WestHartHusk
$3M a Year With March Off
- Joined
- Aug 26, 2011
- Messages
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My guess would be that in its absence there would not be any incoming schools.
But, what I think is really important here is that this gives us increased flexibility in the CR game. What I think gets lost in this is at that CR realignment is about business for the TV networks and the conferences, it is not the fantasy league our bootleg drinking friends in Appalachia play it as. With this kind of padding we can afford to negotiate a much more modest package with a league than makes financial sense for say UVA, UNC, GA Tech, etc.
Let's put this into perspective with some hard numbers:
ACC exit fee may drop to $35M (higher is better, but lets be realistic)
B1G Contract currently pays $20M, estimated by many sources to jump to $30M in 2017.
ACC Contract, on average for next 15 years, is 17.1 (I know it is backloaded, but for analysis we can leave it at 17).
And let's assume that conferences are looking at a 15 year horizon (10 seems short given the length of the contracts, but anything longer that 15 seems to uncertain).
So, if UVA or UNC were to jump to the B1G they would start out in the hole $35M so of course they would demand a full cut right up front. But, even with that, the differential in TV money would not bring them back to break even until 2019 so they would surely want a lump payment up front. For argument, if they also demand a three-year payback period on that cost to be generated by TV money and a lump sum payment such a payment would cost the B1G an extra $23M ($10M if the payback was 4 years - the new TV deal closes the gap fast).
Compare that to UConn who will start +$30M so will need no help with exit fees, nor would they factor into our business case. On this basis we would be able to offer something like: 10% share of TV money for our first league season, increasing 10% per year for 10 years until we are full members. The benefits to us are too obvious to explain, but this is also a very generous deal for the B1G given what we know about our ability to drive ratings, carriage fees, and the fact that we would not exceed $10M in TV revenue until 2018.
In net, UVA/UNC teams will cost the B1G, over the 15 years, $105M more per school than UConn - and with an upfront payment as much as $130M - per school. To put it another way, is UVA/UNC worth $130M more than UConn? I don't know the answer, but the further you can push the spread the more likely the answer will eventually be No and this payment allows us to push the spread. Hell, I would even propose that UConn sign up for our current TV deal paid through the B1G, with the 10% vesting per year growing in the background so that on year 7 we are 70% member which pushes the spread up as high as $170M!
But, what I think is really important here is that this gives us increased flexibility in the CR game. What I think gets lost in this is at that CR realignment is about business for the TV networks and the conferences, it is not the fantasy league our bootleg drinking friends in Appalachia play it as. With this kind of padding we can afford to negotiate a much more modest package with a league than makes financial sense for say UVA, UNC, GA Tech, etc.
Let's put this into perspective with some hard numbers:
ACC exit fee may drop to $35M (higher is better, but lets be realistic)
B1G Contract currently pays $20M, estimated by many sources to jump to $30M in 2017.
ACC Contract, on average for next 15 years, is 17.1 (I know it is backloaded, but for analysis we can leave it at 17).
And let's assume that conferences are looking at a 15 year horizon (10 seems short given the length of the contracts, but anything longer that 15 seems to uncertain).
So, if UVA or UNC were to jump to the B1G they would start out in the hole $35M so of course they would demand a full cut right up front. But, even with that, the differential in TV money would not bring them back to break even until 2019 so they would surely want a lump payment up front. For argument, if they also demand a three-year payback period on that cost to be generated by TV money and a lump sum payment such a payment would cost the B1G an extra $23M ($10M if the payback was 4 years - the new TV deal closes the gap fast).
Compare that to UConn who will start +$30M so will need no help with exit fees, nor would they factor into our business case. On this basis we would be able to offer something like: 10% share of TV money for our first league season, increasing 10% per year for 10 years until we are full members. The benefits to us are too obvious to explain, but this is also a very generous deal for the B1G given what we know about our ability to drive ratings, carriage fees, and the fact that we would not exceed $10M in TV revenue until 2018.
In net, UVA/UNC teams will cost the B1G, over the 15 years, $105M more per school than UConn - and with an upfront payment as much as $130M - per school. To put it another way, is UVA/UNC worth $130M more than UConn? I don't know the answer, but the further you can push the spread the more likely the answer will eventually be No and this payment allows us to push the spread. Hell, I would even propose that UConn sign up for our current TV deal paid through the B1G, with the 10% vesting per year growing in the background so that on year 7 we are 70% member which pushes the spread up as high as $170M!
