The Tier III myth

[TuxedoYoda]

In regards to Tier 3, Texas gets $15M from LHN and $9M for radio/internet and other media rights through IMG for a total of $24M

 

[The Funster]

If I understand correctly, and the light bulb went off with WestCoast's post - is that tier 3 is basically what Delaney had the foresight to consolidate for the big 10 a long time ago, in forming the big 10 network. So ceding rights isn't necessarily a bad thing, if the conference is going to form it's own television network.

I'm not sure it's a good thing for us, right now to be doing, if a big east network is to be formed, b/c it sure looks like our tier 3 rights are a lot more valueable than others in this confererence, and there's the whole thing about hybrid membership, and Notre dame.

I think that if I'm understainding correctly, maintaining your own freedom to do what you want with your tier-3 broadcasting rights, is probably what the glue behind this thing is right now.

All just internet rumor and speculation of course.

I could buy ceding tier 3 rights for a conference network like the BTN. The advantage is that you give your schools other sports a good platform for recruiting. I watch Big 10 softball a lot and I have to believe it will be an aid in the recruitment process down the road. Those schools can now say that if you go to an SEC school, you could play on ESPN but if you go to our school in the Big 10, you'll definitely get to play on our own network.

I think if you look at the ACC deal there may be some hidden value. Lets say ESPN said to the ACC, "If you give us all your Tier 3 rights we'll guarantee that we'll produce X amount of content for baseball, soccer, lax, softball, etc. The ACC might decide that having all their other sports being broadcast may be worth the value of their Tier 3 rights. They have the world wide leader in sports producing coverage of all their olympic sports which are then either broadcast on ESPN or farmed out to other regional networks. More ACC exposure would logically lead to more successful recruiting.

The problem I see with that approach, though, is that if ESPN produces and then sells it you lose the consistency of your own network. You don't have to look on different channels for different events on different days. A conference network is ideal. I have no clue what the startup cost would be though. I also don't think the NBE could do it. First, I feel that the FB schools would have to split away from the non FB schools. There is too much football related content that can be produced and I don'ty see how that can be shared. Secondly, I'm not sure the other FB schools all share the same commitment to the olympic sports.

 

[Jericho]

I have a simple question - if tier 3 rights suck so badly, how come the Pac 12, Big 12 and down the line are making money with it, and nobody is trying to do what Swofford did with ESPN and the ACC?

I dont' understand this stuff, and i'm not too familiar w/ the guys out west but on simple face value, and knowing alittle bit about three important guys in all of this.....Chuck Neinas, Jim Delaney and Swofford.....if Neinas and Delaney are doing the same thing with broadasting and college athletics, and it's different than Swofford, I'm inclined to lean toward whateve Neinas and Delaney are doing as a better way to be doing things.

It's not that you cannot make any money. It's just the money you make is not going to be huge. Not to mention conferences like the Big 10 form networks with their Tier 3 rights (and the Big 10 Network also has Tier 2 rights). It's possible to make even more money from a Network that can go beyond Tier 3 programming.

But let's be logical here. Who's going to pay tons of money to show Big East cross county and tennis? Cause that's what Tier 3 is. There's a great post in this thread quoting from Oliver Luck on what Tier 3 is. Is maybe one football game (possibly against a I-AA opponent), the leftover basketball games that the major carriers don't want, and all the other sports that 99% of America does not care about. How is that going to earn $10 million when the major contracts for the top stuff from the major conferences aren't doing much better?

Look, UConn can make money outside their Big East contract. There are posts in this thread about how they make $8 million on a lot of these other rights, things like coach's shows and radio deals. And sometimes these other rights get lump together with Tier 3 rights into one package all called "Tier 3".

Some people like to point out how UConn got over $1 million per year for it's women's basketball team. For one, UConn women's basketball is an anomaly. Last I checked, it was actually profitable as a sport (normally only Football and men's basketball are profitable). Not sure any other school in the country could swing a deal like that for its women's basketball. And that deal appears to include some other stuff (like coach's shows) and basically the entire schedule (since women's basketball as a whole falls into Tier 3). The UConn men's basketball Tier 3 rights would be games against Wagner and Coppin State. It would be a small fraction of the games against the worst opponents. And sweetheart deal or no, when the Big East as a whole is averaging a little over $500,000 per team for many more games against the premier opponents, why are a small handful of games against the worst opponents going to earn 6 times as much?

