AAC, ESPN Agree To 12-Year Media-Rights Deal Worth $1B

[Omaha1]

From a Houston site:

THREAD: The AAC TV deal is a complex situation. There are a few good parts of it & many bad parts.

The good news: our rights fee will be going up. From around $1.5 million to just under $7 million. But even with the raise, it is lower than many "experts" believed. #GoCoogs /1

2/ In addition, UH isn't locked into a grant of rights that would make leaving the conference difficult. That's probably the most important aspect for UH's longterm future.

But that's where the good news ends

3/ The bad news begins with the school presidents locking themselves into a 12-year agreement with ESPN. Most likely, none of them will be here a decade from now when that $6.93 million looks like peanuts.

Aresco has touted P6 for so long but this deal looks amateurish.

4/ But the worst part of it is that the "majority of basketball games and a significant number of the football games" will be on ESPN+. That means fans must to subscribe to the new streaming service and games won't be as readily available.

This is a big screw-up.

5/ You've taken the bulk of your inventory off of television. As bad as ESPNU & CBSSports are, at least they're on TV. Viewers can flip back & forth between those games & others.

One of the big pluses to staying with ESPN & not bringing this to market was games being *on* ESPN.

6/ This is worse than the MWC leaving ESPN to CSTV/CBSSN. The American agreed to a deal that is significantly worse than what it had before. Definitely worse for the fans and exposing teams to others.

Yes the money is better. But at what cost?

[GumbyDamnit!]

So I don't know if this is a good thing for ESPN or a bad thing...but it seems to be a thing nonetheless. So correct me if I'm wrong... ESPN+ is a subscription service, right? So in effect the ESPN is saying: "look, we don't think anybody really wants to watch your teams/schools play, but we're willing to give you a platform to watch these games if you want, and we'll just charge you a nominal fee to do so." So UCF has a good year and they've got a half a million fans willing to shell out a few buck every month during football season. So the UCF fan watches the game but literally no casual FB watchers catch one AAC game becasue why would they shell out money for Tier 2 or 3 product? In effect the AAC fans just financed their own TV contract. That's a little pathetic.

Hey maybe that is what we are going to see moving forward. Fans just pay for content and watch exactly what you want to watch. But for 12 years the AAC just locked itself into a barren wasteland if that ends up not being the case. Yikes that's a big gamble for them...not so much for ESPN. I think the AAC just got snookered...

[Xudash]

So I don't know if this is a good thing for ESPN or a bad thing...but it seems to be a thing nonetheless. So correct me if I'm wrong... ESPN+ is a subscription service, right? So in effect the ESPN is saying: "look, we don't think anybody really wants to watch your teams/schools play, but we're willing to give you a platform to watch these games if you want, and we'll just charge you a nominal fee to do so." So UCF has a good year and they've got a half a million fans willing to shell out a few buck every month during football season. So the UCF fan watches the game but literally no casual FB watchers catch one AAC game becasue why would they shell out money for Tier 2 or 3 product? In effect the AAC fans just financed their own TV contract. That's a little pathetic.

Hey maybe that is what we are going to see moving forward. Fans just pay for content and watch exactly what you want to watch. But for 12 years the AAC just locked itself into a barren wasteland if that ends up not being the case. Yikes that's a big gamble for them...not so much for ESPN. I think the AAC just got snookered...

I believe you nailed it.

But isn't it worse than that? How do you recruit talent into that environment?

[GoldenWarrior11]

My prediction was $5-$6 million, so I wasn't that off. As with all business deals, there are winners and there are losers. I would categorize the groupings below:

Huge Winners
ESPN - They get to retain valuable inventory for their ESPN+ network, creating a need for each of the AAC fan bases that will ultimately spend some money subscribing to the network. While a $1 billion deal over 12-years, it is still remarkably cheap in the long-run, for all of the content the AAC will ultimately provide. Finally, in 12 years, under $7 million per year will be peanuts (once again) to what the P5/P4/etc. will then be making.

Tulane/ECU/SMU/Temple - Considering what they came from a decade ago, and their lack of success in football and men's basketball, to be making that amount of television revenue annually, is a huge victory for each of those schools and athletic programs. Tulane and ECU have provided little-to-no value in football and men's basketball; SMU received the death penalty over 30 years ago; Temple got kicked out of Big East Football; for these programs to officially be valued higher than any other G5 is a grand slam.

Winners
Houston/UCF/Memphis - These programs have invested in themselves, had success in football and men's basketball, and are in prime position for a P5 invite - if the P5 ever realigns/consolidates/expands/etc. They will be earning way more now under this deal, and - especially in Houston's case - validates their investments. While not P5-level money, it keeps the current spending up for another potential go-around.

Navy/Wichita State - While partial members, the deal affirms their affiliations as providing some value to the league.

Losers
USF/Cincinnati - Unfortunately, combining the $6.7 million that will be coming annually from the next TV deal, and the CFP money, and any potential tournament credits, it still will not surpass the $11 million that the Big East turned down almost ten years ago. Additionally, they will be earning around the exact same amounts that they were receiving under the war chest separation fees. Finally, they have now seen Houston, UCF and Memphis very much appear to have overtaken them for the on-deck circle for any potential P5 invitation, due to their football success.

