MUScoop
MUScoop => Hangin' at the Al => Topic started by: GGGG on January 10, 2013, 08:41:21 AM
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http://espn.go.com/mens-college-basketball/story/_/id/8831345/catholic-7-talk-tv-deal-commissioners-sources
--$500M Fox offer has been "reaffirmed."
--Expansion looks to be five candidates
--Commish names discussed but not available to report.
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Reaffirmed you say?
(http://static2.businessinsider.com/image/50ec9daceab8eae83100000d/aj-mccarron.gif)
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Yes sir... this is going to happen soon. IMO -- that little table to the left of this frame that says "Big East Standings" is going to have nine fewer and five different names in about 6 months.
And it's quite possible that MU will be the de facto "defending Big East Champion" going into the 2013-14 campaign.
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So $500 million over 12 years split between 12 teams comes out to $3.47 million per year, if split equally.
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But not to rehash the discussion from the other thread, but the C7 will likely get a greater share of that to cover the start up costs for the new conference.
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So $500 million over 12 years split between 12 teams comes out to $3.47 million per year, if split equally.
Which it really shouldn't be. Eventually, yes, but not until after the C7 have recouped costs for exit fees and setting up the new conference.
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The other major thing I took away from the article was that it looks like they are going to attempt to start this league for NEXT year - which would be fracking tits!!!!
Just rip the band-aid off - it will all be better after.
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The other major thing I took away from the article was that it looks like they are going to attempt to start this league for NEXT year - which would be fracking tits!!!!
Just rip the band-aid off - it will all be better after.
Agreed, the most promising thing in all this is the idea that it could happen by the fall. I have to think that’s in everyone’s best interests, including Aresco’s bunch. I’d assume he will want to get their league in order and in position to negotiate a deal vs squabbling for NCAA units and exit fees. Plus, the earlier we leave, the more leverage they have to negotiate for said exit fees. Seems like everyone should want to get this done quickly since it’s already in the works.
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Just rip the band-aid off - it will all be better after.
The most tried and true of Catholic doctrine: "It is better to beg for forgiveness than to ask for permission."
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The most tried and true of Catholic doctrine: "It is better to beg for forgiveness than to ask for permission."
Also the most tried and true doctrine of married men.....in most situations.
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(http://s3-ec.buzzfed.com/static/enhanced/webdr02/2012/12/17/13/anigif_enhanced-buzz-13299-1355767307-6.gif)
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(http://s3-ec.buzzfed.com/static/enhanced/webdr02/2012/12/17/13/anigif_enhanced-buzz-13299-1355767307-6.gif)
That's weird, sixstring03, but your picture got cut off half-way so I can't really tell what that silly duck is doing. Can you repost the whole thing?
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That's weird, sixstring03, but your picture got cut off half-way so I can't really tell what that silly duck is doing. Can you repost the whole thing?
That's all, folks
He's watching intently as the C7 situation develops
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That's all, folks
He's watching intently as the C7 situation develops
It's even funnier watching it the second time... or maybe it's because it's on the screen twice, now.
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Excuse my ignorance but is conference commissioner a full-time job?
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This is the thing that has me concerned about the shake-ups in conferences and where I could see Congress getting involved (as much as that is distasteful to me).
At the meeting, Fox officials reaffirmed a $500 million rights fee offer that would be predicated on a 12-year deal with the Big East Catholic schools (DePaul, Georgetown, Marquette, Providence, Seton Hall, St. John's, Villanova) adding five additional teams to a newly formed league.
So, the deal is contingent on the league adding 5 teams. Essentially you have a corporation dictating the terms of amateur/collegiate athletics.
I think going to 12 is a no-brainer, but when it is placed out in front like this, it has me concerned that we may see intervention that I don't want.
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This is the thing that has me concerned about the shake-ups in conferences and where I could see Congress getting involved (as much as that is distasteful to me).
So, the deal is contingent on the league adding 5 teams. Essentially you have a corporation dictating the terms of amateur/collegiate athletics.
I think going to 12 is a no-brainer, but when it is placed out in front like this, it has me concerned that we may see intervention that I don't want.
I'm not sure why Congress would get involved. The corporation isn't "dictating terms"--they're making an offer, which the schools can either accept or reject.
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I'm not sure why Congress would get involved. The corporation isn't "dictating terms"--they're making an offer, which the schools can either accept or reject.
+1
They aren't dictating the number of teams. That's up to the C7. They are saying what they would offer for a prescribed amount of content. With 12 teams, you get 108 games. With 10, you get 90. Of course their offer will only be based on how much content they can get. Otherwise we could just go to 8 teams, play 14 game seasons, offer them 56 total games and everyone gets $5.2M for the duration of the deal.
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http://aol.sportingnews.com/ncaa-basketball/story/2013-01-09/catholic-7-tv-contract-rpi-ratings-cj-mccollum-kentucky-john-calipari-mid-major
Mike is connected....extremely. You can bet he's spoken to Xavier folks, etc. Honestly, I mentioned the other day I don't like the revenue sharing tiered approach. It's hypocritical at best, and doesn't build stability or loyalty when that is what should be done day one for a league. It will be interesting if some schools decide not to join as a result, or do they come anyway but have a bad taste in their mouth that may take many years to cleanse.
On the dollar front, had a few conversations about this the last two days with industry folks at our annual meetings. Nothing new, everyone is hearing the same things that are out there. FOX needs content so it's a seller's market big time. As we all said at the meetings, if the C7 are getting this, can you imagine what the next round of fees are going to be for the football conferences...insanity. So in the short term, it's good for us, more money coming, but it will be short term and the football schools revenue will exceed it by exponential sums.
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I'm not sure why Congress would get involved. The corporation isn't "dictating terms"--they're making an offer, which the schools can either accept or reject.
I agree. And the money in the offer is going to be based on number of conference games, quality of schools, and location of those schools. Most likely, representatives of the C7 have informed FOX on who they have either been in direct contact with or are targeting to join the league in order to try and get more money. Fox isn't going to want to make a deal if there is a ton of unknowns in the equation.
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http://aol.sportingnews.com/ncaa-basketball/story/2013-01-09/catholic-7-tv-contract-rpi-ratings-cj-mccollum-kentucky-john-calipari-mid-major
Mike is connected....extremely. You can bet he's spoken to Xavier folks, etc. Honestly, I mentioned the other day I don't like the revenue sharing tiered approach. It's hypocritical at best, and does build stability or loyalty when that is what should be done day one for a league. It will be interesting if some schools decide not to join as a result, or do they come anyway but have a bad taste in their mouth that may take many years to cleanse.
I agree 100%. I can maybe see a tiered approach for the very short term (1-3 years), but after that it's only going to breed contempt.
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This is the thing that has me concerned about the shake-ups in conferences and where I could see Congress getting involved (as much as that is distasteful to me).
So, the deal is contingent on the league adding 5 teams. Essentially you have a corporation dictating the terms of amateur/collegiate athletics.
I think going to 12 is a no-brainer, but when it is placed out in front like this, it has me concerned that we may see intervention that I don't want.
This happens every day in big business. Fox is paying that kind of money, they expect to have sway in what they are buying. I don't see anything wrong with it as it is part of the norm, in my view. Even on a personal level, if I'm buying a house there are contingencies. I may want the current homeowner to pay for new carpet, put money aside for landscaping, etc. Now, that owner can say no, and wait for another buyer or may feel compelled to do those things to get the sale. The C7 could say no, we're only doing 10 teams and FOX might say go find another partner, or the price just dropped to $200 million (or whatever). I see zero issue here.
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Honestly, I mentioned the other day I don't like the revenue sharing tiered approach. It's hypocritical at best, and does build stability or loyalty when that is what should be done day one for a league. It will be interesting if some schools decide not to join as a result, or do they come anyway but have a bad taste in their mouth that may take many years to cleanse.