Throw out the current Big East deal for a second. The Big Ten sold a choice selection of its basketball games AND the conference tournament semifinals and finals for $1 million per year per school. This is at a minimum twice the content (probably more like triple to quadruple), way better games, and some of the most watched Big Ten games a year. And they're going to get one third what UConn will get for a handful of out of conference games? No. Because UConn's Tier 3 basketball rights are not worth much. No one's are.

 

[Jericho]

In regards to Tier 3, Texas gets $15M from LHN and $9M for radio/internet and other media rights through IMG for a total of $24M

I'm pretty sure that is not correct. That prior posts indicating otherwise are misled. The $15 million per year LHN deal superseded and bought out the prior $9 million IMG/Learfield deal. Or at least some of the $15 million goes to pay off the other deal. It's still a sweetheart deal, but I think people are misreading it.

Here's an interesting post on some Tier 3 info for public schools (this includes many non Tier 3 revenue like coach's shows and other media revenues):

http://businessofcollegesports.com/2011/05/06/school-specific-broadcasting-revenue/

Edit to the above. Found this posted on another site:

The contract (LHN) was with IMG (ISP), not Learfield. The LHN contract pays IMG for rights that IMG owned that are being transferred to ESPN. There is an escalator in the contract every year.
In the first year, Texas netted a tick under $11 mil, and kicked $5 mil of that to the school for academics. There is a 3 percent escalator in the contract every year. Basically, once ESPN makes back its investment, ad proceeds are shared. IMG is an agent for ad sales.

 

[Dann]

so learning all about our t3 rights has been great, great thread guys. based off this, is it possible that we passed on the acc and are holding out for a b12/b10 invite or are going to stay with the nbe becuase our t3 stuff is so good with sny putting out to so many?

 

[WestCoastHusky]

so learning all about our t3 rights has been great, great thread guys. based off this, is it possible that we passed on the acc and are holding out for a b12/b10 invite or are going to stay with the nbe becuase our t3 stuff is so good with sny putting out to so many?

It is one possibility we have to consider. B1G or B12 would be much better options for making money. ACC would be good for regional rivals and academic fit. NBE would be a good place to grow our FB program. Our basketball and other Olympic sports will be fine in the NBE. At end of the day, we need to do what's best for UCONN. By controlling our own tier-3 rights, we will more or less have a major say in our future. We need to do that in the nBE regardless of the future. I believe schools like ND and BYU (if they join) will help us achieve this goal.

 

[Jericho]

so learning all about our t3 rights has been great, great thread guys. based off this, is it possible that we passed on the acc and are holding out for a b12/b10 invite or are going to stay with the nbe becuase our t3 stuff is so good with sny putting out to so many?

Let's be clear, no one passed on anything. If the ACC came calling, UConn would agree in a second. While schools should earn more in both the Big 10 and the Big 12 than the ACC, the difference is not huge. And the Big 12 has its others problems that casued 4 good schools to leave a huge money making conference. Not to mention some geographic concerns moving over to the Big 12. Third Tier rights will not be a deciding factor in conference movement.

 

[Carl Spackler]

I don't understand the numbers in all of this or what any of it really means. But once again, from my perspective.

You've got a couple of power playres in all of this. Swofford, Delaney, Neinas, Slive, Scott...........They're all dealing with broadcasting arrangments in the billions of dollar range, for leagues of university athletic departments.

You look at the deals in place, and a simple thing jumps out at me.....which one of these things is not like the other?

And then - when you look at the track records of these guys, and what they've done, and learn a little bit about them - I still have yet to hear a single argument as to why what Swofford has done is better than what any of the others have done.......and there's pleny of reason, simply based on their histories, and experiences, to think that what the other four have done - is most likely a better way to be doing the business.

 

[Jericho]

I don't understand the numbers in all of this or what any of it really means. But once again, from my perspective.

You've got a couple of power playres in all of this. Swofford, Delaney, Neinas, Slive, Scott...........They're all dealing with broadcasting arrangments in the billions of dollar range, for leagues of university athletic departments.

You look at the deals in place, and a simple thing jumps out at me.....which one of these things is not like the other?

And then - when you look at the track records of these guys, and what they've done, and learn a little bit about them - I still have yet to hear a single argument as to why what Swofford has done is better than what any of the others have done.......and there's pleny of reason, simply based on their histories, and experiences, to think that what the other four have done - is most likely a better way to be doing the business.

What's out of line? I'll grant the ACC has the worst deal, but outside the PAc-12, they also have the worst football.

