When pondering the three conferences about to unite hand in hand in a multifaceted alliance to stave off SEC (and ESPN) world domination, view the ACC as the league most uniquely positioned.
It neither produces the revenue of the robust Big Ten (distributing an industry-leading $54.3 million to each school) nor seeks national relevance like the Pac-12 (which has just two College Football Playoff berths in seven years). And amid a landscape in which multi-billion-dollar media-rights deals fuel college football’s engine, the ACC possesses the media rights deal unlike the others.
The move makes sense for the Big Ten, which should even further boost the value of its league as it inches toward the expiration of its six-year, $2.64 billion rights deal with Fox and ESPN in 2023. It also makes sense for the Pac-12, which should add value as it eyes the expiration of its 12-year, $3 billion rights deal with Fox and ESPN in the summer of 2024.
But why is an alliance the ideal chess move for the ACC? Its 20-year, top-tier rights deal with ESPN extends through 2036. The network only pays the league about $240 million annually in a deal viewed as highly advantageous for the network; other leagues will further lap the ACC with rights deals long before the ACC next goes to market.
Interviews with sources within the league and across college sports point to a few reasons the alliance is the best-case scenario now as the ground continues to shift rapidly in college athletics.
ACC needs more premium games
First, this is not a short-term play for the ACC. Leave aside that current non-conference contracts for the next several years will have to be addressed. A scheduling component will be one of the facets of the alliance. The belief is if the ACC can schedule more high-profile matchups with Big Ten or Pac-12 teams in non-conference play, it can create attractive neutral-site games that would be broadcast on Fox instead of ESPN. The goal is to increase the value of the league without necessarily increasing its size, and creating more premium inventory is a step in that direction.
The operative word is “premium.” The key is for the scheduling alliance to incorporate the few top brands from each league. In general, TV executives said the top three brands from a respective league attract more than 50 percent of the TV viewers for that league. In terms of ratings, all other matchups of mediocre appeal see a precipitous drop.
The viewing model is extremely top-heavy. Networks right now, one source said, “will pay you whatever you need them to pay you for the top inventory — just the top inventory. What they don’t want to do anymore is pay $7 million for Clemson-Miami and also pay $7 million for Wake Forest-Boston College.”
For the ACC, that means more Clemson, Miami, North Carolina and Florida State. The aim, of course, is to create more long-term value.
“It is not going to be a financial return early,” one high-ranking ACC official said. “But it may create relationships that might turn into something years down the road. It is a longer-term commitment to see what might happen.”
Revenue generation has been a mixed bag recently for the ACC. The league brought in a conference-record $496.7 million in 2019-20, federal tax filings show. And with the ACC Network launching in August 2019, TV revenue rose 15 percent to $332.8 million. But while the per-school revenue share ($32.4 million) saw the largest increase among Power 5 conferences, the payout per school still ranked last among those leagues. Boosting revenue is the priority. ACC commissioner Jim Phillips told David Teel in March: “It’s still really early in my tenure, but it is something we have to address.”
Competition for CFP TV package
Second, the alliance would afford the ACC — as well as the Pac-12 and Big Ten — a unified voice in legislative governance issues. That is particularly important in the coming years as the NCAA moves toward rewriting its constitution and signals that conferences should be given more power to create and adopt their own rules. As one prominent source outside the ACC noted, “Everyone is aware that the SEC is flexing its muscles right now. Everyone has to look out for their interests.”
The unified voice and voting bloc also are critical in trying to jointly steer CFP expansion in a direction to their favor. None of the three conference commissioners involved in this alliance was on the working group that devised the potential 12-team model under consideration. That group consisted of Big 12 commissioner Bob Bowlsby, SEC commissioner Greg Sankey, Mountain West Conference commissioner Craig Thompson and Notre Dame athletic director Jack Swarbrick.
Sources in conferences outside the SEC are coalescing around the notion that, rather than rush into expanding the CFP format amid a fluid landscape, it is advantageous to take a more deliberate approach. That way, the CFP could take the expanded package to the open market in a few years, likely attract multiple networks as bidders and be well-positioned to split the valuable property between multiple rights-holders.
ESPN currently pays the CFP $470 annually in a deal that runs through the 2025-26 season. Navigate, a Chicago-based consulting firm that provides valuations for rights deals for pro and college teams, projects that a rights deal for a 12-team model could be worth upward of $2 billion per year. Some TV industry sources said that figure may be slightly high. Regardless, they acknowledge that attracting multiple bidders and networks would drive the overall price higher. Still, many throughout the sport have become wary of a potential large-scale takeover by the SEC and ESPN. The 12-team model as outlined earlier this summer is far from a certainty.
If ESPN secured the rights to the entire CFP property in addition to the SEC, which the network will pay $300 million annually beginning in 2024, industry sources believe it could disincentivize other networks from investing in the sport during the regular season. “What we need is competition,” one source said. “We just can’t let ESPN have all the media rights for everything. If Fox is involved, too, it’s better.”
Fox does some token programming surrounding the promotion of the CFP playoff, but CBS and NBC are much more muted in promotion. Awarding another partner a slice of the package would help “promote the hell out of it,” a source said.
ACC expansion doesn’t make financial sense
Lastly, the other possible route for the ACC is expansion. Why doesn’t the ACC simply expand to broaden its footprint? West Virginia has reported interest in joining the ACC. But officials within the ACC have been told that WVU wouldn’t add any financial value. In fact, it could be a net negative because if the revenue pie remains roughly the same size, it then would be sliced more ways, giving each school a thinner slice when revenue is distributed.
“When you bring in a new school, you’ve got to bring in a certain number of subscribers,” the source said. “Well, there’s about four people that live in West Virginia. For the ACC to take West Virginia — this isn’t picking on West Virginia, but it’s not big enough. This would be any interested school” not named Notre Dame.
Thus, that leaves the ACC with its best-case scenario: a three-conference alliance designed to bolster league value and amplify its voice, trying with everyone else to deny the SEC from a clear takeover of college sports.