Category Archives: It’s Just Bidness

“Friday night football is beautiful,” he said, “and no one wants to disrupt that.”

Well, except for the Big Ten and its new television agreements.

After all, those $20 million bonuses to your programming director don’t pay themselves, boys.

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Filed under Big Ten Football, It's Just Bidness

The second greatest trick the devil ever pulled…

… was convincing Notre Dame to pony up an almost $19 million buyout of Charlie Weis’ contract.

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Filed under Charlie Weis Is A Big Fat..., It's Just Bidness, Notre Dame's Faint Echoes

Virtue is its own reward.

Man, the educating young minds the conference broadcast business is kicking some righteous ass these days.

Big Ten Conference commissioner Jim Delany is set to receive more than $20 million in future bonus payments, according to information in the conference’s new federal tax return and a comparison of that document to prior years’ returns.

Yep, everybody’s going broke.

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Filed under Big Ten Football, It's Just Bidness

“Last but certainly not least, Happy Mother’s Day!”

Greg McGarity wants you to know Butts-Mehre so can walk and chew gum at the same time.  So there.

And let’s hear it for the McGill Society ponying up more than $50 million towards improvements.  The reserve fund deeply appreciates y’all’s efforts.

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Filed under Georgia Football, It's Just Bidness

Amateurism’s new worth

If you’re looking for a silver lining in what ESPN’s current troubles may mean for the value of future college football broadcast rights, look no further than this.

The future front in the cable-digital war is a likely reduction in rights fees. For all but the most premium content, prices are likely to drop. One lawyer present for the negotiations chuckles when he recalls ESPN’s most recent NBA contract. “If that deal was being done today, it would look much different…. We’re talking 30%-less different.” That deal, mind you, was made 16 months ago.

In a world of fragmented viewership, professional leagues will try to make up the decline in revenue in other ways. That means finding new partners. (Amazon, Twitter and Verizon have all made recent deals to stream NFL games.) Leagues can—and will—reduce labor costs (that is, player salaries) when revenues fall. They can tinker with ticket pricing. They can attempt to penetrate new markets, as the NBA has in China and India.

College athletics, though, is different. For one, there are no player salaries to slash…

Well, how convenient.

What happens when the rights-fee bubble does burst? And what happens if student-athletes ever become salaried employees?

The antitrust exemption argument just wrote itself.  Thanks, Mickey!

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Filed under ESPN Is The Devil, It's Just Bidness, The NCAA

Today, in the relentless pursuit of excellence

In case you’re wondering what occupies the most space on Kirby Smart’s crowded plate after spring practice, let Jere Morehead explain:

“I think our program is on an upward trajectory. I’m getting ready to leave on a trip right now with Coach Smart to do some fundraising for the new end zone. That is certainly our priority this spring.”

It’s good to have priorities, I suppose.

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Filed under Georgia Football, It's Just Bidness

When it comes to certainty and the future, there’s death, taxes and…

the never-ending expectation of conference commissioners that the broadcast revenue gusher will keep flowing.

The easy hot take given these circumstances is that the sports media rights bubble will pop, and the money college leagues make from selling the broadcast rights to football and basketball will peak just before the Big Ten, Pac-12 and Big 12 deals expire in the middle of the next decade. The revenue that has fueled huge coaching salaries, a facilities arms race and angst over the size of the cut the majority of the labor force receives will slow or fall. Power 5 athletic directors will have to—gasp—manage money responsibly instead of simply relying on the next media rights bump to cover any overspending.

The reality is more complicated and less certain. Like newspapers before them, ESPN and Fox will grapple with disruption to their business model and ultimately may have to remake themselves if they want to continue to thrive in the new media landscape. But reflexively forecasting doom assumes television networks are the only entities that will bid on sports rights in the future*. That is almost certainly not going to be the case. “I really see a time when there are going to be a lot of players in the marketplace and there are going to be a lot of distribution methods,” Big 12 commissioner Bob Bowlsby said. “The unknown is how much is it all worth? I don’t think there’s anyone who legitimately knows what it’s going to be worth.”

*Don’t get hung up on the television-versus-Internet delivery issue. No, streaming isn’t as reliable on May 8, 2017, as cable or satellite service. Buffering remains a problem. But by May 8, 2023, the differences could be negligible.

