They apparently have until 2025 to decide whether they want the ACC rights at current values from 2027-36.

One would think they do since they are a bargain.

However, if ESPN views this as a battle against FOX for long term control over key ACC properties, then from ESPN's viewpoint:

1. Paying double for UNC, UVa, Fla St and Clemson in the SEC,
2. Moving as many as they want into the Big 12 at essentially ACC-level rates
3. Paying nothing for several unattractive ACC properties such as Wake Forest

costs them about the same as what they would be paying the ACC from 2027-36.

ESPN can give its priority targets a large pay bump and cut dead weight saving money in the end.

Can ESPN go to unequal revenue sharing past ‘27 and give FSU Clemson UNC a raise?

ESPN doesn't decide how the money is divided up, the ACC does.

(12-23-2023 03:08 PM)Glenn360 Wrote:  ESPN doesn't decide how the money is divided up, the ACC does.

The ACC isn’t dividing the money in such a way that Florida St and others are getting enough to match the SEC or B1G. The rest of the schools would never allow that.

Besides ND leaving, how many ACC members leaving cause the ESPN contract to be renegotiated (down)?

E.g., if the hot teams leave (and get paid more in the S2), ESPN could save some funds by paying the nACC less.

(12-23-2023 03:40 PM)PlayBall! Wrote:  Besides ND leaving, how many ACC members leaving cause the ESPN contract to be renegotiated (down)?

E.g., if the hot teams leave (and get paid more in the S2), ESPN could save some funds by paying the nACC less.

If the conference drops below 15 full members which includes Notre Dame. So the recent adds were defensive to an ESPN reduction.

(12-23-2023 03:08 PM)Glenn360 Wrote:  ESPN doesn't decide how the money is divided up, the ACC does.

What I am saying is that ESPN gives the four a pay bump IN THE SEC.

Pays others IN THE BIG 12 about what they made in the ACC.

Saves money on deadweight of the ACC.

Works out about the same as paying the ACC what it owes from 2027-36.

In other words, ESPN may be ambivalent about the floodgates opening in the ACC IF (big IF) it can be assured to get the top brands into the SEC....

(12-23-2023 03:05 PM)RUScarlets Wrote:  Can ESPN go to unequal revenue sharing past ‘27 and give FSU Clemson UNC a raise?

Not in the ACC.

But they can give them a raise in the SEC.

(12-23-2023 03:42 PM)BePcr07 Wrote:  

(12-23-2023 03:40 PM)PlayBall! Wrote:  Besides ND leaving, how many ACC members leaving cause the ESPN contract to be renegotiated (down)?

E.g., if the hot teams leave (and get paid more in the S2), ESPN could save some funds by paying the nACC less.

If the conference drops below 15 full members which includes Notre Dame. So the recent adds were defensive to an ESPN reduction.

ESPN could waive that 15 school rule in exchange for eliminating the ability to add G5 schools pro-rata.

I don't know why they wouldn't want the ACC basically intact. Moving schools to the Big 12 to pay them the same is inferior for the schools thM leaving them alone and paying them the same.

ESPN isn’t going to encourage a thing.

They are in financial austerity mode. The total disconnect with fans is that the FSU case largely rests on arguing that ESPN got such an insanely good deal from the ACC that the ACC breached their fiduciary duty. If that’s true, why on Earth would ESPN do anything to touch that deal at all? It makes no financial sense.

Wall Street legitimately doesn’t care if ESPN continues to have FSU games or not, but they very much care if they have to spend more money for anything other than the NBA or keeping NFL games down the road.

Fans are overrating how much ESPN cares to please the SEC or showing FSU games in general and COMPLETELY underrating how much every single decision at ESPN and Disney in general is being filtered right now through the cold, harsh, pure short-term cost reductionist stance of Wall Street. They are NOT looking long-term and caring whatsoever if FSU ends up in the Big Ten or SEC. Wall Street straight up wants ESPN to stop spending more money and they’ve made that loud and clear. The power isn’t with the South, but rather the hedge fund managers and activist investors in New York that just want Disney’s stock price to go up 10% in the next 6 months.

Boy, where have we heard about ESPN actively organizing and maximizing value by moving select brands over to another owned and controlled property before (thus lowering the value of its other property but keeping its rights for cheap and affordable content long-term)?

(12-23-2023 03:58 PM)Frank the Tank Wrote:  ESPN isn’t going to encourage a thing.

They are in financial austerity mode. The total disconnect with fans is that the FSU case largely rests on arguing that ESPN got such an insanely good deal from the ACC that the ACC breached their fiduciary duty. If that’s true, why on Earth would ESPN do anything to touch that deal at all? It makes no financial sense.

