Conference Realignment

[RamblinRed]

Sources: ACC presidents meeting on conference expansion to include Cal, Stanford and SMU

Three weeks of deep exploration into a three-team expansion plan including Stanford, Cal and SMU appears to coming to an end.

sports.yahoo.com

This is one of the best articles i've seen on ACC revenue and expansion. It provides alot of useful color.

Let's start with this:

"The ACC’s television contract with ESPN includes a pro-rata clause requiring the network to increase the value of the deal by one Tier 1 share for every new member — believed to be about $24 million a share, or about 70% of a full ACC share, which includes Tier 1-3."

So ESPN's yearly payment to ACC right now is around $34M if you include all 3 tiers. The pro rata is just for Tier 1 (which is the biggest piece).

"The significant reduction of shares from Cal, Stanford and SMU is not permanent. The schools would see shares escalate over the course of the grant-of-rights, a binding agreement running through 2036 that they are required to sign. Also, the three schools will receive non-TV distribution annually from the league, including evenly distributed monies from the CFP and NCAA tournament as well as the additional revenue from the incentive pool."

So their shares will increase over time, that is to be expected but the first time i've seen it in print.

Finally there is this:

"For ESPN, the league would retain SMU’s broadcasting rights (it now owns the Mustangs' rights as part of the American Athletic Conference package) and regains the rights of Stanford and Cal. ESPN would also receive an increase in in-network rates for now having schools reside in California and Texas."

The last part is I assume ACC Network carriage rates. So while that is not included in what ESPN will pay to the ACC, increase in carraige rates will mean more revenue for ESPN through the ACC Network and ACC will get its contracted percentage of that so money from ACC Network should increase as well.

 

[RamblinRed]

In Thamel's post above when he said $ would be "spilt up" was it a typo or a sly way of messaging that FSU and Clemson would be feasting on the funds?

As I stated earlier I don't think the discussion among the Presidents is about whether to admit the schools anymore, it is about how much of that additional money is going to be distributed equally and how much is distributed based on performance metrics agreed to by the Presidents. When that is finalized is when I think a vote is taken and new members added.

Also, keep in mind even the addition of 1 member dilutes the strengths of dissenting programs. Going from 15 to 16 means 4 votes no longer is enough to stop a decision, now you need 5 schools to stop a decision and I doubt any of the schools that might be added are likely to argue against what the significant majority of schools want to do. It reduces the power of Clemson, FSU and the NC Schools. Before the 4 NC schools could vote to block anything (though they are hardly a monolith as this expansion has shown with them splitting 2-2 in the first informal vote), they no longer could do that with new members.

I'll also add that it has been reported that GT has been one of the strongest proponents of this expansion, which tells me Batt and Cabrera see this as a positive for GT.

 

[Techster]

Sources: ACC presidents meeting on conference expansion to include Cal, Stanford and SMU

Three weeks of deep exploration into a three-team expansion plan including Stanford, Cal and SMU appears to coming to an end.

sports.yahoo.com

This is one of the best articles i've seen on ACC revenue and expansion. It provides alot of useful color.

Let's start with this:

"The ACC’s television contract with ESPN includes a pro-rata clause requiring the network to increase the value of the deal by one Tier 1 share for every new member — believed to be about $24 million a share, or about 70% of a full ACC share, which includes Tier 1-3."

So ESPN's yearly payment to ACC right now is around $34M if you include all 3 tiers. The pro rata is just for Tier 1 (which is the biggest piece).

"The significant reduction of shares from Cal, Stanford and SMU is not permanent. The schools would see shares escalate over the course of the grant-of-rights, a binding agreement running through 2036 that they are required to sign. Also, the three schools will receive non-TV distribution annually from the league, including evenly distributed monies from the CFP and NCAA tournament as well as the additional revenue from the incentive pool."

So their shares will increase over time, that is to be expected but the first time i've seen it in print.

Finally there is this:

"For ESPN, the league would retain SMU’s broadcasting rights (it now owns the Mustangs' rights as part of the American Athletic Conference package) and regains the rights of Stanford and Cal. ESPN would also receive an increase in in-network rates for now having schools reside in California and Texas."

