alphabetical channel line-up, “Longhorn Network” follows immediately after “142 Lifetime Real Women” ,
“1840 Light Classical [Music Choice]”, and (NO HOMO) “187 Logo”! — at least we get followed by the manly “318 Mav TV” . I feel certain the WWL will find a way to overcome this unfortunate position and would like to believe the on-field perforance will as well. Hook ’em!

Fantastic article.
 
Any person who wants to discuss our future and the LHN who hasn’t read this series will just be babbling.
 
I don’t want to overstate it, but this is the most important thing written since the Magna Carta.

When BYU comes in and we make the ND game an annual affair, that will be three teams playing each other every year who are the only ones with their own network. It’s pretty clear that OU wants one to, which would make it four.

Anybody see a pattern here? The LHN has nothing to do with what the Big 12 looks like right now or will look like when Aggy leaves and everything to do with whatever the whole of college football is going to look like in say five years.
 
Imagine a world where the cumbersome BCS is finally jettisoned and a 16 team playoff exists. Kudos to the dipshit Fiesta Bowl executive for publicly exposing what everyone knew about the bowl system already, and Jim Delaney and the Rose Bowl Committee don’t have enough fingers to plug that dike forever. Any kind of football (only) alliance (call it whatever the fuck you want) that includes UT, OU, ND (and BYU) each with their own TV network, is going to thrive in that environment. If OSU and Tech come along for the ride, no harm done. If all four go independent, that will be fine as well. Do you think there’d be a playoff system that would make it harder for at least three of them to get a front row seat at the table? I don’t.

“My chat with "Tawney" on the FIOS website [aka Chandra Singh in the call center] indicated that the LHN will be availible on the Ultimate HD tier of channels starting September 1st, at least in Northern Virginia.”

Hilariously, the FIOS webchat person I got said they had no plans to offer LHN. When I sent the ESPN.com link, she said she had no reason to believe that it was wrong, but they do not tell the reps until the Network is actually on the channel lineup (on September 1).

@jake lonergan

It’s pretty clear that OU wants one to, which would make it four.

Supposedly, they’re already preparing a network, to be called “ONE.” Dunno what it stands for.

LHN will be availible on the Ultimate HD tier of channels starting September 1st, at least in Northern Virginia

Assuming anyone has their power back on by then.

“Supposedly, they’re already preparing a network, to be called "ONE." Dunno what it stands for.”

I imagine it to be similar to Oprah’s “OWN”, with loads of extra estrogen.

OK, maybe I’ve been had.

Pun intended.

Excited for this series. Great Commanding Heights ref, a must see/read.

Anyone on any insights on why/how academic affiliations with Universities are aligned along an Athletic affiliation (conferences)?

Just for the record, this billion dollar network is the thing we invited the ags to be a part of, right? This is the thing the ags turned down because Byrne couldn’t think of what to air on it, right?

Oh, boy. If you ever wanted to summarize the difference between Dodds and Byrne, their respective views on what this network could be is sufficient for the task.

More generally, I the network is unquestionably a great thing for Texas. The only downside risk I see is that somehow we get ostracized from meaningful conference affiliation because of the specter of the LHN. That seems extremely unlikely. Moreover, if the contract is as minimal as it appears, it seems quite likely that a deal could be negotiated between Texas, the PAC/B1G, and ESPN that makes everyone happy/rich.

Looking at it from ESPN’s point of view, there’s a lot more risk in the near term. It will almost certainly lose them money for the next few years, and it may never be profitable. Obviously, their bet is that it solidifies the vision for college football that they prefer: one where they own the rights to everything.

Erik -
 
I’ve written about this before. As best I can tell, the answer is that no one fully understands it. It just doesn’t make much sense.

It stands for Oklahoma sports NEtwork

They have already filed an intent to use trademark application — except it appears that they might not have done their due diligence before filing an application. Someone already has a TM registration for TV ONE (with the design mark being very similar).

I’m not saying OU won’t be able to overcome this issue, but it is an issue.

John Taylor – the non-athletic side of UT’s budget is hurting. The state keeps cutting funding. I think the school definitely views the network as a way to strengthen the university’s revenue in the broadest sense.

