Pac 12 Trumps Rivals In The TV Race, But Not Without Costs PDF Print E-mail
Written by Roger Groves   

Why do you think the Pac 12 Conference reached outside of traditional circles to select a commissioner? They know college football is America’s most popular sport next to the NFL, more so than pro basketball, pro baseball, and pro hockey. So why pick a Harvard tennis player? Perhaps it was because even if that tennis player (Larry Scott) never took a snap under center, he served an ace corporate sponsorship as chairman and CEO of the Women’s Tennis Association. It apparently didn’t matter if he knew X’s and O’s, as long as he could transform brand X to brand $. And he appears to be well on his way. The conference he took over had double faulted in the television arms race. He added Utah and Colorado, created a conference championship, packaged the Pac 12 brand in a TV network, and sold it to various cable providers. Football’s nearly forgotten coast conference is thereby experiencing a talismanic jump to national relevance.

The Big 10 Network was the gold standard. It grew from its August 30, 2007 beginnings to the multi-million dollar envy of all other conferences, growing in revenue each year – 15% last year alone. It was particularly the envy of Nebraska. Some say the Cornhuskers’ move to the Big 10 was largely because even Northwestern received more corn from network revenue sharing than Nebraska got from its own conference. Nebraska had to decide whether its allegiance to conference traditions, including the rivalry game upon which most of its loyal fans were weaned, Nebraska-Oklahoma, was worth forfeiting for future profits. The decision must make purists more peeved than pleased. But it is a sign of the times. That is one of the reasons I wince when I hear people clamor for athletes to just play “for the love of the game.” That, like nostalgia, is unfortunately better suited for the History Channel.

Not looking backwards, Scott has orchestrated a record setting $3 billion deal. He also took the Pac 12 beyond a single national network like the Big 10, where its fans all watched the same thing. The PAC 12 has gone pro. Like the NFL, it is the first collegiate conference to have both national and regional games. By dividing the conference into six regional viewing sectors, the conference will exponentially increase viewing options. And for effect, Scott’s announcement was not made in the Pac 12 region. It was made in New York City, symbolizing big time national relevance for Pac 12 football.

But there are other implications and they are not all good. Not for every team in the conference, not the NCAA, and not college football.

These televised games are great exposure for great football teams. Oh, for instance a team that just won back-to-back conference championships, is 22 and 4 over those two years and last season played for the national championship. That would be the multi-wardrobed, nearly malfunction-free Oregon Ducks. Its coach Chip Kelly succinctly stated that he can now “guarantee” recruits they will be on the big screen every game. And by the terms of the conference contracts, he would be right.

But I wonder what the coach of a perennially porous team is thinking in the privacy of his insecurities. The Colorado Buffaloes were 5-7 last season and 19 -39 over the recent seasons. That was enough to get Coach Dan Hawkins fired. Now Jon Embree is the new coach with a new and improved conference. Embree must wonder whether his team is current collateral damage from the network deal. Even his own athletic director admitted, “If we can emerge from not being dead last in the Pac-12 Conference as far as number of donors and amount of money raised -- that's a challenge for us.” And contextually speaking, the network affiliation is not necessarily an immediate benefit to Colorado. Last year the Buff’s
lost to Oklahoma 43-10. And the last game - the one that lingers in the memory during a long non-bowl offseason, they were thumped by Nebraska 45-17. Absent EA sports animation or another exceptional coaching effort, recruits will see the disparity between the Ducks and the Buffaloes and prefer to quack.

Conventional coach-speak is that you recruit better with national TV exposure. But more analytically, you recruit better if you are already good. Then you may convince the top recruits that you are already on the way to the mountaintop, and they are the special ones to make history in getting you there. But if your team is exposed as woefully non-competitive with top teams during national exposure, it may do more harm to recruiting than good.

And while there are NCAA scholarship limitations designed to prevent stockpiling, that hasn’t curtailed the emergence of perennial super teams. Rather, this TV network arms race appears to be only more mortar in the building of super teams. That appears to be a recipe for increased benefits for the haves and more embarrassing despair for the have-nots.

The potential for an increasing gap within the conference is but a micro-version of the disparity likely to grow between the strong TV networked conferences and the remaining conferences. I fear that advocates for the parity of pre-2011 Boise State and Utah with the best of the Big 6 conferences will have a muted tone in future years. Utah built a respectable program. But it surrendered to the Pac 12 in realization that it is better to be adopted by a networked conference than to be orphaned without it. It realized that there is not likely to be parity without networked TV, which provides a sizeable revenue split that will allow them to compete for a more impressive stadium, more funds for recruiting, more academic support, glitzy locker rooms, NFL-styled workout facilities, money to hire top coaches, and the goodwill that appeals in a special way to the video generation. Football is just a different animal. If Duke has twelve times the Rhoades Scholars and hoops championships as the entire Pac 12, they still can’t get the next Cam Newton on current facilities. They too are upgrading facilities, but Congress will balance the budget long before a Cam II plays across from Cameron Indoor Stadium.

The reason the NFL structured draft choices so the worst get first picks is to increase parity. That is because parity brings more drama which brings more fans. It’s been good for the NFL, and it would be good for college football. So despite public optimism about a team’s upcoming season, I suspect the Super Pac 12 network is privately a daunting challenge for the have-nots.

