Lights. Camera. ACCtion!
The ACC has pinned its financial future on revenue it expects to generate from a conference-branded linear network. But before it realizes any income from the ACC Network, which will launch a year from now, its schools will spend a whopping $110 million to $120 million of their own money so they are prepared to produce live events and other programming.
That’s four times what SEC schools spent to get ready for that conference’s network launch in 2014.
The ramp-up to the ACC Network will be an expensive one, to say the least, with ACC schools budgeting $6 million to $10 million each to buy equipment, build infrastructure and hire staff that will man high-end production studios and cutting-edge control rooms — the bones of a network that will be owned and operated by ESPN.
Schools in the SEC, by comparison, spent around $30 million cumulatively, ranging from $700,000 at Florida to $7 million at Arkansas prior to the SEC Network’s launch. The SEC Network is structured the same as the ACC’s — ESPN owns it and profits are split with the conference.
The financial commitment by the ACC’s schools reflects the enthusiasm emanating from the conference and ESPN to create a first-rate cable network at a time when virtually no one else is launching a linear channel.
It wasn’t that long ago that skeptics doubted whether an ACC Network would ever get off the ground, given ESPN’s cost cutting and the shifting media landscape away from cable. But the ACC and ESPN have stuck to their guns in the face of a shrinking cable subscriber base, saying they remain bullish about the prospects of the ACC Network.
Doubts bubbled to the surface again earlier this year when ESPN President John Skipper stepped down and was replaced by Jimmy Pitaro. Skipper, who graduated from North Carolina and grew up in the state, enjoyed a close relationship with ACC Commissioner John Swofford. That unique bond was the driving force behind ESPN’s initial support of an ACC Network.
Pitaro, a Cornell graduate, on the other hand, came up through the digital world and had no such natural allegiance to the conference.
Swofford, by all accounts, was eager to hear Pitaro’s take on the ACC Network when they met for the first time in Dallas a few months ago and was relieved when Pitaro reassured the commissioner that the ACC’s linear channel would be no less of a priority under his leadership.
Swofford, emboldened as ever, went before the media at last month’s kickoff event with a confident message regarding the ACC Network.
“We’re exactly where we need to be,” he said. “ESPN is into it and into it in a highly energetic way, as are our schools. A year out, I don’t think we could be in a better place.”
ACC schools, with so many millions invested, were glad to hear it.
Still, that begs the question: Why is the ACC spending drastically more money for its channel than the SEC did at the same stage?
You’re always playing catch-up. Some of the schools are feeling the pressure. It’s tough to keep up.
For one, ESPN and the conference agreed to a higher set of standards for the ACC Network. Schools are expected to buy the equipment necessary to produce multiple live events for the linear TV channel. That means more linear-capable control rooms, cameras and camera angles, better replay and, in general, producing a more sophisticated broadcast than the typical digital production.
It’s an expensive proposition that could lead to spending $100,000 on a camera platform or $1 million to run fiber-optic connections from a school’s venues to the control rooms.
Some schools have greater infrastructure needs, which leads to more construction costs to retrofit spaces or build new buildings. Those dollars add up, especially given the ACC’s commitment to have it all ready by launch. Many SEC schools built up their production capabilities after launch.
Not only has the ACC Network startup been expensive, costs escalate over time as schools spend the money to create the highest-quality production. A year ago, Virginia Tech was expecting to spend $5 million to $7 million to prepare for the ACC Network’s demands. The final budget came in at $10 million.
Angie Littlejohn, Virginia Tech’s senior associate athletic director for internal operations, is responsible for managing those costs.
“They make changes, they make additions, and you’re always playing catch-up,” Littlejohn said of ESPN’s requests to improve live-event production. “Some of the schools are feeling the pressure. It’s tough to keep up.”
Still, she added, “One of the things we kept hearing from the SEC was that they wish they’d invested more money on the front end instead of going back every year for another million to fix something.”
SEC schools started out producing live events with digital standards as opposed to linear standards. In the most crude cases, an SEC school produced games for the digital platform using a single camera combined with the school’s radio broadcast or a Flypack mobile unit if a control room wasn’t available.
