A lot of fluff, but a few business tidbits from the Big 12, ACC and AAC
|Jul 18||Public post|| 1|
Good morning! We’re neck deep in college football media days, and I feel like I’m seeing most angst about the entire affair from actual media members.
I don’t want to spill too much digital ink on the value of media days, since I’ve learned that most fans just don’t care that much about the ol’ content biz, even though we all love talking about it. I think it’s fair to say that the utility of any media days event varies by reporter, organization and mission. Anybody expecting anything especially earth-shattering is usually going to be disappointed.
They’re nice networking events, and for fans, they serve as an excellent signpost that the 2019 college football season is no longer just an intellectual abstraction, but nigh approaching. And if you squint, buried in all the Talk Abouts, and coach press conference filibusters, there’s occasionally some bits of real news.
Or at least, the type of news that this newsletter might be concerned about. If you’re more interested in whether Nick Saban and Alabama showed the Clemson football program the proper respect, might I direct your attention to well, the rest of college football internet.
You might not be able to watch the ACC Network at launch
It goes without saying, but the ACC really needs this new ACC Network to be successful.
They’re entering the cable channel game much later than their peers, and their demographics and fanbases don’t have quite the built-in advantages that the Big Ten or SEC have. Some schools, like Georgia Tech, are really counting on increased revenues to help shore up their books.
The News & Observer puts an especially fine point on the situation, writing:
…There’s not much on the line. Just the financial future of the ACC, which is no longer in the hands of the schools. They’ve invested their millions in studios and other infrastructure. It’s up to ESPN to make it all worthwhile, for ESPN and the ACC both.
Just the financial future of the conference, folks!
Of course, the timing isn’t so bad. Clemson is the defending national champ in football and looks to be the safest bet for the College Football Playoff this season. Virginia is your defending national champ in men’s basketball and lacrosse. It’ll be an elite basketball league again, and maybe, just maybe, some of their other football teams will start to get their acts together. The ACC doesn’t boast as many “national” (or close to it) football brands as the SEC or Big Ten, but there’s still plenty of firepower in its membership.
Like with many new channels, there are some questions about what distribution is going to look like right off the bat. Clemson AD Dan Radakovich was pretty candid, telling the Herald:
Financially it’ll be better in Year 2 and 3 than it is in Year 1, as the distribution continues to grow and opportunities for our partner ESPN to expand the footprint.
We don’t know exactly what that distribution will be right out of the gate, but we do know that Comcast/Xfinity, Spectrum, Dish and Cox, among others, do not currently have agreements to carry the channel.
Multiple analysts have said that Charter/Spectrum is the carrier most likely to get a deal done before that August 22 launch. That’s good news for fans in the Carolinas, where Charter/Spectrum has a significant presence.
But the odds that everybody is lined up in time? Not great. For one, Comcast’s deal with Disney, the parent company of ESPN (and thus, the ACCN) doesn’t expire until the end of 2021, and it’s unlikely there will be enough of an immediate subscriber demand to force a new deal. Comcast is a major player in several ACC area markets, like Atlanta, D.C, Miami, Pittsburgh, Boston, as well as other major metros like my Chicago, as well as Detroit and Minneapolis. Cox Cable is big in Rhode Island, New Orleans, and parts of Virginia. Dish Network, well, that’s about everywhere.
The most important distribution partner that the ACCN has secured is DirectTV, something the Pac-12 network still hasn’t done (and internal documents suggest probably won’t for at least a few more years). You can also get the network on Hulu and PlayStation Vue, so most consumers won’t be totally out of options should their local cable companies decide not to pick up the channel before the Georgia Tech/Clemson game.
But the ACC isn’t the SEC, so it’s quite possible that not everybody will be able to easily secure the channel as quickly as they’d like. Exactly how many fans complain, and how loudly, will probably help determine exactly what the distribution is in year two. As ACC Commissioner John Swofford noted, these sorts of deals often happen “at the midnight hour”, so maybe some fan hollerin’ can change some minds.
