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BYU, on their next TV deal: "We are going to be with ESPN"

Good morning! A quick housekeeping note. I’m going to be in LA for a family reunion for most of this week, so there’s a chance this is the only Extra Points you’ll get for a few days. If something absolutely earth-shattering happens on say, Thursday, I’m confident my colleagues will have something interesting to read while I am chasing feral children under the guise of “vacation”.

Anyway, you’re not here to read about the stupidity of me flying 2,000 miles away with two little girls under five. So let’s get to the news.

BYU is reportedly closing in on their next ESPN deal

Most of the college football media deals are locked up for the next few years, but there are still a few still out there. One is the Mountain West, who should announce their new deal sometime this summer, and the other is BYU. BYU football’s current arrangement with ESPN expires after the 2019 season. It was expected that the school would re-up with ESPN in some capacity, and according to a recent report from the Salt Lake Tribune, that seems to be happening in the near future.

The Salt Lake Tribune has learned that discussions have intensified the past few weeks, perhaps so BYU can make a news splash on June 18 when it holds its media day — earlier than any program in the country, as usual — to kick off the 2019 football season.

“ESPN has a great relationship with BYU and its athletics department,” said Kurt Dargis, ESPN senior director of programming and acquisitions. “We expect that affiliation to continue beyond this [football] season and are engaged in those discussions.”

Okay, so we’ve got a credible report from local media saying the two sides are talking, and we’ve got ESPN on the record saying they expect the relationship to continue, so that sounds pretty rock solid…

“We are having a good dialogue with ESPN about a new regular-season contract and a bowl game agreement,” Holmoe said via email. “Those contract discussions are currently ongoing. We are going to be with ESPN. It is just a matter of working through some details of the new deal.”

Okay then, so there you go. If Tom Holmoe says to the Salt Lake Tribune, of all places, that “we are going to be with ESPN”, then BYU is re-upping this deal.

While there would have been plenty of other interested parties in BYU football should those talks have broken down, that ESPN would remain BYU’s partner isn’t too surprising. Even more than money, BYU is most interested in exposure for their football program, since part of the mission of their athletic department is to help the missionary efforts of the LDS church. Nobody can deliver more eyeballs than ESPN, after all. Plus, the school and the network have worked together for a long time, and there’s plenty of business reasons for BYU football to be an attractive property, even if the program has taken a step back over the last decade.

The interesting questions are the length of the deal, and the financial terms. I imagine we’ll probably know the length around BYU football Media Day on June 18. My educated guess is that this deal won’t extend beyond say, 2025, although per my conversations with industry sources, BYU signing a longer-term deal wouldn’t mean that a change in conference affiliation is off the table. BYU won’t announce the terms, but I bet the SBJ will have a solid estimate a week or so later. My educated guess is that they won’t bring in quite as much as the rosier, BYU-fan estimates, but their annual take-home will be more than what an AAC school gets (~7 million a year), and substantially more than anybody in the MWC would get, even with their new deal.

I’m also interested to hear how ESPN+ will factor in this deal. I would be shocked if at least one BYU football game a season isn’t on ESPN+ starting in 2020, even if it’s not a BYU home game.

The deal is mission critical to BYU football. Not only do they need the money, but without the bowl affiliation agreements and the national exposure, BYU couldn’t function as an independent. The extension of this deal almost certainly means that remaining independent will continue to be an option. Can BYU thrive as an independent? Would any success be sustainable? Those are different questions, to me, and ones that go far beyond media rights deals. But despite what you might hear on Twitter from folks with Utah avatars, I don’t think church leaders are shuttering the program any time soon.

Wait, people are bidding on the Pac-12? Like, for real?

When news broke that the Pac-12 was looking to sell an equity stake of their media and distribution rights, a lot of the internet laughed. I certainly did. Forget, for a second, how such an arrangement would make “amateur athletics” an even bigger farce. Who would want to pay $750 million dollars to invest in a conference facing major demographic headwinds, when it isn’t clear how you could liquify your asset?

Well, apparently, somebody wants to do that. Or more accurately, multiple somebodies. According to Michael Smith of the SBJ:

The Pac-12 already has multiple bids of at least $750 million in hand from companies looking to become equity investors in the conference. Over the next few months, it will work with consultant Raine Group to narrow the field down to a potential partner. News that there’s been so much interest comes as somewhat of a surprise. The Pac-12’s plan to seek an investor drew skepticism from many conference insiders when it was first put forward six months ago. No college conference has ever sought outside investors before.

Multiple bids at $750 million is certainly a positive sign that others think highly of the Pac-12’s potential valuation. Even with their demographic disadvantages, their linear distribution problems and unequal market value of conference institutions, live TV is still an immensely valuable product, especially for premium college athletic brands like USC.

I don’t want to drop everything I have on this subject now, because I have some additional reporting to share soon, but I can conclusively tell you that the Pac-12 going through the process, even with multiple bids, is not a guarantee that league will actually throw all of their rights into a holding company and sell off a portion. That’s simply one of the options they’re considering. Beyond the ugly amateurism optics, there’s the simple fact that for a league that badly wants flexibility in a changing world, selling a chunk of your rights (which includes merchandising rights, archive content, and more) locks you up with that partner for decades to come.

The major appeal in doing this is that it gives conference schools an immediate, and substantial, cash infusion. That’s badly needed, not just because the Big Ten and SEC are crushing the Pac-12 in revenue distributions, but because a few schools are BROKE. Like Washington State, whose athletic department deficit is actually even worse than projected, and will climb to $103 million.

My big question is…what happens if the Pac-12 does this, gives everybody a fat check up front….and then they’re still broke? The league has plenty of issues that could be alleviated with more money, but the league has taken it on the chin on the football field and basketball court primarily because of bad local leadership. You can type FIRE LARRY SCOTT in all caps as much as you want on Twitter or Reddit, but that won’t make UCLA basketball any better.

Stay tuned for more information here. The TL;DR is that the league may be a more attractive investment vehicle than we all thought….but whether that actually matters to anybody who isn’t in venture capital…that’s still an open question.

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