The pie that no longer expands, a teaching moment for John Feinstein

How ’bout these March Madness apples:

… As it was calculating its future, CBS was hoping — but could not be sure — that the N.C.A.A. would exercise its option to eliminate the final three years of the deal and open bidding for a new long-term contract that would start in 2011.

Why would CBS want that?

… Central to CBS’s interest in paying ESPN to take over the tournament was what it owed the N.C.A.A. for the last three years of the $6 billion deal that started in 2003. CBS was obligated to pay $657 million in 2011, $710 million in 2012 and $765 million in 2013. Losses could have been at least $200 million a year.

Those are some mighty big losses… wait a minute – CBS’s interest in paying ESPN to take over the tournament?  WTF?

Yep, that’s the story the New York Times has to tell today.

CBS talked with ESPN about paying it to take the 2010 to 2013 tournaments off its hands, according to four executives with direct knowledge of the talks who were not authorized or willing to speak publicly.

The idea, initiated at the top levels of both news-media companies, was seriously considered but eventually discarded by Leslie Moonves, CBS’s chief executive; Robert A. Iger, chief executive of the Walt Disney Company, ESPN’s parent; and George W. Bodenheimer, the president of ESPN.

If it had occurred, the transaction would have been a fascinating episode in sports TV negotiations: a broadcaster, CBS, paying a rich cable competitor, ESPN, to end its association with an event that has been part of the foundation of CBS Sports since the 1980s.

“We live in unusual times,” said Neal Pilson, an industry consultant and former CBS Sports president.

You can say that again, brother.

Basically, the NCAA was bailed out by the corporate egos of CBS and Turner Sports.

… Instead of making a deal with ESPN, CBS decided it would be more profitable to share the tournament with Turner Sports and agreed last month to pay $10.8 billion from 2011 to 2024 under that arrangement.

CBS preferred that deal because it enabled the network to maintain its connection to the tournament while carrying fewer games and mitigating the huge losses it was forecasting over the final few years of its previous contract.

Turner’s games will be on TBS, TNT and truTV, and starting in 2016, CBS and TBS will alternate the Final Four and the national championship game, a major coup for a cable network.

So now we get to the crux of why the NCAA didn’t expand the tourney to 96 teams.  It wasn’t because of fan pressure, media disdain, concern about academics or scheduling, or any of the other high falutin’ reasons we saw bandied about.  The decision was made because none of the networks wanted to pay for a 96-team playoff.

If you’re a rational, sentient being who’s charged with the responsibility of having a position of authority with a major college conference, here’s the part of the story that has to be the most sobering:

… Subsequently, the bidding for the tournament turned into a one-on-one competition between CBS/Turner and ESPN.

To the surprise of many, ESPN lost, prompting speculation that the cable empire’s major contribution to the profitability of its parent, the Walt Disney Company, made its bidding more conservative. That stance may continue in coming bidding against NBC for the rights to the 2014 and 2016 Olympics.

If there’s a limit to what the market pays for a marquee postseason event – and the WWL seems to be making that pretty clear these days – and you’re convinced that it’s your product that generates most of the value (i.e., your programs are the ones that command much more of the viewership than the mid-majors do), what do you take from the latest round of negotiations?

Certainly not this.

… What’s more, the NCAA is a private organization. Membership is voluntary. It can make any rules it wants (and does) and any member has the right to drop out if it doesn’t like the rules. Aha, you say—the BCS schools will drop out and form their own organization. Not as easy as it sounds. For one thing, the basketball contract for the next 14 years is with the NCAA. And, even if they formed their own superpower tournament the magic of the tournament would be completely lost. Butler makes the NCAA Tournament a must-see event. So does Cornell. The superpowers are semi-pro teams with zero romance attached to them other than by their own fans. The BCS would be cutting off its nose to spite its face if it went rogue. The easiest and best way would be to go kicking and screaming into an incredibly lucrative—for all—football tournament.

Hell, no.  If you’re Jim Delany, you’re thinking the exact opposite.  Butler and Cornell are stealing money from you.

Once you come to the realization that the pie isn’t going to grow past a certain point, the logic driven by selfish interest becomes inevitable.  Let’s just say that my skepticism about the possibility of significant conference realignment and the effect it would have on D-1 sports has shrunk this morning.


Filed under BCS/Playoffs, It's Just Bidness, The NCAA

3 responses to “The pie that no longer expands, a teaching moment for John Feinstein

  1. Just made my morning to read that. ESPN had a shot to get the NCAA tourney and they didn’t want it. They tightened their pockets as to not overbid for future rights and CBS had to bring in Turner to absorb some of the cost because its not a big enough money maker to warrant the asking price on its own.

    If the “super conference” re-alignment happens how in the hell will CBS get out of this deal and what sort of shiteatin’ grin will ESPN have carrying the teams everyone wants to see.


  2. The Realist

    The basketball deal would not have to be matched for the power conferences… only their allotment. So, ESPN wouldn’t have to match the eleven billion dollars… only the portion that would normally go to the power conference teams for those athletic departments to break even on the decision. Giving each team one dollar more would give them incentive to break free and give ESPN complete world domination… at a fraction of the current market price.


  3. Cojones

    Anything from Delany should be consigned to the BS pit. He is not our friend.