Over the last few months, the Big 12 watched as its TV network partners, ESPN and Fox, made a $2.64 billion commitment to the Big Ten, and ESPN promised to start a conference channel for the ACC.
Finally, the Big 12 raised its hand and said, “What about us?” The conference responded by unexpectedly resurrecting expansion talk on July 19 — the day after news of the ACC Network broke — as a means of generating more revenue.
Last week, after ESPN and Fox Sports made it clear that they were unhappy with the Big 12’s plans to expand, the conference’s commissioner, Bob Bowlsby, called executives at both networks. It’s not clear with whom Bowlsby spoke; President Eric Shanks and Executive Vice President Larry Jones have been leading negotiations for Fox Sports; Executive Vice President Burke Magnus has been handling negotiations for ESPN.
| Big 12 schools |
Big 12 prospects |
| Baylor |
BYU |
| Iowa State |
Central Florida |
| Kansas |
Cincinnati |
| Kansas State |
Colorado State |
| Oklahoma |
UConn |
| Oklahoma State |
Houston |
| TCU |
Memphis |
| Texas |
South Florida |
| Texas Tech |
Tulane |
| West Virginia |
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Bowlsby assured the networks that expansion was not imminent, multiple sources said, although the conference is moving in that direction by vetting expansion candidates.
In those talks, the commissioner emphasized the need to rework its current media deal, which runs nine more years. He stressed that a new media deal will allow the Big 12 to keep up with the other power five leagues, especially since both network partners recently told the Big 12 that a linear channel wasn’t feasible for its 10-school league.
Expansion provides the clearest path for the Big 12 to grow revenue because its 13-year, $2.6 billion contract calls for rights-fee increases of about $20 million annually per new school from the networks. The conference publicly has made it clear that full payment from adding any new schools was the Big 12’s expectation.
Since then, based on industry sources, several compelling scenarios have emerged as alternatives to expansion. Essentially, sources say, the Big 12 is telling the networks to bring their best offer.
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The Big 12 could agree not to expand and stay at its current 10 schools. In exchange, ESPN and Fox would give the conference an increased rights fee to remove the pro rata clause from their contract. How much of a raise would be subject to negotiation, but it would be less expensive for the networks than expansion.
This would generate new revenue for the Big 12’s existing 10 members to share without potentially watering down the conference with schools from outside the power five.
The Big 12’s current deal pays an average of $200 million annually through 2024-25.
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The networks could agree to give back some of their game inventory, which would enable the Big 12 to take those games to a third network. Sources say CBS Sports, NBC Sports Group and Turner could be candidates for a small package of games, though the conference has not had any serious talks with any other TV partner.
But there’s a lot of skepticism that the Big 12 would find enough interest in what essentially would be its third package of rights.
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A compromise might come in the form of a two-school expansion to 12, restoring the number of members to the number in the conference name. The networks would attempt to negotiate the rights-fee increase and have a say in which schools to invite.
One of the main TV network complaints with Big 12 expansion has been the schools — BYU, Central Florida, Cincinnati, UConn, Memphis and others — under consideration from outside the power five.
The networks might find any of these alternatives preferable to the pro rata increases outlined in the Big 12’s deal, which was negotiated in 2012. A pro rata increase in rights fees would cost ESPN and Fox $40 million per year for two schools and $80 million per year for four schools at a time when both networks have encountered financial headwinds.
Since 2012, ESPN has lost more than 10 million subscribers, according to Nielsen estimates. Last year, ESPN had to lay off more than 300 employees, and starting this fall it will have to start paying its rich NBA contract.
Fox Sports Group similarly started accepting 300 to 400 cost-cutting buyouts from long-term employees earlier this year.
Bowlsby and the TV executives did not discuss potential compromises on their phone calls last week, sources said, but the Big 12 is clearly exercising its leverage by putting expansion back on the table.
Often, these types of disputes or realignment lead to new, long-term rights deals — more money in exchange for more years. That’s not expected in this case, though, because any contract extension beyond 2025 would require the Big 12 schools to also extend their grant-of-rights, which commits their TV rights to the conference for the length of the deal.
Most insiders don’t expect the Big 12’s big boys — Texas and Oklahoma — to make an even longer commitment that goes past 2025 because of questions about the league’s future.
