I want to preface this post by saying I am in no way an expert in television negotiations, revenue sharing, or many other things. This is my take on what the Big 12's possible new TV deal means. Please let me know if I've misinterpreted something or gotten something wrong!
Today's news that the Big 12 is close to agreeing to a new contract with Fox for television rights comes as yet another sign of encouraging news that the Big 12 is in a much more stable position than once thought. I alluded to the fact last week that the option to market third tier television rights could help the Big 12 stay together. With today's newest tidbit, we now see that FOX is willing to come to the table with a deal that not only doubles, but triples what they are willing to pay for second tier rights. And, those third tier rights we were discussing? FOX wants them too.
First, a little education of what first, second and third tier rights are in the Big 12 - because it's complicated.
- Big 12 has rights to games in Big 12 stadiums and neutral site games in Big 12 states.
First Tier (Currently under contract with ABC/ESPN through 2015):
ABC/ESPN has rights to 19 games. No one team can appear more than six times.
Second Tier (Currently up for bid with Fox):
FSN has rights to televise 24 games. They have sublicensed some of their games in the past to TBS and ESPN. The conference has also agreed to let FSN sublicense an additional 6 games in the past to Versus, and in the past year let FSN have the rights to those additional six games.
Third Tier/All Other Games:
FSN has had rejection rights before games could go to FCS, PPV or web streaming.
So, basically in the past, ABC/ESPN had the first pick of football games, FSN had the second, and they could sell the rights to those games that they did not choose for Fox Sports to networks such as TBS, Versus or ESPN. Any games that were not picked then were available to Fox College Sports or for pay-per-view telecast, local distribution (such as Mediacom Connections) or web streaming (such as Clone Zone). FSN could still deny the rights to these games.
- Big 12 has rights to games in Big 12 arenas and neutral site games in Big 12 states.
First Tier (Currently under contract with ABC/ESPN through 2015-16):
ABC/ESPN has rights to 95 games. ABC/ESPN can distribute the following ways.
Over the Air Games (Games available as part of an ABC or CBS national package).
ABC/ESPN can sublicense up to 20 games a year.
Cable (ESPN, ESPN2, ESPNU and ESPN Classic). At least 43 games total must be over the air or on ESPN/ESPN2. Also up to 6 games can be broadcast on ESPN3.com.
Big 12 Network/ESPN+ . From 20 to 32 games on syndicated network.
Third Tier/All Other Games:
Institutions can distribute through their third tier packages with Learfield, IMG, etc.
So what that means is ESPN has rights to 95 games of their choosing. They can allow up to 20 games to be sublicensed nationally, must put at least 43 games on ESPN/ESPN2/ESPNU/ESPN Classic, and at least 20 games are broadcast regionally on what is known as the Big 12 Network - syndicated programming available on local stations (such as on WOI or Mediacom Connections in Iowa). Those third tier games - games that are usually of little interest - are games that for Iowa State were broadcast on the Cyclone Television Network.
Got all of that? Because it's essential to figure out what's going on.
So what is Fox bidding on?
Just that one little slice of second tier games. The previous contract had FOX paying $20 million a year for those rights. ABC/ESPN, in comparison, pays $60 million per year for first tier rights, and will through 2015-16. FOX will now reportedly pay $60-70 million a year, again, for second choice of football games. That $20 million was split 12 ways. The $60 million, or thereabouts, would be split 10 ways. Of course, television revenues are split unevenly, but the tripling in total revenue coupled with the fewer slices of the overall pie mean quite a bit more money for each school.
So what exactly does this mean for your average Big 12 school?
In the past, your hypothetical university garnering 1/12th of the television revenue would have seen the following in television revenues:
Total: $6.66 million, not counting any third-tier contract.
This, of course, is overgeneralized. Big 12 schools are compensated in concert with their television appearances. But it's roughly what a middle of the pack school in the Big 12 has been making.
If the new deal from FOX materializes, the breakdown looks like this:
Total: $12 million, not counting any third-tier contract.
