SEC Football: Why $5 Billion TV Deal Is Obtainable
Yesterday, over at The Post and Courier, Travis Sawchik, one of our favorite guys to follow for Clemson information was discussing Tigers football, the ACC and how the next round of television negotiations is only going to serve to widen the gap between the ACC and the SEC.
In this discussion Sawchik kicked out a number that would catapult the SEC to the front of the pack when it comes to television revenue—again. That number?
Recently the Pac-12 passed the SEC in television revenue. New commissioner Larry Scott was able to grab some $250 million per year in his $3 billion, 12-year deal with ESPN and Fox. The Big 12 reportedly has a mega $2.5 billion, 12-year deal with ESPN and FOX on the table that would push them pass the SEC's $205 million a year number as well.
Throw in the Big Ten and their ESPN, Big Ten Network deal, along with the SEC in all of its splendor, and we now have four big boys on the power-conference block.
Mike Slive and the SEC will not stand for this, and with the addition of Texas A&M and Missouri there is most certainly ground to be made up by the league. With an increase in inventory, the league has the right to open up a new round of negotiations with their partners, CBS and ESPN.
That $5 billion number might not be so far off if you're looking at a 15-year deal, which is what the SEC has right now. To put that in real terms as compared to the Pac-12's $3 billion over 12 years, the SEC would be at about $3.9 billion over 12 years if the $5 billion-for-15 stood.
The thing about it is, that number's not that crazy for several reasons.
At the basic level the SEC is entering negotiations with 14 teams as compared to the Pac-12's 12 schools. Throw in the fact that the SEC has big selling needle-movers like Florida, Georgia, Tennessee, Alabama, LSU and toss in Texas A&M for good measure.
Now add their string of absolute dominance from a BCS Championship standpoint and at the base level there is the framework for why the league should walk into the negotiations expecting to get paid cash money.
Will the SEC return to the top of the CFB TV revenue charts?
Now the question becomes: how can the networks afford this?
The answer is simple really—ratings are declining across the board, and while networks are charging a premium price for their shows that pull in viewers, the prime time ad-space cost is down overall. In short, average costs are steady or have gone up, but that's because of the Grey's Anatomy, American Idol and Two and a Half Men type-shows of the world.
Thanks to the DVR, Hulu, Netflix and cable, the actual viewing audience for prime time television is not nearly as captive as it was just a decade ago. People don't watch live television nearly as much as they used to.
Except for sports.
Sports are the time where there are no reruns, people aren't skipping commercials on DVR and people are a captive audience. Slaves to the screen. The NFL has proven its worth and college football, as the sport proving itself to be America's second favorite, is following right behind its big daddy, the NFL.
Networks—both cable (ESPN) and broadcast (ABC/CBS)—can charge higher premiums for ad revenue during sporting events because that is an audience that they can deliver to advertisers.
Slive's got that information in his pocket, he's got 14 teams and he's got 6 straight BCS Championships—you better believe he walks into the negotiations looking for a number that will put him ahead of the rest of the competition.
$5 billion over 15 years would slide them in at $22-23 million and that's ahead of the rest.
The question here isn't, "can Slive get to $5 billion?" folks, but is, "is $5 billion—just a million and change more than the Pac-12—going to be enough?"
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