Building off of Jake Lonergan’s comment and the ongoing discussions with BYU and Notre Dame, in terms of super-conference vs. independence…
Is it possible that the talks we’re having aren’t just about a football scheduling alliance but about how to have a conference affiliation for the other sports?
Taking this one step further, when the Big 12 finally blows up, what if we (along with our rivals across the Red River) help to create a conference involving the Big 12 leftovers? Take a core of Tech, Baylor, OSU, Kansas, Kansas State, Iowa State, Mizzou (assuming they’re not going B1G or SEC). Make a play for Tulsa. Bring in some of the second tier Texas state schools like UTEP, UNT (brings in Dallas area), maybe Texas State or UTSA, add some RIce. This can be our non-football conference, as well as providing a regular group of football opponents. Then, make a deal for this conference to be broadcast on The Longhorn Network.
This would make the Texas Lege happy, provides a home for the Big 12 remnants that could still be a powerhouse in basketball and baseball, and eases our football scheduling issues. It adds a lot of live sports programming to TLN (or LHN) that might be of interest to the UT base because of the conference implications, and adds a substantial viewer base that allows for the network to expand regionally.

note: I got some of the basis for this idea from some other posts either here or the ‘Cosm or BON, but I don’t recall which, so forgive me if I don’t give full credit where due.

Aggie is manuevering themselves from one of the most influential member of a conference to being “equal” members of the SEC. Meanwhile we are manuevering to control a bllion dollars worth of our own football programing. they are going to get the blamed for breaking up the Big 12 and they are ecstatic about the situation.

I will say this in the 15 odd years since i left UT we have gone from a after thought ijn nthe SWC to perhaps the single most powerful entity in college athletics.

Whatever dodds and mack are making we should double it

Thank you Verizon / FIOS. LHN will be on basic digital tier of service in the DFW area (channel pair 79/579HD), starting Sept. 1.

Spider: nice Hitchhiker’s Guide reference.

John Taylor: The athletics department could take Texas TOTALLY independent, even independent of the Texas legislature. We could change the name of the university to
The Universe of Texas. May be just speculating there.

Roach, how will A&M get blamed for breaking up the B12? B12 going to be around next year, and the year after and will last as long as Texas wants it to last. Tech and Baylor will be clinging to the back of Texas leg, up until the day Texas kicks them off.

A&M has tried to be influential on the conference for the past 6 months, and has found itself not able to achieve anything that Texas didn’t want. The sole purpose of B12 administration’s existence is to serve Texas every want and need. There is no competitive equality in any policy making. That is just one reason why A&M is leaving.

A&M administration has not been napping for the last 6 months. They have been studying these details and possibilities since last summer. "All the right reasons for leaving, " detailed here are exactly why they are leaving. Look at the big picture, long term outlook for B12 conference and Texas’ control over it — is just simply not the best long term option for Texas A&M.

All the “wrong reasons” are just simple Internet fodder that folks on these interwebs like to focus on, so they can puff their chests and make jokes amongst their circle of friends.

If ONE doesn’t work out, I think ou has a golden opportunity with TNRHNF as their network’s call-letters.

All —

Thanks a ton for all the great feedback so far. Keep it coming. I’m keeping a running tab on questions and I’ll answer as many of them as I can in the last two parts. Working on Part II now, so stay tuned.

/WWM

My guess is this turns into a loss leader for ESPN that forces other schools to the table to get their own networks at bargain rates.

Uh no.

ESPN doesn’t believe in loss leaders, and they don’t expect this to be one (and neither do I — for the very reasons W.W. lists in this article.)

Excellent read, WW. Can’t wait for part deux.

Thanks, WW. Looking forward to the rest of the series.

Let this series be forever known as the Bevo Brief.

Great stuff, Mr. McClyde. I know the BC crew appreciates the pro bono effort.

And to get the LHN launch party kick started, feast your Eyes on this.

http://vimeo.com/28136772

W.W -
Maybe you or others have answered this question and parson me if you have but wasn’t one of the main stumbling blocks for U.T. going to the Pac-12 the LHN? Won’t this continue to be a sticking point in U.T.’s joining any conference? it seems that unless everyone gets in the act with their own networks then U.T. will be forced to be an independent or join in with schools that are so csh strapped they will take U.T under any terms.