So are you saying the C7 should just eat the $100M or so in start-up costs for the new league? We should pay the exit fees, pay the lawyers, buy the naming and MSG rights, and then split profits after that with everyone evenly despite half of them not putting in anywhere near the investment we did?
That's kooky talk.
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So are you saying the C7 should just eat the $100M or so in start-up costs for the new league? We should pay the exit fees, pay the lawyers, buy the naming and MSG rights, and then split profits after that with everyone evenly despite half of them not putting in anywhere near the investment we did?
That's kooky talk.
No, not saying that at all. It's all about bucketing. I would pull that (start up costs) out separately as an expense and have that covered separately from the various revenue streams as well as any "buy-ins" required to join the conference. Not that hard, really. Just make it part of the provision of jumping into the conference. If the cost is $100 million to startup, then each school is on the hook for $8.33 million...get out your check books. They're all going to be charter members...right? Then the revenues are split evenly on the receivables side. What you can't have is two tiered approach that breeds contempt from the start. To me, this is pretty simple and can be addressed with a bucketing of dollars approach that shouldn't be all that hard to do.
Where are you getting $100 million in start up costs?
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So are you saying the C7 should just eat the $100M or so in start-up costs for the new league? We should pay the exit fees, pay the lawyers, buy the naming and MSG rights, and then split profits after that with everyone evenly despite half of them not putting in anywhere near the investment we did?
That's kooky talk.
Yeah after being initially skeptical about the uneven revenue deal, I've looked at what the C7 (hate that moniker) is giving up vs. what the new additions gain and have to agree that the best way to go about it is to be uneven to start as compensation for what was lost, then move to equal revenue split once all parties agree that any losses are recouped. If it doesn't even out eventually, I agreee that it will lead to resentment and instability.
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This is the thing that has me concerned about the shake-ups in conferences and where I could see Congress getting involved (as much as that is distasteful to me).
So, the deal is contingent on the league adding 5 teams. Essentially you have a corporation dictating the terms of amateur/collegiate athletics.
I think going to 12 is a no-brainer, but when it is placed out in front like this, it has me concerned that we may see intervention that I don't want.
This isn't anything new. ESPN orchestrated Pitt's and Syracuse's departure from the Big East.
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No, not saying that at all. It's all about bucketing. I would pull that (start up costs) out separately as an expense and have that covered separately from the various revenue streams as well as any "buy-ins" required to join the conference. Not that hard, really. Just make it part of the provision of jumping into the conference. If the cost is $100 million to startup, then each school is on the hook for $8.33 million...get out your check books. They're all going to be charter members...right? Then the revenues are split evenly on the receivables side. What you can't have is two tiered approach that breeds contempt from the start. To me, this is pretty simple and can be addressed with a bucketing of dollars approach that shouldn't be all that hard to do.
Where are you getting $100 million in start up costs?
1. What other shared revenues streams are significant enough to make the C7 schools whole in a relatively timely manner?
2. You think a (hopefully temporary) two-tier revenue-sharing model will be unfair/unpalatable to the non C7 members, but they'll go along with paying more than $8 million upfront to make the C7 whole?
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No, not saying that at all. It's all about bucketing. I would pull that (start up costs) out separately as an expense and have that covered separately from the various revenue streams as well as any "buy-ins" required to join the conference. Not that hard, really. Just make it part of the provision of jumping into the conference. If the cost is $100 million to startup, then each school is on the hook for $8.33 million...get out your check books. They're all going to be charter members...right? Then the revenues are split evenly on the receivables side. What you can't have is two tiered approach that breeds contempt from the start. To me, this is pretty simple and can be addressed with a bucketing of dollars approach that shouldn't be all that hard to do.
Where are you getting $100 million in start up costs?
First best news all day is that this is going to happen next year.
Second, not to dip into the other thread, as long as C7 start-up costs are covered then great. If the methodolgy is add up everyone's cost divide by 12 and then right a check to the community pool and we split revenue equally fine. If it's C7 incur your costs but you get X% more for y years before we're even fine. Either way the C7 have more value and are spending way more than the +5 are and whatever deal is struck needs to compensate for that.
The C7 members should not lose more money in the deal than they would have gotten staying with the BE, doesn't make business sense.
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1. What other shared revenues streams are significant enough to make the C7 schools whole in a relatively timely manner?
2. You think a (hopefully temporary) two-tier revenue-sharing model will be unfair/unpalatable to the non C7 members, but they'll go along with paying more than $8 million upfront to make the C7 whole?
+$1
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This is a brand new league, meaning EVERY school that is in the conference day 1 is a charter member. I don't understand why the C7 are going to be spending more than the others..if so, they should be equally distributed as part of the payment to get into the league.
From a purely business sense, why would the C7 take on all the financial risk to begin with? You start the league, you have 10 or 12 schools, the costs should be distributed equally and the revenues equally. Someone will have to explain to me how 7 charter members are incurring costs that 5 other charter members wouldn't, and thus the revenue model needs to be portioned out differently to make the 7 whole. Why are the 7 incurring costs the other 5 aren't?
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From a purely business sense, why would the C7 take on all the financial risk to begin with?
The only way to avoid the risk is to stand pat, and that's just simply not an option.
You start the league, you have 10 or 12 schools, the costs should be distributed equally and the revenues equally. Someone will have to explain to me how 7 charter members are incurring costs that 5 other charter members wouldn't, and thus the revenue model needs to be portioned out differently to make the 7 whole. Why are the 7 incurring costs the other 5 aren't?
See below:
We should pay the exit fees, pay the lawyers, buy the naming and MSG rights, and then split profits after that with everyone evenly despite half of them not putting in anywhere near the investment we did?
That's kooky talk.
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And can someone show me where the $100 million is coming from, or was that just conjecture. Honestly, don't know...just asking.
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And can someone show me where the $100 million is coming from, or was that just conjecture. Honestly, don't know...just asking.
Call it $50M, $20M, a kabajillion dollars... whatever. Point is that the C7 are either coming out of pocket and/or giving up revenue that the Invite 5 won't be.
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This is a brand new league, meaning EVERY school that is in the conference day 1 is a charter member. I don't understand why the C7 are going to be spending more than the others..if so, they should be equally distributed as part of the payment to get into the league.
From a purely business sense, why would the C7 take on all the financial risk to begin with? You start the league, you have 10 or 12 schools, the costs should be distributed equally and the revenues equally. Someone will have to explain to me how 7 charter members are incurring costs that 5 other charter members wouldn't, and thus the revenue model needs to be portioned out differently to make the 7 whole. Why are the 7 incurring costs the other 5 aren't?
Im hung up on the same things. Invite the other 5 and THEN get together and split all the costs evenly. What's the problem with that?
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And can someone show me where the $100 million is coming from, or was that just conjecture. Honestly, don't know...just asking.
Just for starters, the exit fee for the Big East is $10M per team. So that's $75M without factoring in anything else. Will we pay that? Probably not, but it will be very expensive to make this move. Anyone thinking otherwise is crazy.
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This is a brand new league, meaning EVERY school that is in the conference day 1 is a charter member. I don't understand why the C7 are going to be spending more than the others..if so, they should be equally distributed as part of the payment to get into the league.
From a purely business sense, why would the C7 take on all the financial risk to begin with? You start the league, you have 10 or 12 schools, the costs should be distributed equally and the revenues equally. Someone will have to explain to me how 7 charter members are incurring costs that 5 other charter members wouldn't, and thus the revenue model needs to be portioned out differently to make the 7 whole. Why are the 7 incurring costs the other 5 aren't?
Whether it's the best approach or not, clearly the C7 have taken the tact that they're going to organize the conference and then bring other members aboard. Hence, they're negotiating TV deals (which requires lawyers and consultants, who cost money); they're negotiating exit terms with the Big East (which requires lawyers, who cost money); they're very likely negotiating/paying for the Big East name (which ... well, you know); they're interviewing and hiring commissioner/administrative candidates; etc.
Remember, they've already hired Proskauer Rose and Pilson Communications.
That's why the C7 are spending more than the others.
