Big East TV Rights: Where do we go? -- Part One

EDIT: An incorrect rights fee was used below.  Along with some really bad math on my part.  I have used strikethrough where appropriate to acknowledge my changes.

Note: In interest of disclosure, I'm a Syracuse fan.  Not a graduate of the university, but a fan.  Better to get that out up front.

With five of the AQ conferences locked up for at least the next five years, its time to look at the Big East.  Right now they are the lowest paid conference on a per school basis in football, and the hybrid nature of their conference forces them to sign separate deals governing TV for football and men's basketball, instead of all-encompassing deals.

Football drives the majority of the conference TV deals these days.  Unfortunately for the Big East, its not their strength.  While the conference does regularly finish in the top six when ranking conferences using various statistical and computer models, it has several subjective and objective measures working against it.  In football it is the AQ conference that provides the lowest number of conference games (28, in 2012 that increases to 36 with the addition of TCU but is still lowest) and is the only conference not tied to a BCS bowl game.  And in the eyes of the media, fair or not, it is considered the weakest conference of the six and routinely suggested for demotion in favor of the MWC or whomever catches the eye of the media.

Basketball is a vastly different story.  At 16 teams, it delivers a ton of value to TV partners with 18 conferences games per team (I believe the number is 144 conference games) and provides several quality OOC games.  They delivered a high water mark of 11 teams into the NCAA tournament this year and while several teams were upset early, the conference does house the national champion in UConn (UConn's worthiness based on NCAA violations is another story for another time, and its been debated thoroughly through the media already).

Sports Business Daily provided a pair of great articles recently on rights negotiations.  The 1st dealt with ESPN floating an offer to the conference for all existing rights the network has for a high water mark of $130 million.  I'm told this is an offer for both football and basketball and not just towards one sport or the other.  The 2nd article was on the Pac-12 negotiations and how FOX & ESPN were able to hold off Comcast, who was a strong bidder for Pac-12 rights.

With ESPN offering this extension at a time while the Big East is still under contract, it is testing the conference to see if it will hold off and allow its rights to go through the open market and how much it values its relationship with ESPN.

There's a few key issues for the conference to consider too:

1. Financial - The football conference members make around $2 $3.47 million per year from ESPN (this does not include any additional money from CBS, who pays the conference around $9 million on a per year basis for just basketball).  I assumed that the ESPN money is divided up where 2/3 of the money is divided up among the football members ($13.3m $22.2m out of $20m $33.3m), then the rest is divided among all 16 members equally.  When coupled with the CBS money, its around $5.3 $4 million for the football playing members, $3.7 $1.25 million for those not playing football in conference.  While that is a great number for the non-football members, the "all sports" members number is around 41% 33% of the revenue that the new ESPN contract will generate for the ACC.
2. Exposure - The football members now have a interesting view in to the future with the Pac-12.  The current contract allows for Big East games to be played Wednesday-Sunday.  With the exception of the Sunday of Labor Day weekend, ESPN has not televised a Sunday night Big East game since 2008 (UConn @ USF, 11/23/08).  But Thursdays and Fridays, particularly Fridays, have become a Big East staple with at least four Big East telecasts on Fridays nights, excluding Black Fridays.  Now that the Big East isn't the only AQ conference playing on Fridays and that their Thursday night appearances have slightly decreased, is ESPN still the place to be?  For Saturday games, the appearances on ABC are minimal and many times are not conference games.  ESPN/ESPN2 in-season appearances are rare with the exception of late in the season. 
   
   On the basketball side, things couldn't be better.  Big Monday is the flagship night and due to the flexible nature of scheduling with the conference and the arenas that they play in, Big East basketball can be seen nearly every day of the week on ESPN/ESPN2.  ESPNU typically has 2-3 conference games each week and the syndication games are easy to find.  The conference tournament is televised nationally and up until the 13th-16th place teams' additions into the tournament, was touted as the only tournament to be exclusively televised on the main ESPN channel.  The championship holds the key 9pm ET slot on Saturday of Championship Week and gets a full one hour preview, so it can be inferred that ESPN treats this game as their crown jewel, even with the ACC & SEC games the next day.
   
   On the CBS side, the games are usually national and CBS & ESPN often work with the conference to pick the best matchups for TV and are involved in who are the "mirror" opponents for a given season (which teams will play home-home).
3. Content ownership and visibility - Over each of the past five AQ conference negotiations, there have been various types of use of third tier content.  This is content that the major networks typically don't want and conferences have found ways to monetize that content, in addition to content aired nationally.
   
   * ACC - All content now owned by ESPN, but a greater amount of sublicensing to Raycom for airing on regional cable and over-the-air networks (two separate packages).
   * Big Ten - Big Ten Network. 51% owned by the conference, 49% owned by FOX Sports Media Group
   * Big 12 - FOX Sports Media Group purchased more football games than ever for national cable telecasts, but now schools will have one football game per year that they can sell independently on a regional basis.  Basketball has had the ability to do 3rd tier packages of games.
   * Pac-12 - Pac-12 Media Enterprises, which will have both digital and television components to it owned by the conference 100%.
   * SEC - a mix of the ACC and Big 12 where there will be ESPN owned regional content, sublicensed content to regional cable networks, plus the ability to take football/basketball to regional partners.  In addition, the SEC is able to stream freely or sell digital copies of its games because it owns the copyright to its games.
   
   The Big East today is close to the ACC's model, without the sublicensing of regional content to Raycom.  ESPN takes care of production and finding outlets for the games to air.  The conference receives no additional rights fees; it is part of the existing deal with ESPN.
   
   Another pair of item to consider is ESPNU and ESPN3.com.  When the Big East negotiated their deals, ESPNU and ESPN3.com weren't in nearly as many homes as today.  ESPNU wasn't on many highly viewed tiers but Time Warner, DirecTV and Comcast has all placed it on a highly viewed digital tier (in some places, it swapped spots with ESPN Classic).  ESPN3, back then known as ESPN360, had limited reach, but with Time Warner signing on last year, the online channel has the ability to reach at least 60 million homes.

So where should the conference go?  Renegotiate with ESPN?  Hold out and see what suitors are in the market in a couple years?  My next entry will discuss the options.