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SBJ/September 26-October 2, 2011/CollegesPrint All
Just three weeks into a new TV deal that already is considered well below market value, the Atlantic Coast Conference is getting a mulligan.
The conference is adding Big East Conference schools Syracuse and Pittsburgh, which will give it another crack at negotiating its media rights deal with ESPN. This time, the ACC expects to do much better than its current deal, which went into effect this football season.
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John Swofford saw the marketplace change after doing the ACC’s latest TV deal.
“The marketplace certainly has changed since we did our deal,” Swofford said.
The ACC’s contract with ESPN, which is valued at $155 million a year, contains a standard line called a “composition clause” that allows either the conference or ESPN to reopen the deal if membership increases or decreases by at least two schools. The conference or the network can act on that clause any time the conference’s membership changes by at least two schools.
The agreement does not permit the ACC to take its rights to the open market. But the addition of two schools does create the opportunity for a new negotiation and, undoubtedly, more money. If the two sides cannot come to an agreement, the deal would go to an arbitrator.
Swofford said he looks forward to meeting with ESPN soon, although he didn’t put a timetable on it. It’s still unclear when Syracuse and Pittsburgh will join the conference, which is when a new deal likely would kick in. Big East bylaws mandate that they have to wait 27 months before departing, but reports have indicated that the schools will negotiate with the conference to leave sooner.
It’s also unclear whether the ACC will add two more schools, taking its membership to 16, which also would affect any new deal.
Swofford was careful to refer to ESPN as the conference’s “partner” on several occasions throughout an interview with SportsBusiness Journal last week and said he expects the new round of talks to go smoothly. He clearly has expectations, though.
When asked if he anticipates the ACC’s per-school revenue of $12.9 million a year to increase from the current deal, Swofford said, “The simple answer is yes. We expect to do better than our schools staying even.”
In a statement sent to SportsBusiness Journal, ESPN said: “Conversations continue with our conference partners regarding conference composition clauses in our existing contracts. We are looking forward to discussions with the ACC.”
Officials representing ACC schools wouldn’t say exactly how much more money they expect, but industry executives suggest that the ACC’s new contract could increase in value by as much as $2 million per school per year, which would make the overall conference deal worth nearly $210 million a year.
The conference, of course, expects to do better, and it will use other conference deals as a gauge. The Pac-12 and Big Ten are at the top of the list, with media deals that average close to $21 million for each school annually. The SEC’s deal averages out to $17.1 million per school per year.
Even the beleaguered Big 12, which is trying to weather its latest round of defections, receives more per school than the ACC on average. The Big 12’s $150 million a year from separate deals with Fox and ESPN averages out to $15 million a school when divided by the 10 schools.
The Big East was scheduled to take its media rights to the open market next year, but its current instability could change that. In May, the Big East turned down an extension offer from ESPN that would have paid it $130 million a year. It’s not certain what the per-school allocation would have been in that deal because not all of the Big East’s members play football.
A new deal, for example, that would put the ACC’s 14 schools on par annually with the SEC schools would have to pay the conference $240 million a year, although industry experts question whether the ACC’s football can command that kind of money. Even when the deal was signed last year, the ACC’s contract with ESPN at $155 million annually fell far short of the SEC’s $205 million a year from CBS and ESPN, signed in 2008.
It was dwarfed even further this past May when the Pac-12 hammered out a deal for 12 years at $250 million a year, or $3 billion overall, establishing a new market for conference rights (see chart).
But Syracuse and Pittsburgh bring respectable football and elite basketball programs into the ACC, while also introducing new markets. Pittsburgh represents the nation’s 24th-largest TV market, while Syracuse ranks 84th.
“We really like the way these schools close the geographical gap,” Swofford said of the distance between the ACC’s base of schools in the south and Boston College. “That’s a real plus for us.”
One way for the ACC to convince ESPN to increase its rights fee would be to offer more rights in exchange. It’s likely that ESPN would want to extend the ACC’s deal by several more years, sources said.