What do you see as the difference between requiring the other schools to make a "payment to get into the league" and simply reducing their share of early revenues to make the C7 whole?
One might think the latter is even preferable, given that it doesn't require these schools to come up with a large fee upfront - at a time when they may be having to for over their own exit fees - and their "loss" isn't really a loss, but rather less of a gain.
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Whether it's the best approach or not, clearly the C7 have taken the tact that they're going to organize the conference and then bring other members aboard. Hence, they're negotiating TV deals (which requires lawyers and consultants, who cost money); they're negotiating exit terms with the Big East (which requires lawyers, who cost money); they're very likely negotiating/paying for the Big East name (which ... well, you know); they're interviewing and hiring commissioner/administrative candidates; etc.
Remember, they've already hired Proskauer Rose and Pilson Communications.
That's why the C7 are spending more than the others.
What do you see as the difference between requiring the other schools to make a "payment to get into the league" and simply reducing their share of early revenues to make the C7 whole?
One might think the latter is even preferable, given that it doesn't require these schools to come up with a large fee upfront - at a time when they may be having to for over their own exit fees - and their "loss" isn't really a loss, but rather less of a gain.
Nailed it.
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Benny, you just make those part of the cost of doing business of the new league and distribute those costs across the schools. Just as Xavier will be paying an exit fee to the A-10, lawyer fees, etc.
Maybe it's an optics thing for me, but in putting deals together in my line of work, I believe in partnerships and bad deals just simmer and come back to haunt business down the road. I'd prefer the put all the costs associated with this conference creation and distribute them to all charter members as the cost to enter. That way, at least optically, everyone has the same skin in the game and everyone is sharing equally in the pain and the reward. There is no second class citizenship, unified from the start. This really isn't hard to do. Hell, I'd even include the fees the non C7 institutions will incur (their legal fees, their exit fees, etc) into the same pool of expenditures. I'm all for Socialism in this case. :D
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Im hung up on the same things. Invite the other 5 and THEN get together and split all the costs evenly. What's the problem with that?
Invite them to what? A league which doesn't yet exist?
You have to have a conference in place before you can invite anyone to it.
Will the invite look like this:
Dear Xavier,
We're forming a basketball-centric sports conference. We don't know its name yet. Or when it will begin play. We hope to have a TV contract, but we don't know how often teams will appear on television or even on what network. We don't know how much revenue schools can expect from this deal. We don't know where the conference will be based, nor where the conference tournaments will be played. We don't know what other sports will be included. We don't have a commissioner or any semblance of a staff.
Now please leave behind the conference in which you've had great success for more than a decade and join us.
Sincerely,
Marquette, DePaul, Georgetown, St. John's, Villanova, Providence and Seton Hall
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Just for starters, the exit fee for the Big East is $10M per team. So that's $75M without factoring in anything else. Will we pay that? Probably not, but it will be very expensive to make this move. Anyone thinking otherwise is crazy.
In that I'm including exit fees for the other 5 teams. If the Big East name is worth $30M, we'd probably have to buy out half that. Add in lawyers fees and I think $100M may be high bit isn't at all far-fetched.
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Whether it's the best approach or not, clearly the C7 have taken the tact that they're going to organize the conference and then bring other members aboard. Hence, they're negotiating TV deals (which requires lawyers and consultants, who cost money); they're negotiating exit terms with the Big East (which requires lawyers, who cost money); they're very likely negotiating/paying for the Big East name (which ... well, you know); they're interviewing and hiring commissioner/administrative candidates; etc.
Remember, they've already hired Proskauer Rose and Pilson Communications.
That's why the C7 are spending more than the others.
What do you see as the difference between requiring the other schools to make a "payment to get into the league" and simply reducing their share of early revenues to make the C7 whole?
One might think the latter is even preferable, given that it doesn't require these schools to come up with a large fee upfront - at a time when they may be having to for over their own exit fees - and their "loss" isn't really a loss, but rather less of a gain.
The logic behind this seems to be because the C7 had to take a financial bath to get out of the Big East, they feel they deserve more of the revnues from a new league going forward. This might be finanicaly advantagous to them, but is inconsistent with the accounting concept of sunk cost.
I don't think its unreasonable for Xavier or Butler on the other hand to say "Look, I don't care how much it cost you to get out of your old deal, if we're going to do business together going forward we want to be equals from Day 1."
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The logic behind this seems to be because the C7 had to take a financial bath to get out of the Big East, they feel they deserve more of the revnues from a new league going forward. This might be finanicaly advantagous to them, but is inconsistent with the accounting concept of sunk cost.
I don't think its unreasonable for Xavier or Butler on the other hand to say "Look, I don't care how much it cost you to get out of your old deal, if we're going to do business together going forward we want to be equals from Day 1."
First, two assets that those schools absolutely can't get without the C7 are MSG and Big East brand. Second the C7 paying to get out of the Big East is the only way the +teams even get this opportunity for more money....so whether they like it or not, this league and associated revenue doesn't occur without the C7 and therefor there is a value to the C7 that the +teams need to account for.
As has been pointed out, if the C7 lose money over the next 12 years compared to what they would have gotten staying in BE why would they do it?
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Invite them to what? A league which doesn't yet exist?
You have to have a conference in place before you can invite anyone to it.
Will the invite look like this:
Dear Xavier,
We're forming a basketball-centric sports conference. We don't know its name yet. Or when it will begin play. We hope to have a TV contract, but we don't know how often teams will appear on television or even on what network. We don't know how much revenue schools can expect from this deal. We don't know where the conference will be based, nor where the conference tournaments will be played. We don't know what other sports will be included. We don't have a commissioner or any semblance of a staff.
Now please leave behind the conference in which you've had great success for more than a decade and join us.
Sincerely,
Marquette, DePaul, Georgetown, St. John's, Villanova, Providence and Seton Hall
Well, 7 schools have already gotten together despite the fact that none of those questions have been answered. Why not make it 12?
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The logic behind this seems to be because the C7 had to take a financial bath to get out of the Big East, they feel they deserve more of the revnues from a new league going forward. This might be finanicaly advantagous to them, but is inconsistent with the accounting concept of sunk cost.
I don't think its unreasonable for Xavier or Butler on the other hand to say "Look, I don't care how much it cost you to get out of your old deal, if we're going to do business together going forward we want to be equals from Day 1."
Except you didn't finish the sentence by listing the other schools' alternatives.
"Look, I don't care how much it cost you to get out of your old deal, if we're going to do business together going forward we want to be equals from Day 1 or we'll stay in the A-10/MVC, where we stand to earn $12-$20 million less over the next decade."
Given the full sentence, it's wholly unreasonable for them to say that. Pragmatism usually wins out in these matters. And suggesting that a school like Butler is going to turn down $2.1 million a year in added television revenue - not to mention all the other benefits of the new league - over a demand to be equals in every regard from Day 1 is not pragmatic at all. You think that extra $2.1 million won't come in handy for Butler when other programs make runs at Brad Stevens?
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In that I'm including exit fees for the other 5 teams. If the Big East name is worth $30M, we'd probably have to buy out half that. Add in lawyers fees and I think $100M may be high bit isn't at all far-fetched.
Counting all 7 schools, $100M might be low
-Exit fees for each school
-Lost NCAA fees for each school
-Legal and PR fees for the BE exit and creation of new league
-Legal and PR fees for any new contracts required for tv deal
-What has to be paid to retain BE brand
-What has to be paid to retain MSG tourny contract
Lets say $100M is correct, +teams have the following choice:
-Cut a check for $8.3M now and receive an equal share of revenue for $3.47M each year for the next 12
or
-Cut no check now and receive $2.3M revenue each year for the first 7 and then $3.47M each year for the last 5
Take your pick. Chico's argues the bad optics of the later, I would argue the time value of money for the former. The $8.3M the +teams aren't paying can be spent on something else.
