C7 Announcement Rumor

[brewcity77]

I thought I read somewhere that the C7 schools would not have to pay exit fees and that it might have something to do with the number of schools involved. Anyone know what the real deal on that is?

No. And not a "no" as in I don't know (though I don't) but more so that I don't think anyone that does know is talking about it right now.

There will almost certainly be some form of payment/settlement to the remaining Big East football schools. Right now the buyout is $10M. I doubt we'll all pay that much to get out, but that is the current agreed-upon fee. I figure they'll negotiate that down, mostly using our share of the buyout fees gained from Louisville, Rutgers, Syracuse, etc. There's also a decent chance we'll end up paying for Xavier, Butler, Creighton, and everyone else's exit fees to get them out of their respective leagues.

In addition, lawyer fees, paying for rights to the Big East name, and all the NCAA credits we'll be leaving on the table, it's going to cost a lot. Probably somewhere between $10M and $20M per C7 team. Which is why a disparity in economic rights between us and the new members is not only a good idea, it's a fair one. We're going to foot the bill to get out of our league, get them out of their leagues, and create this non-football school conference. The least they can do is let us recoup all the costs we're going to pay.

[Avenue Commons]

The way this article is written it sounds as though this announcement that was rumored for today might not actually take place today.  Especially as it mentions that none of the presidents will be present at the meeting.

I presumed the announcement was a formal meeting in and of itself.

[drewm88]

Why stop at unequal revenue sharing? Who says we have to let the new teams play half their games at home?

Xavier: 8 home, 10 road
Butler/Creighton: 7 home, 11 road
SLU: 6 home, 12 road
Dayton: 2 home, 16 road. (Hope the early 90's Cavaliers get good mileage.)

[🏀]

Why stop at unequal revenue sharing? Who says we have to let the new teams play half their games at home?

Xavier: 8 home, 10 road
Butler/Creighton: 7 home, 11 road
SLU: 6 home, 12 road
Dayton: 2 home, 16 road. (Hope the early 90's Cavaliers get good mileage.)

Dayton travels so well this only makes sense.

[Dr. Blackheart]

Some of you who advocate equal revenue sharing please read what the C7 is giving up on the cost side imbedded in this thread to the benefit of the A11 teams and get back to us.  Some of you guys are advocating 9th place ribbons and giving away the shop.

Equal revenues shared = Equal Cost Shared.  There is NOTHING UNFAIR about that!

As I laid out, unless there is a tiered system for the the length of the deal, MU is better off staying in the old BE.  Gladly, for profit guys run Georgetown and they understand that.  MU could build their indoor soccer|track facility tomorrow or they could start a new conference for that capital....hoping to build that facility in 7-10 years.  At this point I am ready to bag the C7 for the legacy BE.  Glad to have UCONN, Cinci, Memphis, USF over the Dayton's, SLU at this point despite the football woes.

[ChitownSpaceForRent]

Some of you who advocate equal revenue sharing please read what the C7 is giving up on the cost side imbedded in this thread to the benefit of the A11 teams and get back to us.  Some of you guys are advocating 9th place ribbons and giving away the shop.

Equal revenues shared = Equal Cost Shared.  There is NOTHING UNFAIR about that!

As I laid out, unless there is a tiered system for the the length of the deal, MU is better off staying in the old BE.  Gladly, for profit guys run Georgetown and they understand that.  MU could build their indoor soccer|track facility tomorrow or they could start a new conference for that capital....hoping to build that facility in 7-10 years.  At this point I am ready to bag the C7 for the legacy BE.  Glad to have UCONN, Cinci, Memphis, USF over the Dayton's, SLU at this point despite the football woes.

Youre insane. I wouldnt want to stick around at all because the second UConn, Cinci or even USF for that matter get a chance to go to another conference they would not hesitate. Then were stuck with the Tulanes and the SMUs of the world.

[brewcity77]

Some of you who advocate equal revenue sharing please read what the C7 is giving up on the cost side imbedded in this thread to the benefit of the A11 teams and get back to us.  Some of you guys are advocating 9th place ribbons and giving away the shop.