Wall Street legitimately doesn’t care if ESPN continues to have FSU games or not, but they very much care if they have to spend more money for anything other than the NBA or keeping NFL games down the road.

Fans are overrating how much ESPN cares to please the SEC or showing FSU games in general and COMPLETELY underrating how much every single decision at ESPN and Disney in general is being filtered right now through the cold, harsh, pure short-term cost reductionist stance of Wall Street. They are NOT looking long-term and caring whatsoever if FSU ends up in the Big Ten or SEC. Wall Street straight up wants ESPN to stop spending more money and they’ve made that loud and clear.

I thought ESPN was profitable. That other parts of Disney were the problem.

In any event, I have seen this movie twice before. Once when the Big East rejected ESPN's $11M per school offer to go to the open market. Again when the Pac 12 rejected ESPN's offer to go to market.

ESPN budgets a certain amount for a collection of schools in a conference. If the chess pieces move and the conference changes, they end up paying out about the same amount as originally budgeted, but some schools in the original collection get more and some get less and some get the same.

(12-23-2023 04:06 PM)CougarRed Wrote:  

(12-23-2023 03:58 PM)Frank the Tank Wrote:  ESPN isn’t going to encourage a thing.

They are in financial austerity mode. The total disconnect with fans is that the FSU case largely rests on arguing that ESPN got such an insanely good deal from the ACC that the ACC breached their fiduciary duty. If that’s true, why on Earth would ESPN do anything to touch that deal at all? It makes no financial sense.

Wall Street legitimately doesn’t care if ESPN continues to have FSU games or not, but they very much care if they have to spend more money for anything other than the NBA or keeping NFL games down the road.

Fans are overrating how much ESPN cares to please the SEC or showing FSU games in general and COMPLETELY underrating how much every single decision at ESPN and Disney in general is being filtered right now through the cold, harsh, pure short-term cost reductionist stance of Wall Street. They are NOT looking long-term and caring whatsoever if FSU ends up in the Big Ten or SEC. Wall Street straight up wants ESPN to stop spending more money and they’ve made that loud and clear.

I thought ESPN was profitable. That other parts of Disney were the problem.

In any event, I have seen this movie twice before. Once when the Big East rejected ESPN's $11M per school offer to go to the open market. Again when the Pac 12 rejected ESPN's offer to go to market.

ESPN budgets a certain amount for a collection of schools in a conference. If the chess pieces move and the conference changes, they end up paying out about the same amount as originally budgeted, but some schools in the original collection get more and some get less and some get the same.

It’s the complete opposite situation of the Big East and Pac-12: not only did the ACC accept ESPN’s deal, they locked it in until 2036 and even gave them unilateral options! And it’s so favorable in ESPN’s favor that FSU is saying that they’re willing to put $572 million in damages on the line to try to get out of that contract! There is no objective financial reason for ESPN to change a thing about that ACC deal outside of FSU partisanship or SEC/Big Ten partisanship to take ACC schools.

At same time, Wall Street doesn’t care that ESPN is profitable anymore. All that they see is that revenue and profitability is declining due to chord cutting, and since stock prices are about how a company will look in the future, they have been hammering Disney’s stock for the past few years due to that decline.

Now, is Wall Street totally sending two different signals that (a) they hate streaming losses but (b) also hate the declining linear TV business that’s profitable but isn’t growing like streaming? Pretty much! However, this isn’t even a debate: Wall Street wants straight up cost reductions at Disney, *especially* at declining businesses like ESPN. There is no threading argument that ESPN gets more value from higher ratings for FSU games if they’re in the SEC and that would justify the costs. Nope - Wall Street is SCREAMING at Disney to stop spending money outright.

(12-23-2023 03:58 PM)Frank the Tank Wrote:  ESPN isn’t going to encourage a thing.

They are in financial austerity mode. The total disconnect with fans is that the FSU case largely rests on arguing that ESPN got such an insanely good deal from the ACC that the ACC breached their fiduciary duty. If that’s true, why on Earth would ESPN do anything to touch that deal at all? It makes no financial sense.

Because they're in financial austerity mode, and in the grand scheme of things it's not crucial to ESPN to have the ACC, or any of the ACC schools.

The information that ESPN wrote themselves an option to dump the ACC in 2027 changes things. They wrote that option into the 2016 contract I guess, triggered the option period when the ACC Network went online in 2019, kicked the can down the road on that option in 2021.

If the ACC blows up, it's pretty certain that the SEC picks up four schools at the $75M or so pro rata. That's a $300M increase in ESPN's costs. And ESPN stops collecting their $150M or so a year share of the ACC Network profits.

(50M subscribers * $0.67 * 12 = $400M, subtract the $80M a year the Pac 12 Networks were spending, split the rest 50-50. Hamfisted estimations, but it matches the numbers for total ACC media distributions from the FSU lawsuit).