Acc gets 17 million per
Big 12 likely will get 20 million
Big 10 gets 20 million
Pac-12 gets 21 million
Sec gets 17 million (subject to renegotiation)

Where's this huge difference?

 

[Jericho]

I disagree. I think our revenue situation around athletics is not compatible with the ACC. I think it's very real possibility that we stand lose money in the future if we join the ACC. I think the most important thing for uconn moving forward is freedom in our ability to schedule our sports as we see the best fit to reach our audience in primetime spots.

I don't see the ACC giving that to us.

How's that? The ACC would give UConn $17 million per year. Uconn would keep their existing $8 million per year in multimedia rights and $4 million in uniform money. The only possible thing UConn would lose would be the $1 million Women's basketball contract. And its unclear it they'd even have to lose that.

 

[Carl Spackler]

What's out of line? I'll grant the ACC has the worst deal, but outside the PAc-12, they also have the worst football.

Acc gets 17 million per
Big 12 likely will get 20 million
Big 10 gets 20 million
Pac-12 gets 21 million
Sec gets 17 million (subject to renegotiation)

Where's this huge difference?

I don't know. I'm not claiming to understand this. I know one difference. 4 of 5 conferences have retained their own rights, to some broadcasting. 1 conference has not.

Again, on simple face value, I think that Delaney, Slive, Scott - and especially Neinas, are a hell of a lot more endowed when it comes to aptitude in dealing with sports broadcasting, than Swofford is. That's my opinion.

but that fact is that the ACC deal is significnatly different than 4 others. WHy is that? You tell me, you're the expert.

 

[Jericho]

I don't know. I'm not claiming to understand this. I know one difference. 4 of 5 conferences have retained their own rights, to some broadcasting. 1 conference has not.

Again, on simple face value, I think that Delaney, Slive, Scott - and especially Neinas, are a hell of a lot more endowed when it comes to aptitude in dealing with sports broadcasting, than Swofford is. That's my opinion.

but that fact is that the ACC deal is significnatly different than 4 others. WHy is that? You tell me, you're the expert.

You're talking about Tier 3 rights. Something that most schools get $1 million or less on. It's not this huge money maker people make it out to be.

 

[Carl Spackler]

How's that? The ACC would give UConn $17 million per year. Uconn would keep their existing $8 million per year in multimedia rights and $4 million in uniform money. The only possible thing UConn would lose would be the $1 million Women's basketball contract. And its unclear it they'd even have to lose that.

Because I see 5 broadcasting arrangements, for major conferences, and 4 of them are different than 1. In a situation like this, you ahve to find out why 4 or similar and 1 is different, and based on what I know about the 5 entities invovled, the one that is different, makes me uncomfortable.

 

[Carl Spackler]

You're talking about Tier 3 rights. Something that most schools get $1 million or less on. It's not this huge money maker people make it out to be.

That's not good enough. You're talking aobut billions of dollars here. Dozens of universities, major state universities. 4 deals are significantly different than 1. Why?

 

[jrazz12]

So I understand this....right now UConn's Tier III rights consist of the 8M IMG deal, the Nike deal, some women's bball broadcasting rights, perhaps some other small pieces, and then what the Big East owns/shares, which is the crappy football game and some crappy basketball games. I believe the chart that was linked before shows that latter value (which I believe reflects the SNY deal) at about 1.8M dollars.

Am I correct in understanding that the latter piece, the crappy broadcasting rights owned by the BE valued at approximately 1.8M, is the only thing we would EVER have to share with a conference? We keep everything else correct?

 

[whaler11]

That's not good enough. You're talking aobut billions of dollars here. Dozens of universities, major state universities. 4 deals are significantly different than 1. Why?

Because their rights aren't as valuable. If someone sells their BMW for more than your Tercel it doesn't always mean they are a better sales person than you, they had something more valuable to sell.

Commissioners aren't alchemists, they aren't turning lead into programming gold. You can measure the interest in these programs quite easily - in a shocking twist, the conferences with the most interest have gotten the highest paydays.

 

[Carl Spackler]

Because their rights aren't as valuable. If someone sells their BMW for more than your Tercel it doesn't always mean they are a better sales person than you, they had something more valuable to sell.

Commissioners aren't alchemists, they aren't turning lead into programming gold. You can measure the interest in these programs quite easily - in a shocking twist, the conferences with the most interest have gotten the highest paydays.