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The logic behind this seems to be because the C7 had to take a financial bath to get out of the Big East, they feel they deserve more of the revnues from a new league going forward. This might be finanicaly advantagous to them, but is inconsistent with the accounting concept of sunk cost.
I don't think its unreasonable for Xavier or Butler on the other hand to say "Look, I don't care how much it cost you to get out of your old deal, if we're going to do business together going forward we want to be equals from Day 1."
No, the logic behind it is "we are making a 9-figure investment to get this going and you are jumping in virtually for free, we want to get a return on our investment, not wait 5-6 years just to break even, especially as you will be multiplying your own incomes well beyond your current state from day 1."
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The most tried and true of Catholic doctrine: "It is better to beg for forgiveness than to ask for permission."
...and collect money whenever possible.
Don't forget about the money. Ever. The Catholic Church never does.
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Can everybody please stop all "C7" or "Catholic 7" references??? Let's call it "Hoops 7" or "Basketball 7" or "Big East 7"...this needs to be branded as a basketball league, not a religion conference.
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Can everybody please stop all "C7" or "Catholic 7" references??? Let's call it "Hoops 7" or "Basketball 7" or "Big East 7"...this needs to be branded as a basketball league, not a religion conference.
Are you telling me I've been scouting Leviticus for nothing? crap.
When there's a new name, people will use it. In the meantime, who cares what we call them?
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Can everybody please stop all "C7" or "Catholic 7" references??? Let's call it "Hoops 7" or "Basketball 7" or "Big East 7"...this needs to be branded as a basketball league, not a religion conference.
Good luck with that. The fact that the name has arisen naturally in the media probably bodes well for the Catholic League as the alternative to Big East if we can't get it. Atheists please don't get your panties in a bunch...
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The logic behind this seems to be because the C7 had to take a financial bath to get out of the Big East, they feel they deserve more of the revnues from a new league going forward. This might be finanicaly advantagous to them, but is inconsistent with the accounting concept of sunk cost.
I don't think its unreasonable for Xavier or Butler on the other hand to say "Look, I don't care how much it cost you to get out of your old deal, if we're going to do business together going forward we want to be equals from Day 1."
I would expect Xavier and Butler to say that. Furthermore, Xavier and Butler both know that without them, the pot of gold for this contract isn't happening for the C7. Dayton...eh. SLU..eh. But Xavier and Butler, especially as a tandem, have some muscle here.
Brew, I do think the $100 million is high. Pitt and Syracuse each paid $7.5M to leave early. That, to me, is the worst case scenario and would cost the 7 schools a combined $52.5 million....worst case scenario. I wouldn't pay $30 million for the Big East name. With the marketing and promotion that Fox will give the conference (we were part of that team for several years..they are the best), whatever we are called will be known. Fox isn't going to spend $500 million on something without totally blowing it out of the water to maximize the promotion of it. Keeping the name, I have no problem with because of the brand equity, but I wouldn't spend $30 million on it.
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Is it possible to use tourney credits toward exit fees?
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Except you didn't finish the sentence by listing the other schools' alternatives.
"Look, I don't care how much it cost you to get out of your old deal, if we're going to do business together going forward we want to be equals from Day 1 or we'll stay in the A-10/MVC, where we stand to earn $12-$20 million less over the next decade."
Given the full sentence, it's wholly unreasonable for them to say that. Pragmatism usually wins out in these matters. And suggesting that a school like Butler is going to turn down $2.1 million a year in added television revenue - not to mention all the other benefits of the new league - over a demand to be equals in every regard from Day 1 is not pragmatic at all. You think that extra $2.1 million won't come in handy for Butler when other programs make runs at Brad Stevens?
Disagree, because without those additional schools, that $500 million contract doesn't exist so the value of increased earnings is overstated. It's actually tied to them being in the conference, thus the power and leverage that they have. Sure, they'll make more money by joining the new league, but how much more they make is absolutely tied to them actually joining the league. Without the additional schools, that contract isn't the same, not close.
"Dear C7,
We are excited that you are willing to consider us to join your not yet named, not yet approved or certified athletics conference. However, we have a few concerns. We understand you want us to be paid less than you guys in terms of media revenues, despite the fact your basketball prowess for most of the your schools is not very good, your attendance is lower than ours and you generally are trading in on achievements from decades ago (not you Marquette, Georgetown and Villanova). More importantly, we understand that we are the vital piece missing so that you guys can actually implement this plan of inequitable payments. We are sorry that you have to incur exit fees from the Big East, we also would have to incur exit fees from the MVC and Atlantic 10. We're sorry that legal fees will be large and consulting costs added to the expenditures, we also have to incur these costs. As for the Big East name, well what is that worth today? It has become a name that has been tarnished, mocked, sullied, and weakened in the last few years. A sunken ship where schools can't wait to get off before they drown. We're fine not paying for that name and coming up with a new one which Fox will promote heavily.
So let us know when we are all aboard this new conference TOGETHER, on equal footing. We're happy to split up all of the costs, our exit fees...your exit fees, our lawyer fees and your lawyer fees and equally happy to share in the revenues equally. It seems you need us for that television contract you so desire. We want more revenues, as well, but to make both of these objectives a reality, we both need each other and cannot get their on our own. So call us when terms are equal, in the meantime we're going to continue winning games, going to the NCAA tournament....we're happy to explain that to DePaul, Providence, Seton Hall, etc if they don't know what that means"
Sincerely,
Butler, Xavier, Creighton (and two others we don't particularly care who they are
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What we do not know is whether the C7 is willing to pass on Xavier or Butler, if they would not accept a less money from the TV deal. The TV deal is dependent on a 12 team conference, not on whether Xavier and Butler join.
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Chicos, I specifically said "half that" regarding the $30M name rights figure. I don't think $2M per team would be too much to retain the name. But let's say we all get out for $5M each, get the Big East name for $10M, and spend only $5M on lawyer's fees. That's still $50M in expenditures not counting what we leave on the table in NCAA credits which will be millions more.
We should all just eat that and congratulate the I5 (Invitation) on their new bounty?
I'm not saying forever. I'm not saying the length of the deal. But even if we take $4M and they take $2.7M for the first 5-6 years, they make a ton more than they make now and we recoup our costs. How on earth would getting them more than six times their current earnings be seen as a negative? It's all about getting a fair return on our investment.
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This is business, not communism.
The deal needs to be fair, but "fair" doesn't always mean "equal".
With this said, create an agreement that allows the other schools to eventually get a better share of the pie, and it's perfect.
I actually like the schools keeping their own NCAA money. It encourages them to succeed. That would keep the competition high and encourage schools to invest in their programs.
Oh, and Chico's is turning into a socialist. Too much time in California.
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What we do not know is whether the C7 is willing to pass on Xavier or Butler, if they would not accept a less money from the TV deal. The TV deal is dependent on a 12 team conference, not on whether Xavier and Butler join.
I don't think we know the latter of that statement fully, either. If it's any 12, we should just add 5 dregs that will get us to 12. FOX is going to help dictate who these schools are with that kind of change being thrown around. Get X, Y and Z...you get this. Get plan B, B1, and B2, you get less. They have to monetize that investment and the only way they do that is with attractive content that people want to watch. Xavier and Butler know this.
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I don't think we know the latter of that statement fully, either. If it's any 12, we should just add 5 dregs that will get us to 12. FOX is going to help dictate who these schools are with that kind of change being thrown around. Get X, Y and Z...you get this. Get plan B, B1, and B2, you get less. They have to monetize that investment and the only way they do that is with attractive content that people want to watch. Xavier and Butler know this.
And the C7 do as well. Look, Fox, the C7, the potential invitees...everyone likely knows where they stand. And I'm pretty sure everyone wants this to work out. The rest is just negotiations.
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Chicos, I specifically said "half that" regarding the $30M name rights figure. I don't think $2M per team would be too much to retain the name. But let's say we all get out for $5M each, get the Big East name for $10M, and spend only $5M on lawyer's fees. That's still $50M in expenditures not counting what we leave on the table in NCAA credits which will be millions more.
