ESPN deal with Big 12 relies on streaming content, falls short of desired value for football title games
Negotiations for the Big 12’s complicated deal with ESPN did not seem so complicated when the two sides first sat down more than a year ago.
The Big 12 was trying to sell the rights to three college football games — its championship games in 2019, 2021 and 2023 — and ESPN was one of the few media companies that wanted to buy them. ESPN already owned rights to the games in 2020, 2022 and 2024. It should have been an easy deal, but the two sides could not get close on price.
The Big 12 wanted around $20 million for each game. ESPN wanted to pay much less. It became clear pretty quickly that they couldn’t come to terms on money, so they had to get more creative.
That’s where streaming rights came into play. ESPN had embarked on a strategy of buying as many rights as it could for ESPN+. It was particularly interested in college sports, believing that schools’ rabid fans are more likely to buy a $5 monthly subscription to the streaming service.
In those early talks more than a year ago, the idea of ESPN picking up streaming rights never was broached. Over time, however, after the April 2018 launch of ESPN+, it became apparent that the streaming service could provide a solution to bridge the gap on price.
One complicating factor, as always seems to be the case with the Big 12, was that the conference’s multimedia rights were not as unified as other college conferences in the power five. Texas has Longhorn Network with ESPN and Oklahoma has Sooner Sports TV with Fox, providing the conference’s two biggest brands with outlets for all of their games, including Olympic sports.
What’s in the deal?
The timeline and financial breakdown of the Big 12’s enhanced media agreement
In September 2012, ESPN and Fox Sports agreed to a combined 13-year, $2.6 billion deal that averages $200 million per year. ESPN’s payout amounts to $100 million per year.
In October 2016, ESPN restructured its deal, paying for the rights to four football championship games at a cost of $30 million per game — an inflated price that helped get rid of a pro rata clause that would have forced it to pay a higher rights fee if the conference expanded.
In April 2019, ESPN paid $40 million for the streaming rights to a minimum of 50 events per school plus three football championship games that Fox decided not to carry. Together, the 2016 and 2019 deals amount to an average of $22 million per year for the six total games from 2019 through 2024. All told, ESPN now is paying the Big 12 an average of $122 million per year.
The other eight schools in the Big 12 — Baylor, Iowa State, Kansas, Kansas State, Oklahoma State, TCU, Texas Tech and West Virginia — cobbled their own local deals together so that any live events not carried by ESPN or Fox still would be available on TV or online.
ESPN’s main competitor for those three championship football games, Fox Sports, eventually passed on them in January, citing scheduling conflicts and money concerns. ESPN was left as the only serious bidder, which meant that they had to get creative to reach a deal that would make both sides happy.
Knowing that Texas and Oklahoma’s rights were tied up, ESPN opted for a package with the other eight schools.
Conference officials also were rethinking how they handled streaming rights. Commissioner Bob Bowlsby started referring to the inventory of more than 10 football games, 60 men’s basketball games and Olympic sports as “the last beachfront property.” He meant that they were the last handful of live events available in the five biggest conferences.
The other power five conferences have their own branded channels to carry Olympic sports and some football and basketball.
“I think aggregation probably makes some sense,” Bowlsby said at SBJ’s Intercollegiate Athletics Forum in December. “We’ve frankly tried to keep our powder dry because the technology world is changing so rapidly. … But we have a lot of inventory that’s valuable and, at some point in time, we will probably aggregate and activate around.”
ESPN ultimately paid $40 million for the three football games, but when combined with previous deals between the network and the conference, the overall average for the championship games is $22 million (see box).
Athletic directors in the Big 12 expected the football title games, its marquee event, to pull in more revenue. Expectations, according to multiple ADs, were that the games would fetch something more along the lines of $60 million total rather than $40 million.
Still, the ADs sounded optimistic last week about the prospect of a Big 12-branded presence on ESPN+. Conference officials long had discussed the potential of a Big 12 digital network that could stream all of those third-tier games. ESPN+ provides a solution for that.
For the Big 12 to aggregate those live events for ESPN+, the eight schools had to take back the rights to them from their multimedia rights holder, Learfield IMG College. To complete that phase of the deal, Learfield IMG College will now begin to negotiate the terms for returning that inventory to the schools. In some cases, it could result in a reduction in the annual guarantee paid to the school, or the school could provide additional marketing assets.
Separately, sources say, Learfield IMG College has agreed to begin selling corporate sponsorships for the Big 12. The Big 12’s marketing rights add even more heft to the college rights that Learfield IMG College already owns. One of the company’s highest priorities is to increase its national sales, and Big 12 rights provide more valuable inventory for national sales chief Andrew Judelson to leverage.