Aresco Sounds Off

[jbdphi]

ROFRs tend to up the purchase price. You bid high enough that 1) the ROFR holder won't take the bid, and 2) if he does he has money available to compete the next time. NBCs low balling means one of more of the following:

a) they didn't want the product

(Probably due the fact that UConn and Cinci were likely to leave. I wonder if the bid would be different after the ACC GOR?);​

b) they had a collateral "in the margins" deal with ESPN;
c) they are incompetant; and/or
d) Aresco and company are the world's worst negotiators.

Completely wrong in my opinion, and even if it may apply in selected situations, it would only be for incredibly attractive properties which have a massive amount of demand, and even in that case, it doesn't really apply.

Because the primary driver of ROFR is to scare people off from doing any serious work or due diligence on a property because regardless of how much time they spend and how smart they may think they are, they already know that someone else with more knowledge (the current rights holder) can step in at the last second and match their offer and they just wasted a bunch of time and talent on something that had a very low likelihood of occurring. It scares people out of the process before the process even begins. Hence, all we had was NBC.

Typically, if you do decide to move forward in that kind of situation, you put in an offer that makes the current rights holder think twice about matching. Given NBC obviously didn't do that leads you to two conclusions:
1) NBC are idiots (your choice c)
2) The Big East / AAC was worth a lot less than they originally thought after doing due diligence and their offer reflected that (kind of your choice a)

Unfortunately, I think I know the answer.

 

[whaler11]

NBC was a fantasy. ESPN knows exactly what NBC is and they knew how NBC would approach.

NBC is such a joke that going up against a league with a right to match they underbid. I can't even imagine the laughter in Bristol when they knew the number. In their wildest dreams it wasn't that ridiculously low.


NBC was the guy who spent 2 months talking his girlfriend into breaking up with her boyfriend and on prom night blew her off to go bowling.

 

[whaler11]

Completely wrong in my opinion, and even if it may apply in selected situations, it would only be for incredibly attractive properties which have a massive amount of demand, and even in that case, it doesn't really apply.

Because the primary driver of ROFR is to scare people off from doing any serious work or due diligence on a property because regardless of how much time they spend and how smart they may think they are, they already know that someone else with more knowledge (the current rights holder) can step in at the last second and match their offer and they just wasted a bunch of time and talent on something that had a very low likelihood of occurring. It scares people out of the process before the process even begins. Hence, all we had was NBC.

Typically, if you do decide to move forward in that kind of situation, you put in an offer that makes the current rights holder think twice about matching. Given NBC obviously didn't do that leads you to two conclusions:
1) NBC are idiots (your choice c)
2) The Big East / AAC was worth a lot less than they originally thought after doing due diligence and their offer reflected that (kind of your choice a)

Unfortunately, I think I know the answer.

The AAC isn't worth much but it's worth more than the Big East. Does anyone actually know anything about NBC? They are both cheap and stupid.

I guarantee you that NBC is so lost they did not think ESPN would match. The network is that clueless.

 

[whaler11]

This is where having a 6 year deal can potentially be a very good thing in the future. Who the hell knows what the technology for entertainment viewing will be like in 2020. Whatever it is, UCONN, and the rest of the AAC, will be free agents in the market at that time - when every other conference is still locked up with their media deals, and potentially there are all different kinds of broadcasting possibilities.

Carl when you are right you are right. A short contract is a huge advantage in the medium term with the rate of change.

 

[nelsonmuntz]

Completely wrong in my opinion, and even if it may apply in selected situations, it would only be for incredibly attractive properties which have a massive amount of demand, and even in that case, it doesn't really apply.

Because the primary driver of ROFR is to scare people off from doing any serious work or due diligence on a property because regardless of how much time they spend and how smart they may think they are, they already know that someone else with more knowledge (the current rights holder) can step in at the last second and match their offer and they just wasted a bunch of time and talent on something that had a very low likelihood of occurring. It scares people out of the process before the process even begins. Hence, all we had was NBC.

Typically, if you do decide to move forward in that kind of situation, you put in an offer that makes the current rights holder think twice about matching. Given NBC obviously didn't do that leads you to two conclusions:
1) NBC are idiots (your choice c)
2) The Big East / AAC was worth a lot less than they originally thought after doing due diligence and their offer reflected that (kind of your choice a)

Unfortunately, I think I know the answer.

