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Canzano: Pac-12 AD says conference is "Now at the plate... energized"
Unpacking the Big Ten media rights deal.
I did some calling around after the Big Ten Conference announced it had finalized its media rights packages on Thursday. I asked a South Division athletic director from the Pac-12 Conference how he felt about things.
He said: “Next up… now at the plate… energized.”
It’s the Pac-12’s turn to negotiate. Conference commissioner George Kliavkoff will need to be very good in the next couple of weeks. The landscape is tricky. The market has been disrupted. The conference is negotiating from a less-than-ideal position. Kliavkoff is going to have to be shrewd, creative and wise.
While we wait for the Pac-12, I had a few thoughts:
• The Big Ten’s deal was reported by some to be a total of $8.4 billion over seven years. That figure sounded inflated to those who work in the industry. I asked two media experts to crunch numbers and deconstruct the deal. They both came back with estimates that place the total value of the deal in the $7.5 billion to $8 billion range. One guessed that the involvement of the Big Ten Network, 60 percent of which is owned by Fox, may be causing the accounting discrepancy.
Regardless, it’s a massive windfall for members. As Dennis Dodd of CBS pointed out on Twitter, the last media rights deal for the Big Ten was a seven-year deal with a total of $2.64 billion.
• The Big Ten signed a seven-year agreement in this round of media rights. Why seven years and not eight or 10? Because it gets the conference back to market before the SEC. That was apparently important to Big Ten commissioner Kevin Warren.
• Warren will appear on an episode of HBO’s Real Sports next Tuesday night. The promotional transcript of the interview includes host Bryant Gumbel asking Warren whether the Big Ten could foresee paying players.
Warren’s answer: “Yes. Yeah.”
Also, Gumbel asked whether Warren could foresee Big Ten expansion from 16 teams to 20 teams. Warren’s answer: “I could. Yeah. I could see perpetual and future growth.”
• The first year of the Big Ten’s new media rights deal won’t include USC and UCLA. It will just be 14 universities. That first-year figure is estimated by Bob Thompson, the former Fox Sports Network executive, to fall well short of the $1 billion-a-year figure that has been floated for months. The first year payout will more likely be around $700 million to $750 million.
• The annual distribution to the Big Ten jumps over $1 billion in 2024 with the additions of USC and UCLA. Then, the deal kicks up approximately four percent annually. This allows the media partners to start at a lower payment, then raise their prices for carriage and advertising over the length of the deal. Schools get a little more on the back end. Everyone wins.
• A lot was made of the Big Ten including an “escalator” clause in its newest deal. It raised speculation about Oregon and Washington and presumably left the door open for additional members to join the conference. But Thompson, who negotiated hundreds of these deals in his career, told me those clauses have been around since 2010.
“We started putting them in because schools were coming and going,” he said. “The thing is that there’s no set dollar figure. It’s basically just a requirement to negotiate in good faith on an adjustment to the right deal. I’ve never seen one actually be invoked.”
• A second Pac-12 AD told me of conference expansion and realignment, “It always starts with shock, surprise and frustration, then folks who weren’t invited start knocking on doors asking, ‘Why not us?’ Then, the dust settles and folks confront reality. This is when the work begins.”
• I’ve been thinking a lot about San Diego State and some others as Pac-12 expansion candidates. I am focused primarily on the television households and media rights value that the potential universities bring. San Diego has 1.1 million television households. Portland and Salt Lake City are both around 1.1 million TV homes as well, by comparison. San Diego is an intriguing fit and gives the conference a presence in Southern California.
• I think ESPN is going to get a very important vote on this subject. If the network wants to be in Southern California, I think the Pac-12 will expand. If it’s not as important, it won’t. Most of the time we talk about academic fit, geography, and the votes of presidents and chancellors, but TV executives are running the show right now.
• UNLV is in the No. 40 television market in the country. Las Vegas has 757,840 television households, but would the Pac-12 make a bet on the rapid growth of that region? The NHL won big in Vegas. The NBA and MLB will soon follow. Between the summer of 2020 and 2021, the Las Vegas metro population grew by nearly 20,000 people and is now more than 2.3 million total residents. There’s a lot of money in the desert, a line of potential corporate partners, and Pac-12 commissioner George Kliavkoff is well connected in Vegas. Keep that in mind.
• SMU is a little bit interesting. It brings a robust television market, but it has a tiny footprint in Texas. Beyond that, we’ve talked about Boise State (517,000 TV households), Fresno State (the giant of the Central California’s valley) or the potential that the Pac-12 poaches Big 12-bound Houston (2.45 million TV homes). The Pac-12 will only expand if it’s a no-brainer. I can’t be the only one having a difficult time finding can’t-miss expansion candidates for the Pac-12.
• I continue to hear enthusiasm within the Pac-12 about a “loose partnership” with the ACC. One Pac-12 university president whispered about this to me last month and it makes a lot of sense when you consider a partnership solves two problems for ESPN. One, it gives the network inventory in the Pacific Time Zone. Two, it creates an opportunity for ESPN to keep restless ACC members happy by sprinkling unexpected money on them.
• Neither Apple nor Amazon got in on the Big Ten media rights deal. The prevailing thought is the Pac-12’s Tier 1 rights will land on linear television. But I keep thinking there’s a place for one of the major streaming platforms when it comes to the Pac-12. Or maybe Amazon and Apple are just here to help create leverage for the conference. ESPN+ would probably love to absorb the Pac-12 Network content itself.
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