Realignment Megathread (All The Moves)

[Jer]

And yet ESPN just shelled out $10M per for Pat McAfee plus whatever they're going to pay his crew and picked up 100% of his production costs including, apparently, reimbursing him for the purchase and renovations of his new building/studio while giving him the go ahead to use everything but the f-word for 3 hours everyday on the main channel. I like McAfee a lot but that still seems like a stretch,

Feels like ESPN is 'selectively' cost cutting and targeting long tenured (expensive) employees.

I'll get downvoted like crazy, but I PERSONALLY (aka my own opinion guys) find McAfee to be a giant narcissistic, douchebag, attention *****. I loved Rodgers in GB, but there's a reason McAfee and Rodgers get along so great - they're both all about attention.

Ahh, makes sense why ESPN would pay so much for him.

 

[FriendlySpartan]

It's coming from the Big 10 or SEC. They would front them the dough and have it paid back with reduced media payouts for awhile

Yeah I don’t know about that. Why not just wait the extra years for them to be free on your terms? The schools the big ten want have no other real landing spot.

 

[Jer]

Yeah I don’t know about that. Why not just wait the extra years for them to be free on your terms? The schools the big ten want have no other real landing spot.

I agree fully with this. There isn't really a benefit in hurrying and plenty of reason to wait.

 

[Cloneon]

And yet ESPN just shelled out $10M per for Pat McAfee plus whatever they're going to pay his crew and picked up 100% of his production costs including, apparently, reimbursing him for the purchase and renovations of his new building/studio while giving him the go ahead to use everything but the f-word for 3 hours everyday on the main channel. I like McAfee a lot but that still seems like a stretch,

Feels like ESPN is 'selectively' cost cutting and targeting long tenured (expensive) employees.

I'm sure his contract is tied to performance; whereas 'performance' related to conference contracts are a bit more difficult to be shorted.

 

[clone52]

Yeah I don’t know about that. Why not just wait the extra years for them to be free on your terms? The schools the big ten want have no other real landing spot.

If it makes financial sense for the SEC and Big 10, why on earth would you wait until 2036?

If it happens, it would be because there is a financial benefit for the SEC and Big 10. It's plausible there is.

 

[exCyDing]

I don't see the ACC falling apart for 4-6 years. So the massive cost cuts should be in the rear view mirror.

The ACC deal with ESPN is $17M/school annually. The SEC and Big10 deals are around $65M/school annually. Let's say the Magnificent 7 schools join Big10 or SEC in 2028, 8 years before the ACC GOR expires. And there are 7 schools left behind. A 1:1 ratio, so easy math.

- Per School Big10/SEC Incremental Revenue 8 Years = $384M / $48M/yr ($65M-$17M)
- ACC Exit Fee = $125M
- Net Revenue Over 8 Years = $259M

I would expect the left behind 7 would negotiate beyond the $125M exit fee. And there is some wiggle room in that $259M figure that I would bet the Magnificent 7 would part with.

A key is a majority of schools not getting a Big10/SEC invite, getting a Big12 invite. ACC schools should be financially ahead making $32M annually in the Big12 vs. $17M annually in the ACC. And by 2028 the Big12 will be a couple years out from its next media rights deal.

Greed can make the impossible happen.

Schools would likely see an ROI if they could get out of the ACC and into the B10/SEC/B12, but I think you're total figure is low and you skipped some issues that will have to be resolved or bought out.

So let's say they decide to do it. First order or business is the ACC buyout: $120M each.

Next, the left behind schools will probably lose out about $10m per year if their new TV deal is in the ballpark of what the AAC gets. So that's $400m, or another $40m from each school leaving. $160M

Now here's where things start to get interesting.

First, if the ACC sticks together, it's still a P4/5 conference and will get CFP money accordingly. How much? Really hard to say at this point. Suffice to say, it'll be a whole lot more than they'll get as a non-power conference member. Will they just give this up? No they will not. They currently get like $5M, but the next deal should double that. Another $40M each! $200M

Next, if the ACC sticks together, those schools get the prestige of being the P4/5 conference. How much is that worth? This one is harder to quantify, but maybe $4M per year? $240M.

Here's one that's tougher yet. Notre Dame. First, they get about $10M a year from the ACC for their non-football sports + 5 FB games. The ACC solves a lot of problems they'd otherwise have in keeping their FB independent. Money's not the most important thing for ND, and ESPN/Fox have no sway with them (assuming they re-up with NBC). Maybe they agree for $30M for each of the 10 years? $30M each, $270M total.