Somebody other than Clemson becoming very good at football certainly wouldn’t hurt those long-term distribution plans, though. No pressure, Miami! Take your time, Florida State! Only the financial future of the league is apparently at stake and all.
The Big 12 on ESPN+ has a name
The Big 12 never got around to building a conventional television network, and thanks to the geography of the league and the changing economics of television, it’s safe to say they never will. But they do have what they’re calling a digital network on ESPN+, and if you want to watch absolutely every Big 12 football and basketball game, you’ll need to subscribe to it. It’ll be called Big 12 Now.
That this product exists isn’t news, but now we have a bit more clarity as to exactly what will be on it. In 2019, there won’t be much, as only games controlled by Baylor, Kansas, Kansas State and Oklahoma State will be featured. Iowa State, TCU, West Virginia and Texas Tech will “join” in 2020-2021. Texas and Oklahoma, of course, will not be a part of the network, thanks to their pre-existing media deals, although they will appear as road teams in some Big 12 Now contests.
In terms of football, my understanding is that Stephen F. Austin at Baylor, Nichols at Kansas State, Coastal Carolina at Kansas and McNeese State at Oklahoma State will all be on ESPN+ this season. No disrespect to any programs mentioned there, but none of that seems like must-see TV, unless you happen to be a fan of one of those schools.
Big 12 Commissioner Bob Bowlsby, quoted here by the Tulsa World, said:
Obviously cable is not going to go away….It’s going to continue to be a huge part of our strategy, but we are on the right side of technology. We have the right partners, and the future on this is very exciting.
“I think we believe that the ESPN+ platform embodied in Big 12 Now is the right thing technologically. The product has evolved to the point where it’s very high quality and very reliable in terms of your ability to get on and get it.”
Generally speaking, I think that sounds about right. As far as streaming providers go, ESPN+ is reliable, affordably priced (it’s only $5 bucks a month now, although it’s probably not staying that low), and offers a fair amount of other programming from good college basketball games, to AAC football, and even some non-live sports programming, like this massive Les Miles and Kansas football documentary.
Is this a game-changing deal for the conference, financially? No. Does it suck that you need to pay for something else in order to watch every single one of your favorite school’s football or basketball games? Yeah, probably. Does it change the long-term stability of the Big 12? No, I don’t think so. Is it pretty great if you care about more easily watching Big 12 baseball or volleyball? Yes.
It doesn’t look like the AAC is expanding now, and maybe there are other bumps in the road to come
The exact details of how or when UConn will exit the AAC aren’t completely settled, which probably makes things very awkward for UConn’s football team. For starters, there’s no exit date set. UConn’s schedule after 2019 is a big ol’ ???. They don’t have a football broadcast partner yet. There’s a lot to figure out.
There’s also the question of what the AAC does to replace them. If AAC media day is any indication, the answer is clear. They won’t be replaced, at least, not now. “We have no plans to add a member to replace UConn” feels straightforward, and lines up with most reporting over the last two weeks. Nobody that would be interested provides the competitive or financial value, at least in 2019.
For basketball, being an 11-team league isn’t really an issue, but it does make things harder for football, since the AAC doesn’t want to go to 10 conference games, and they still want to have a conference title game.
You could go unbalanced divisions, but Aresco didn’t seem keen on the idea, and that’d make scheduling messy. The perhaps most likely option, via The Athletic:
The American has been in contact with the Big Ten about how that league scheduled with 11 teams from 1993-2010, though there wasn’t a conference championship game. The AAC would need an NCAA waiver to hold that title game without divisions because there wouldn’t be a full round-robin regular season like the Big 12. The most likely possibility mentioned included two permanent opponents and six rotating opponents. Tiebreakers would also have to be determined.
Figuring out geographically-tied annual opponents shouldn’t be too hard in the AAC, but that also seems like a pretty unwieldy system long-term, and there’s no guarantee the NCAA grants them that waiver.