AAC P6 Awareness - While getting paid, AAC membership will be going from ESPN's 86 million subscribers to (now) ESPN+'s 2 million subscribers (along with a subscription fee). There are no P5 conferences on ESPN+. ESPN+ currently has A10, American East, A-Sun, Big South, C-USA, Horizon League, Ivy League, MAAC, MAC, MVC, OVC, SoCon, Southland, Summit and Sun Belt.

Biggest Loser
UConn - Combing all of the issues for USF/Cincinnati above, they still have one of the nation's worst football programs, as well as one of the largest athletic budget deficits. UConn spends $7 million annually on travel costs alone, so the new TV deal revenue won't even fully cover those expenses. In the FY 2014, UConn earned nearly $14 million in payouts from the AAC. In 2032, UConn can only hope that they earn that much with CFP money and tournament credits assisting in elevating that revenue.

[Hall2012]

So I don't know if this is a good thing for ESPN or a bad thing...but it seems to be a thing nonetheless. So correct me if I'm wrong... ESPN+ is a subscription service, right? So in effect the ESPN is saying: "look, we don't think anybody really wants to watch your teams/schools play, but we're willing to give you a platform to watch these games if you want, and we'll just charge you a nominal fee to do so." So UCF has a good year and they've got a half a million fans willing to shell out a few buck every month during football season. So the UCF fan watches the game but literally no casual FB watchers catch one AAC game becasue why would they shell out money for Tier 2 or 3 product? In effect the AAC fans just financed their own TV contract. That's a little pathetic.

Hey maybe that is what we are going to see moving forward. Fans just pay for content and watch exactly what you want to watch. But for 12 years the AAC just locked itself into a barren wasteland if that ends up not being the case. Yikes that's a big gamble for them...not so much for ESPN. I think the AAC just got snookered...

Honestly, if FOX had a streaming pay-service (say the same $5/month as ESPN+) and moved all of our games that normally get relegated to CBSSN and Fox regional networks (and really even FS2) onto it, I'd be all for that. Especially if it included some other decent content, such as ESPN having a ton of soccer (every Serie A, MLS, USL, FA Cup plus more), a lot of midmajor basketball and football, an NHL game a day, some college Olympic sports plus plenty more. It's frustrating having to miss a few games a year because I don't get the channels they're on - but it's also not really worth upgrading to my cable company's premium package.

[adoraz]

I saw several months ago the A10 agreed to a new contract which heavily involved ESPN+. I figured the AAC might get a similar treatment. Before the AAC deal was announced, I thought there were two scenarios:

A. $10-12m per team & lots of ESPN+ games
B. $6-8m per team & no (or very few) ESPN+ games

Turns out the correct answer was C. The worst of both.

At this point, ESPN+ is a bad look because there are no power conferences on it and only 2 million people are subscribed. That probably changes in the future, but many years from now. How many people on this board are subscribed to ESPN+? Is anybody? I bet even Stever wasn't.

I predict that 5+ years from now, this will universally be seen as a bad contract when some of the power conferences are negotiating their own deals.

[stever20]

I think the question yet to be answred is just how many games are going to be on ESPN+. That's something we just do not know right now at all.....

You would assume that the number of ESPN,2,U games will remain the same. Especially given the ACC network coming around, ESPN isn't going to air nothing. I'd also add that probably over half of the total number of games this year aired on ESPN3. Have got to remember that the total number of games is not just the 108 conference games. It's that plus the 90ish OOC games that the conference controls. So probably 200 games, if 20 OOC games are aired on TV, that would leave 80 of the 108 conference games to air on ESPN. A majority of games can be 51%. It'd be interesting to see how many total to include OOC AAC games were on ESPN3 this year. It may be much ado about nothing.

I would also say that news came down yesterday that all UFC PPV's going forward will be only available thru ESPN+.

[Hall2012]

I saw several months ago the A10 agreed to a new contract which heavily involved ESPN+. I figured the AAC might get a similar treatment. Before the AAC deal was announced, I thought there were two scenarios:

A. $10-12m per team & lots of ESPN+ games
B. $6-8m per team & no (or very few) ESPN+ games

Turns out the correct answer was C. The worst of both.

At this point, ESPN+ is a bad look because there are no power conferences on it and only 2 million people are subscribed. That probably changes in the future, but many years from now. How many people on this board are subscribed to ESPN+? Is anybody? I bet even Stever wasn't.

I predict that 5+ years from now, this will universally be seen as a bad contract when some of the power conferences are negotiating their own deals.

I am, but only for the soccer content.

[MUPanther]

If the 2 million people that are subscribed to ESPN+ is the new updated number, that has went up because of UFC.

[adoraz]

If the 2 million people that are subscribed to ESPN+ is the new updated number, that has went up because of UFC.

Yeah, and as we've seen with FS1 there isn't exactly overlap in the audiences. UFC helped Fox get ratings but those viewers weren't tuning into Big East games. The best overlap is college basketball (like the B1G joining Fox), but mid majors aren't great company to be with.

Hall and a couple others on this board may be subscribed, but end of the day having an audience of 2 million vs 100+ million is night and day. Personally I'm a fairly big sports fan (baseball, football, golf, etc) and I've never considered subscribing.