ESPN / 2 / U / ABC lose about 3 ACC football games a week, gain 2 SEC football games per week. (7 games per week, minus 3 ACC Network games and 1 CW game). And ACC basketall, which fills a lot of hours for ESPN / 2 / U.

So ESPN's costs if the ACC goes away and the SEC picks up four schools: $450M. On the other hand, ESPN stops paying ~$20M * 17 = $340M in ACC base-rate rights fees. That's a $100M or so a year loss for ESPN.

Probably add to the ledger 4*$20M = $80M, as you'd expect the Big 12 to go to 20 with the likes of Louisville, Pitt, and whoever else after the Big Ten and SEC take their picks. So ESPN's annual budget gets worse by $180M a year.

Quote:Wall Street legitimately doesn’t care if ESPN continues to have FSU games or not, but they very much care if they have to spend more money for anything other than the NBA or keeping NFL games down the road.

Fans are overrating how much ESPN cares to please the SEC or showing FSU games in general and COMPLETELY underrating how much every single decision at ESPN and Disney in general is being filtered right now through the cold, harsh, pure short-term cost reductionist stance of Wall Street. They are NOT looking long-term and caring whatsoever if FSU ends up in the Big Ten or SEC. Wall Street straight up wants ESPN to stop spending more money and they’ve made that loud and clear. The power isn’t with the South, but rather the hedge fund managers and activist investors in New York that just want Disney’s stock price to go up 10% in the next 6 months.

I wonder if those guys know the college sports landscape well enough to do the napkin math I did above?

I'm still processing the news that ESPN wrote themselves an option to dump the ACC in 2027.

(12-23-2023 05:07 PM)johnbragg Wrote:  

(12-23-2023 03:58 PM)Frank the Tank Wrote:  ESPN isn’t going to encourage a thing.

They are in financial austerity mode. The total disconnect with fans is that the FSU case largely rests on arguing that ESPN got such an insanely good deal from the ACC that the ACC breached their fiduciary duty. If that’s true, why on Earth would ESPN do anything to touch that deal at all? It makes no financial sense.

Because they're in financial austerity mode, and in the grand scheme of things it's not crucial to ESPN to have the ACC, or any of the ACC schools.

The information that ESPN wrote themselves an option to dump the ACC in 2027 changes things. They wrote that option into the 2016 contract I guess, triggered the option period when the ACC Network went online in 2019, kicked the can down the road on that option in 2021.

If the ACC blows up, it's pretty certain that the SEC picks up four schools at the $75M or so pro rata. That's a $300M increase in ESPN's costs. And ESPN stops collecting their $150M or so a year share of the ACC Network profits.

(50M subscribers * $0.67 * 12 = $400M, subtract the $80M a year the Pac 12 Networks were spending, split the rest 50-50. Hamfisted estimations, but it matches the numbers for total ACC media distributions from the FSU lawsuit).

ESPN / 2 / U / ABC lose about 3 ACC football games a week, gain 2 SEC football games per week. (7 games per week, minus 3 ACC Network games and 1 CW game). And ACC basketall, which fills a lot of hours for ESPN / 2 / U.

So ESPN's costs if the ACC goes away and the SEC picks up four schools: $450M. On the other hand, ESPN stops paying ~$20M * 17 = $340M in ACC base-rate rights fees. That's a $100M or so a year loss for ESPN.

Probably add to the ledger 4*$20M = $80M, as you'd expect the Big 12 to go to 20 with the likes of Louisville, Pitt, and whoever else after the Big Ten and SEC take their picks. So ESPN's annual budget gets worse by $180M a year.

Quote:Wall Street legitimately doesn’t care if ESPN continues to have FSU games or not, but they very much care if they have to spend more money for anything other than the NBA or keeping NFL games down the road.

Fans are overrating how much ESPN cares to please the SEC or showing FSU games in general and COMPLETELY underrating how much every single decision at ESPN and Disney in general is being filtered right now through the cold, harsh, pure short-term cost reductionist stance of Wall Street. They are NOT looking long-term and caring whatsoever if FSU ends up in the Big Ten or SEC. Wall Street straight up wants ESPN to stop spending more money and they’ve made that loud and clear. The power isn’t with the South, but rather the hedge fund managers and activist investors in New York that just want Disney’s stock price to go up 10% in the next 6 months.

I wonder if those guys know the college sports landscape well enough to do the napkin math I did above?

I'm still processing the news that ESPN wrote themselves an option to dump the ACC in 2027.

Believe me - these guys are looking at every penny at Disney. There was an article a few years ago about the talent that the top Wall Street hedge funds are hiring and the quote was essentially that they had enough brain power in PhDs in fields like physics, computer science and biomedical engineering on their trading floor to cure cancer, but they’re working for these hedge funds because of how insane the financial compensation is. These are among the *smartest* people you’ll find *anywhere*. They are following every minute detail and cost at Disney, much less a story involving an ESPN contract that’s splashed across every major news site in America.

