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SBJ/July 16-22, 2012/CollegesPrint All
The financial windfall from the new college football playoff system is evident already.
ESPN has agreed to pay an average of $80 million a year for the Rose Bowl, industry experts say, which could push the price tag for the playoffs media rights as high as $600 million for an all-in package that includes a championship game, two semifinals and four major bowls each season.
With the new Rose Bowl deal, big increases seem assured for other playoff bowls
Photo by:AP IMAGES
The Rose Bowl’s partners, the Pac-12 and Big Ten, keep all of that media revenue, except in years when the Rose Bowl is a semifinal game in the playoffs. When the bowl is part of the playoffs, that media revenue would flow through the playoff system and be distributed to all of the FBS conferences. That method of distribution has not been determined yet.
ESPN, the current BCS partner, will get first crack at the championship game and semifinals this fall during a 30-day negotiating window. If a deal can’t be struck, the package would then go to the open market where Fox Sports and other networks will be waiting.
ESPN currently pays $125 million annually for media rights to the BCS championship, in addition to the $30 million it pays for the Rose Bowl.
But by the time ESPN and college playoff officials have their first conversation in September or October, two other bowls, the new Champions and Orange, will have signed their own separate TV contracts. The ACC will handle the rights negotiations for the Orange Bowl, while the SEC and the Big 12 will jointly negotiate the Champions Bowl deal, which means those bowls would not be included in the overall playoff package.
The Champions is expected to generate an annual rights fee similar to the Rose Bowl, while the Orange Bowl value is expected to be less, sources said. It’s hard to put a value on the Orange Bowl now because the ACC does not have a permanent opponent in place for the game, although the conference has had talks with Notre Dame about appearing in the game.
The ideal scenario for the conference commissioners is to keep all of the playoff games and major bowls on the same network, but the open bidding for the Orange and Champions bowl games could complicate matters if another network took one of the games.
“It’s pretty simple if ESPN buys everything,” Pac-12 Commissioner Larry Scott said. “Only when they don’t does it start to get complicated with what happens to the semifinals.”
One of the quirks of the process is that by the time ESPN bids on the playoff package this fall, it already will have a contract with the Rose and could very well have separate contracts with the Orange and Champions. Those individual bowls can freely negotiate with any network, but ESPN has taken an aggressive stance, considering its bid to keep the Rose.
If ESPN locks down those bowls, it will go into the fall negotiations for the playoffs in position to own the new college postseason.
The semifinal games are expected to rotate among a group of bowls — the Rose, Champions, Orange and three others to be determined. The Rose and Champions have not said publicly if they will participate in the new playoff format, but they are expected to provide the venue for the semifinals in two, three or four years in the 12-year cycle. Most commissioners expect the Rose and Champions to be semifinal games in the same years.
The hodgepodge of what eventually will be four separate contracts — one for each of the three bowls, plus the playoffs — illustrates how convoluted the financial side of the new playoff structure remains. While conference commissioners basked in the glow of their playoff announcement last month, that was the easy part. The harder part — determining how the money will be distributed — remains a significant obstacle.
“It’s terribly complex,” said Craig Thompson, commissioner of the Mountain West. “There are a ton of moving parts. Right now, we have more questions than we have answers. When you have different levels of stakeholders and different contracts involved, you just have to work through it and that takes time.”
The Rose, Orange and Champions are considered “contract bowls” because they have contracts with conference partners and those big five conferences are protecting their revenue from those games.
By doing separate TV deals for those three bowls, the ACC, Big Ten, Big 12, Pac-12 and SEC guarantee that a significant portion of TV revenue will flow directly into their coffers and won’t have to be shared with the other conferences.
The TV revenue that comes from the playoff TV package, however, will be shared with the other conferences — the big five, plus the Big East, MAC, Sun Belt, Mountain West and Conference USA.
The commissioners still haven’t determined which bowls will serve as semifinal games.
“Even after the ‘contract’ bowls do their deals, that leaves a lot of inventory in a playoff package,” said ACC Commissioner John Swofford. “It’s still a massive package once you consider the championship games, the semifinals and the other ‘non-contract’ bowls.”
The playoff officials will be represented in media talks by BCS Executive Director Bill Hancock and a pair of consultants, Dean Jordan of Wasserman Media Group and former ESPN executive Chuck Gerber. The conference commissioners, however, will have the final say on accepting a deal or not.
Currently, ESPN and Fox, the two dominant networks in the college space, appear to be the most serious bidders. ESPN fills its schedule with college football throughout the fall and its BCS championship games have generated strong audience numbers. Fox, meanwhile, is planning to launch a weekly schedule of Pac-12 and, likely, Big 12 games on its broadcast network this fall.
NBC is a wild card. The network is expected to kick the tires on the package, but because it does not have as many rights to college football games as ESPN or Fox, it is not expected to be a serious bidder.
