Preemptive strike

Per Street & Smith’s Sports Business Journal (h/t Mr. Westerdawg), ESPN is paying the SEC the sum of $2.25 billion over the next fifteen years for all of the remaining TV broadcast rights the conference didn’t sell to CBS.

Needless to say, that’s an amazing amount of money.

… Combined with the 15-year, $55 million a year that the SEC will receive from CBS for the over-the-air package of games (SportsBusiness Journal, Aug. 18-24), the conference will bring in an average of $205 million annually in media rights beginning in 2009-10 and running through fiscal 2025.

That’s nearly three times what the SEC had been receiving in TV revenue as part of its current deal, which runs out next spring. That amounted to around $70 million per year.

The new deals average out to approximately $17 million per school.  Even after the conference takes its own cut, it’s expected that the deal could wind up distributing $15 million to each school.  And that’s before any other revenues are shared, like bowl revenues (remember that the most recent annual distribution to the conference members was $127 million total).

So, yeah, that’s a helluva lot of money.  What’s in it for ESPN to lay out that kind of bread?  Basically, it cuts off rivals and potential rivals at the knees.

… The deal effectively ends any conversation of a conference network, and it knocks Raycom Sports (formerly Lincoln Financial and Jefferson Pilot) out of the SEC’s distribution business for the first time since 1986, when JP Sports began distributing SEC basketball.

It’s eat or be eaten time.

Speaking of which, I do have one little question about these deals.  Given their length and the financial outlay, how concerned do you think CBS and ESPN are now about an extended D-1 football playoff format devaluing the significance of regular season SEC games?

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UPDATE: As usual, Michael Elkon adds some perceptive thoughts, including this one:

These are massive TV deals for regular season telecasts. You think the revenue would be the same with a 16-team playoff? By resisting the urge to turn the sport into just another sport, college football (or at least the conference that represents college football in its highest [or most drunken] form) has cashed in.

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10 Comments

Filed under It's Just Bidness, SEC Football

10 responses to “Preemptive strike

  1. Jim

    Maybe they will reduce the price of football tickets since they have all this money. Its a great business when you pay next to nothing for the talent and can charge what you want to let someone watch it. Higher learning at is best.

  2. Pete Holiday

    “devaluing the significance of regular season SEC games?”

    If only that were actually true and not just a myth that the anti-playoff types propagate. It’s trivial to create a playoff system where the regular season matters, especially in a league of 120 teams.

  3. Somehow I doubt the two networks see it as trivial. ;)

    Besides, I think you can come up with a four or eight team playoff format that does little or no harm to the regular season.

  4. Ally

    This makes me nervous.

  5. NM

    Choice quote: “sports have a built-in, not recession-proof, but recession-resistant quality” — unless you’re Georgia Tech, I guess.

    I like it. It means ESPN has no choice but to promote the SEC, it means we’ll have at least as much or likely more national visibility than anybody else, and it means lots more money, which helps us stay on top. Works for me.

    …Of course the real question is, how long before we add USC, Ohio State, and a couple other marquee programs and put all the other conferences on permanent and unarguable second-tier status.

  6. Robert

    I don’t see this as a bad thing…

    But, I wonder how much the price of the ‘ESPN Game Plan’ will jump up to next year.

    I guess this means the SEC is now officially the WWL in sports? Sorry ABC.

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  8. S.E. Dawg

    This is good money but watch out for double the TV time outs during the games. Just a thought.

  9. Wolfman

    Yes…and all the weird start times. I’m terrified of them moving start times to 830am and 1140pm.

    And Senator, agreed on the 4 or 8 game playoff, but I doubt that the WWL begins to promote any sort of playoff whatsoever…until that pesky FOX contact expires.

    It makes me a little nervous too.

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