The rights to broadcast a college football game is an asset, just like any other. It can be bought and sold, and it has a market value that can fluctuate.

Over the past month, ND, the SEC, and the Big East have signed VERY long-term contracts. As of today, 6 of the 7 most lucrative brands (Power 5, BE, and ND) have sold nearly all of their broadcasting rights through 2024-25, more than 11 years into the future. The only exception is the Big 10.

Why are they signing such long-term contracts? If the last decade has taught us anything, it's that the value of an asset can fluctuate wildly with market conditions. Real estate soared, then plummeted. The value of cable networks has risen, while broadcast networks have plummeted.

College sports broadcasting rights are no different than these other assets, and changing technologies make their future value VERY uncertain. The value of college sports has soared over the past decade, but do conferences commissioners think they have peaked? Do networks think they will continue to soar over the next decade? Or is something else going on here?

Silly you, didn't you know the Dot Com bubble would never bust...oh wait...

Networks will pay more per year if they can get a long-term deal. Gives them forward stability and allows them to avoid having to renegotiate until further down the road.

Short-term deals reflect the proven today value.

Long-term deals reflect estimates about future growth.

Right now there is a lot of uncertainty in the market about about the impact of connected devices (internet ready TV's, tablets, smartphones, computers). Locking down high value properties pushes the next negotiation into a period when the estimates say connected devices will be in about as many homes as convetional TV delivery is today and a point when the networks will have a better idea about monetizing the new delivery methods.

2016 is currently estimated to be when more than 60% of TV's are connected devices. So kicking the can down the road nearly a decade past that point gives stability. It provides a deterrent to wholesale cord-cutting before the content rights holders understand how to make money off them.

So basically you list all of the things that can cause headaches for both conferences and broadcast networks, and are asking why they want fewer headaches rather than more headaches?

You've listed many of the reasons why both sides find long term contracts appealing

Quote: If the last decade has taught us anything, it's that the value of an asset can fluctuate wildly with market conditions. Real estate soared, then plummeted. The value of cable networks has risen, while broadcast networks have plummeted.

Obviously given that, the conferences would be insane to not seek the stability of a long term deal. But for the media companies as well, they are much more likely to have the rug pulled out from under them if they have rights that are on a series of rotating three year deals than if they have a longer term package of rights that can justify investing in the coming new generation of media distribution markets.

The conferences are getting more money guaranteed than they would with a shorter deal.

The networks are (they hope) securing their content against further escalation in rights fees.

(04-19-2013 02:14 PM)johnbragg Wrote:  The conferences are getting more money guaranteed than they would with a shorter deal.

The networks are (they hope) securing their content against further escalation in rights fees.

Bingo!

Plus the networks are more comfortable spending promotional dollars on conferences they have a long-term deal with. You really don't want to spend three years promoting Conference X then have a competitor reap the benefit in year 4.

If you are ESPN or Fox, or whomever, you want to be able to go to the cable companies and say, we've got x, y, and z for the next 10 years. That is worth at least _____. You don't want the cable company to say, "Well, you've got a lot of properties for 2 years, but there's no guarantee they'll sign up with you again after that. We won't pay as much for that."

It's all about stability and planning ahead.

If you're a school and you know that you will be getting $10m per year for 10 years then you can use that money effectively, you can budget for things in the long term.

If you're a network and you know that you will broadcasting something of relative value for 10 years then you can plan accordingly. That means getting advertising deals and promoting your coverage of a conference. It means you can plan to hire people and buy equipment more easily, since you know that you will be having something on your schedule for a decade.

If you know what your income and outgoings are going to be over a long period of time then you can budget much more easily. If contracts were 1-3 years then it would be a mess.

(04-19-2013 02:33 PM)ODUgradstudent Wrote:  It's all about stability and planning ahead.

If you're a school and you know that you will be getting $10m per year for 10 years then you can use that money effectively, you can budget for things in the long term.

If you're a network and you know that you will broadcasting something of relative value for 10 years then you can plan accordingly. That means getting advertising deals and promoting your coverage of a conference. It means you can plan to hire people and buy equipment more easily, since you know that you will be having something on your schedule for a decade.

If you know what your income and outgoings are going to be over a long period of time then you can budget much more easily. If contracts were 1-3 years then it would be a mess.

What should be of a concern is that there are apparently some schools that have taken on long-term debt for facilities that extends further than their league's TV contract and are relying on conference revenue to pay the debt (and of course assume that because they are making that investment, winning will increase along with ticket sales and donations).

If some of these deals renew in the future at the same money (ie. lose value vs. inflation) or come in lower because of some change in the marketplace, there will be some schools in dire financial straits if they are not successful in increasing their win totals, donations and ticket sales. The math says not everyone is going to increase their win totals.

(04-19-2013 03:13 PM)arkstfan Wrote:  

(04-19-2013 02:33 PM)ODUgradstudent Wrote:  It's all about stability and planning ahead.

