I hope someday the ACC can achieve a conference network that brings in SEC/B1G level revenue. My concern today is that John Swofford's insistence to include Raycom (The company his son worked for at the time) in the ESPN/ACC TV contract, will cost the ACC this ability.
The ACC's Third Tier Rights And Why They're Killing The Conference
"I wrote last week that the ACC is currently on its deathbed, largely because of the conference’s poorly renegotiated TV deal with ESPN. My claim provoked an impassioned reaction from commenters on both sides of the debate, and many readers offered detailed and thoughtful responses. But some of those comments also made it apparent that there is a fair amount of confusion regarding the details of the conference’s television rights, particularly third tier rights, and what impact they will likely have on the conference’s future.
It ultimately comes down to the fact that ACC schools do not retain third tier rights for football or basketball games, a sacrifice that was not rewarded with comparable rights fees to those paid to the other “major” conferences. That does not mean that ACC schools are entirely without valuable media rights, but it puts the conference at a significant disadvantage and has led schools like Florida State and Clemson to consider leaving the ACC for another conference.
To quickly cover the basics: there are three tiers of media rights. The first and second tiers are generally controlled by the conferences, which sell them – either separately or combined – to national networks like ABC/ESPN, CBS and Fox. The first tier rights holder gets first pick of the conference’s televised sporting events, usually for over-the-air broadcasts. The unselected games then pass to the second tier rights holder, and games chosen at that level are generally aired on cable networks. The technical definition of “third tier” varies from conference to conference, but it mostly consists of what remains after the first two tier selections have been made. For most conferences, third tier rights belong to the conference members, who are free to monetize them as they see fit.
The most valuable football and basketball telecasts are obviously snatched up by the national networks. What usually remains in the third tier is a few football and basketball games, plus the vast majority of non-revenue sports like baseball, lacrosse and soccer. Third tier rights can also include schools’ multimedia rights for things like radio broadcasts, coaches’ shows, arena/stadium signage and website advertising.
All of these details are important because the ACC included its first, second and a significant portion its third tier rights in the recently signed contract with ESPN. There was some initial confusion about how much the conference actually gave away, but Burke Magnus, Senior Vice President of ESPN’s College Sports Programming, thankfully broke down the details of the new contract a few weeks ago:
ESPN retains exclusive rights to all football and men’s basketball games. Additionally, ESPN retains the first selection rights to women’s basketball and all other ACC sports such as baseball, softball, soccer, lacrosse, etc. Whatever is not selected for coverage and distribution by ESPN from these sports is retained by the member institutions.
When I predicted that the conference’s days are numbered, the crux of my argument was that the ACC gave away its members’ most valuable televised properties but accepted sub-par rights fees (the ACC’s deal is worth an average $17 million per school annually; the Big 12′s is worth $20 million). In short, the ACC is giving away more and getting back less.
What’s more, this isn’t the first time that ACC Commissioner John Swofford has left media rights money on the table. When the ACC signed its previous ESPN contract a few years ago, Swofford insisted on maintaining a partnership with syndicator Raycom Sports, possibly giving away increased media rights revenue in the process:
Swofford let the strongest bidders, ESPN and Fox, know that he wanted to include Raycom, which went into the talks as a partner to both networks, rather than trying to bid against their deeper pockets.The ACC television rights that Raycom secured are credited with keeping the syndicator alive: “company executives acknowledged that keeping a piece of the ACC’s business was the only way the small, regional TV syndicator and production company could stay relevant.” Raycom pays $50 million annually in a sublicense agreement with ESPN; ACC schools see none of that money.
It’s rather surprising that a conference would so willingly take less TV money – the core source of revenue in collegiate athletics – just to keep a broadcast company from folding. There are, of course, plenty of conspiracy theories to explain Swofford’s irrational decision. Raycom Sports is based in North Carolina, and the ACC is often accused of favoring its four NC schools. Then there’s Swofford’s son, Chad Swofford, who is the Senior Director of New Media and Business Development at Raycom Sports (he was also employed by Boston College athletics when the school received an invite from the ACC). But regardless of what theory you choose to believe, the ultimate conclusion is that the ACC has not been the best at negotiating its TV rights contracts."
ESPN launching 15 online college conference channels, but why the ACC?
"ESPN launched 15 conference-specific channels for its online outlet, WatchESPN, the media company announced on Thursday.
The channels can be streamed to television via Apple TV or Roku, and they will feature live men's and women's college basketball games and replays of college football games. With conference basketball tournaments on the horizon, ESPN is offering a platform for most Division I conferences around the country. Those included are the ACC, America East, Atlantic Sun, Big South, Big West, MEAC, SWAC, CIA, Horizon, MAC, MAAC, Missouri Valley, Northeast, Ohio Valley, Southern, Sun Belt and Southland. ESPN plans on broadcasting more than 2,000 live men's and women's games during conference tournaments.
The deal doesn't include the Big Ten, Big 12, Pac-12 or SEC because those conferences either already have or are planning to launch their own networks.
The ACC was also expected to be getting its own ESPN television network, not just a piece of WatchESPN. It's unclear what this news means as far as the ACC Network goes. As you'd expect, ACC fans are concerned."
ESPN Launching ACC Network... Plus 14 Other Online College Conference Channels
"Obviously, the main driver here is basketball and the conference tournaments, so that's all well and good, but this does sort of paint our current conference as a second-class citizen compared to the other four major conferences (all of which are exempt from this due to their own current or pending network deals already, by the way). The release mentions that come the fall, non-revenue sports and even some football will be tossed onto these channels though, which is where the worry comes in...
What if this works? What if ESPN can just casually toss all of these league properties onto streaming channels, all for a lower cost and not have to charge consumers a dime (at least upfront)? As the only "power conference" without a network to call its own, this is a critical blow to the ACC in that case. Without those revenues, the gap between the ACC and the other major leagues would widen. We'd see more of Syracuse's (football) games relegated to the online channel. ESPN would have no motivation to go all-in on an ACC Network if this venture is a success, because it would just cost them more money and give them another thing to argue with cable and satellite providers about.
... Or maybe I'm just worrying over nothing? No, this doesn't KILL the idea of a stand-alone ACC Network, but it certainly diminishes that possibility a bit. In the short term, it's not the end of the world. But I'm highly concerned about what this could mean in terms of future conference stability, our place in the college sports landscape and the ACC overall."
"Hmm… the ACC is looking into a TV Channel of their own, and this “channel adjacency” is “very very valuable.” Hey those aren’t my words they are ESPN’s.
In addition from that same article…
The additional digital services let ESPN, which is majority owned by Disney, negotiate higher carriage fees from cable and satellite TV providers and also present additional ad inventory.
Let me explain what that statement means… WatchESPN is a service provided by your Cable or Satellite provider. As ESPN enhances their digital content they can charge more for their cable channels, because there is more content to view. Now while I cannot make the leap that an ESPN driven ACC Network will benefit from this because such a network does yet exist, you can infer it in no way would it hinder the development of such a channel. In fact you can argue it may actually help drive the carriage fee up.
For those concerned this is the extent of an ACC Channel, don’t be. It’s doesn’t hinder the possibility in anyway."
"So, as the ACC basketball tournament hits its stride over the next few days, another decision looms for the conference off the court: whether to start a 24-7 cable channel dedicated to the ACC. Commissioner John Swofford told me during a recent interview in Charlotte that the league has begun exploring the idea with ESPN, the company that controls all of the conference’s TV rights through 2026-27.
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