Well, if the numbers in that college sports business link are to be trusted, you're flat out wrong, because if I read it right, schools like North Carolina, Florida State, NC State....and others have multiple millions tied up in this tier 3 mystery, that they no longer have their own rights to control.

 

[Jericho]

So I understand this....right now UConn's Tier III rights consist of the 8M IMG deal, the Nike deal, some women's bball broadcasting rights, perhaps some other small pieces, and then what the Big East owns/shares, which is the crappy football game and some crappy basketball games. I believe the chart that was linked before shows that latter value (which I believe reflects the SNY deal) at about 1.8M dollars.

Am I correct in understanding that the latter piece, the crappy broadcasting rights owned by the BE valued at approximately 1.8M, is the only thing we would EVER have to share with a conference? We keep everything else correct?

It's somewhat confusing because of the way people use the term Tier 3. But you have it right. The 8 million IMG deal is something that all schools always keep to themselves. Even all ACC schools have the power to enter into such contracts and those rights are not given in the conference contracts. Similarly, the Nike deal is negotiated on an individual school level. That will not be affected by any conference deal.

The conference deals are solely about television rights. Tiers 1 and Tiers 2 cover men's baketball and football. Whatever is left falls into Tier 3, which usually includes some men's basketball and maybe men's football (although SEC Tier 3 received no football last year). Women's basketball as whole falls into that Tier, so that could be affected. The only conference that cedes any Third Tier rights as a whole is the ACC. It's unclear what the coverage of that contract is. I believe some content may still flow through to schools, but that's somewhat speculative on my part.

But bottom line, the only Tier 3 stuff UConn might have to give to a conference are the TV rights to sports not covered by Tiers 1 and 2.

 

[Jericho]

Well, if the numbers in that college sports business link are to be trusted, you're flat out wrong, because if I read it right, schools like North Carolina, Florida State, NC State....and others have multiple millions tied up in this tier 3 mystery, that they no longer have their own rights to control.

You're misinterpreting the data. Lots of the claims on what Tier 3 is usually lumps in a whole littany of items including Tier 3 television rights and a whole bunch of other items like coaches shows, radio broadcasts, stadium advertising rights, website operation rights, and various other marketing & advertising related enterprises. The only item in that list that the ACC is giving to ESPN is the television rights. Everything else remains in control of the schools and the schools do make money off it (for example - NC State just signed a deal for $5 million per year for this "other" stuff. This is the exact same "stuff" UConn is selling for $8 million a year through IMG)

As to your other question. You indicated the ACC is doing things wrong by granting Tier 3 rights to ESPN. Not sure I follow the logic. Just because its different does not mean its wrong. The total purchase price by ESPN factors in Tier 3 rights, so the ACC is getting paid for them. Just as any other conference is getting paid. In the Big 12, these rights are sold at an individual school level. That's great for a school like Texas, not so great for an Iowa State. In the Pac 12, they grant them not to ESPN but to their own Network. In the end, all conferences are getting paid for that Tier 3 content. The ACC sells it as a group. Technically so do the Big 10 and Pac 12, except they're selling them to their own networks. The Big 12 lets the schools sell them. Not sure the ACC is smarter (I would suspect no), but it's not exactly radically different either.

 

[whaler11]

Well, if the numbers in that college sports business link are to be trusted, you're flat out wrong, because if I read it right, schools like North Carolina, Florida State, NC State....and others have multiple millions tied up in this tier 3 mystery, that they no longer have their own rights to control.

You are adding apple and oranges and saying they are all apples. They only give up the games, not the rest that is included. The games are virtually worthless beyond a few exceptions.

 

[Carl Spackler]

I still see no reason to think that tying up all your media rights with a single company, a cable company no less, is better than what the others have done. I have plenty of reason to think that the business models for broadcasting that the other four conferences are using, with multiple levels of ownership of rights and multiple broadcasting partners is a better way to do it, and I fully admit that my reasoning is based entirely on my opinion of the quality of leadership in each conference.

 

[Carl Spackler]

You are adding apple and oranges and saying they are all apples. They only give up the games, not the rest that is included. The games are virtually worthless beyond a few exceptions.

So are you saying that the ACC tier 3 is worthless? so much so that they don't give a about it and want ESPN to handle it?

 

[whaler11]

So are you saying that the ACC tier 3 is worthless? so much so that they don't give a about it and want ESPN to handle it?

Its pretty close to worthless and if they feel its in their best interest to include it how can you know they are wrong. You have no idea what the true facts are.

Youve just decided its different..... Therefore bad. The Big 12 is very different than the Pac 12 and Big 10, why aren't they wrong.