So the B12 doesn't work as a destination. $32M * 10 = $320M- $270M = $50M. All that work and negotiating to come out with $120M less than if you did nothing. If the can get out for $120M, makes sense. If the B10/SEC 6 blow up the ACC, even better. Otherwise? They're stuck.

So some of the buying out gets shifted to the B10/SEC schools. I think there's six of them (UNC, UVA, Miami, FSU, Clemson and either NC State or VA Tech, but not both). Leaving everything else the same (and assuming the 4 the B12 picks up just kind of let it all slide since they'll be better off if they can get out for free/just the $120M exit fee), those six would have to shoulder about $300M each. Their break-even point is at ~$47M per year for the TV portion. Doable, but not exactly massive after all the up-front investment.

Still unanswered: Where do these schools get the $270M+ needed up front to make this happen?

 

[FriendlySpartan]

If it makes financial sense for the SEC and Big 10, why on earth would you wait until 2036?

If it happens, it would be because there is a financial benefit for the SEC and Big 10. It's plausible there is.

Plausible sure. But the only way it has financial benefit is to bring in more than 70mil per year per school. Do you really think Virginia can command that? UNC maybe but their recent political action might be causing concerns for the presidents.

If they can’t command more then that then they aren’t adding value to the P2 and if they were then holy crap the ACC deal is horrific.

 

[clone52]

Plausible sure. But the only way it has financial benefit is to bring in more than 70mil per year per school. Do you really think Virginia can command that? UNC maybe but their recent political action might be causing concerns for the presidents.

If they can’t command more then that then they aren’t adding value to the P2 and if they were then holy crap the ACC deal is horrific.

Yeah, but a better way to look at it is if they would provide more value than the average Big 10 team? They are likely more valuable than Rutgers, Maryland, Indiana, Minnesota, Nebraska, Purdue, Northwestern. Maybe even more valuable that Iowa, Illinois, Wisconsin, UCLA. And do why would Michigan State be more valuable than Virginia or North Carolina?

 

[isucy86]

Math checks out if they get immediate full shares and don’t have to pay anything for breaking the GOR. Agree the problem is those 7 are not all getting into the P2. Also wonder if the media partners of the P2 think those schools are worth it. For example the Presidents in the big ten love Virginia but do the media partners love them enough to shell out another 70mil per year for them.

Since ACC schools will be the last opportunity for Big2 to add brand schools, I think the competition between Big10 and SEC will be pretty stiff for UNC, Miami and FSU. Would guess FOX and ESPN agree. Clemson might be in an odd spot as the Big10 might not have interest and what if Clemson is just OK in 5 years?

Agree about athletic value of schools like Virginia, Ga Tech, Duke to the networks. I could see where FOX or ESPN might prefer/be neutral about west coast schools in major metros like ASU, Utah, Cal and Stanford. Will also be interesting how the ACC unequal revenue share talk plays out. My guess is schools like Ohio State, Michigan, Penn State, Alabama, Georgia, might follow closely.

Five years is a long time and a sport brand can rise or fall significantly.

 

[FriendlySpartan]

Yeah, but a better way to look at it is if they would provide more value than the average Big 10 team? They are likely more valuable than Rutgers, Maryland, Indiana, Minnesota, Nebraska, Purdue, Northwestern. Maybe even more valuable that Iowa, Illinois, Wisconsin, UCLA. And do why would Michigan State be more valuable than Virginia or North Carolina?

I would put Wisconsin, illinois, UCLA, Sparty (although trending down hard) Iowa, UNC, and Virginia all on the same tier. The problem is that while those schools could have more individual value the big ten schools get grandfathered in, so a new school needs to being insanely high value. It’s annoying that a team like Rutgers or Maryland get to just coast where better schools like UNC have to show big value adds to the media partners.

 

[isucy86]

Schools would likely see an ROI if they could get out of the ACC and into the B10/SEC/B12, but I think you're total figure is low and you skipped some issues that will have to be resolved or bought out.

So let's say they decide to do it. First order or business is the ACC buyout: $120M each.

Next, the left behind schools will probably lose out about $10m per year if their new TV deal is in the ballpark of what the AAC gets. So that's $400m, or another $40m from each school leaving. $160M

Now here's where things start to get interesting.