Again, these numbers are a rough estimate and overgeneralized. A school like Texas will obviously make more due to uneven revenue sharing, and a school like Iowa State would make less. Of course, Texas will also make an additional $15 million a year alone from their new Longhorn Network, and Oklahoma will also make more through the new sale of their third tier rights. Revenues for third tier rights are not available, but it is believed Iowa State gets between somewhere over $1 million a year for their third tier rights from Learfield. (Of course, if those third tier rights were to become part of a nationally-available network, they could always come up for renegotiation, or at least be worth more the next time third-tier rights are up for bid.....). As of right now, SEC schools currently bring in around $17 million per year in television revenue, so the Big 12 still lags behind, but a comparable increase for first-tier rights would instantly make the Big 12 a hell of a lot more money.
But what of those third tier rights?
Turns out FOX wants them. FOX has been in talks with Learfield Sports, third-tier rights holder for Kansas State, Iowa State, Missouri, Oklahoma State, Texas A&M and Texas Tech, while IMG College holds rights at Baylor and Kansas. FOX is looking into aggregating those rights together, and then paying/partnering/negotiating with Learfield and IMG to broadcast that content. It would essentially be a Big 12 Network. It might even have that name. The channel, however, would have no home Texas or Oklahoma contests. It would be limited to the eight other schools. The current thinking is that FOX would flip one of its Fox College Sports channels (likely FCS Central) into a Big 12 channel, and it would essentially do the same thing that the Big 10 Network does.
What would be on this channel?
Not a whole lot of high-level content. It would likely include one home nonconference football game for each school (think UNI @ ISU), a half-dozen to a dozen men's basketball games per school (think CTN broadcasts), and increased coverage for all other sports (women's basketball, track and field, baseball, softball, etc.). Schools would likely be able to produce their own content as well as classic games involving the schools.
Would we get it?
If FOX follows through on flipping one of their Fox College Sports channels, it's already on Mediacom on the digital sports tier, making it a heck of a lot more likely that viewers in Iowa would get such a channel from the start. It's also why it was so important that Mediacom eventually picked up the Big Ten Network, as it has set a precedent for picking up a channel with local college sports ties. Would it be put on regular cable? Hopefully.
Does it bring in more money?
The Sports Business Journal doesn't seem to think it will immediately, but it's hard to imagine that it won't eventually turn into more money for the partner schools, especially with a school like Texas being able to sell their third-tier rights for $15 million a year. The third tier content may not increase a ton in value for member schools and the overall worth to Learfield and IMG, but it should likely result in at least a small increase in value.
What does it all mean?
The news that FOX is willing to ante up for the Big 12 is a good sign. They were one of the first to step into the fold during conference realignment. Dan Beebe's White Paper indicates that FOX wanted to help slow the process and wanted a piece of the Big 12:
Conversations with Fox indicate their bullishness about competing in the future for our rights, and they have already made overtures about their willingness to pay exponentially higher rights fees than those in our current agreements," Beebe wrote in the paper. "A primary driver of higher rights fees are competitors for the rights and all information is that there are more serious bidders about to enter the marketplace.
It turns out they weren't bluffing. And, if they want second and third tier rights, hopefully they will bid and drive up the first-tier rights. There has been a lot of conjecture that ESPN wanted to prevent the superconference as well and was willing to pay. When their first-tier deal runs out after 2015-16, we will truly know for sure. But this small step by FOX is great news for the conference, because it means that there are those out there willing to invest in the future security of the Big 12.
For Iowa State, it's just more and more money. It's no secret that Iowa State wants a self-sufficient athletics department, and a big increased in TV money will likely allow them to join Iowa in being off of state money. So, there's the money factor. And it's damn important. But it also should be good news to fans and viewers of Iowa State and the Big 12. The possibility (and promise) of every football and men's basketball game being available on television, as well as increased coverage of all other sports should go a long ways in aiding recruiting and exposure.
Just nine months ago, it would have been hard to believe we could be at this point. But somehow, Dan Beebe keeps pulling that rabbit out of his hat.