This is a bit of a game changer as Sports Business Daily’s John Ourand and Michael Smith report that the Big 12 television partners, FOX and ESPN, aren’t real happy about the prospects of expansion, mainly because it would require those two entities to pony up more cash so that the Big 12 would essentially remain the same, which is apparently guaranteed in the television contracts.
ESPN and Fox Sports believe that expansion with schools from outside the power five conferences will water down the Big 12 and make it less valuable, not more, sources said. But the Big 12 is financially motivated to add more teams. A clause in the conference’s media deals stipulate that if the Big 12 expands, it would receive pro rata increases in its rights fees.
The original deals pay $2.6 billion over 13 years, or about $20 million per school annually. Expansion by two schools, theoretically, would force ESPN and Fox combined to pay an additional $40 million per year in rights fees. Expansion by four teams could mean another $80 million per year.
The problem is that the television partners don’t really like the additional inventory, stating that the Big 12 would then be watered down. Of course, every conference has it’s teams that stink. The Big Ten has Purdue and Rutgers and Rutgers is terrible in just about everything. The Pac 12 has Colorado and there’s usually another stinker each year. The ACC has Boston College, Wake Forest, Syracuse and Pittsburgh, all teams that haven’t been great.
The networks are also saying that if the Big 12 does decide to expand, they may just not pay the Big 12, which would then entail a lawsuit, which would be fun for everyone. I honestly don’t feel sorry for the networks here and if you’re an attorney that helped negotiate this deal, you might be crapping a brick right about now. The other side of this is that ESPN is balking on paying the pro-rated shares to any additional members to the Big 12, but ESPN just paid a ton of money to the ACC for their network.
ESPN and Fox could negotiate smaller rights-fee increases as opposed to the pro rata increases.
If the networks, both of which have encountered some financial challenges in the last year with cutbacks and subscriber losses, decided to staunchly challenge the contracts, they could simply not pay the increases and force the conference to take them to court. ESPN and Fox would argue that the move to expand and charge the TV networks more money does not reflect the spirit of the original deals, which were signed four years ago. The conference, of course, can fall back on its contracts, which spell out pro rata increases.
ESPN and FOX could bite the bullet and then make the Big 12 eat it in the shorts in 2025 when the grant of rights terminates. There could be a play between the networks and the Big 12, expand the grant of rights in exchange for continuing the television deal.
Of course, if ESPN wanted to shave about $15 million from it’s annual budget, I know a television network that’s probably not worth that much.
In other news:
* The Salt Lake Tribune, via ESPN, reports that the Sooners have long eyed BYU as a candidate:
In a story published Monday on ESPN.com, that website detailed Oklahoma president David Boren’s role in the situation and noted, the “Sooners have long believed to have had their eye on BYU, which has the strongest football brand of any non-Power 5 school. The Cougars also have a national following through the Mormon Church, and operate near Salt Lake City, a top-35 TV market.”
* Frogs O’ War reports that they have a source inside the athletic department and they say that expansion is complicated, which sure, makes lots of sense. They also state that it is the presidents that are driving expansion, not the athletic directors and that if it were up to the AD’s, it would be a dead topic.