“We’re going to sit down with ESPN and renegotiate as partners,” Swofford said. “We’ll see where that leads us, but we’re confident it will lead us to a good place. If we couldn’t agree — and that would be a big ‘if’ — it could go to arbitration. … Things need to settle down a bit [across the college landscape], but we’ll sit down soon.”
Swofford in the past has used IMG’s Barry Frank as a media consultant to the conference. He said no decisions have been made on a consultant for the next round of talks.
Wasserman Media Group’s Dean Jordan also has worked on media research for the conference.
The clause in the ACC-ESPN contract that permits the deal to be reopened is standard among college conferences. The SEC is expected to exercise its right to a new deal if it adds Texas A&M and another school, as reported. ESPN and Fox, meanwhile, could void the Big 12’s contract or ask the conference to give it a reduction in fees if it loses teams. Network sources say that is an unlikely option, especially if Texas remains in the conference.
The ACC-ESPN deal that went into effect this season pays about $4 million in new media revenue for each existing ACC school. Three percent escalators are built in annually.
HISTORY LESSON: Super-conference concept rooted in 1990 proposal.
It’s a mid-September afternoon inside Northwestern University’s athletic department, and staff members are throwing themselves an impromptu party after posting ticket sales marks not seen since the football team went to the Rose Bowl in 1996.
Having success in a competitive market like Chicago is no easy task. Northwestern is competing for attention, and dollars, against some 30 other professional and minor league teams and schools all located within 90 miles of the city. Jim Phillips, who came to NU as athletic director in 2008, has aggressively worked to boost the school’s athletic profile.
“We are in a crowded market,” Phillips said from his office overlooking the football team’s practice field. “The key was to begin to act and think of ourselves as a professional sports organization.”
The schools gained exposure for their nationally televised game at Wrigley Field last year.
“From my view, there is a sense that we are underbranded in Chicago,” said Mike Thomas, the newly hired athletic director at Illinois. “In the past, it hasn’t been a priority.”
So as the two schools look ahead to Saturday, when their football teams meet in Champaign, Ill., for their annual football rivalry game, both are looking at their state’s prime market, as well. And while their branding strategies and their plans for attacking the Chicago market are different, the goal of the two schools is the same: more local relevance — and revenue.
The Illini’s Chicago-based marketing effort will look to draw on the school’s massive local alumni base for added ticket, merchandise and sponsorship sales. Northwestern’s desired marketing success is pinned on attracting fans and sponsors from far beyond its smaller Chicago alumni base.
Both schools profited in publicity from last year’s nationally hyped football game at Wrigley Field, a revenue-enhancing home game for Northwestern but a touchstone of exposure for both programs. ESPN’s “College GameDay” did its traveling road show from outside the ballpark, and both the talk and sight of a football field on Wrigley’s grounds drew national coverage — including when tight quarters forced a rules adjustment that resulted in the game being played toward only one end zone.
The differences in the two schools are as wide as the 150 miles separating their campuses.
Illinois is the state’s largest public university, with 44,000 undergraduates, and it has a giant, 220,000-member Chicago-area alumni base. Of those 220,000 alumni, more than 65 percent earn more than $100,000 annually. Eighty-five percent of the school’s 44,000 students are from the Chicago area, according to Illinois officials.
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Illinois’ Thomas and Northwestern’s Phillips are each aiming to tap Chicago as a revenue source.
That’s why Northwestern, also lacking the draw from consistent success in major college sports — NU is one of only a handful of schools never to have played in the NCAA basketball tournament — has spent the past year pitching itself as “Chicago’s Big Ten Team,” the tag line of a seven-figure print, radio and billboard marketing campaign.
To draw more interest among casual fans, the school is beefing up its nonconference football schedule. Home-and-home games with Notre Dame, California and Stanford are planned for future seasons. It also has invested heavily in overhauling its athletic department as it continues a strategic effort to attract more revenue.
Previously, the athletic department marketed itself mostly by sitting back and waiting for the phone to ring in its sales offices.
“It was more of an operational approach,” Phillips said.