Pardon my pardon misspelling

A billion dollars. A billion dollars. You kind of have to repeat “a billion dollars” a time or two to give it its due respect.

I have argued quite often that the B12 needs to die and Texas needs to join either the B10, PAC10, or SEC. It is no secret that I personally prefer the B10.

However, if Texas can make a billion dollars off its network, then realignment needs to be considered with thorough analysis of this intervening circumstance.

I mean, if Texas can make a billion dollars off of its network, then the other 3 major conferences, which are ostensibly stable, may well be in jeopardy.

If Texas can make a billion dollars, why can’t USC? Michigan? Alabama? Florida? You get the picture.

Very interesting, this “billion dollar” TV rights potentiality.

Latest response from AT&T in the Houston area.

What good is this billion dollar network if we can’t watch it? I keep hearing be patient, things are in the works, but so far Verizon and 6 no-name carriers are the only cable providers that have gotten on board.

wow that didnt work….response below

“We’re always looking to add content that our customers want, at a fair and reasonable cost. We’ve been talking with ESPN about the Longhorn Network. We can’t discuss details of our programming negotiations, but we can say that t…heir cost is very high for our customers in and outside of Texas, without knowing the exact content they’ll deliver.

One more time:

EPSN and the providers are a couple of Big Dogs arguing over who has the biggest pair. The argument could continue right up to the coin toss next Saturday night, and the providers could flip a switch and the game would be live,

I really don’t enjoy this PAC talk. It’s almost impossible to watch the games up here in New England and with a move to the PAC it will only be more challenging.

The two most competitive schools in the PAC have the same type of compliance issues we complain about being so prevalent in the $EC. USC is on probation and Oregon could be as well. What’s the point of going to a conference where your best competition is going to be from our current rivals and conference mates(OU)? That’s if they decide to go the same direction that we do. If they don’t, we’re playing against a lower level of competition and have to endure Bill Plaschke.

well, let’s look into the crystal ball. in 2 years (or less) Texas, Texas Tech, Oklahoma, and
Oklahoma State join the PAC16, the first of 4 superconferences ( which is what we are going to have)- therefore allowing a playoff and a REAL NATIONAL CHAMPIONSHIP GAME
 worth trillions whoever gets to broadcast that game. that leaves baylor, kansas, kansas state, misery, and iowa state to wallow with smu , houston, and as e. gordon gee puts it,
“the little sisters of the poor” ( who is actually a serpent with a bow tie on).
as for the aggies- they will be happy to sing the aggie war hymn at War Memorial stadium
in little rock to punish Texas some more. ESPN knows what it is doing and the aggies haven’t a clue. (i don’t think they ever did.)

1) Great article. I’m so tempted to show all my aggie friends, but I have a feeling that will increase the trolls. I also enjoy it from the legal perspective. I mean, I should. I am in law school. But it is more fun to apply the law to things you actually like.

2) Here is a fun video from LHN:
http://www.youtube.com/watch?v=NIYtcL-iAF8&feature=relmfu

I like the muscles, I wish they were selling that shirt, and boy can Wylie look scary when he tries.

Hot damn dont shovel your aggie shit over her. That may work at tgexags but not here

This is a great read. It is truly fascinating to watch this thing play out.

I took a “chaos theory” class in b-school and it really shaped the way that I think about complex systems. Thus, I have a hard time believing that UT could anticipate moves so many steps ahead of everyone else. I most certainly could be wrong, but there are SO MANY variables.

Just one example: Political – I never dawned on me that Aggy leaving essentially gives us a free pass to finally do whatever the hell we want (although I am not the sharpest knife in the drawer). Clearly, there is NO way that UT could leave the conference without making sure Aggy and TTU came along for the ride. Aggy leaving on its own removes a giant anchor. Did we REALLY force Aggy’s hand? If Bellmont foresaw this and made it so with the HS games announcement, it was truly a master stroke.

Taking the past and present actions into consideration, lets look into the future and evaluate possible, albeit unlikely, events . What if OU goes to the SEC? What if ND says f you Texas? What if something else happens like, I dont know, Illinois decides they want out of the big 10 because Purdue keeps leaving the seat down when it pisses. I have a hard time believing that Bellmont and ESPN could be THAT much ahead of everyone else with so many variables and almost infinite possible outcomes. Can DeLoss et.al be really this prescient?