One of the good features of the conference network is that each team will get a bigger revenue piece than it had prior to the super deal. But look behind the transaction. That raises the issue of revenue sharing among teams. Do the worst teams get more revenue than the successful programs to overcome the disparities? Under the Pac 12 deal, the teams share revenue equally. That does not add parity unless there is an economies of scale where after a certain point, there are diminishing returns for excess. No ceiling in the arms races appears from what I can see. No super team is returning funds to donors. So it is hard to find how equal splits cure the pre-existing inequalities.

Another plus is the larger recruiting base that comes with national relevance, assuming a charming coach and compelling institutional benefits. But just because teams are in the same conference does not mean they equally share national exposure. The Pac 12 has to negotiate a contract with cable providers. Who can blame cable companies for wanting large market share which brings larger advertising revenues? So the agreement gives Oregon more national exposure than the conference have-nots. Once again, the rich get richer. That is not an indictment. No one gave top programs that status. They built it. The moral hazard is to reward those who have not earned it. Subsidies therefore are suspect. In fact,
Oregon could complain that it should receive more money if it has more fan appeal, i.e. all its R & D and quality program building cost money too. So reward them for their success. After a fermented juice, I can imagine a high level Duck saying privately, “Let the ‘competing’ schools find their own way to beat us. But don’t ask us to sacrifice our success to help them beat us.”

Then there is the question of whether the TV network has $3 billion ways to be overly influential with college football – the game on the field. The Pac 12 has negotiated agreements with several cable franchises. With each agreement comes revenue from licensing agreements. Importantly, the network is owned solely by the conference. They do not have a tiny royalty from the NCAA or the schools. They negotiate with the schools from a position of power because they own the TV rights. Do you think that matters when they want teams to adopt certain game rules, scheduling that burdens the players, or a share of bowl game tickets?

License fees come to the network, and are then distributed among the teams and conference based on an agreement. That’s a sweet thing to do, but it’s not a Christmas gift. The conference has its own board of directors to pay, its own mid-level administrators to pay. So when they negotiate revenue sharing with the schools, they factor that in. Just as they do when negotiating with the cable franchises that carry the games. More fees add logs to the fire of controversy. Is the tail wagging the dog? It would be one thing if money is distributed to the players who admittedly are not paid for the full cost of schooling. But what stops the conferences from doing what the NCAA already does – paying a
substantial administration of those whose role is to support the athletes who often get less than the overall cost of attendance.

And importantly, the conferences are negotiating these television deals independent of the NCAA. The bigger the independently-sourced revenue, the more independent the conferences become from the NCAA. The conferences already have their own eligibility rules. They can have their own championships if they ban together. It may sound far-fetched but once upon a time the NCAA sued prominent football powers in the east that negotiated their own television contracts and openly questioned “Why do we need to NCAA? Down the road, a lack of uniformity nationally could result from conference independence. That too may not be good for the spectators of college football.

I’ll save for another day ways in which conference independence can possibly be good for the college players. The NCAA makes billions from the players they call amateurs. Teenagers are bestowed that status from NCAA grown-ups to protect them from “exploitation” by those evil professionals. Yet the NCAA and some big conference commissioners now begrudgingly admit that many players they lured in with promises to take care of them do not receive enough in college stipends. So who’s the exploiter?

I am not at all sure the conferences would classify student-athletes any differently, but they may move faster to increase the player living expenses than what we are seeing from the current bureaucracy of entrenched administration within the NCAA. The NCAA only moved materially in that direction when threatened with lawsuits and were in fact sued. Perhaps the conferences would have a different sense of fair play off the field.

And then there is the historic mantra of any for-profit corporation, TV networks included: “We must continue to grow.” In fact it is the board of director’s fiduciary duty to grow value for their shareholders. Growth is not confined to dollars. It can include activities. They pay people to come up with ways to expand beyond artichokes. “Let’s get the anchovies crowd what they want – perhaps a taste for high school football.” Why not televise those games too? The Texas Longhorns think it is a good idea and have done more than just talk about it. All Big Ten Commissioner Delaney said was that the conference was not interested in broadcasting high school games “in the near future”. That statement was a long
way from never. If high school telecasts from one conference appear to cause a talent-drain from another conference, the calculus of future will likely change.

So the Pac 12 trumps the other conferences – for now. But the arms race is not over. It’s just heating up. My guess is that every conference will anti-up if they can. The Big 10 is not satisfied with its 80 million households, and 15% growth last year in a static economy. It did not rest on the fact it currently leads all conference networks in international viewership. During the conference media day that used to just be coaches talking about their teams, network president Mark Silverman already announced what it termed its “re-launching”. Sounding like GM at a 1960’s auto show, he rolled out its new logo (BTN), showed clips of its new graphics packages, noted its additional programming, digital partnering with
school websites, more online interactive content, and thank God - a re-tooled tailgate program. It also realized the future of providing more options for its audience. So it negotiated more flexible game times with cable providers, and double headers – the end game being to get its followers to sit in front of the television all day and night. I think I almost heard him whisper, “And if you must go get groceries, pick up artichokes with one hand and stream with your Android in the other.”

The media asked the Big 10’s Silverman if added television exposure is good for the college game. Silverman did not whisper. Without the slightest pause of uncertainty, he said they intend to “give people what they want” and more television equals a “stronger connection to the school.” He signed off with the comment: “More options, more games to watch are a positive development for all of us”. I suspect Pac 12 Commissioner Scott is totally in tune with those comments, and is singing to a national choir of his own. If other conferences do not follow suit, it is hard to imagine how they will compete absent the few solo performers like Notre Dame that have their own television deals. More likely they will be collateral damage – on television.

 

 

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