Northwestern’s strategy now includes not only its “Chicago’s Big Ten Team” marketing effort, but also a major investment in the athletic department’s external strategy that has brought forth the hiring of 16 new full-time staff members, including Mike Polisky, senior associate athletics director for external affairs, who came on board in 2009 to bolster the branding effort. The new hires also include eight additional season-ticket sales representatives and two marketing staffers for a total of 30 employees working on the department’s external business efforts.
Polisky, who was president of the AHL’s Chicago Wolves and AFL’s Chicago Rush before joining NU, had previously never worked in a college athletic department — exactly the qualities Phillips was looking for as he pushed to hire someone familiar with grinding out sales in the Chicago market.
The school earlier this year signed both head football coach Pat Fitzgerald (a former NU player) and Phillips to deals through 2020, signaling its commitment to stability in the athletic department. Also due shortly is a study by sports facilities architect Populous that will recommend improvements and changes to NU’s facilities.
“The numbers don’t lie, and the alumni numbers are never going to change,” Phillips said. “We can’t rely on our alumni base. We want to latch on to folks with interest in sports. We are in their backyard.”
While Northwestern, as a private school, does not make public its specific athletic department finances, it had a balanced athletic budget of $48.9 million in 2010, according to U.S. Department of Education’s Equity in Athletics Data Analysis. School officials said combined season tickets from the football and basketball programs have increased about 55 percent in the past year. Attendance last year at 47,000-seat Ryan Field rose to 36,000 from 24,000, the largest same-stadium growth in the NCAA, according to school officials.
Sponsorship revenue more than doubled in the past year, with NU now having deals with about 50 sponsors.
Despite those gains, Phillips is not about to ease his push to raise NU’s athletic department
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Northwestern points to its Chicago proximity, while Illinois enjoys a large Windy City fan base.
“There are no quick fixes,” Phillips said. “It is about doing it over a long period of time.”
Illinois is working to build from an athletic budget that for 2011-12 reached $70 million. While Thomas would not disclose specifics, he said he expects the Illini’s Chicago campaign to be rolled out “sooner rather than later.”
The university recently hired former Chicago Cubs executive Matt Wszolek for the newly created position of associate director of development and corporate partnerships. Wszolek works out of Illinois’ downtown Chicago satellite offices and will be looking to add to the school’s current total of about 60 athletic department sponsors. About half of those partners have a Chicago presence.
Illinois does not have a deal with an outside agency like NU’s deal with Learfield, but whether the school should bring in an agency is a subject of review, said Thomas, who came to Illinois last month from the University of Cincinnati, where he had been AD since 2005.
Beyond any direct marketing efforts, the Illini this winter will again look for a Chicago bump through the men’s basketball team. Illinois hosts UNLV on Dec. 17 at the United Center in what has become an annual nonconference effort for the Illini — hosting a school in Chicago in hopes of appealing to alumni and other fans in the major market.
“Our messaging,” Wszolek said, “is that we are all Illini. We are not just a Champaign brand.”
When Matt Wszolek was a sales and marketing executive with the Chicago Cubs, he wore his emotions on the flagpole in front of his house.
If the University of Illinois flag was flying, it meant the Illini had won their most recent football or basketball game. If it wasn’t, Wszolek was mourning a loss.
In that same Chicagoland market, Northwestern employs Mike Polisky as senior associate athletics director for external affairs. Polisky marketed and ran Chicago franchises in the Arena Football League and the American Hockey League before joining the Wildcats as their chief marketer last year.
There are other examples around the country. West Virginia AD Oliver Luck was president of the MLS Houston Dynamo. Steve Patterson, a former NBA executive with the Houston Rockets and Portland Trail Blazers, was hired this summer as the new COO for Arizona State athletics.
“I think what you’re seeing is that a lot of universities are similarly positioned, in terms of facing a lot of competition for the dollars in the marketplace,” said Polisky, an Iowa alum who ran the AFL’s Chicago Rush and the AHL’s Chicago Wolves before going to Northwestern. “You can get into a mode of sitting back and letting things happen or you can get more aggressive and compete. For me, my background was especially appropriate because there are 30-some professional and collegiate teams in the Chicagoland area, there are great cultural and entertainment options — there’s a heck of a lot of competition.”