I am 100% sure UT will come out better than Aggy on this. Beyond that however, I think your thesis is a bit flawed because I feel the probability of infinite outcomes cant be predicted.

Also I am coked up and drunk on scotch and listening to “I am the Walrus” on repeat, so what the fuck do I know.

googoogajoob

Everyone keeps talking about the possibility of Texas becoming a football independent or being part of a loosely affiliated group of football independents, both of which make sense to some extent, but I keep wondering what the story would be on the rest of Texas’ sports? I know football is the money maker and all that, but you can’t say that the University and Longhorn fans don’t take pride in the other sports.

Would we be looking at the basketball team playing Boise State and New Mexico or Marshall and Southern Mississippi as part of their conference slate? Would the baseball team be playing Nevada and Colorado State? UTEP and UCF? Or would someone have the unenviable task of trying to set up full independent schedules with respectable teams for everything from softball to tennis?

I don’t really see Texas having a strong “Big East” option like Notre Dame does. I don’t think the Pac-## or SEC would want our non-football sports without the football team and I don’t know that, even if they did, the Big East or B1G would make sense… that’s a lot of long-distance travel on a week-in-week-out basis without any real local destinations (aside from TCU in the case of the BE).

Gardner Barnes:

I’m saving my responses until Part III, but I wanted to go ahead and reply to your comment since I found your reference to the chaos theory quite compelling. Do I think UT/ESPN basically left a loaded gun on the table and left the room knowing that Texas A&M would pull the trigger? Yes. Do I think that the high school football thing was geared to force their hand? Meh … not sure I buy that. That’s where I think “chaos” comes into play.

Thanks for your scotch-and-blow insight, and stay strong for America.

WWM

GB: Hope you’ve rejoined us here on Earth.

I’m still convinced that the pitch for HS games was made because it was good for the network and because there were no rules against it.

The idea that a consistent menu of HS sports is a recruiting benefit is monstrously overblown. It also ultimately will detract from the brand, which is, after all, The Longhorn Network. But it was something to show when the market would bear it.

Fascinating read. I’m a bit skeptical about the billion dollar angle and I think GB makes good points about predicting and controlling the outcome of events in complex systems.

My main quibble: I think there is generally a loose correlation between content and the $ paid for it. If UT gets an $11 million dollar payment in the first year, that’s about $10 mil more than the content justifies (yeah I know, my subjective view). However, this can be explained away by the ancillary benefit ESPN gains by forestalling conference realignment armageddon, If I understand it correctly, if the SEC just adds A&M and unnamed, there is a minor pro-rata type renegotiation for them. If wholesale realignment occurs, the contracts of many of the conferences would have to be largely renegotiated. With the precedent the PAC12 recently set, the new SEC and Big10 contracts would be expensive, costing ESPN way more than the extra $10 mil they paid UT.

Getting back to content vs $, if UT is already getting overpaid, what makes us think they’ll trigger all the bonus provisions of the contract? If your point is that ESPN merely overpaid to gain a right of first refusal anticipating the breakup of the Big12, I agree. But I don’t see how that turns an $11 million dollar rights deal into $1 billion.

One other thing ESPN gains is the opportunity to experiment with the highest profile university sports brand. Getting back to what GB stated, nobody knows what the future holds regarding university or conference networks. There is just a bunch of guys with a lot of money guessing. With the ESPN/UT network, ESPN can find out if a single school network can generate enough content to be viewable and if so, how profitable it might be. Armed with the knowledge, they could offer other high profile schools similar deals to leverage them away from the conference contracts such as the PAC and Big 10 have struck. My guess is it would be more cost effective for ESPN to overpay a bit to the highest profile programs and tell all the middle to low tier programs they get nothing, rather than negotiate with a united conference for their 3rd tier rights.

Anyway, awaiting the next billion dollar bevo installment.

WWM – I am sure that I (JD/MBA ’85) am only one of a number of M&A lawyers who lurk here.

Is the $1BB contract readily available on the internet? I note the agroid link only has excerpts. I would love to take a peek.

Are super-conferences dead on arrival? In every conference, teams with the largest TV audience subsidize teams with the smallest TV audience.