Every ROFR I have ever seen serves primarily to scare people off. Why spend time and money to bid on something you have no chance of winning? In the rare times where a bidder is not scared off, they have to bid way too high because for some reason they need whatever was protected by the ROFR and want to chase off the holder of the ROFR. 9 times out of 10 a ROFR results in a throwaway low ball bid, because the bidder, in this case NBC, figures that the only way they will get the property is if ESPN doesn't want it, in which case NBC is the only bidder. So they act like they are the only bidder and submit a lowball, which is exactly what NBC did.

 

[clmssun]

Bingo. There's the blame. Walk from the NBC offer. Never should have been accepted. The match rights are only relevant if you give ESPN something so easy to match.

Maybe I view the world too cautiously or too pessimistically, but I would be concerned that a rejection of NBC's offer could have led to a *lower* offer from ESPN.

 

[HuskyHawk]

Maybe I view the world too cautiously or too pessimistically, but I would be concerned that a rejection of NBC's offer could have led to a *lower* offer from ESPN.

It might. Who cares? The Problem with the contract for UConn is that it's a blended average of teams that probably could have gotten $5, 6, 7M selling their rights themselves, and those who would get maybe $300K. UConn has the most valuable rights in the conference by miles, and so we are the largest donor to the welfare of others in the league. Carl is right, that the exposure is better than we'd get on our own, but the money is much worse.

I think the contract with NBC did not do enough to reserve to the schools, the chance to sell certain rights independently. The other problem was timing...post ACC GOR, the AAC would have gotten more, since the league would appear to be more stable.

 

[CL82]

Every ROFR I have ever seen serves primarily to scare people off. Why spend time and money to bid on something you have no chance of winning? In the rare times where a bidder is not scared off, they have to bid way too high because for some reason they need whatever was protected by the ROFR and want to chase off the holder of the ROFR. 9 times out of 10 a ROFR results in a throwaway low ball bid, because the bidder, in this case NBC, figures that the only way they will get the property is if ESPN doesn't want it, in which case NBC is the only bidder. So they act like they are the only bidder and submit a lowball, which is exactly what NBC did.

Depends on the value of the property (size of the pot) and the relative econmic strength of the player (availability of chips to play.) In this case the size of the pot wasn't worth going all in to NBC and the ESPN likely had enough chips to cover regardless.

 

[noeynox]

It might. Who cares? The Problem with the contract for UConn is that it's a blended average of teams that probably could have gotten $5, 6, 7M selling their rights themselves, and those who would get maybe $300K. UConn has the most valuable rights in the conference by miles, and so we are the largest donor to the welfare of others in the league. Carl is right, that the exposure is better than we'd get on our own, but the money is much worse.

I think the contract with NBC did not do enough to reserve to the schools, the chance to sell certain rights independently. The other problem was timing...post ACC GOR, the AAC would have gotten more, since the league would appear to be more stable.

Conference welfare is the way it works in all the conferences. Anyone think, Michigan's TV rights and Purdue's are worth the same? North Carolina and Wake Forest? How about UConn and Ohio State? You'd have no problem if UConn one day got an equal pay day to Ohio State's but you have a problem with Tulane getting an equal share today with UConn.

While I do believe UConn's rights are probably worth the most, UConn simply had to compromise a little to you know, have a conference to play sports in. Terry Holland of ECU proposed a plan where the individual schools sold their rights, my guess is it wasn't adopted because there is no incentive financial or otherwise for the schools making less to play sports with us. There has to be something in it for everyone for them to want to come together and form a conference. What is in it for us is simply having a collection of schools to play against in a "conference". For some schools in this league, the money probably tripled.

 

[HuskyHawk]

Conference welfare is the way it works in all the conferences. Anyone think, Michigan's TV rights and Purdue's are worth the same? North Carolina and Wake Forest? How about UConn and Ohio State? You'd have no problem if UConn one day got an equal pay day to Ohio State's but you have a problem with Tulane getting an equal share today with UConn.

While I do believe UConn's rights are probably worth the most, UConn simply had to compromise a little to you know, have a conference to play sports in. Terry Holland of ECU proposed a plan where the individual schools sold their rights, my guess is it wasn't adopted because there is no incentive financial or otherwise for the schools making less to play sports with us. There has to be something in it for everyone for them to want to come together and form a conference. What is in it for us is simply having a collection of schools to play against in a "conference". For some schools in this league, the money probably tripled.

Not disagreeing at all. Just saying why this is a bad deal for UConn, and that preserving some additional rights to be marketed separately would have leveled it out some. Especially around women's basketball.