For Wszolek, he entered the college space at Illinois last year with the perception that marketers were sometimes handcuffed with restrictions. What he found, instead, was “fertile ground.”
“There’s this misnomer that you have all of this bureaucracy, but really, I’m sitting down with companies basically with a blank sheet of paper,” Wszolek said. “You want in-stadium, traditional media, social media, activation that targets the student population, activation aimed at alumni. … There is so much tailoring you can do, and that’s huge in this day and age of customization.”
Unlike most schools that outsource their multimedia and marketing rights — Northwestern partners with Learfield Sports — the Illini handle all of their marketing and sponsorships in-house. That puts Wszolek on the front lines in Chicago against a slew of competitors. But what he learned with the Cubs, who have precious little signage available in Wrigley Field compared with most MLB teams, is to do more with less. That meant developing promotional programs and marketplace activation that originated outside of Wrigley, away from the three-hour baseball game.
Similarly, Wszolek has tried to uncover marketing opportunities at Illinois, where student athletes are off-limits and stadium signage is limited, that might not be traditional in nature.
“Think about what you can do with a sweepstakes winner boarding a basketball team charter to fly to Cancun for a tournament with the team,” he said of a concept he’s trying to implement at Illinois. “There’s huge value there, and there are all kinds of experiential opportunities that you can showcase with the Illinois ‘I’ on them.”
Editor's note: This story is updated from the print edition.
With collegiate athletics facing an ever-changing business landscape, San Diego-based JMI Sports, the firm that planned and oversaw the building of Petco Park, is creating a college division that will offer a broad range of consulting and services to athletic departments.
Jeff Schemmel, the former athletic director at San Diego State University and a veteran athletic administrator, has been hired by JMI to be managing director of the new college division. The firm also has signed the University of Houston, which is working on a plan for a new football stadium and upgrades to its basketball arena, as a client. JMI will work with the Cougars’ administration on a variety of operational and Title IX issues as well.
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Former San Diego State AD Jeff Schemmel will head the operation.
In addition to JMI’s core competency in facilities and development, the college division will work with athletic departments on ticket sales strategies, budgeting, compliance, legal, gender equity, coach and administrator searches, event management and revenue generation.
Among the key consultants for JMI will be Chuck Neinas, the interim commissioner of the Big 12 Conference and one of the industry’s leading coaching-search coordinators. Neinas, who was selected by the Big 12 last week as Dan Beebe departed, will assist school clients with coaching and AD searches, something he has done previously through his own business, Neinas Sports Services. JMI also has secured former NCAA President Cedric Dempsey for its team of advisers. Dempsey, 79, has been a consultant to institutions since he departed the NCAA in 2002.
“We want to take the valuable lessons we’ve learned off the shelf and take them to campuses,” Judson said. “Having worked on projects in the college business, we’ve seen the challenges that athletic departments face and they need to be addressed. We can come in with our group of experts and provide answers to their challenges.”
JMI has assembled a panel of 17 consultants who are current or former college administrators or coaches. They will take on projects as JMI secures new clients. Among those consultants are Neinas, Dempsey, former Oregon AD Pat Kilkenny and former UCLA chancellor and former Florida President Charles Young. Among the sitting ADs on the advisory team are Texas’ DeLoss Dodds, UC San Diego’s Earl Edwards and UNC Charlotte’s Judy Rose, while sitting commissioners include Conference USA’s Britton Banowsky and the Mountain West’s Craig Thompson.
The list of advisers is rich with relationships that go back to Schemmel, who ran track at Kansas State for Dodds. Schemmel also was hired at San Diego State after a search that Neinas led for the school.
Former administrators will be direct consultants to the school clients. Current administrators, to prevent a conflict of interest, will work more as general advisers to the company.