There’s one other note from The Athletic about the AAC TV deal, from Cincinnati’s perspective. It appears UConn wasn’t the only school with some questions. The whole story is here ($), but here are a few notes that jumped out to me.
….the AAC, meanwhile, is locked into an agreement through the 2031-32 school year, a seemingly arbitrary length dictated more than anything by the negotiators wanting the value of the deal to reach the gaudy $1-billion threshold.
Yup, readers of this newsletter know that I’ve raised this point before, and have heard this from industry sources. How big a problem the length of the deal could be depends heavily on factors that are unknown, and might never be known to the public. Is the ~$7 million average distribution the same over the length of the whole deal, or is it back-loaded? Are there merit-based kickers that would increase that distribution (say, in case the Playoff expanded and an AAC team was a regular participant)? What happens if the market totally resets in 2025 after the next round of P5 deals and the back-half of the AAC deal looks even more dramatically under-market?
This is also super interesting to me and confirms something else I’ve been told:
On Feb. 24 of this year — more than a month before the new rights deal was officially announced — UC Athletic Director Mike Bohn wrote a letter to Aresco on behalf of the AAC Finance Committee and Television Committee, which also included Patrick Kraft of Temple and Danny White of UCF. The letter, acquired via a public records request, laid out two specific points of contention with the then unfinalized agreement with ESPN. The first was “the assignment of production costs associated with increased ESPN+ digital streaming content.” The second was “a model of media rights payouts that includes a merit-based distribution component,” which Aresco has since stated is not something he felt was in the league’s best interest.
In Aresco’s response to Bohn two days later, obtained via the same record request, the commissioner wrote: “Please be assured that the internal items you mention should and will be discussed with the athletic directors. However, these matters can be addressed after the ESPN negotiation is completed and should not slow down that process. We have good reason to want to conclude the ESPN negotiation and announce a new deal as soon as possible. Neither of the items you reference has an impact on whether we accept and conclude the ESPN deal that is on the table. As I mentioned, these are matters we can take up later because the new deal will not start until 2020-21 and we will have no ESPN+ obligations until then. We will have ample time to discuss them.”
The TL;DR here is that the ~$7 million deal isn’t exactly ~$7 million, because schools now also have an increased production cost factor to consider, since they’re producing even more programming to fill those ESPN+ slots…not just football and men’s basketball, but other sports too. Those costs aren’t so high as to torpedo the deal, obviously, but I’ve been told it can cost thousands of dollars to produce say, a women’s basketball game. Depending on what infrastructure existed at the school beforehand, those $7 million dollars might be closer to like, $6.3. Maybe less. The devil is in those details, and it would appear not all of those details have been completely resolved.
That Cincinnati, one of the top overall brands and athletic departments in the league, would be interested in merit-based revenue bonuses isn’t shocking, or irrational, but also speaks to what I think is a structural issue with the AAC that is just hard to ignore.
Even without UConn, there are still pretty big institutional differences between the rest of the schools. It’s a Southern league…with Cincinnati and Temple. A league of mostly non-flagship state schools, but also Tulane and SMU. It’s a league that cares a lot about football and talks about parity with the P5 (lol), but also includes Tulane, East Carolina and Tulsa. It isn’t a league with deep, historical rivalries or common institutional ties. Most of these schools have played in lots of different conferences.
That makes hashing out the money potentially problematic. What Cincinnati wants, needs, and deserves is going to be different from what Tulsa or Tulane can bring to the table in the short-term. Ohio State and Northwestern can paper over those differences because they’ve been playing football for a hundred years and shit, everybody is still getting rich.
That’s not the case in the AAC, even with this new TV deal. The potential for real tension is still there.
Right now, everything is probably fine. But if the bottom of this league fails to improve, and the top half of the league finds itself needing more money to reach their athletic potential? Maybe those emails get a bit more acrimonious.
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