We should all just eat that and congratulate the I5 (Invitation) on their new bounty?
I'm not saying forever. I'm not saying the length of the deal. But even if we take $4M and they take $2.7M for the first 5-6 years, they make a ton more than they make now and we recoup our costs. How on earth would getting them more than six times their current earnings be seen as a negative? It's all about getting a fair return on our investment.
I'm not sure how NCAA credits got wrapped all up in this? Those are not an expense. They are future revenue which the C7 are willingly walking away from to gain control of their future. You want to be made whole on real expenses, that's fine. Including those NCAA credits is silly.
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Chicos,
You should be in politics. Your spin on this is brilliant. ;)
Wrong, but well done.
And yes, that was meant as a compliment.
Bottom line is, the c8+ will get a tiered deal. It will be just and honorable. They will AGREE to it. It will be the TERMS they agree to. it will have a sunset. All will be happy.
Go WARRIORS!!!
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I don't think we know the latter of that statement fully, either. If it's any 12, we should just add 5 dregs that will get us to 12. FOX is going to help dictate who these schools are with that kind of change being thrown around. Get X, Y and Z...you get this. Get plan B, B1, and B2, you get less. They have to monetize that investment and the only way they do that is with attractive content that people want to watch. Xavier and Butler know this.
If the C7 (including DePaul, St. Johns, Providence and Seton Hall in their current state) and any five generic teams are worth $500 million, I have to think a conference built around Butler, VCU, Xavier, Gonzaga, and Creighton is would wind up in a similar neighborhood. Clearly they start out with an argument that they are a better basketball conference, more tounrament-calibre teams, more recent on-court success, and probably a greater national following.
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If the C7 (including DePaul, St. Johns, Providence and Seton Hall in their current state) and any five generic teams are worth $500 million, I have to think a conference built around Butler, VCU, Xavier, Gonzaga, and Creighton is would wind up in a similar neighborhood. Clearly they start out with an argument that they are a better basketball conference, more tounrament-calibre teams, more recent on-court success, and probably a greater national following.
They aren't coming nor are they in the discussion. And they probably have more of a national following than the other four combined.
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Disagree, because without those additional schools, that $500 million contract doesn't exist so the value of increased earnings is overstated. It's actually tied to them being in the conference, thus the power and leverage that they have. Sure, they'll make more money by joining the new league, but how much more they make is absolutely tied to them actually joining the league. Without the additional schools, that contract isn't the same, not close.
"Dear C7,
We are excited that you are willing to consider us to join your not yet named, not yet approved or certified athletics conference. However, we have a few concerns. We understand you want us to be paid less than you guys in terms of media revenues, despite the fact your basketball prowess for most of the your schools is not very good, your attendance is lower than ours and you generally are trading in on achievements from decades ago (not you Marquette, Georgetown and Villanova). More importantly, we understand that we are the vital piece missing so that you guys can actually implement this plan of inequitable payments. We are sorry that you have to incur exit fees from the Big East, we also would have to incur exit fees from the MVC and Atlantic 10. We're sorry that legal fees will be large and consulting costs added to the expenditures, we also have to incur these costs. As for the Big East name, well what is that worth today? It has become a name that has been tarnished, mocked, sullied, and weakened in the last few years. A sunken ship where schools can't wait to get off before they drown. We're fine not paying for that name and coming up with a new one which Fox will promote heavily.
So let us know when we are all aboard this new conference TOGETHER, on equal footing. We're happy to split up all of the costs, our exit fees...your exit fees, our lawyer fees and your lawyer fees and equally happy to share in the revenues equally. It seems you need us for that television contract you so desire. We want more revenues, as well, but to make both of these objectives a reality, we both need each other and cannot get their on our own. So call us when terms are equal, in the meantime we're going to continue winning games, going to the NCAA tournament....we're happy to explain that to DePaul, Providence, Seton Hall, etc if they don't know what that means"
Sincerely,
Butler, Xavier, Creighton (and two others we don't particularly care who they are
You've got a few faulty assumptions here, but the biggest is this notion that the potential invitees are acting as a unit, in the way that the C7 are. They're not. Butler isn't looking out for Xavier. Xavier doesn't have Creighton's back. Creighton doesn't give two poops about what happens to St. Louis or Dayton. Most of these programs have little to no history with one another and none will subordinate their own individual interests in favor of the others'. What you have here essentially are five free agents all looking for the best possible deal for their programs. If there's one enduring lesson of all this conference realignment, that's it - it's every school for itself out there. Do you really believe Butler or Creighton are going to turn down an extra $2+ million in revenue just from TV - not even mentioning the benefits of additional exposure, etc. - to stand on principal with Xavier?
So, this idea that these schools hold some notable leverage over the C7 is misguided. They might have a little if they were somehow acting in concert, but they're not and they won't.
And, to further the point, what this means is that none of these schools want to chance being left behind in a gutted A-10. Sure, Xavier would like to get equal revenues from the get-go, but are they going to take a stand on that and see the C7 add VCU instead, along with Dayton, Butler and St. Louis? Is Butler going to stand on principal and risk Gonzaga taking their spot, relegating them back to their Horizon League days?
I doubt it.
Also, you overrate their influence over the TV deal. The deal certainly is better with Xavier and Butler and Creighton, but how much better than with VCU, St. Louis and Gonzaga instead? I don't think much. And the real value for the network is in the C7 programs that inhabit larger markets like New York, northern Jersey, Philly, Chicago and D.C., not a divided Cincy market, Dayton or Indy. Heck, even Milwaukee brings more to a network than Cincy (which is shared by UC) or Omaha.
So, is the contract better with Xavier, Butler, etc.? Yes. Is it so much better that those schools somehow are in a position to dictate terms? No chance. From an economic perspective, a smaller TV deal with unbalanced revenues probably is more profitable to the C7 than a slightly larger deal in which all revenues must be divided equally.
Lastly, I think you may just be playing a bit contrarian here if you believe all parties involved don't believe the schools that are doing the work creating this conference should be compensated for those costs and efforts.
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If the C7 (including DePaul, St. Johns, Providence and Seton Hall in their current state) and any five generic teams are worth $500 million, I have to think a conference built around Butler, VCU, Xavier, Gonzaga, and Creighton is would wind up in a similar neighborhood. Clearly they start out with an argument that they are a better basketball conference, more tounrament-calibre teams, more recent on-court success, and probably a greater national following.
Really? You think a conference featuring teams in the Cincy (divided among two major D-1 programs), Indy, Omaha and Spokane markets is as valuable as one with teams in Washington, D.C., New York, Chicago, Philly and Milwaukee?
You really think that?
The new A-10 deal is worth $6.4 million per year. The proposed C7+ deal is worth nearly $42 million per year. So, apparentlyCreighton and Gonzaga are worth about $35 million a year. At least that's what it would take to get that conference in your similar neighborhood.
Really?
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Really? You think a conference featuring teams in the Cincy (divided among two major D-1 programs), Indy, Omaha and Spokane markets is as valuable as one with teams in Washington, D.C., New York, Chicago, Philly and Milwaukee?
You really think that?
Really? Do you really think more people coast-to-coast would actually prefer watching a DePaul game right now as opposed to Goznaga or Butler? Really?
Hell, I don't think DePaul ratings would beat Gonzaga or Xavier in CHICAGO. Coast to coast wouldn't even be close.
But networks don't care about eyeballs or ratings, right? Doesn't matter that Gonzaga would bring in better ratings. DePaul is in a bigger city--that's the ONLY thing that matters. Is that what you're saying?
Based on your logic, phones at Iona and Cal State Northridge and Chicago State should be ringing of the hook with offers--becuase you know the size of their market makes them oh, so much more valuable than teams from Durham NC, or Lawrence, KS, or Bloomington, IN or Lexington KY.
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Based on your logic, phones at Iona and Cal State Northridge and Chicago State should be ringing of the hook with offers--becuase you know the size of their market makes them oh, so much more valuable than teams from Durham NC, or Lawrence, KS, or Bloomington, IN or Lexington KY.