Consultants will be paid on a project-by-project basis.
“The reason our team of advisers is so diverse is that we wanted to take the best people and put them under one roof,” Schemmel said. “It provides a one-stop shop where schools can go if they have an infractions case, an issue with Title IX or a coaching search.”
Schemmel and Judson view JMI as more of a complement than a competitor to the rights holder businesses like Learfield Sports and IMG College.
One area where JMI could find itself competing is in ticket sales, a function of the athletic department that is being outsourced on a growing basis to companies like The Aspire Group and IMG College.
“You almost have to outsource these days as an administrator to keep up with what life is,” Neinas said. “In ticketing, for example, who thought there would be a StubHub? This business changes so quickly.”
Schemmel met JMI’s co-founders, Judson and Moores, when he was AD at San Diego State. Schemmel worked for the Aztecs from 2005 to ’09 before resigning under a cloud of scandal.
San Diego State investigated claims that Schemmel used his school credit card to pay for expenses related to an alleged affair he was having with a woman in Alabama. The school concluded that Schemmel “disappointed the university” by improperly using state funds, said Stephen Weber, SDSU’s president, in 2009. Weber at the time described Schemmel’s actions as “tragic on a personal level and an institutional level.”
Judson said he had full faith that Schemmel’s unseemly departure from SDSU would not hinder his ability to bring in new business.
“John and I have known Jeff a long time and we admire him for his expertise, his leadership skills and his work ethic,” Judson said. “We know the passion he has for this business and the respect that people have for him.”
The Pac-12 Conference has hired a team of experts to produce its first football championship.
Unlike other FBS conferences where championship games are awarded through competitive bids, the Pac-12 will stage its title game at the home stadium of the divisional champion with the best record in conference games. Depending on how the season unfolds, the site may not be decided until five days before the Dec. 2 championship. If the Pac-12’s two divisional champions have the same conference record, the final BCS standings released Nov. 27 would serve as the tiebreaker to identify which stadium will play host to the game.
The group will start making site visits to 11 stadiums next month. They don’t have to visit Los Angeles Memorial Coliseum because Southern Cal, its tenant, is ineligible for the championship game. As the season progresses, the group will focus on the five to six schools with the best chance to compete for the conference title, Steeg said.
One issue involves signage. For the title game, the Pac-12 requires that all existing advertising inside the stadium gates be replaced with signs displaying brands of the event’s four founding sponsors. (Those deals have not been announced).
It could be tricky should California or Washington reach the title game. This season, those two schools play home games at AT&T Park and CenturyLink Field, respectively, while their on-campus stadiums undergo renovations. Those major league facilities have more corporate signs than a typical college football facility and the Pac-12 would have to work around those deals, Steeg said.
In addition, Rose Bowl Stadium, home of UCLA, has new video boards with advertising that must remain exposed, Steeg said.
Gameday Merchandising is handling both on-site retail operation and wholesale distribution, and setting up shop on short notice will not be an issue, said Alan Fey, Gameday’s president. The Denver-based firm runs retail at Cal and Oregon State and manages team stores in the Pac-12 territory of Phoenix for the Diamondbacks and Suns.
The Pac-12’s other title game partners include Big Screen Networks, Infinite Scale Design Group, Shoreline Publishing Group, Wide Angle Productions for game entertainment, SparkyJax for event production and Weldon, Williams and Lick for ticketing.
Super Bowl field director Ed Mangan is in charge of field services and Delta Air Lines will provide the team charters. Paul Olden, public address announcer for the New York Yankees, will handle the same duties for the Pac-12 championship.
The idea was to create a super conference of 16 schools overlapping states from the Northeast through the South. Eventually, according to this plan, there would be four super conferences that blanketed the country, and their champions would come together in a playoff to decide the national champ in college football.
“Developing the Super Conference” was the name of the booklet that first proposed the idea in 1990, and its 240 pages held the future of college athletics. It’s just that no one knew how long it would take to get there.