Texas subsidizes the rest of the Big 12. Penn State, Ohio State and Michigan subsidize the rest of the Big 10. USC, UCLA, and Cailfornia subsidize the rest of the Pac 12. Florida and Georgia subsidize the rest of the SEC.

Which of these universities would benefit by going independent?

BornaHorn – it’s a Google doc at the following link (change “hxxp” to “http”):

hxxp://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0Byz6Uzwv3AiuM2I3NjAzNGItOGFiMS00ZWZlLTkxYTAtZTMzMjhiMDJmYzY0&hl=en_US

I believe several posters here have misunderstood what the “$1 Billion” figure means. Unless I am the one who doesn’t understand, WWM never said that ESPN would pay UT a billion $$$, but rather the annual budget of $26 million ($15 million + $11 million overhead), combined with UT’s guaranteed annual minimum of $9.8 million (+ 3-4% annual increase) amounts to close to $1 Billion over 20 years.

Yes, UT might well earn more than the MAGR of $15 million/yr (average), but please don’t go telling your friends that “UT is going to make a Billion dollars off the LHN.”

Suffice to say the LHN is a Billion dollar enterprise, and Texas will earn at minimum $300 Million, and probably more. Somebody correct me if I’m wrong.

sinless -
 
Correct.
 
He will address just how much we can make – probably more – in Part II.

"Do I think UT/ESPN basically left a loaded gun on the table and left the room knowing that Texas A&M would pull the trigger? Yes. Do I think that the high school football thing was geared to force their hand? Meh … not sure I buy that."

Geared to force their hand? Perhaps not entirely for that purpose, but I can’t imagine that DeLoss Dodds didn’t understand the recruiting advantage these broadcasts gave UT, or that he never considered that having such an advantage might prod A&M into bolting the conference, particularly if they were already considering it.

Could we call this a paradigm shift? Thanks to Notre Dame (for staying independent), forward thinking individuals at Texas may see the future of college sports as being outside a conference. Why not maximize profits, and kick that cash back into the university as a whole, as academic and athletic excellence go hand in hand. It’s the total package with success on the field increasing the success in the classroom. Who needs to be tied down in a conference when you have built a product that any other university will gladly play, no matter the sport, or whether it’s men’s or women’s. Texas should play a yearly football schedule that brings in the most cash. Yeah, that means a tougher schedule, and the chance to get your butt kicked, but what outstanding athlete wouldn’t want to be a part of it? Brilliant! By the way, UofH or SMU … why?

Could work for football. Every other sport figures to suffer.

I suppose it depends on how you define suffering. Do we trade the mega-football-bucks for a conference tittle in women’s volleyball? I enjoy our women’s teams … and as an example, I actually follow the Lady Horns on the links, but I would much rather see TEXAS get the football cash and glory.

and as an example, I actually follow the Lady Horns on the links, but I would much rather see TEXAS get the football cash and glory.

First of all the UT Athletics Department has built a solid reputation with the administration over the years just because it isn’t all about football cash and glory.

Secondly, a part of the “We Are the Joneses” ethic is that the entire athletics department succeeds.

i was thinking about the money this venture might bring in and the comment about some of that possibly funding something on the academic side and realized that the working relationship between the athletic dept and the academicians may become a bit more cozy.

there has always been a bit of friction there, and the athletic dept being helpful in these trying economic times would no doubt grease some squeaky wheels.

Who knows how the academic side would spend the money, but UT using its own money to fund research could open some interesting opportunities

The entire athletic department is succeeding, and they will continue to succeed as the football cash intake is developed well beyond the traditional model. The traditional model is on the way out, which is not to say that it won’t reemerge when the megabucks strategy plays itself out. If it isn’t UT, then someone else will jump in the driver’s seat … or do we think that only BC is the only people talking about this stuff? If the institutions wearing their traditional values like lode-stones around their neck can’t keep up with the “Joneses,” then too bad. UT shouldn’t be scheduling a single game with an university that doesn’t have their football program in the top 25, and they better pack the house when UT travels to their stadium. Let the rest fight for the scraps, or let them get the drive to join those at the top.

UT shouldn’t be scheduling a single game with an university that doesn’t have their football program in the top 25, and they better pack the house when UT travels to their stadium.

