Archive for May, 2011

There’s a fairly well-known story about how Bobby Knight, who had coached Michael Jordan on the U.S. Olympic team in 1984, called up his friend and then-Portland Trailblazer GM Stu Inman prior to the NBA Draft that year to sell him on taking MJ with the second pick.  (It was assumed and unquestioned by everyone at that time that the Houston Rockets would take Hakeem Olajuwon at #1.)  Inman kept saying, “We need a center.” Knight responded, “Then draft Jordan and play him at center!

Inman didn’t heed Coach Knight’s advice and ended up taking Sam Bowie, leaving the Chicago Bulls to pick Jordan at #3.  We all know what has happened since then: a Bulls dynasty, millions of Nikes sold, the Shrug and even coming full circle years later with Greg Oden spending more time taking cell phone pictures than actually playing, the Bulls getting Derrick Rose with a 1.7% lottery chance and the Taj Majal teabagging Dwyane Wade last Sunday night.  The lesson is that in the draft for any sport, you should take the best player on the board regardless of perceived need or fit.

In the world of non-AQ schools, the best school on the board to move up to the AQ level is BYU (and I don’t believe there’s a close second).  The school has an athletic department whose revenue and size is right in line with other AQ schools, sells out a 63,725-seat football stadium consistently, travels extremely well for bowls, has a nationwide following among members of the LDS, and even boasts a top-level basketball program.  However, the two most geographically accessible AQ conferences for BYU don’t really want them (the Pac-12 on religious grounds and the Big 12 for the lack of financial need for Texas and friends).

Enter the Big East, where BYU pretty much delivers everything that the conference could possibly want in an expansion candidate… except that it’s a juuuuuuust a bit outside of the Northeast.  I’d compare it to one of those draft decisions where there’s a player on the board with all of the talent in the world but has a little reefer problem – it’s a 99% dream pick with a 1% glaring issue.

Still, it didn’t really surprise me that much that the Big East apparently had a cup of coffee (or maybe a can of caffeine-free Diet Coke) with BYU to see if the Cougars would entertain a football-only invite.  Who knows whether this will really lead to anything, but count me in as someone that likes this line of thinking for the Big East.  I’ve proposed the Big Country Conference in the past (a coast-to-coast football-only conference with the Big East football members as the pillars) along with expounding the value of BYU.  My position is that if the Big East really wants to expand for football, then it needs a ready-made school to plug-in as opposed to searching for potential or focusing on geography.  (I was pushing TCU for the Big East many months before they were publicly on the radar for the conference.)  The usual suspects such as Central Florida, East Carolina and Houston are a bit more geographically-friendly for the Big East compared to BYU, but nowhere near the same level in terms of history, fan base size and financial resources.

Now, is this a good idea for BYU?  As a newly minted independent, it’s guaranteed at least three games per year on ESPN worth $800,000 to $1.2 million per game.  That means $2.4 million in TV money annually from ESPN at a minimum and with attractive games on the future schedule with Notre Dame and Texas, BYU is probably looking at closer to the $4 million to $5 million range just for football TV rights, which is more than what the Big East football members are currently making from ESPN for both football and basketball (around $3 million per year).  Coupled with BYU TV and from a pure television contract perspective, BYU may very well be better off as an independent than joining the Big East at this time.

At the same time, the travel burden of being a western outpost in an Eastern-based conference is really on BYU as opposed to the rest of the Big East.  Is it all worth it in order to join an AQ conference?

I would unequivocally say yes.  That status in and of itself is invaluable in terms of recruiting, national perception and certain in terms of competing with in-state rival Utah (who just hit the lottery with the Pac-12′s new TV deal).  The Big East TV contract is due for at least a market-based increase in a couple of years. So, even if BYU’s ESPN money looks good right now, it may not look so hot compared to a new Big East deal.  Also, a 10-2 BYU in the Big East is probably going to a BCS bowl, whereas a 10-2 BYU as an independent is going to be scrambling around to find a second-tier bowl bid.  Finally, if BYU thinks that it would be a good idea to wait around to see if the Big 12 would expand down the road, that certainly isn’t a guarantee and even if the Big 12 really did want BYU, the school would actually be even more attractive as having had AQ status.  Offers for spots in AQ conferences are few and far between and it wouldn’t be wise for anyone from the non-AQ level to pass those up.

Now, I could understand if BYU won’t consider anything less than a full invite to the Big East… and if I’m running the Big East, I’d give it to them.  BYU is really the only realistic “big” move that the Big East could possibly make where they would provide a material increase in the value of the conference’s deals on both the football and basketball sides.  Therefore, despite the fact that a Big East-BYU marriage would stretch the conference far west, that geographic issue is far outweighed by everything else that the Cougars bring to the table.  It may not be a perfect fit, but the Big East and BYU are ultimately the best players on the board for each other.

(Follow Frank the Tank’s Slant on Twitter @frankthetank111 and Facebook)

(Image from byucougars.com)

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The Pac-12 is ready to announce a massive new television deal with Fox and ESPN worth $250 million annually.  (No one has been covering this story better than Jon Wilner of the San Jose Mercury News.)  I certainly have to give props to Pac-12 Commissioner Larry Scott here.  Up to this point, I’ve thought that he was smart and aggressive but more full of bluster with big ideas without necessarily the ability to implement them.  The amount of the Pac-12 deal, shows that the conference made a smart move in hiring from outside of the college administrator ranks.

