As John Swofford and his team of BCS TV negotiators entered a ballroom at Chicago’s Palmer House Hilton on Nov. 10, they were braced for a challenge from university presidents.
Swofford brought with him news of a monstrous $495 million bid from ESPN, delivered that morning over the phone by the network’s executive vice president of content, John Skipper, who was in London. The bid called for all four of the BCS’ games to be televised on cable from 2011 through 2014.
Swofford, the BCS coordinator and ACC commissioner, expected to hear complaints from the presidents about taking the bowl games off over-the-air TV and onto cable, which reaches 16 million fewer homes.
Turns out, he had them at $495 million.
Swofford, working with IMG consultant Barry Frank, needed the approval of the BCS presidential oversight committee before he could give ESPN a thumbs-up. That approval came swiftly. One source in the room said the anticipated pushback from the presidents never came.
ESPN, represented in Chicago by John Wildhack, executive vice president for programming, and Burke Magnus, senior vice president of college sports, learned that afternoon that the BCS had accepted the bid.
Fox, the incumbent with BCS TV rights through the 2010 games, offered $395 million over four years and had a five-day window to match ESPN’s bid, but declined. Sources say that Fox’s profits on the current deal, while solid, have not been nearly lucrative enough to challenge ESPN’s offer, especially in this declining ad market.
“The BCS has limited sales inventory, less than 300 ad units annually in the total package,” said Kevin O’Malley, a former CBS and Turner executive who consults with college conferences and previously assisted the BCS. “As rights fees go up, it’s going to be more and more difficult for over-the-air networks to compete with cable. ESPN has an enormous advantage because of its subscriber fees and a large inventory with its regular-season package. ESPN can have much more of an impact for the BCS sponsors over the course of a season, instead of just 10 days around the bowl.”
The Sugar (top) and three others move to
ESPN in 2011; the Rose is expected to follow.
When Fox executives considered matching ESPN’s bid, they explored whether they could put some of the games on FX, one of the network’s cable channels, which would allow Fox to take advantage of a dual revenue stream from advertising and affiliate sales, sources said. Ultimately, Fox executives decided that the games would not be a good fit for FX, which has not carried much sports programming since it lost NASCAR last year.
“We put what we thought was a very competitive bid on the platform that we felt comfortable [with],” said Bob Thompson, president of Fox Sports Networks, during a SportsBusiness Journal/Daily conference last week. “Given the current economic condition, we went as far as we could. And we lost.”
ESPN, with the dual revenue stream of advertising and subscription fees it receives from cable operators, came to the table determined not to let the BCS get away again, as it did when Fox swooped in four years ago. That was evident by ESPN’s bid of nearly $124 million annually, which represented a staggering 50 percent increase over the current $82.5 million deal.
The BCS bowl payout, currently $18 million a team, is expected to grow to $22 million to $23 million under the new contract.
Sean Bratches, ESPN executive vice president of sales and marketing, said he network plans to push digital and international advertising for the BCS games.
“From an advertising standpoint, we think it’s an attractive vehicle by itself,” Bratches said. “With the robust college football schedule we have across multiple platforms, our ability to package the BCS will drive some incremental revenue to our company.”
Frank said none of the other networks entered the bidding. Versus President Jamie Davis said his 24-hour sports network didn’t bid on the BCS package because the four annual games did not fit into Versus’ strategy of “super-serving the fan.”
The Rose Bowl, which is part of a separate contract with ESPN that’s worth $30 million annually, is scheduled to be televised on ABC through its 2010 game, but is expected to move to ESPN after that.
“I think the shock here is that the Rose Bowl is going to end up on cable,” said Howard Katz, senior vice president of broadcasting and media operations for the NFL. “It’ll be interesting to see the ramifications here.”