College officials hope Turner will be interested in a package, which would serve as a complement to its NCAA men’s basketball tournament rights. But sources don’t expect Turner to make a strong bid because it has no other college football programming.
CBS Sports has a long-term deal to show SEC football, but the network to date has not showed an interest, sources said.
If ESPN and the BCS don’t reach a deal on the playoff package this fall and the games go to the open market, that’s where negotiations will get complicated. With the playoff games and the Rose, Orange and Champions all having separate media contracts, the conferences risk having playoff games split among multiple networks.
For those bigger conferences, though, doing their own deals comes down to money and control.
“For the Rose Bowl, it’s just been understood that a condition of its participation is to maintain its independence and keep the TV deal separate,” Scott said.
Editor's note: This story is revised from the print edition.
Attorneys for Electronic Arts were scheduled to square off in a California federal appeals court last Friday against counsel for former college quarterback Sam Keller and NFL legend Jim Brown over the right to use their and other athletes’ images in video games, a long-running issue that predates their lawsuits.
EA, Keller and Brown, however, are not the only powerful sports interests battling in these cases. The NCAA last week filed a brief attacking the major professional players unions for a lengthy filing they submitted on behalf of Keller and Brown, who have separate but related lawsuits against the video game maker.
The players associations contend that if Brown and Keller were to lose their cases, such an outcome could harm the value of the currently lucrative licensing deals the unions have with EA.
“EA’s argument, if accepted by this court, would provide a massive commercial windfall to EA, effectively eliminate the right of publicity in the context where it is most often — and most importantly — invoked, and jeopardize long-settled expectations and the future value of [union] group licensing agreements,” warned the brief from the NFL Players Association, MLB Players Association, NHL Players’ Association, National Basketball Players Association and MLS Players Union.
The unions contend that if EA can take Keller’s image and use it without paying him, it could open the door for doing the same thing with pro athletes.
The NCAA, which licenses EA to use the NCAA and related trademarks, blasted back last week.
“The professional games marketed by EA … operate under express licenses from the Players Associations for which EA pays royalties in the games as well as in marketing and promotion associated with the game,” the NCAA wrote. “The NCAA respectfully requests that this court disregard the players associations’ unfounded and incorrect factual assertions regarding the use of student-athlete name, image or likeness.”
EA is appealing a district court ruling not to dismiss the Keller case, while Brown’s counsel is appealing a lower court’s dismissal of his case. Brown’s case is somewhat different in that he is suing under a right of publicity law, different from Keller’s more purely commercial case. But both involve EA using their images in video games without paying them.
The cases had previously been argued before the 9th Circuit, but the arguments were rescheduled after one of the judges, Pamela Rymer, died.
XOS Digital has replaced IMG College as the Sun Belt Conference’s multimedia rights holder.
The two signed a seven-year deal for an undisclosed sum to have XOS launch and manage the Sun Belt Digital Network, which will stream conference games and events.
XOS will handle sales for the conference’s entire corporate sponsorship inventory. The two will share revenue after the Sun Belt receives its guaranteed amount each year.
But XOS’ deal with the Sun Belt and its experience in developing the SEC’s digital network gives the Orlando-based technology company a solid starting point to move into multimedia rights.
“This is a first for us,” said XOS Digital CEO Chris McCleary. “The Sun Belt Conference is in sync in understanding the needs of its sponsors and the community.”
In fact, the conference’s commissioner, Karl Benson, said he opened talks with XOS soon after he was hired in March. Benson knew about XOS from his time as commissioner of the WAC, when he was negotiating to have XOS start a digital network.
IMG College had previously held the Sun Belt Conference’s rights but dropped the conference earlier this year.
“We were talking with XOS about setting up the digital network at the same time that IMG pulled the plug,” Benson said.
Benson said he was most attracted by the idea of a digital network that will stream games to mobile, tablet and smart TV devices.
“As a conference, we needed to maximize our media exposure, and the digital network is the vehicle outside of traditional cable,” he said. “This will complement our arrangement with ESPN.”
The digital network will stream games that are not carried on ESPN or regional sports networks. All sports, including football, will be streamed, but Benson said the conference still is a long way from coming up with a schedule or even figuring out who will produce the games. In some cases, XOS will produce the games; in others, the schools will carry that responsibility. But XOS will handle all of the back-end technology.
“Right now the biggest obstacle is in the production,” McCleary said. “All of the infrastructure is in place to stream games in HD quality. We have to make sure that the games are produced well.”
Sales will be handled by Max Heineman, XOS’ senior vice president of strategic partnerships. He is based in Orlando, but the company has account executives in five other markets: Atlanta, Cincinnati, Detroit, Los Angeles and New York.
Staff writer Michael Smith contributed to this report.