Nope. That one is BS. You simply can't compare a state school to local schools. They carry the weight of not just their city but all their state's cities.
I get your argument an you're right in the sense that viewers matter more than markets because we aren't selling a channel (like the B1G Network) but using a state school as your example is simply an unfair practice.
Durham is the only one there that works.
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Chicos, you realize both CBS and NBC are in negotiations with the C7 as well, right?
I don't say this often, but terrible argument on your end on this.
At the end of the day, it's business. C7 have a forthcoming product. Schools that want in know the terms and weigh the risk (12 yrs) vs reward (increased revenues and exposure).
If schools don't like the deal, tough crap. Stay in th A10 or Valley. Good luck getting a better deal down the road. It ain't happening in the next 12 yrs.
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Nope. That one is BS. You simply can't compare a state school to local schools. They carry the weight of not just their city but all their state's cities.
I get your argument an you're right in the sense that viewers matter more than markets because we aren't selling a channel (like the B1G Network) but using a state school as your example is simply an unfair practice.
Durham is the only one there that works.
Actually the population of the Chicago (9.5 million) excedes the population of the entire states of Kentucky (4.4 million), Kansas (2.8 million) or Indiana (6.5 million).
I can't say I chose it this way, but because they are population states, the analogy still works. :D
But you recognized the main point--viewers are more important than market size.
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Actually the population of the Chicago (9.5 million) excedes the population of the entire states of Kentucky (4.4 million), Kansas (2.8 million) or Indiana (6.5 million).
I can't say I chose it this way, but because they are population states, the analogy still works. :D
But you recognized the main point--viewers are more important than market size.
The population of Chicago is not 9.5 million. Are you counting the whole region?
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So $500 million over 12 years split between 12 teams comes out to $3.47 million per year, if split equally.
Yea, but the NPV of that aint crap over 12 years
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Yea, but the NPV of that aint crap over 12 years
Wow. The amount of people throwing around finance buzz terms trying to sound like they know what they're talking about in these threads is hilarious. So you know the start-up costs? You know what the incremental revenue numbers are? You know the discount rate each individual school uses? You put that all in a spreadsheet and calculated the NPV of the deal? Or did you just look at a single data point - a $3.47 million annual revenue stream projection - and say to yourself, "man, that looks like one crappy NPV."
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Really? Do you really think more people coast-to-coast would actually prefer watching a DePaul game right now as opposed to Goznaga or Butler? Really?
Hell, I don't think DePaul ratings would beat Gonzaga or Xavier in CHICAGO. Coast to coast wouldn't even be close.
But networks don't care about eyeballs or ratings, right? Doesn't matter that Gonzaga would bring in better ratings. DePaul is in a bigger city--that's the ONLY thing that matters. Is that what you're saying?
Based on your logic, phones at Iona and Cal State Northridge and Chicago State should be ringing of the hook with offers--becuase you know the size of their market makes them oh, so much more valuable than teams from Durham NC, or Lawrence, KS, or Bloomington, IN or Lexington KY.
As has been pointed out by many - you included (an argument you've now abandoned for convenience sake, I suppose) - non-tournament college basketball is not a national ratings draw in the way college football is. The reality is, someone in California or Florida isn't like to tune into a DePaul game or a Creighton game. Coast to coast isn't a major consideration.
Eyeballs is a major consideration, though, and the fact is having the predominant program in a large market has the potential, if not likelihood, for more eyeballs than a program in a smaller market.
I'd love to see some evidence for your contention that a Xavier-Creighton game is going to get more eyeballs in Chicago than DePaul-Marquette or DePaul- Villanova, or maybe more in New York than St. John's-Georgetown.
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They aren't coming nor are they in the discussion. And they probably have more of a national following than the other four combined.
Uh, actually they are in the mix.
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Uh, actually they are in the mix.
Keep dreaming. When you wake up, Gonzaga still won't be here.
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Pakuni has it right. The C7 hold most (actually almost all) of the cards and will absolutely act in concert for their own benefit. The Invite 5 (which certainly has more than 5 names on the list) may be given some opportunity to offer suggestions but in the end will be presented with a final 'take it or leave it' offer to join. Knowing that a 'polite no' will relegate them to the equivalent of the Horizon league and likely not materially change the deal that the C7 can negotiate with Fox, they'll happily sign on the dotted line smiling because good fortune shined on them that day. BOTH sides of the negotiation know it.
Whether that deal has a two tiered structure (I'd put the probablilty of that over 75% but just a guess) and a sunset (maybe yes, maybe no, maybe at the NEXT TV deal), it'll be the C7 that decides, not Xavier or Butler or anyone else.
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Pakuni has it right. The C7 hold most (actually almost all) of the cards and will absolutely act in concert for their own benefit. The Invite 5 (which certainly has more than 5 names on the list) may be given some opportunity to offer suggestions but in the end will be presented with a final 'take it or leave it' offer to join. Knowing that a 'polite no' will relegate them to the equivalent of the Horizon league and likely not materially change the deal that the C7 can negotiate with Fox, they'll happily sign on the dotted line smiling because good fortune shined on them that day. BOTH sides of the negotiation know it.
What makes you believe this is the case? I think Chicos is right here. You think Fox isn't going to change their tune if Xavier, Butler, et al say "no," and instead the C7 invite the likes of St. Bonnies and Duquesne? They have a little more leverage than you are giving them credit for.
As I have been saying, in the end everyone wants this to happen. The C7 want to build a power conference. The "Invite 5" want to be a part of it. And unless either side is completely unreasonable, they will figure things out in a manner that satisfies everyone. If they don't, neither side is going to maximize their revenue.
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Disagree, because without those additional schools, that $500 million contract doesn't exist so the value of increased earnings is overstated. It's actually tied to them being in the conference, thus the power and leverage that they have. Sure, they'll make more money by joining the new league, but how much more they make is absolutely tied to them actually joining the league. Without the additional schools, that contract isn't the same, not close.
"Dear C7,
We are excited that you are willing to consider us to join your not yet named, not yet approved or certified athletics conference. However, we have a few concerns. We understand you want us to be paid less than you guys in terms of media revenues, despite the fact your basketball prowess for most of the your schools is not very good, your attendance is lower than ours and you generally are trading in on achievements from decades ago (not you Marquette, Georgetown and Villanova). More importantly, we understand that we are the vital piece missing so that you guys can actually implement this plan of inequitable payments. We are sorry that you have to incur exit fees from the Big East, we also would have to incur exit fees from the MVC and Atlantic 10. We're sorry that legal fees will be large and consulting costs added to the expenditures, we also have to incur these costs. As for the Big East name, well what is that worth today? It has become a name that has been tarnished, mocked, sullied, and weakened in the last few years. A sunken ship where schools can't wait to get off before they drown. We're fine not paying for that name and coming up with a new one which Fox will promote heavily.
So let us know when we are all aboard this new conference TOGETHER, on equal footing. We're happy to split up all of the costs, our exit fees...your exit fees, our lawyer fees and your lawyer fees and equally happy to share in the revenues equally. It seems you need us for that television contract you so desire. We want more revenues, as well, but to make both of these objectives a reality, we both need each other and cannot get their on our own. So call us when terms are equal, in the meantime we're going to continue winning games, going to the NCAA tournament....we're happy to explain that to DePaul, Providence, Seton Hall, etc if they don't know what that means"
Sincerely,
Butler, Xavier, Creighton (and two others we don't particularly care who they are
Chicos is spot on here
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As I have been saying, in the end everyone wants this to happen. The C7 want to build a power conference. The "Invite 5" want to be a part of it. And unless either side is completely unreasonable, they will figure things out in a manner that satisfies everyone. If they don't, neither side is going to maximize their revenue.
Boom, nailed it.
C7: We're fronting the start-up costs and effort, we've done the work to get this thing started, we've got the major conference label and are offering you five times your current TV deal revenue and more exposure.