For SEC games going on the linear channel, ESPN brought in its own production truck. Over time, SEC schools have raised their standards, which has allowed them to spread the costs for equipment over several years. But the ACC’s goal at launch is to have every school prepared to produce multiple live events at linear-TV quality at the same time.
Georgia Tech, North Carolina, Notre Dame and Virginia Tech are among the schools on the high end, spending $10 million each to build infrastructure, buy equipment and hire staff. The Hokies, like many of the conference schools, are borrowing the money from the university and will pay it back over time, hoping to use revenue from the network.
“If the ACC Network is as good as we hope it is, we can pay that back in two to three years,” said Whit Babcock, Virginia Tech’s athletic director.
Much of the expense on each ACC campus is going to outfit costly TV control rooms that will give each school maximum flexibility. Schools will have four or five control rooms each, at least two of which will have linear capabilities.
For example, a school could produce a baseball game and a softball game for the ACC Network on a given spring day and still have multiple control rooms to run video boards at those venues. Each school is putting together a staff of students — some 50-60 people deep — who can handle production duties.
“The idea of schools producing content has been around long enough that nobody is starting from zero,” said ESPN’s Rex Arends, director of remote production operations and the chief liaison to the schools. “Some already are producing linear content. The idea is that when we flip the switch a year from now, we come out strong.”
One thing the ACC schools learned from the SEC was not to sacrifice the in-venue video-board production that’s so critical to the fan experience for the TV broadcast. That’s the counter-intuitive line these schools walk. They’re in the business of providing a great experience by keeping the fans in the stands entertained, and the video boards are a big part of that. Now, they’re also in the media business of delivering a high-end broadcast to serve the fans at home.
“We’re being mindful not to let the fan experience slip,” said Kenny Klein, senior associate AD at Louisville, which is spending $8 million to get ready.
Not all of the expenditures on campus are going into the production equipment, though. Some schools, like UNC, are spending several million dollars on construction costs. Close to $4 million of North Carolina’s $10 million project is going into a renovation of Koury Natatorium, next to the Smith Center. Inside the refurbished area will be control rooms, edit bays, studios and office space.
“We knew our project would be different,” said Ken Cleary, the Tar Heels’ assistant athletic director, new media. “There’s so much construction already going on across campus, it hasn’t been easy to navigate finding a space, funding it and construction. So, we’re probably going to go right down to the wire to be ready.”
The ACC Network is viewed as the great equalizer for the conference, a way to stem the growing revenue divide between the ACC and the financial front-runners in college athletics, the Big Ten and SEC, both of which already have profit-producing branded channels.
The most recent conference revenue numbers available from 2016-17 show that the ACC was fourth among the power five in total revenue and last in per-school payouts to its 15 members. That’s why the channel absolutely must be a revenue home run. The schools are counting on it. So is ESPN.
Neither the conference office nor the schools are disclosing their revenue projections, but some reports have suggested $10 million to $15 million in per-school revenue annually from the network — lofty expectations indeed that would have to be based on full distribution throughout the league’s footprint.
At the same time, Swofford is insisting the actual projections are much more conservative. He’s repeatedly told the schools that another launch like the SEC Network’s in 2014 isn’t likely. The SEC Network hit the airwaves with 60 million subscribers, the most successful cable launch in history, ESPN said, resulting in $7.5 million in new revenue, per school, in year one.
“We’ve seen some pro formas, but we really don’t know,” Virginia Tech’s Babcock said. “You’ve seen the big gap in revenue. It’s tough. The network is going to be a huge piece of making that up. … You don’t want to get your hopes up, but we’d be lying if we said we didn’t see what the Big Ten and SEC are doing.”
The Hokies are one of the schools throwing their full weight behind the network. They hired operations manager Eric Frey and chief engineer Sam Jones from Arkansas to tap into their SEC Network experience. Virginia Tech also is converting high-visibility space at Lane Stadium into dynamic studios.
“Some SEC schools are just now getting on the linear bandwagon after four years because there wasn’t the upfront investment,” Frey said. “In the ACC, we already have three or four schools doing linear broadcasts, and more soon, and we haven’t even launched.”
But all of that comes with a cost, as ACC schools have discovered. The question is what kind of return that $110 million to $120 million investment will deliver.