First, if the ACC sticks together, it's still a P4/5 conference and will get CFP money accordingly. How much? Really hard to say at this point. Suffice to say, it'll be a whole lot more than they'll get as a non-power conference member. Will they just give this up? No they will not. They currently get like $5M, but the next deal should double that. Another $40M each! $200M

Next, if the ACC sticks together, those schools get the prestige of being the P4/5 conference. How much is that worth? This one is harder to quantify, but maybe $4M per year? $240M.

Here's one that's tougher yet. Notre Dame. First, they get about $10M a year from the ACC for their non-football sports + 5 FB games. The ACC solves a lot of problems they'd otherwise have in keeping their FB independent. Money's not the most important thing for ND, and ESPN/Fox have no sway with them (assuming they re-up with NBC). Maybe they agree for $30M for each of the 10 years? $30M each, $270M total.

So the B12 doesn't work as a destination. $32M * 10 = $320M- $270M = $50M. All that work and negotiating to come out with $120M less than if you did nothing. If the can get out for $120M, makes sense. If the B10/SEC 6 blow up the ACC, even better. Otherwise? They're stuck.

So some of the buying out gets shifted to the B10/SEC schools. I think there's six of them (UNC, UVA, Miami, FSU, Clemson and either NC State or VA Tech, but not both). Leaving everything else the same (and assuming the 4 the B12 picks up just kind of let it all slide since they'll be better off if they can get out for free/just the $120M exit fee), those six would have to shoulder about $300M each. Their break-even point is at ~$47M per year for the TV portion. Doable, but not exactly massive after all the up-front investment.

Still unanswered: Where do these schools get the $270M+ needed up front to make this happen?

Everything is a negotiation. I haven't seen if the Big12 exit fees were a one-time payment or series of payments. My bet is the left behind group would be willing to receive exit fee payment over a 4-5 year period with interest.

Getting the money over time might help the recipient schools manage their new-found wealth and expectations on campus.

 

[Gunnerclone]

Since ACC schools will be the last opportunity for Big2 to add brand schools, I think the competition between Big10 and SEC will be pretty stiff for UNC, Miami and FSU. Would guess FOX and ESPN agree. Clemson might be in an odd spot as the Big10 might not have interest and what if Clemson is just OK in 5 years?

Agree about athletic value of schools like Virginia, Ga Tech, Duke to the networks. I could see where FOX or ESPN might prefer/be neutral about west coast schools in major metros like ASU, Utah, Cal and Stanford. Will also be interesting how the ACC unequal revenue share talk plays out. My guess is schools like Ohio State, Michigan, Penn State, Alabama, Georgia, might follow closely.

Five years is a long time and a sport brand can rise or fall significantly.

I think Duke would fit perfectly on n the a big 12 from an athletics standpoint except the lacrosse and (men’s) soccer problem. They probably have field hockey as well. All the “Eastern Time Zone Sports”.

 

[clone52]

I would put Wisconsin, illinois, UCLA, Sparty (although trending down hard) Iowa, UNC, and Virginia all on the same tier. The problem is that while those schools could have more individual value the big ten schools get grandfathered in, so a new school needs to being insanely high value. It’s annoying that a team like Rutgers or Maryland get to just coast where better schools like UNC have to show big value adds to the media partners.

No, it just needs to be higher than average. Not insanely high value.

 

[FriendlySpartan]

No, it just needs to be higher than average. Not insanely high value.

I might be misunderstanding but they have to bring in over 70mil a year to have any kind of value add to the current conference members. If the media partners are willing to pay that then it’s a no brainer. If they aren’t willing to pay an extra 140mil for UNC/UVA then there will be an issue.

 

[Gunnerclone]

I might be misunderstanding but they have to bring in over 70mil a year to have any kind of value add to the current conference members. If the media partners are willing to pay that then it’s a no brainer. If they aren’t willing to pay an extra 140mil for UNC/UVA then there will be an issue.

That’s the short short sighted view. They might not bring that “value” right this second, but if you don’t act and say “no thanks” on their 40 million of “value” or whatever now, then you’re not going to grow.

I think that’s what confuses me so much about the “value” conversations when it comes to realignment. I’m thinking of this like value stocks, they are “value” stocks because they have potential to be something greater, pay nice dividends or have some other aspect to their business that has an appeal to investors. The price doesn’t match the potential.

 

[isucy86]

I might be misunderstanding but they have to bring in over 70mil a year to have any kind of value add to the current conference members. If the media partners are willing to pay that then it’s a no brainer. If they aren’t willing to pay an extra 140mil for UNC/UVA then there will be an issue.

That's why schools like FSU and Notre Dame are important to Big10. If ND and FSU are worth $90M each, then the Big10 could add 2 other teams with significantly less athletic value ($50M each).

