Why are sports so valuable to networks? Big games from known leagues are the only things that bring most people under the age of 60 to live television anymore. ESPN and FOX know it. It’s why every rights package that hits the open market is bound to spawn a bidding war.
College sports may not be one of America’s four major pro leagues, but they matter. They are a known entity. That’s especially true when you are talking about power conference college football. The SEC and Big Ten are making billions in television revenue because the teams in those leagues have serious national appeal.
ESPN pounced on the chance to renew the NCAA championship TV package at the beginning of the year because it has seen viewership for women’s basketball, baseball, softball, women’s gymnastics and more explode in recent years. Conference TV deals offer so many games across so many sports that there is always growth potential.
Right now though, the schools that make up the NCAA are entering an uncertain era. After agreeing to a nearly $3 billion settlement with former athletes denied the opportunity to profit off their name, image and likeness, the door has been open for legitimate athlete compensation. Schools can no longer get away with not paying the kids that do more than entire marketing departments to generate interest from potential new students. They can’t pass the buck on to booster collectives anymore either.
It’s a new day and that has resulted in some smart people saying some dumb things. School and conference administrators are doing a lot of fear-mongering, trying to get fans nervous enough to call their senator and demand action.
College athletic departments will soon be sharing as much as $21 million per year with their athletes. Where is that money going to come from? I suggest that it comes from television. SEC Commissioner Greg Sankey should be on the phone with ESPN and Big Ten Commissioner Tony Petitti should be on the phone with FOX. They should make it clear to their media partners that opening Mickey Mouse’s and Rupert Murdoch’s respective checkbooks is the best way to ensure their investments pay off.
ESPN and FOX have more skin in the game with college sports than just what each shows on its networks. Look up ESPN Events. It stages bowl games, invitational basketball and baseball tournaments and more. Just this week, it announced a new softball invitational. The whole division basically relies on college athletic departments to create its inventory.
Earlier this year, FOX made a similar announcement. Even amidst the impending collapse of the NIT, the network has decided another second-tier college basketball tournament is needed.
The future of college sports matters to these companies and if the future involves having to build new financial models, they should want to step up. The alternative is so much scarier.
Agreeing to settle with those former athletes and open a door to direct compensation for players created a whole new world for American colleges and universities. Even the smartest people can make dumb decisions when faced with the unknown.
The words “private equity” are being thrown around as a potential solution to generating new income. FOX and Disney, two gigantic companies, have to know that that could very well be the death knell for some programs.
Private equity does not build. Those firms invest and then cut costs to generate profit. The reality of college football, where even the strength coach at UConn, which doesn’t have to worry about conference competition, is making nearly $270,000 per year, does not jive with the private equity model. Strength and conditioning programs are fundamental to a team’s success, but it won’t matter if everything in a school’s athletic department becomes a number on a spreadsheet. One side would have to drastically change the way it does business and it probably wouldn’t be the side providing the money.
Sankey laid this reality out for his member schools and reporters at the SEC’s spring meetings last week.
“In my experience, those involved in private equity want to be paid back,” he said, “so I would caution people around the notion of short-term fixes.”
He should be making similar statements to Bob Iger and Jimmy Pitaro: You’re invested in this product. We’re entering a new, more exclusive business relationship. Don’t let people who don’t understand and value this business get in the way. Ask Red Lobster how that worked out for them.
Usually, when you’re in business with someone, they expect you to honor the contract you signed. You have to give them a very good reason to renegotiate, and usually, you aren’t even given the chance, instead being met with a firm no or even a laugh. But FOX and ESPN would be wise to play ball with the conferences they are in business with. We’re talking about billions in investment. Another cash infusion is the best way to ensure that no outsiders hurt the return on your investment.
ESPN just poured billions into the College Football Playoff. The two networks are teaming up to launch Venu, a streaming platform built on their sports properties. They know college games have never been more valuable to them.
It makes sense to be part of this solution, to be bold leaders instead of passengers along for whatever ride others want to take them on. ESPN and FOX paid plenty for this car. Shouldn’t they want to be in the driver’s seat?
Demetri Ravanos is a columnist and features writer for Barrett Media. He is also the creator of The Sports Podcast Festival, and a previous host on the Chewing Clock and Media Noise podcasts. He occasionally fills in on stations across the Carolinas in addition to hosting Panthers and College Football podcasts. His radio resume includes stops at WAVH and WZEW in Mobile, AL, WBPT in Birmingham, AL and WBBB, WPTK and WDNC in Raleigh, NC.
You can find him on Twitter @DemetriRavanos or reach him by email at DemetriTheGreek@gmail.com.