I know it’s hard for a lot of people to understand because we see college sports as the crux of all of these huge decisions, but Bob Iger is legitimately paying more attention to phone calls from these random nameless hedge fund analysts than he is to Greg Sankey or Jim Phillips right now. The whole point is that the ACC deal is priced in and they know that cost. It’s booked and already priced in. They don’t need any price uncertainty - this is the worst possible time for that to occur because ESPN also has to justify an NBA contract that’s going to skyrocket and the new expanded CFP contract. That’s why ESPN was so keen to have the SEC and ACC contracts until the 2030s - they want to put those contracts on a shelf and forget them and that’s frankly even more the case with all of these Wall Street people absolutely hammering Iger on Disney’s costs. Look at how ESPN is refusing to budge on paying the SEC any extra money for a 9th conference game (which is why the SEC is staying at 8). The money there is GONE.

(12-23-2023 02:54 PM)CougarRed Wrote:  They apparently have until 2025 to decide whether they want the ACC rights at current values from 2027-36.

One would think they do since they are a bargain.

However, if ESPN views this as a battle against FOX for long term control over key ACC properties, then from ESPN's viewpoint:

1. Paying double for UNC, UVa, Fla St and Clemson in the SEC,
2. Moving as many as they want into the Big 12 at essentially ACC-level rates
3. Paying nothing for several unattractive ACC properties such as Wake Forest

costs them about the same as what they would be paying the ACC from 2027-36.

#2 isn't that simple. You gotta have Fox play ball on that one.

(12-23-2023 04:24 PM)Frank the Tank Wrote:  It’s the complete opposite situation of the Big East and Pac-12

Frank, if it's such a great deal for ESPN, why haven't they exercised the option?

I'd say very analogous to the Big East and Pac 12. ESPN has it's exclusive offer on the table.

And the most powerful members (Florida St here, Wash/Ore in the Pac 12, Syr/Pitt in the Big East) are saying: we can make more elsewhere.

My point is not that ESPN will encourage anything. Only that they are ambivalent as to the Florida St outcome IF (big IF) they can shepherd the top brands into the SEC.

They have an amount budgeted, and those 18 schools are going to get that money. Maybe not in the ACC however...

As a result, I don't think you will see ESPN exercise its option until it knows the outcome of Florida State's lawsuit.

As I’ve been thinking about it more, my last point ought to be more prima facie evidence of the ESPN’s refusal to spend more money: they’ve rejected higher payments to the SEC for a 9th conference game. This means that the SEC went to ESPN and said, “Hey! We can make Texas-Texas A&M into an annual game again and have way more games between UT, OU, UGA, Alabama, LSU, Tennessee, Florida, etc. if you just pay us a little more.” ESPN’s response has been, “Nah - we good. Bank account is tapped out.”

This makes any argument that ESPN is going to open up its checkbook because it wants to integrate FSU games into that lineup totally faulty. ESPN has the unilateral ability to get a whole bunch of better SEC games by paying more for a 9th conference game without messing with GORs or ripping up a favorable ACC contract, yet it’s not doing it because they are truly and completely and utterly tapped out of money. It’s simply not there anymore.

(12-23-2023 05:43 PM)CougarRed Wrote:  

(12-23-2023 04:24 PM)Frank the Tank Wrote:  It’s the complete opposite situation of the Big East and Pac-12

Frank, if it's such a great deal for ESPN, why haven't they exercised the option?

I'd say very analogous to the Big East and Pac 12. ESPN has it's exclusive offer on the table.

And the most powerful members (Florida St here, Wash/Ore in the Pac 12, Syr/Pitt in the Big East) are saying: we can make more elsewhere.

My point is not that ESPN will encourage anything. Only that they are ambivalent as to the Florida St outcome IF (big IF) they can shepherd the top brands into the SEC.

They have an amount budgeted, and those 18 schools are going to get that money. Maybe not in the ACC however...

As a result, I don't think you will see ESPN exercise its option until it knows the outcome of Florida State's lawsuit.

ESPN will be reasonably exercising that option. They just don’t need to do so any earlier than required.

They need cost certainty - they don’t need even the risk of having to pay more money to the SEC. They know exactly to the penny what it would cost to keep the ACC until 2036 and booked it. The last thing Wall Street wants is cost uncertainty.

Wall Street is running the show here. The SEC (and ACC and Big Ten and FSU) are all peons compared to the entire Wall Street view of the linear TV business (of which ESPN is the single largest player), which has been, “Stop spending money on this business and kill it already.”