Ultimately, the reasoning for a TV rights fee is akin to examining the price of a stock.  A portion of the price is going to be related to the market overall, another portion is connected to the industry sector, and there’s a final part that is based on the fundamentals of the individual company itself.  It wasn’t a surprise that the Pac-12 was able to raise its TV rights fees significantly, as the demand for sports programming in general has been skyrocketing over the past few months.  That’s a market-based factor that all sports entities negotiating new TV deals are benefiting from right now, which I examined in-depth in my last post.  What I didn’t expect was that the Pac-12 would vault itself to a position alongside the Big Ten and SEC in terms of TV revenue so quickly.  The Big Ten has the benefit of having the Big Ten Network that can take advantage of the market trends until its ABC/ESPN ends in 2016, but the SEC is locked into its CBS and ESPN deals until well into the next decade.  That doesn’t mean that the Pac-12 is inherently as valuable as either the Big Ten or SEC.  Indeed, the Big Ten and Pac-12 negotiated for the rights to their respective new conference championship games with Fox at virtually the same time.  Head-to-head, the Big Ten game garnered over $23 million per year, while the Pac-12 game received $14.5 million per year, so that gives you an idea of what the conferences are worth relative to each other when you take timing out of it.  My impression that the SEC championship game would be worth even more.  Still, it’s significant that the Pac-12 seems to have been able to pull away from the ACC and non-Texas/Oklahoma portion of the Big 12.

So, what are the fundamentals specific to the Pac-12 that led to this deal (as opposed to just the overall rising tide of sports fees)?  One important point that I’ve mentioned before but probably underestimated in the scheme of things is that the Pac-12 is the only conference with a BCS monopoly in its own footprint.  In fact, with the additions of Colorado and Utah, it’s the only BCS conference located in the entire Pacific and Rocky Mountain Time Zones.  That’s a pretty massive swath of area to effectively have all to yourself.  In contrast, all of the other BCS conferences compete with at least 2 other BCS conferences in their footprints.  For the the Big East in particular, it has to compete with all of the other BCS conferences in its footprint except for the Pac-12.

Another item to note is that Fox needed to retain the Pac-12 very badly for its owned-and-operated West Coast regional sports networks, especially FS West in the Los Angeles market.  FS West is suffering from the blow of losing its most valuable property of the Lakers next year, who are pouring salt in the wound by creating two competing networks (one English and the other Spanish) with Time Warner Cable.  Losing Pac-12 sports on top of that would have left FSN West to rely on the Clippers… and I don’t care how badass Blake Griffin might be (and he’s about as badass as one can be badass), but if I’m Rupert Murdoch, I’ll be damned if I run any organization that has to rely on the Clippers.  With ownership of FS Arizona and a minority interest Comcast SportsNet Bay Area, Fox had some heavy incentives to protect or expand its Pac-12 programming.

(Note that Fox’s owned-and-operated regional sports networks are heavily concentrated in California, Arizona, Texas, the Great Plains Midwest and the Southeast.  Looking at that lineup, it should come as no surprise why Fox paid up heavily for the Pac-12 and Big 12 TV rights and sent in a large bid for the ACC.  The Northeast markets, on the other hand, are largely the domain of Comcast RSNs with Fox largely being shut out.  This is instructive as to who might be (and not be) looking at the Big East’s TV rights down the road.)

ESPN expanding its relationship with the Pac-12 is a little more difficult to read.  Variety has indicated that the Pac-12 has agreed to provide 4 Thursday night and 4 Friday night football games per year to ESPN, so there seems to be a push from the Worldwide Leader to get more higher quality weeknight college football contests.  The Pac-12 also allows for late night games on Saturdays to compensate for the moves of Hawaii and Fresno State from the WAC to the MWC (which doesn’t show any games on ESPN).  Finally, there could be a return of a 11 pm Central Time Big Monday basketball time slot allocated to the Pac-12, which ESPN used to have for Big West or West Coast Conference games.  Overall, ESPN’s modus operandi may very well have been to ensure that neither Comcast nor Turner Sports would end up with the Pac-12, who could have been used as a cornerstone to really have beefed themselves up as legitimate college sports broadcast competitors.

It’s also a bit of a surprise that a Pac-12 network would be wholly-owned.  This is a good thing if the network can receive basic carriage, but could be a roadblock if there are any carriage disputes.  The Big Ten Network, which is 49% owned by Fox, was able to leverage its basic carriage with DirecTV (which was owned by Fox at the time of the launch of the BTN) to apply pressure on cable operators, while the MLB Network garnered one of the largest basic cable launches of any channel in history by offering minority stakes to several cable companies in exchange for carriage.  Those cable companies also provided capital start-up costs.  On the other end of the spectrum, the NFL Network (wholly-owned by the NFL) is still battling cable operators 8 years after it went on the air.  There seems to be a presumption that the Pac-12 wanted to have 100% ownership of a network, but I’m not so sure that’s the case with the amount of ramp-up costs involved and how critical basic cable carriage is for success.

Regardless, even if a conference network never even gets off the ground, I’m pretty sure the Pac-12 schools are acting like this right now.

(Follow Frank the Tank’s Slant on Twitter @frankthetank111 and Facebook)

(Image from Lehigh Valley Live)