Monday, August 24, 2009

Addendum to the C-USA discussion

I wanted to share a comment and interesting discussion point that was brought up regarding the C-USA analysis by a poster on MWCboard

One significant omission from your CUSA discussion.

Did you ever wonder why ESPN surrendered exclusivity at the very time that CUSA was weakened by the Big East raid? I could see surrendering something as a concession to strength but as a concession to weakness? Intuitively at least, that makes no sense. So here's the deal...

ESPN basically messed up and, in the CUSA contract, failed to protect
their right to cancel or renegotiate the contract if the membership changed --
which obviously it did when the Big East raided them. If they hadn't left that
out of the contract, then CSTV never would have entered the picture. The ability
that CUSA had to work with both networks wasn't a superior television
attractiveness to the other non-AQ conferences, but an inadvertently strong
negotiating position. ESPN wanted to limit their expenditures for CUSA so they
reached an agreement with CUSA requiring them to broadcast the same number of
games, all on ESPN/ESPN2, but for far less money. And in exchange for that, they
let CUSA work with CSTV to broadcast more games -- enough more games that CUSA was made whole financially.

So it was a win-win-win situation for all parties. ESPN cut their payments to CUSA -- but had to give up exclusivity to do so. In gaining CUSA, CSTV got more product -- which they desperately needed in their infancy. And CUSA got more exposure for roughly the same money and stayed in the good graces of ESPN doing it.

Which brings us to today. My expectation is that ESPN will now require exclusivity and CUSA will have to make a choice between ESPN and CBSC. CBSC will probably still pay more than ESPN will, and will probably give them better broadcast times, so I'm guessing CUSA will go with CBSC. With Memphis basketball suddenly in trouble (I'm referring mostly to the loss of the HC) and the economy shot, I can't imagine that they deserve more than the WAC gets -- but they will probably get a little more anyway.

But the per school / per year income from a CBSC contract should plummet -- perhaps by more than 50% from what they get currently from ESPN/CBSC. How much will probably depend upon how many football games a year they want.

And my response:

It's a fair question Yoda. ESPN did have the DOJ sniffing around many of their
contracts because of their practice of warehousing games from many conferences
(airing 1-2 games and holding the rest from being sold to another network). Karl
Benson (WAC), Rick Chryst (MAC) and others were interviewed by the DOJ (don't
know if C-USA's commissioner was). ESPN made the announcement for ESPNU in
September of 2004 and one would assume that ESPN made it known to C-USA that
they would have a place here if they so desired. I think I remember reading in
Sports Business Journal that ESPN, like they did with the WAC, said that they'd
put games on ESPNU as long as ESPN didn't have to pay anything extra.

I think ESPN may have been dealing with an outside force watching over them (DOJ) and I think its possible that the external force's presence is what led ESPN to
give up exclusivity.

Now I said its feasible. Whether it actually happened like that is another story.

As a postscript, it is a great question. Why did ESPN give up exclusivity to C-USA? Was it a mistake or loophole that C-USA took advantage of? Was the Department of Justice sniffing into ESPN's business deals with college conferences and was this a concession ESPN had to make? Was CSTV making noise that they would expose something in the negotiations to prove that ESPN was going to hold C-USA's inventory hostage?

Fact is that we're 2/3rd of the way through the contract, ESPNU is now entering its fifth season of televising games and CSTV became CBS College Sports and in my opinion, looks far less amateurish in its production values than it did four years ago. But its a great discussion.

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