That plan, the first to suggest the super-conference model as the best way to maximize a league’s value, was written by Charlotte-based Raycom Sports for the now-defunct Metro Conference. From that, the concept of a super conference and its merits were born. Based on where conference expansion now appears to be headed, it was an idea well ahead of its time.
It was January 1990 when the Metro Conference commissioned Raycom Sports, its media partner, to craft a plan that would help solidify the league’s future. At the time, institutions came and went from the Metro, which ranged from six to nine schools during its run from 1975 to 1995. It wasn’t unlike the fluidity that the current-day Big East has experienced in recent years.
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Says Raycom Sports CEO Ken Haines, with the original plan: “We felt like the idea would be … implemented by all of the major conferences. We just didn’t know when.”
McFillen asked Raycom how to do that.
Raycom, the dominant TV production company and syndicator of that day, had deals with the Big Eight, Southwest Conference, Big Ten and ACC. It spent six months developing the super-conference model, taking into account TV households, conference footprint, alumni bases, regional rivalries and institutional compatibility. The 240 pages included everything from mock schedules and average attendance in football to SAT scores for each school.
Raycom’s plan called for the Metro to expand to 16 football-playing schools with two eight-team divisions or four four-team divisions, similar to what has been discussed by the ACC, the Pac-12 and others in recent weeks. It was compelling enough that at one point that spring in 1990, presidents and ADs from all 16 schools met in Dallas to talk it through.
“It would have changed the face of college athletics,” said Dave Hart, who attended that meeting as the AD at East Carolina, and now serves as the AD at Tennessee. “But the presidents just couldn’t get their arms around it. There were several people who understood the vision and were really excited, but they were outnumbered by those who were just terrified of something so radical. Nobody had ever heard of a super conference before.”
According to Raycom’s plan, the Metro’s members would have come from the North (Boston College, Syracuse, Pittsburgh), the South (Miami, Florida State, South Carolina) and moved west through the middle of the country (Louisville, Memphis, Cincinnati). The original plan also included Penn State, but the Nittany Lions committed to the Big Ten before Raycom could finish the project.
At the time, those schools were independents in football, so the super conference would not have been raiding schools from other conferences, as leagues do now.
“A lot of what’s happening now reminds me of 1990,” said Bill Olsen, who back then was the athletic director at Louisville. “Most of us were strongly in favor of doing this and we thought it had a lot of potential. It definitely made the SEC and the ACC stand up and take notice. It got their attention.”
In a 1990 story in USA Today that explored the possibility of massive college realignment, Haines was quoted as saying the super-conference model is “cutting edge. … What you’re going to see within the next five years will form the fabric of college sports for the next 50 years.”
Haines missed his five-year assessment, but he was prescient in his estimation that it could form the fabric for the next 50 years. Recently, Cedric Dempsey, the NCAA’s former president and now a college consultant, said this latest round of realignment puts the major college conferences on a path toward creating their own division, perhaps separate from the NCAA.
The six major conferences “for a long time have thought they could govern themselves,” Dempsey said. “I wouldn’t be surprised if that’s where we end up, with five or six super conferences that form their own organization.”
In 1990, the super-conference model was grounded in the same basics that are driving conferences to expand now. It went after major markets, it increased the conference footprint to include multiple regions of the country, and it would have captured a significant number of the nation’s TV households. The divisional format maintained geographical rivalries, while the larger conference stretched up and down the East Coast.
“I always felt the super-conference concept would happen at some point, even though this particular model didn’t happen,” Haines said. “This all came about 21 years ago because of the pressure to generate revenue and fund programs. It’s no different today.”
The super-conference idea didn’t work out for the Metro. A year after the study, in 1991, Florida State ended up going to the ACC, South Carolina joined Arkansas as new members of the SEC, and the Big East began playing football, which gave Syracuse, Boston College, Pittsburgh, Virginia Tech and Miami a conference home for football.
Many of the other Metro members migrated to a new league called Conference USA.
“If we had been able to create that super conference, I think it would have turned into four super conferences nationally,” Olsen said. “But it never became a reality.”
Well, not yet.