There is a reason why Universities have been reluctant to reduce everything down to what you suggest. The BCS turns into the NFL where parity (if you are lucky) is the rule. You schedule every single game against Top 25 programs and you lose 4 or 5 games a year.

Thanks Dagga.

You lose 4 or 5 games if you think you’re going to lose that many. Pride in accomplishment cannot be found in beating up on lesser programs … having the balls to take on the best breeds success, even when there are losses in a season. Do we have the coaches to beat any program in the country? Yes, now that GD is gone. Do we have the players? Yes. Do we have the fan base to take it to an opponent’s house on a road game? Yes. Then UT should go big, or go home, as they say.

I was driving on an insignificant side road in Emporia, KS not long ago … you know where I’m going … and there was this less than average house that had a couple of pick ups with Horns decals on them. They didn’t have Wichita State decals … nor did they have Kansas or K-State … not Auburn … not even the freakin’ Irish … but TEXAS! I drive all 48 states, and I see Longhorn decals, caps, or clothing everywhere. We are the Cowboys, or the Yankees, or Manchester United, and we should be leading the paradigm shift.

We’re TEXAS … we matter.

Exactly. As I posted above, I’m still waiting for someone to explain to me how being an independent will work well for our basketball, baseball, softball, volleyball, swimming, etc., teams. I mean, in Dodds I trust…. I’m certainly not the college sports administration chess-master that he is by a long shot. I’d just like to know what the thought process is for everyone who thinks this is a viable option (not that I’m saying it isn’t… I just don’t know how that would work without our version of Notre Dame and the Big East).

If Notre Dame were on board to cherry pick programs to form a strong conference or mega-conference, that makes sense to me. If they weren’t, joining the Pac-16 makes sense to me. And Football could easily work as an independent. I just want to hear what happens to the rest of the teams in that scenario.

Let all the other UT sports stay, go … who cares? They don’t make the megabucks. They do help sell the brand, though. OK, they all go to the MAC conference and dominate. No BCS in the other sports, right? Easy path to the championship without impeding the money-making machine. I should be UT athletic director.

Let all the other UT sports stay, go … who cares? They don’t make the megabucks. They do help sell the brand, though. OK, they all go to the MAC conference and dominate. No BCS in the other sports, right? Easy path to the championship without impeding the money-making machine. I should be UT athletic director.

And you would last exactly six months.

Why 6 months? Or is that a number you just pulled out of your rear end?

You’d probably be lucky to last six days.

I wouldn’t last 1 second, much less get a shot. I don’t the first thing about pimping out a large university to a fraud of a sports network. I also don’t know the first thing about keeping whiny donors happy. However, I do know a little football, and I would have dumped a certain OC a long time ago so that a 2nd national title might have been possible.

I also don’t know the first thing about keeping whiny donors happy. However, I do know a little football.

AD’s who fit that description were on the endagered species list a long time ago. If Athletic Departments went your way (screw every sport but the moneymaker) the lawsuits to get University Athletic Departments on the tax rolls would make your head spin.

Thinking outside the box: Could Florida and Georgia make more money under Big 12 rules than under SEC revenue sharing rules?

If so, why not invite Florida, Georgia, and Notre Dame to replace aTm in the Big 12? Minimize the number of conference games so each school could maximize revenues from games broadcast on university networks. Florida and Georgia could clamp down on SEC cheating in their territory. The Big 12 could take the SEC’s place as top conference.

Best anaylsis I’ve read so far. Keep it coming.

Can’t wait for #II and #III!! Great work.

Do you guys really think Dodds wanted the Aggies to leave so soon? Of course not. He fought to keep the Big 12 together unitl the can get the network up and running while staying in a conference that provides an easy path to BCS bowls.

The Aggies leaving does make the conference weaker. Notre Dame is not coming, and word is that BYU isn’t coming. All the other “expanion” options are piss poor at best. If ESPN pushing aggressively to get as much content onto the network, with attempted bribes (See Texas Tech) and High School content, the question become how long do the sooners stick around for this.

We know the Sooners are trying to get a network started, but there’s no chance it would come remotely close to the LHN. The demographics for them just aren’t that attractive. I also can’t see ESPN paying up for the Tier 1 contract when that come up for renewal. The most important question has to be How much is Oklahoma willing to put up with before they make a decision to leave?

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