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Too Much... for Too Long... for Too Little

When the SEC announced their previous contract I was quiet. I didn't want to rain on their parade because I was hanging at an all NCAAF forum.

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via i1281.photobucket.com

While they celebrated, my thoughts in 2008 were...

Slive sold too much... Slive sold the rights to everything limiting 3rd tier rights or the possibility of starting a conference network. Broadcasters don't care about the rights to the cruddiest football games of the week or most varsity sports - ESPN wanted to be a roadblock to the SEC forming a conference network. The beauty of the BTN is that it takes the products the broadcasters don't want and converts it into $7+Million a year revenue for each conference member.

...for too long... The old contract started in the 2009-2010 season and ran for 15 years thru the 2023-2024 season, making it the longest running contract among the majors. The length would prevent the SEC from capitalizing on NCAAF audience growth outpacing the yearly contract increases.

...for too little. Slive was chasing a number - $20 Million per year average sounded good, but the SEC only got $16.7 Million/program the 1st year.

"Over his head rube" came to mind. Slive's list of reasons he passed on an SEC Network included "To provide expanded national exposure for football... to provide financial stability for the Conference and for our institutions."

Slive put the SEC in a hole. 3 years into the contract, the SEC dropped to 3rd in broadcast revenue, barely outpacing the contracts with the much smaller ACC and B12 audiences. This wasn't a typical short term lag waiting for the next renewal - the PAC and ACC signed shorter term contracts which would expire the same year as the SEC's, the B12 expires 1 year later.

Slive placed the SEC at a disadvantage in financing expansion. The SEC members had to take a 15% cut in shared revenue until the broadcast contract could be re-negotiated to pay for TA&M and Missouri. The B12 met its broadcast obligations with less than 12 members. The PAC financed expansion with its broadcast contract still to be negotiated, and plans for its own network. The B1G financed expansion with the BTN, and by delaying full revenue sharing until the next broadcast contract was signed. The ACC financed expansion by renegotiating their broadcast contract before the new members joined.

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Slive exercised the Conference Composition Clause after adding TA&M and Missouri, but he entered discussions at a disadvantage. As a contract opener, the clause obliged both parties to negotiate in good faith, but the broadcasters only had to look at the value of the 2 new programs. With virtually all rights already sold, Slive had little leverage to get an SEC Network. With the conference members footing the expansion bill, Slive couldn't wait forever.

CBS passed. Like every holder of the 1st tier rights, CBS reminded Slive they contracted for a fixed number of SEC games, and claimed the 2 new members didn't substantially increase their contract value more than the previous 12 members.

ESPN wasn't going to pay twice for the same broadcast rights, but without these rights, there would be no SEC Network. ESPN could show good faith by just scaling up the contract for 2 new programs, or they could give up the rights to TA&M and Missouri home games if the price got too high. Slive had to put more on the table than TA&M and Missouri to dig out of his 2009 hole.

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via i1281.photobucket.com

Slive sold even more... It was reported the SEC paid nearly $15 Million buying back 3rd tier rights to hand over to ESPN. The SEC's contract with ESPN now encompasses everything except 1st tier rights (about 15 football and 15 basketball games).

...for even longer... Slive increased the contract for 20 years thru 2034. Don't mistake this for the 20 year BTN contract for 3rd tier rights - this include all but 1st tier rights.

...for too little. It is telling the typically boisterous Slive is mum on the financials. The highest estimate I have seen still has the SEC well under $30 Million a year, and this includes the 20 year extension. The SEC might improve to 1st or 2nd in broadcast revenue, but it will be short lived - if it doesn't end with the new B1G contract and/or increased revenue for the PAC's network, it will end in 2024 when everyone else again negotiates their 1st and 2nd tier rights.

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ESPN wanted more from Slive - and got it. Slive passed on a conference network in 2008 "To provide expanded national exposure for football..." ESPN took back this feather from Slive's Headdress. The SEC Network will carry 3 games a week for a total of 45 games - nearly ½ of the conference schedule.

Compare this to the BTN's initial plan (before Nebraska) of airing 36 games a year, as few as 1 game a week, with nearly ½ these OOC creampuffs.

Now ABC/ESPN/ESPN2/yadda-yadda-yadda will typically air fewer football games from the SEC than from the B1G, PAC, or ACC (based on an average of 7 home games per team).

ESPN now gets to move the cruddy SEC games they were previously obliged to show on their main channels, opening up room for better games.

ESPN also took over the SEC's corporate sponsor program because... they could. No longer will the SEC be bothered with the inconvenience of cashing checks from AT&T, State Farm Insurance, Dr. Pepper, etc.

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Slive's bad judgments dug the SEC into a 15 year hole, and then dug them into a deeper 20 year hole. It will be up to the conference members to wait out his follies, and his successor to recover.

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