Invite 5: You are also taking a lot more of the TV deal than we get. Your TV deal falls apart without us and you'll be left with even less than you'd get if things were split equally with us from the get-go. Your NCAA shares will also go down if you're stuck inviting lesser programs since only two or three of the seven of you are in good shape at the moment.
And that's why we have:
(http://www.examiner.com/images/blog/replicate/EXID16041/images/Six_Steps_in_the_Negotiation_Process_Mini_Poster.jpg)
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Pretty simple.
If the 5 new schools are adamant about equal shares(which we dont even know that they are)
Then they need to pay an equal amount of the costs to get this rolling. Either pay up front, or take less until the costs are taken care of.
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And that's why we have:
(http://www.examiner.com/images/blog/replicate/EXID16041/images/Six_Steps_in_the_Negotiation_Process_Mini_Poster.jpg)
HOLY SH1T! Where did you get this? Has anyone thought to get a copy of this to the Taliban? And Hezbullah? Christ but we could have avoided a lot of suffering if we only had this formula! Too bad this wasn't around in 1939.
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What makes you believe this is the case? I think Chicos is right here. You think Fox isn't going to change their tune if Xavier, Butler, et al say "no," and instead the C7 invite the likes of St. Bonnies and Duquesne? They have a little more leverage than you are giving them credit for.
You're making the same mistake Chico's is making ... arguing as if the potential invitees are acting together instead of as five separate entities looking out for their own interests. They have leverage only if they're acting as a single unit. But they're not. Creighton's not going to turn down a better deal for itself because Xavier doesn't like it. Butler isn't going to reject the additional money and exposure because Dayton feels short-shrifted.
To suggest that they're all going to say no to extra revenue, extra exposure, better competition, etc. because of some misguided notion of fairness (and by "fairness" Chico's means, "No, C7, you are not entitled to recover your startup costs") is, well, misguided.
As I have been saying, in the end everyone wants this to happen. The C7 want to build a power conference. The "Invite 5" want to be a part of it. And unless either side is completely unreasonable, they will figure things out in a manner that satisfies everyone. If they don't, neither side is going to maximize their revenue.
Nobody has ever disputed this. This, in fact, is why the invitees take the deal even if it means unbalanced revenue distribution initially. Because they know this is how they maximize their revenues.
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Pretty simple.
If the 5 new schools are adamant about equal shares(which we dont even know that they are)
Then they need to pay an equal amount of the costs to get this rolling. Either pay up front, or take less until the costs are taken care of.
Exactly.
Find it inexplicable that some here seem to be arguing that, essentially, Marquette and the rest of the C7 ought to subsidize other programs' entry into this thing by footing the startup costs on their own.
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You're making the same mistake Chico's is making ... arguing as if the potential invitees are acting together instead of as five separate entities looking out for their own interests. They have leverage only if they're acting as a single unit. But they're not. Creighton's not going to turn down a better deal for itself because Xavier doesn't like it. Butler isn't going to reject the additional money and exposure because Dayton feels short-shrifted.
And you know this how??? How do you know that the Butler people aren't talking to the Xavier people, etc?
This, in fact, is why the invitees take the deal even if it means unbalanced revenue distribution initially. Because they know this is how they maximize their revenues.
If they feel that it based on fairly compensating the C7 for their work...then yes. I was simply commenting on jsglow's point that they have no leverage because the C7 will simply turn elsewhere without substantial impact to the Fox contract.
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I am not understanding what you are arguing about. Reminds me of an episode of Big Bang Theory where Sheldon and Leonard argue about which Klingon is more powerful.
Chicos et al.: Invite 5 get equal TV revenue immediately, but pay up front costs as part of entrance into the league.
Counter argument: Invite 5 enter league with no upfront expenses, but receive a lower payout for some agreeable, negotiated period of time. (assume no acrimony)
Am I missing something? Doesn't this net out the same $$? Some may favor the Counter Argument as slightly less risky. (No upfront $$ paid out). Reasonable people will make this work either way.
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I am not understanding what you are arguing about. Reminds me of an episode of Big Bang Theory where Sheldon and Leonard argue about which Klingon is more powerful.
Chicos et al.: Invite 5 get equal TV revenue immediately, but pay up front costs as part of entrance into the league.
Counter argument: Invite 5 enter league with no upfront expenses, but receive a lower payout for some agreeable, negotiated period of time. (assume no acrimony)
Am I missing something? Doesn't this net out the same $$? Some may favor the Counter Argument as slightly less risky. (No upfront $$ paid out). Reasonable people will make this work either way.
The only people really making this out to be a big deal are the message boards. The costs are costs and will be paid for by every member in some way.
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I am not understanding what you are arguing about. Reminds me of an episode of Big Bang Theory where Sheldon and Leonard argue about which Klingon is more powerful.
Chicos et al.: Invite 5 get equal TV revenue immediately, but pay up front costs as part of entrance into the league.
Counter argument: Invite 5 enter league with no upfront expenses, but receive a lower payout for some agreeable, negotiated period of time. (assume no acrimony)
Am I missing something? Doesn't this net out the same $$? Some may favor the Counter Argument as slightly less risky. (No upfront $$ paid out). Reasonable people will make this work either way.
I agree. But I do think there is a difference. For example, if you have a business idea and you want to allow someone else in on the idea. You can either allow them to invest equally up front and share equally in the profits. Or you can not allow them to invest equally and not quite get equal shares in the profit. Since you are the one with the idea and business, you get to control how it all goes down. Pretty simple.
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here's an interesting article on the possible TV partners and what they bring to the table...
http://www.awfulannouncing.com/2013/january/the-possible-tv-suitors-for-the-catholic-7-basketball-schools.html
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The only people really making this out to be a big deal are the message boards. The costs are costs and will be paid for by every member in some way.
Chicos knows everything because he does everything at DirecTV. Didn't you know that?
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And you know this how??? How do you know that the Butler people aren't talking to the Xavier people, etc?
They may very well be talking, but I think it's highly unlikely that multiple programs from multiple conferences (even moreso if this were happening a mere four months earlier), most of whom have little shared history, are banding together to serve one another's interests, as opposed to each trying to get the best deal they can. Can I say this with 100 percent accuracy? I suppose not. But given that there's been zero reporting of this, and given the recent history of realignment, and given the stakes, I think it's a safe assumption that Butler won't subordinate itself to Xavier and Creighton won't risk being left out in the cold to stand on principle with Dayton.
Maybe I'm wrong, but logic dictates otherwise.
If you can find anything indicating so, I'd be happy to check it out.
If they feel that it based on fairly compensating the C7 for their work...then yes. I was simply commenting on jsglow's point that they have no leverage because the C7 will simply turn elsewhere without substantial impact to the Fox contract.
None of us know the impact on the Fox contract. But I would suggest the true value of the contract for Fox by and large comes from the core programs (i.e. the C7), not the five additions. That's not to suggest those programs wouldn't add value, just that Xavier, Dayton and St. Louis, for example, have less value to a network than Georgetown, Marquette and St. John's.
If anything, the A-10's new contract illustrates this. A conference featuring Xavier, Butler, Dayton, etc. was judged to be worth $40 million over 8 years.
If the reports are true, the market for those schools + the C7 is worth $500 million over 12 years. Have Dayton, Butler and Xavier suddenly become that much more valuable in a matter of months? Did the A-10 woefully underestimate its value and accept a terrible, terrible deal? Or does the majority of the value lie in the C7 programs? I'm suggesting it's primarily the latter.
You're free to disagree.
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Boom, nailed it.
C7: We're fronting the start-up costs and effort, we've done the work to get this thing started, we've got the major conference label and are offering you five times your current TV deal revenue and more exposure.
Invite 5: You are also taking a lot more of the TV deal than we get. Your TV deal falls apart without us and you'll be left with even less than you'd get if things were split equally with us from the get-go. Your NCAA shares will also go down if you're stuck inviting lesser programs since only two or three of the seven of you are in good shape at the moment.