The last part is I assume ACC Network carriage rates. So while that is not included in what ESPN will pay to the ACC, increase in carraige rates will mean more revenue for ESPN through the ACC Network and ACC will get its contracted percentage of that so money from ACC Network should increase as well.

For those that keep questioning why Stanford/Cal/SMU, here's an article on carriage fees and why those markets mean more $$$ for the ACC. To go a step beyond that, if you want to know why the South is important to the B1G (and the SEC), this also applies. It's dated so the numbers aren't accurate for today's purposes, but it gives you an idea of the difference of a conference having a team "within footprint" and out of conference footprint.

SEC Network’s cost will top that of other college nets

www.sportsbusinessjournal.com

 

[Buzzbomb]

 

[Oldgoldandwhite]

Also, keep in mind even the addition of 1 member dilutes the strengths of dissenting programs. Going from 15 to 16 means 4 votes no longer is enough to stop a decision, now you need 5 schools to stop a decision and I doubt any of the schools that might be added are likely to argue against what the significant majority of schools want to do. It reduces the power of Clemson, FSU and the NC Schools.

The main reason I see the Big 2 retaining the status quo. They don’t want the bottom of the conference out voting them on certain issues.

 

[roadkill]

As I stated earlier I don't think the discussion among the Presidents is about whether to admit the schools anymore, it is about how much of that additional money is going to be distributed equally and how much is distributed based on performance metrics agreed to by the Presidents. When that is finalized is when I think a vote is taken and new members added.

Also, keep in mind even the addition of 1 member dilutes the strengths of dissenting programs. Going from 15 to 16 means 4 votes no longer is enough to stop a decision, now you need 5 schools to stop a decision and I doubt any of the schools that might be added are likely to argue against what the significant majority of schools want to do. It reduces the power of Clemson, FSU and the NC Schools. Before the 4 NC schools could vote to block anything (though they are hardly a monolith as this expansion has shown with them splitting 2-2 in the first informal vote), they no longer could do that with new members.

I'll also add that it has been reported that GT has been one of the strongest proponents of this expansion, which tells me Batt and Cabrera see this as a positive for GT.

I'll be disappointed but not surprised if the majority of the temporary windfall goes to performance incentives. This will sound like FSU and Clemson being successful in bullying the rest of the ACC, despite them apparently having no real clout near-term due to the GOR. Also, how does this benefit Notre Dame financially?

While @RamblinRed's explanation above is very consistent with my takeaway in this thread last Thursday, there are a number of different descriptions of the amount of windfall. leading to confusion.
For example, Ross Dellenger's tweet above says ~$55M but allocates that amount to an incentive pool.
The linked article says $72M in additional revenue, some of which I assume would go to the new teams.
But also, "After Stanford's and Cal’s shares are removed, as well as travel costs, ACC schools stand to earn more than $30 million in new wealth to be distributed every year". I realize the deal isn't finalized, but does anyone have a clue what it's potentially worth to GT?

 

[CEB]

Sources: ACC presidents meeting on conference expansion to include Cal, Stanford and SMU

Three weeks of deep exploration into a three-team expansion plan including Stanford, Cal and SMU appears to coming to an end.

sports.yahoo.com

This is one of the best articles i've seen on ACC revenue and expansion. It provides alot of useful color.

Let's start with this:

"The ACC’s television contract with ESPN includes a pro-rata clause requiring the network to increase the value of the deal by one Tier 1 share for every new member — believed to be about $24 million a share, or about 70% of a full ACC share, which includes Tier 1-3."

So ESPN's yearly payment to ACC right now is around $34M if you include all 3 tiers. The pro rata is just for Tier 1 (which is the biggest piece).

"The significant reduction of shares from Cal, Stanford and SMU is not permanent. The schools would see shares escalate over the course of the grant-of-rights, a binding agreement running through 2036 that they are required to sign. Also, the three schools will receive non-TV distribution annually from the league, including evenly distributed monies from the CFP and NCAA tournament as well as the additional revenue from the incentive pool."