If you're a school and you know that you will be getting $10m per year for 10 years then you can use that money effectively, you can budget for things in the long term.

If you're a network and you know that you will broadcasting something of relative value for 10 years then you can plan accordingly. That means getting advertising deals and promoting your coverage of a conference. It means you can plan to hire people and buy equipment more easily, since you know that you will be having something on your schedule for a decade.

If you know what your income and outgoings are going to be over a long period of time then you can budget much more easily. If contracts were 1-3 years then it would be a mess.

What should be of a concern is that there are apparently some schools that have taken on long-term debt for facilities that extends further than their league's TV contract and are relying on conference revenue to pay the debt (and of course assume that because they are making that investment, winning will increase along with ticket sales and donations).

If some of these deals renew in the future at the same money (ie. lose value vs. inflation) or come in lower because of some change in the marketplace, there will be some schools in dire financial straits if they are not successful in increasing their win totals, donations and ticket sales. The math says not everyone is going to increase their win totals.

Someone alluded to these contracts being similar to the housing bubble and that's correct to an extent. We will get in trouble if we assume that the value of our teams will only increase. That's not necessarily the case.

(04-19-2013 03:20 PM)ODUgradstudent Wrote:  

(04-19-2013 03:13 PM)arkstfan Wrote:  

(04-19-2013 02:33 PM)ODUgradstudent Wrote:  It's all about stability and planning ahead.

If you're a school and you know that you will be getting $10m per year for 10 years then you can use that money effectively, you can budget for things in the long term.

If you're a network and you know that you will broadcasting something of relative value for 10 years then you can plan accordingly. That means getting advertising deals and promoting your coverage of a conference. It means you can plan to hire people and buy equipment more easily, since you know that you will be having something on your schedule for a decade.

If you know what your income and outgoings are going to be over a long period of time then you can budget much more easily. If contracts were 1-3 years then it would be a mess.

What should be of a concern is that there are apparently some schools that have taken on long-term debt for facilities that extends further than their league's TV contract and are relying on conference revenue to pay the debt (and of course assume that because they are making that investment, winning will increase along with ticket sales and donations).

If some of these deals renew in the future at the same money (ie. lose value vs. inflation) or come in lower because of some change in the marketplace, there will be some schools in dire financial straits if they are not successful in increasing their win totals, donations and ticket sales. The math says not everyone is going to increase their win totals.

Someone alluded to these contracts being similar to the housing bubble and that's correct to an extent. We will get in trouble if we assume that the value of our teams will only increase. That's not necessarily the case.

If it were to bust, it isn't likely to hurt schools like Texas, Alabama, Michigan because they are less likely to rely on the TV revenue because it is a smaller portion of their budget. The G5 isn't going to hurt. It's the bottom half of the top leagues who will be hurting if they've built their budget around it and don't have enough things they can easily cut.

These are all excellent points for why long-term contracts are good. But every single one of y'alls' points applied 10 years ago. Hell, they applied 30 years ago. It's not like they woke up in 2008 and suddenly realized that long-term contracts promote stability and help incentivize the network to promote and build a brand (both the network's and the conference's brand).

What has changed?

And yes, I threw in a y'alls

(04-19-2013 02:14 PM)johnbragg Wrote:  The conferences are getting more money guaranteed than they would with a shorter deal.

The networks are (they hope) securing their content against further escalation in rights fees.

I think its because inflation on all things (gas, steel, etc) are raging and what seems like a lot of money now wont be worth much 8 years from now. The Long TV contracts will benefit TV only and are used to make it sound like a lot of money but the NPV will be low.

.

(04-19-2013 07:27 PM)Captain Bearcat Wrote:  These are all excellent points for why long-term contracts are good. But every single one of y'alls' points applied 10 years ago. Hell, they applied 30 years ago. It's not like they woke up in 2008 and suddenly realized that long-term contracts promote stability and help incentivize the network to promote and build a brand (both the network's and the conference's brand).

What has changed?

And yes, I threw in a y'alls

Markets hate uncertainty.

10 years ago there was no commercial provider of IPTV in the US. Dual tuner cable and satellite boxes that would allow a built-in DVR to record a different channel while watching another weren't introduced until 2003, the DVR was only first commercially available in 1999.

ESPNU didn't exist and CSTV (now CBSS) wasn't a year old. NBC Sports was Outdoor Life.

Ten years ago the factors that drove the increase in rights fees (more national outlets, time shifting of regular programming creating a premium for live sports, the ability to deliver a high quality picture via the internet) did not exist.

Those factors have increased uncertainty so the marketplace responded with long contracts and paying a premium for security.

Seems questionable for the networks when a lot of people are arguing that we will pull any football game off our computers within just a few years.
If they want to pay the money though, take it.

(04-20-2013 02:24 AM)GoApps70 Wrote:  Seems questionable for the networks when a lot of people are arguing that we will pull any football game off our computers within just a few years.
If they want to pay the money though, take it.

Lock up the valuable rights and sports fans aren't going to cord cut if they can't get what they want.