Bowlsby is correct. No one knows. Not him. Not Big Ten commissioner Jim Delany. Not SEC commissioner Greg Sankey. Not Apple CEO—and Auburn grad—Tim Cook. The only thing we do know is that there is a limited number of major college football and basketball games available for sale and there is a built-in demand for them. How much that demand is worth depends on how many companies wind up bidding. “I don’t think anyone knows exactly what the landscape will look like or what health ESPN or Fox will have in 2023 when we’re negotiating or how significant a player a Twitter or a Facebook will be,” Pac-12 commissioner Larry Scott said. “My sense is that there will be more competition. There will be more and different types of players. And there will still be very limited and highly valuable sports properties.”

Commissioners and ADs look at tech giants as the white knights that could allow their leagues to keep growing revenues, but the question is whether a Google, an Apple, a Netflix or a Hulu would even want to get into the live sports business. If they did, it would be unwise to assume they would overpay simply because their market capitalizations dwarf those of the players in the marketplace now. The money could stay flat or drop even if the tech companies join the fray, but the leaders of college sports hope the competition for a limited resource might drive up the price. “Long-term, I’m very bullish on the value of premium sports rights,” Scott said. “I see more competitors. And frankly, competitors with bigger market cap than ESPN or Comcast or DirecTV. Some of these companies we’re talking about are huge by comparison. If they decide that sports is a vertical they want to get involved in in a big way, that’s good news for the Pac-12 or the NFL.”

Larry Scott sure knows how to drop words that make him sound like he’s got everything under control.  But notice that the key word in the last sentence of his quote is the first one.  Nothing’s happened yet.

What these guys are banking on, without any concrete evidence that it will come to fruition, is that if more capitalized competition arrives, it’s bound to spend even more money than ESPN and Fox already are, because… well, I’m not exactly sure why.  Maybe Big Jim can explain that to us.

Or these companies might kick the tires on sports rights and decide they don’t need them. Remember, they’re already wildly successful without live sports. This is the gamble Delany took when the Big Ten opted for six-year deals for its Tier 1 and Tier 2 rights. “There’s no doubt we’re in a disruptive environment,” Delany said. “There definitely is money and interest on the sideline. It really hasn’t emerged very much yet, but I’m sure that there is—whether it’s Apple or Google or Hulu or any number of companies.”

Delany is betting that demand for Big Ten football will be so valuable that the revenue from the next deals will outpace these deals. But he also has a hedge; the Big Ten Network’s deal with Fox runs until 2032. On the other end of the spectrum is the ACC, which allowed ESPN to lock up its rights until 2036 in return for getting a conference network that is scheduled to launch in 2019. “If you go shorter, you take out a little more risk,” Delany said. “But you also have a little more upside.”

In other words, these guys don’t have a fucking clue.

ESPN’s recent move to clear out a lot of talented journalists/reporters is more than just serving notice to shareholders that it has a plan to deal with its current numbers crunch.  It’s also a realization that the real value is in live content.  We tune in to watch games; for the most part, we’re indifferent to “The Sports Reporters”.  That’s where Mickey’s expense has to focus, then.

But here’s the thing.  If the WWL continues to pare down its operational expenses by whacking out everything other than sports broadcasts and still finds itself bleeding profit margin, there’s only one conclusion left to draw, and it’s that the overall business model isn’t what it used to be.  If that’s the new normal, to think that a shrewdly operated company like Apple, which makes massive bank as easily as we breath, is going to come in on a white horse and throw stupid money around to pull Larry Scott’s nuts out of the proverbial fire is a pipe dream.

… Every league is feeling it as the cable networks hemorrhage subscribers. An industry that has become accustomed to economic growth now has to grapple with the very real possibility of flat revenue or less revenue in the near future. Of course, the possibility is just as real that some deep-pocketed newcomers could swoop in from Silicon Valley and keep the money flowing. “We could be right, or we could be wrong,” Delany said. “History will tell us.”

Hey, if it blows up in their faces, at least Delany’s already written the epitaph.

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Filed under College Football, ESPN Is The Devil, It's Just Bidness