So their shares will increase over time, that is to be expected but the first time i've seen it in print.

Finally there is this:

"For ESPN, the league would retain SMU’s broadcasting rights (it now owns the Mustangs' rights as part of the American Athletic Conference package) and regains the rights of Stanford and Cal. ESPN would also receive an increase in in-network rates for now having schools reside in California and Texas."

The last part is I assume ACC Network carriage rates. So while that is not included in what ESPN will pay to the ACC, increase in carraige rates will mean more revenue for ESPN through the ACC Network and ACC will get its contracted percentage of that so money from ACC Network should increase as well.

Maybe just sloppily written, but this blurb is interesting to me...

"For ESPN, the league would retain SMU’s broadcasting rights (it now owns the Mustangs' rights as part of the American Athletic Conference package) and regains the rights of Stanford and Cal.”

With all the talk of GOR and what it all means, this simple statement prompts a lot of questions. I did a very quick search for “AAC grant of rights” (almost all results were for ACC)

From what I can gather, the AAC did NOT adopt a GOR (although admittedly it looks like they should have gone through a more recent negotiation than what I saw). At any rate, the article states ESPN “owns” SMU’s rights. That would indicate there is some sort of GOR and the AAC/ ESPN still retains media rights to SMU upon their leaving for the ACC.

Also interesting to me is that the ESPN /ACC agreement “pro rata clause” that has been tossed about the internet would actually obligate ESPN to pay more money for a team they already “own” just because that team jumps to a new home. I understand that the AAC retains the rights and revenues of SMU (which are paid by ESPN) but then ESPN is also obligated to pay $24m+/- for tier 1 revenue when that same team goes to the ACC? Now ESPN is paying two conferences for the same team...

Got me thinking about this “pro rata clause” stuff....Does this prove to be a case study for some of the wild statements out of Tallahassee? If the Noles are willing to live on whatever revenue the BIG or SEC gets as part of a “pro rata clause,” they can pull an SMU, right? I don’t think that makes financial sense for them since they still have the exit fee hurdle, but the pro rata stuff makes this interesting...

 

[stech81]

Armed shooter at UNC guess the vote tonight will not happen.

 

[orientalnc]

Armed shooter at UNC guess the vote tonight will not happen.

All clear now.

 

[RonJohn]

Maybe just sloppily written, but this blurb is interesting to me...

"For ESPN, the league would retain SMU’s broadcasting rights (it now owns the Mustangs' rights as part of the American Athletic Conference package) and regains the rights of Stanford and Cal.”

With all the talk of GOR and what it all means, this simple statement prompts a lot of questions. I did a very quick search for “AAC grant of rights” (almost all results were for ACC)

From what I can gather, the AAC did NOT adopt a GOR (although admittedly it looks like they should have gone through a more recent negotiation than what I saw). At any rate, the article states ESPN “owns” SMU’s rights. That would indicate there is some sort of GOR and the AAC/ ESPN still retains media rights to SMU upon their leaving for the ACC.

Also interesting to me is that the ESPN /ACC agreement “pro rata clause” that has been tossed about the internet would actually obligate ESPN to pay more money for a team they already “own” just because that team jumps to a new home. I understand that the AAC retains the rights and revenues of SMU (which are paid by ESPN) but then ESPN is also obligated to pay $24m+/- for tier 1 revenue when that same team goes to the ACC? Now ESPN is paying two conferences for the same team...

Got me thinking about this “pro rata clause” stuff....Does this prove to be a case study for some of the wild statements out of Tallahassee? If the Noles are willing to live on whatever revenue the BIG or SEC gets as part of a “pro rata clause,” they can pull an SMU, right? I don’t think that makes financial sense for them since they still have the exit fee hurdle, but the pro rata stuff makes this interesting...