And that's why we have:
(http://www.examiner.com/images/blog/replicate/EXID16041/images/Six_Steps_in_the_Negotiation_Process_Mini_Poster.jpg)
Meh... here's an even better flowchart.
(http://www.muscoop.com/index.php?action=dlattach;topic=35380.0;attach=3608;image)
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What makes you believe this is the case? I think Chicos is right here. You think Fox isn't going to change their tune if Xavier, Butler, et al say "no," and instead the C7 invite the likes of St. Bonnies and Duquesne? They have a little more leverage than you are giving them credit for.
As I have been saying, in the end everyone wants this to happen. The C7 want to build a power conference. The "Invite 5" want to be a part of it. And unless either side is completely unreasonable, they will figure things out in a manner that satisfies everyone. If they don't, neither side is going to maximize their revenue.
Fox will change their tune a little if Xavier and Butler say no but do you honestly believe Xavier and Butler will walk away from tripling their revenue based on principle? The C7 are going to at least double their revenue no matter what. If the last 2 plus years have shown us anything it is that if any institution can generate WAY MORE revenue somewhere else, they are GONE in less then 60 seconds. Tradition, rivalries and anything else be damned. Xavier and Butler have very little leverage and Creighton, St. Louis, VCU and Dayton have none.
Plus if it really is only about who else we add, wouldn't the C7 bend over backwards to have Gonzaga in the league? Now they are way more a brand name than Xavier and Butler combined. Heck by some arguments in this post, the C7 should all just bow down to Gonzaga and give them twice the revenue of everyone else and even name the league after them.
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You're making the same mistake Chico's is making ... arguing as if the potential invitees are acting together instead of as five separate entities looking out for their own interests. They have leverage only if they're acting as a single unit. But they're not. Creighton's not going to turn down a better deal for itself because Xavier doesn't like it. Butler isn't going to reject the additional money and exposure because Dayton feels short-shrifted.
To suggest that they're all going to say no to extra revenue, extra exposure, better competition, etc. because of some misguided notion of fairness (and by "fairness" Chico's means, "No, C7, you are not entitled to recover your startup costs") is, well, misguided.
Nobody has ever disputed this. This, in fact, is why the invitees take the deal even if it means unbalanced revenue distribution initially. Because they know this is how they maximize their revenues.
You are right Pakuni, but that's also why I said if I were Butler and Xavier, I would form a bloc...they are the key. Maybe Creighton as well. As a bloc of 2 or 3, they control tremendous leverage. These schools, if I were consulting them, would be wise to act as a bloc and say we are coming as a bloc and if you don't invite all three (or five) of us, then go to your next rung on the ladder which is a considerably diluted level. We're happy to come on board, but it has to be as equals. We'll share the burdens and the revenues.
I just don't see why this is so hard, it's actually quite easy framework to setup. Why poison the well in a league before you even get it started. The "critical 3" or Must Have 3 as I like to call them, have a ton of leverage if they act in concert with each other...I absolutely agree with you.
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You are right Pakuni, but that's also why I said if I were Butler and Xavier, I would form a bloc...they are the key. Maybe Creighton as well. As a bloc of 2 or 3, they control tremendous leverage. These schools, if I were consulting them, would be wise to act as a bloc and say we are coming as a bloc and if you don't invite all three (or five) of us, then go to your next rung on the ladder which is a considerably diluted level. We're happy to come on board, but it has to be as equals. We'll share the burdens and the revenues.
I just don't see why this is so hard, it's actually quite easy framework to setup. Why poison the well in a league before you even get it started. The "critical 3" or Must Have 3 as I like to call them, have a ton of leverage if they act in concert with each other...I absolutely agree with you.
If they do that there is no argument. Its just a matter of semmantics. Do the new schools pay up front? Or do they pay as they go by taking less till the debt is recovered?
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Chicos knows everything because he does everything at DirecTV. Didn't you know that?
Definitely not, but I've been around the block on this stuff for almost 20 years and work with these networks, the professional sports leagues, the NCAA, etc. Just trying to help define and put some color on how these things work. There are many turns and twists and more turns. There will be public statements and then there will be what really happened in back rooms. ;)
I'm trying to offer a view from both the business side and the college athletic administration side...I've been in both positions and simply trying to share some of that perspective. This will all get worked out, I'm of the mindset of starting with a clean slate, make sure everyone has equal skin in the game and equal outcomes. It provides for the best possible marriage and long term stability. That's not the standard I would use for some business deals, you have to use your leverage where you can. In a situation like this, however, where multiple parties are needed to make this work...I believe it is the right thing to do.
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Let's all keep in mind that the "uneven distribution" model is still speculation at this point.
Focus more on the "how," less on the "what if."
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Let's all keep in mind that the "uneven distribution" model is still speculation at this point.
Focus more on the "how," less on the "what if."
Yep. Just an offhand comment by an ESPN ( :o) writer so far.
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Definitely not, but I've been around the block on this stuff for almost 20 years and work with these networks, the professional sports leagues, the NCAA, etc. Just trying to help define and put some color on how these things work. There are many turns and twists and more turns. There will be public statements and then there will be what really happened in back rooms. ;)
I'm trying to offer a view from both the business side and the college athletic administration side...I've been in both positions and simply trying to share some of that perspective. This will all get worked out, I'm of the mindset of starting with a clean slate, make sure everyone has equal skin in the game and equal outcomes. It provides for the best possible marriage and long term stability. That's not the standard I would use for some business deals, you have to use your leverage where you can. In a situation like this, however, where multiple parties are needed to make this work...I believe it is the right thing to do.
First, I absolutely respect your knowledge in this stuff as you have an extensive background.
That said, isn't this as much about "eyeballs" as it is about recent basketball success? Xavier has been a really good team for a decade or more but is still playing for peanuts on TV. DePaul has been crap for 20 years but the Big East went after them. The C7 has Chicago, DC, Philly and NY/NJ in addition to (probably)the Big East name. Given that MU, GTown, Villanova roughly = Xavier, Butler and Creighton in recent on court success (and trounce them historically) to me it's advantage (and therefore leverage) to the C7.
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You are right Pakuni, but that's also why I said if I were Butler and Xavier, I would form a bloc...they are the key. Maybe Creighton as well. As a bloc of 2 or 3, they control tremendous leverage. These schools, if I were consulting them, would be wise to act as a bloc and say we are coming as a bloc and if you don't invite all three (or five) of us, then go to your next rung on the ladder which is a considerably diluted level. We're happy to come on board, but it has to be as equals. We'll share the burdens and the revenues.
I just don't see why this is so hard, it's actually quite easy framework to setup. Why poison the well in a league before you even get it started. The "critical 3" or Must Have 3 as I like to call them, have a ton of leverage if they act in concert with each other...I absolutely agree with you.
OK, so we agree the C7 should be reimbursed their startup costs and the other five members should not be subsidized into the league.
I asked a question earlier that probably got lost in the minutiae, so I'll ask again ... why do yo think it would be preferable/advantageous to the non C7 schools to pay some sort of lump sum entry fee to cover a share of startup costs as opposed to letting the C7 recover that money over a defined period of time out of shared revenues? I would think the latter would be more palatable, for a number of reasons, for most of these programs than having to fork over $5-10 million on the spot. It sure would seem to make more sense financially.
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OK, so we agree the C7 should be reimbursed their startup costs and the other five members should be subsidized into the league.
I asked a question earlier that probably got lost in the minutiae, so I'll ask again ... why do yo think it would be preferable/advantageous to the non C7 schools to pay some sort of lump sum entry fee to cover a share of startup costs as opposed to letting the C7 recover that money over a defined period of time out of shared revenues? I would think the latter would be more palatable, for a number of reasons, for most of these programs than having to fork over $5-10 million on the spot. It sure would seem to make more sense financially.
Because Chicos likes to dig in heels and argue a point to death with agonizing minutiae even when proven wrong. Fairly obvious.