To me the Big 12 answer is clearly the worst - it gives Texas such a head start it's ridiculous - but I don't give a damn about the Big 12 so I don't lose much sleep over it.

 

[Carl Spackler]

Its pretty close to worthless and if they feel its in their best interest to include it how can you know they are wrong. You have no idea what the true facts are.

Youve just decided its different..... Therefore bad. The Big 12 is very different than the Pac 12 and Big 10, why aren't they wrong.

To me the Big 12 answer is clearly the worst - it gives Texas such a head start it's ridiculous - but I don't give a damn about the Big 12 so I don't lose much sleep over it.

With my admittedly limited understanding of this - numbers aren't my game......I just think that I'd rather UConn be the Texas of the Northeast, than Florida Sate of the south when it comes to these media situations and seems like UConn wouldn't have a chance to build something like Texas did down south, up here, if we were to agree to what the ACC has done. That's my understanding of all of this.

But then again, I've always kind of wondering whether or not you're really a UConn supporter, so I suppose it shouldn't be a surprise if you'd disagree with that.

 

[whaler11]

With my admittedly limited understanding of this - numbers aren't my game......I just think that I'd rather UConn be the Texas of the Northeast, than Florida Sate of the south when it comes to these media situations and seems like UConn wouldn't have a chance to build something like Texas did down south, up here, if we were to agree to what the ACC has done. That's my understanding of all of this.

But then again, I've always kind of wondering whether or not you're really a UConn supporter, so I suppose it shouldn't be a surprise if you'd disagree with that.

You truly are a jackass. Because I'm realistic and think the new Big East sucks and you have talked yourself into nonsense about the TV contract means I don't like UConn.

UConn can never be Texas for a number of reasons not the least of which you can't be Texas when your conference mates suck.

Texas' arrangement may also be harmful to themselves in the long run. Sports stop being interesting when they aren't competitive. One of the reasons why baseball's tv ratings are in the toilet is that there is a perception that only a few teams can consistently compete. Texas may use their money and snuff out Iowa State and Baylor, but that has unintended consequences down the line.

Michigan pooled their tier 3 rights even though they are more valuable than Northwestern's or Purdue's. It costs them dollars relative to their conference mates, but they used some of those games to build an amazing network that will lift all ships.

So it's really all a bit more complicated than give me every cent I can get today.

 

[Dann]

so all boston college university football games and bball games fall to tier 3? am i'm understanding this right?

 

[Jericho]

I still see no reason to think that tying up all your media rights with a single company, a cable company no less, is better than what the others have done. I have plenty of reason to think that the business models for broadcasting that the other four conferences are using, with multiple levels of ownership of rights and multiple broadcasting partners is a better way to do it, and I fully admit that my reasoning is based entirely on my opinion of the quality of leadership in each conference.

When the one single company has a virtual monopoly on sports broadcasting (and has its own broadcast channel in ABC), it's not so bad. I agree that it might not be the best scenario, but I fail to see how it is inherently bad.

 

[Carl Spackler]

When the one single company has a virtual monopoly on sports broadcasting (and has its own broadcast channel in ABC), it's not so bad. I agree that it might not be the best scenario, but I fail to see how it is inherently bad.

Fair enough, we simply have different opinion on business, and I really don't have much to go on other than what I've stated, becuase numbers and things like all this tier 1, 2, 3 stuff is not anything that interests me. There's a saying about putting all your eggs in one basket - and I'll just add.....even if it's the biggest and nicest, and cushiest easter basket around.

 

[WestCoastHusky]

When the one single company has a virtual monopoly on sports broadcasting (and has its own broadcast channel in ABC), it's not so bad. I agree that it might not be the best scenario, but I fail to see how it is inherently bad.

Bad deal for the ACC anyway you spin it.

BTW, are you an ACC fan?

 

[whaler11]

Fair enough, we simply have different opinion on business, and I really don't have much to go on other than what I've stated, becuase numbers and things like all this tier 1, 2, 3 stuff is not anything that interests me. There's a saying about putting all your eggs in one basket - and I'll just add.....even if it's the biggest and nicest, and cushiest easter basket around.

So pontificating about how to broadcast a league's game over 200,000 words is in your purview, but the actual numbers and details bore you. Ever think maybe if you dont have a handle on the important details maybe you dont have much of a handle on the big picture?

Like 99% of what u say fall back on cliches. Dont put all your eggs in one basket. You should be consulting.