It is just sloppy writing. ESPN doesn't "own" the rights to SMU, they have a contract with the AAC for the teams in that conference. The AAC does not have a GOR, so any team can leave and take their broadcasts with them. ESPN broadcasts the SMU games under the AAC contract, and would pay more to broadcast the games under the ACC contract if SMU moves to the ACC under the ACC contract.

FSU cannot do the same thing because of the GOR. If FSU were to join the Big10, there would be no increase from Fox, NBC, etc to the Big10 because the ACC would still own the broadcast rights for the FSU games. "Pro Rata" simply means proportionally. What is being reported is that ESPN is obligated under the contract to pay each new team that the ACC gains broadcast rights for at the same rate that they pay for each current member. (one tier of three tiers is what is being reported.)

 

[Techster]

All clear now.

 

[CEB]

It is just sloppy writing. ESPN doesn't "own" the rights to SMU, they have a contract with the AAC for the teams in that conference. The AAC does not have a GOR, so any team can leave and take their broadcasts with them. ESPN broadcasts the SMU games under the AAC contract, and would pay more to broadcast the games under the ACC contract if SMU moves to the ACC under the ACC contract.

FSU cannot do the same thing because of the GOR. If FSU were to join the Big10, there would be no increase from Fox, NBC, etc to the Big10 because the ACC would still own the broadcast rights for the FSU games. "Pro Rata" simply means proportionally. What is being reported is that ESPN is obligated under the contract to pay each new team that the ACC gains broadcast rights for at the same rate that they pay for each current member. (one tier of three tiers is what is being reported.)

Thanks. That answers the whole scenario… I couldn’t figure out if the AAC had a GOR. If they don’t, that clarifies everything.

 

[AugustaSwarm]

It ain't official until it's announced...drama drama drama

 

[rfjeff9]

These numbers kind of make you wonder why UNC is perennially the “next ACC champ,” or at least mentioned almost every year as a “dark horse” or “team to watch out for.”

Tech never seems to get that level of unconditional love.

Was watching Gameday (yes I know) Saturday and Desmond had Louisville as his ACC darkhorse.

 

[CEB]

Was watching Gameday (yes I know) Saturday and Desmond had Louisville as his ACC darkhorse.

Even with a week 1 loss, they still are a pretty good pick. Their schedule sets up ridiculously well.
This has the potential to be a REALLY good looking win for us if we pull it off. Lville will be an 8-10 win team

Their ACC schedule:
@ GT (away game at neutral field)
BC
@ NCST
@ Pitt
Duke
UVA
VT
@ Miami

They have ND between the road trips to NCST and Pitt, so that’s a tough stretch, but 6-7 ACC wins is not out of the question. 6-2 with the right tie breakers may sneak into the champ game.

 

[Techster]

 

[CLHarperJackt]

This podcast questions the wisdom of the ACC adding Stanford and Cal at the behest of ND. Do they have a point; is ND really not concern about what is best for the ACC and would the addition of Stanford and Cal at the behest of ND actually weaken the ACC's position and hasten its destruction?

 

[bobongo]

This podcast questions the wisdom of the ACC adding Stanford and Cal at the behest of ND. Do they have a point; is ND really not concern about what is best for the ACC and would the addition of Stanford and Cal at the behest of ND actually weaken the ACC's position and hasten its destruction?

If Notre Dame would come with Cal and Stanford as full-time ACC members, that would be great.
But if they're driving this Pacific coast expansion without being a part of it, they're just leading the ACC by the nose and it won't end well.
It probably won't end well anyway down the road, but that would be a humiliation, IMO.
Maybe the ACC needs to take this opportunity to tell ND to either get all the way in or get all the way out. It's a longshot, but the time has come for them to make a decision, one way or the other.

 

[Techster]

Tracks with what we've seen over the past few years, and if you look at economic growth and population data over the last decade, the B1G case for Atlanta/GT may be even stronger now.

 

[RamblinRed]

This is an excellent tweet that you should look at the graphs. (Note they are inflation adjusted and there are 5 in total). They align with what I have seen in the past - which is that ACC is a clear #3 in terms of revenue and likely to stay that way.