 

[clone52]

I might be misunderstanding but they have to bring in over 70mil a year to have any kind of value add to the current conference members. If the media partners are willing to pay that then it’s a no brainer. If they aren’t willing to pay an extra 140mil for UNC/UVA then there will be an issue.

Of course. I am just thinking that if they are on par with Iowa, UCLA, Illinois, Wisconsin, MSU and clearly ahead of Nebraska, MN, Northwestern, Purdue, Indiana, Rutgers and Maryland, then they must be worth more than 70 million. Otherwise you have a situation where OSU, Michigan, PSU and USC are overwhelmingly subsiding the other 12 teams.

I mean just look at the Big 12. The assumption was that OU and Texas were the Overwhelming majority of value and losing them would relegate everyone else to AAC status. The clearly had the most value, but not to the extreme people were saying.

If those middle tier Big 10 teams are worth less than average, then that would mean if you removed OSU, PSU, Michigan and USC, the remaining 12 teams might only get media deal on par with the Big 12. Maybe that is true, but I doubt it.

 

[clone52]

Another thought is that maybe ESPN doesn't want all that ACC inventory. Maybe they would rather take 4 teams to the SEC and maybe even pay a premium for it and fill up the leftover inventory with something cheaper.

And by all accounts, the BIG 10 wants more teams, whether it is Oregon/Washington or some ACC schools, so Fox must see value in more inventory.

And the math might work for the entire ACC. Let's say 4 go to SEC, 4 go to Big 10. The remaining 8 teams might be expecting $35m a year for the next 12 years. That would be $420m total. What if the 8 leaving teams proposed paying out the $120m buyout plus $20M a year in media rights instead of their full grant of rights. That would mean $30M a year for those 8 remaining teams. Pittsburgh would probably join the Big 12 and make out like a bandit. Wake Forest might be stuck in a new merged ACC/AAC, but that conference might get a media deal like $5M a year so they would break even. Teams going to the Big 10 or SEC would pay a heavy price, but would still bring in more than if they stayed in the ACC

 

[FriendlySpartan]

Of course. I am just thinking that if they are on par with Iowa, UCLA, Illinois, Wisconsin, MSU and clearly ahead of Nebraska, MN, Northwestern, Purdue, Indiana, Rutgers and Maryland, then they must be worth more than 70 million. Otherwise you have a situation where OSU, Michigan, PSU and USC are overwhelmingly subsiding the other 12 teams.

I mean just look at the Big 12. The assumption was that OU and Texas were the Overwhelming majority of value and losing them would relegate everyone else to AAC status. The clearly had the most value, but not to the extreme people were saying.

If those middle tier Big 10 teams are worth less than average, then that would mean if you removed OSU, PSU, Michigan and USC, the remaining 12 teams might only get media deal on par with the Big 12. Maybe that is true, but I doubt it.

There are currently 7 big ten teams that are consistently ranked in the top 20 for ratings but the ratings that OSU and Michigan bring are on a level of their own. Then you have Penn state (who has been consistently good) with a much smaller gap and then the rest of that list who have more up and down years.

But yeah Michigan and OSU have an outsized portion of the ratings/value

 

[2speedy1]

The $120M is the ACC exit fee. Similar to the exit fee that OU & UT agreed to pay Big12. A big difference is the Big12 exit fee paid by 2 teams is split among the 8 remaining teams. With the ACC, potentially, 7 teams will pay $120M apiece that is split among the 7 remaining teams.

ESPN benefits if they can make substantially more in SEC ad rates vs. what they charge for ACC ad rates. But one would think that is the case since ESPN is paying around $65M per SEC school and $17M per ACC school. ESPN currently has exclusivity with both the SEC & ACC.

In the case of ACC vs. Big12 ad rates, I would guess they are fairly close- so ESPN would be indifferent.

$120M is just the exit fee....not including GoR media rights.

So at minimum those would be worth $17M per number of years left on GoR. $220M+ for a total of $340M.

But if a school goes to say the B1G then their media income would be the B1Gs per team income. So estimate $60M per team per year left on GoR at the low end.

That gets huge fast. 13 years times even the low end of the B1G/SEC per year value is insane for any school to pay.

The only way they manage to get out of that number would maybe be to say they would pay the $17M per year each back to the ACC schools, knowing they would be getting 3 times that, But even then the other schools dont have to agree, and could hold out. No matter what it is going to get really expensive to get out of the ACC fast.