Equal revenues shared = Equal Cost Shared.  There is NOTHING UNFAIR about that!

As I laid out, unless there is a tiered system for the the length of the deal, MU is better off staying in the old BE.  Gladly, for profit guys run Georgetown and they understand that.  MU could build their indoor soccer|track facility tomorrow or they could start a new conference for that capital....hoping to build that facility in 7-10 years.  At this point I am ready to bag the C7 for the legacy BE.  Glad to have UCONN, Cinci, Memphis, USF over the Dayton's, SLU at this point despite the football woes.

I don't think Dr. B is advocating staying in the old Big East. He's saying that if we leave and hand an equal share immediately to all these other schools, we would have been better off staying. That a tiered system to help the C7 recoup their profits is not only fair, but should also be necessary to offset the ridiculous amounts of money our schools are going to be putting on the table for exit fees (our and the other schools'), Big East naming rights, possibly the MSG contract, and the amount of money we will be forfeiting in NCAA credits.

We are taking a HUGE hit financially by making this move. Getting a larger cut of the new TV deal is the only way we are going to offset that. Essentially, the C7 are all investing in a new company at a cost of around $15M each (speculative number, but probably in that realm). So people advocating equal media rights are saying the 7 schools should invest over $100M of their own money, bring in 5 partners who are investing NOTHING, and share all the profits with them equally? After we built this whole thing for them? That's insane.

Not only should it be a tiered deal, it better be a tiered deal if the ADs and presidents have any sense. If everyone is making the same from day one, then Xavier, Butler, Creighton, VCU, and Dayton better be willing to not only pay their own exit fees, but also to pay a $20M entry fee to get into our league. It's the only way it would make sense.

[Dr. Blackheart]

Youre insane. I wouldnt want to stick around at all because the second UConn, Cinci or even USF for that matter get a chance to go to another conference they would not hesitate. Then were stuck with the Tulanes and the SMUs of the world.

Brew caught my hyperbole.  Again, look at it in simple financial terms:

--If MU stays in the legacy BE and the current media deal is extended 10 years, MU will make $25mm in media revenue+ $10mm it has in the bank TODAY in earned and forfeited NCAA credits from departed schools and their exit fees.  That is $35mm over 10 years.

--if the new league equally shares revenue at $3.1 for 10 years.  MU will earn $31mm or $6mm more on the TV deal.  However, MU gives up at least $10mm in that revenue for leaving.  So, over years of equal partnership, then MU loses $4mm in the new conference deal.  If as an alternative, MU invested the $10mm today, they would reasonably have at least $20mm in the bank in ten years.  Equal revenue sharing is a horrible deal for MU, despite what the puppy dog society led by DeCourcy is railing about.

--Tiered scenario:  The C7 gets $5mm per year, they clear $50mm.  If you subtract then $10mm MU has to give up to leave, you are left with $40mm, which is $15mm better than staying in the legacy BE and a bit better than investing the $10mm MU has today in the bank.  MU takes that deal.

--If I am Dayton, I will make $5mm over ten years staying in the A10.  Or I can take $25mm by joining at the C7 with $2.5mm in media revenue per year.  I will have to pay $1mm in exit fees and give up, let's say another $1mm in NCAA credits.  So, in 10 years Dayton is $18mm better off...or in the same range as MU in a tiered structure.  Dayton takes that deal.

--The puppy dog society says MU is greedy, that the partnership is unfair.  It simply isn't the case financially if all alternatives are considered.  If new members insist on it, MU should stay put as insane as that sounds.

[real chili 83]

Thanks Doc. Your earlier post was plenty clear.

Just goes to show the filters some people use under the subjective guise of how they choose to define "fair".

[mu03eng]

Brew caught my hyperbole.  Again, look at it in simple financial terms:

--If MU stays in the legacy BE and the current media deal is extended 10 years, MU will make $25mm in media revenue+ $10mm it has in the bank TODAY in earned and forfeited NCAA credits from departed schools and their exit fees.  That is $35mm over 10 years.

--if the new league equally shares revenue at $3.1 for 10 years.  MU will earn $31mm or $6mm more on the TV deal.  However, MU gives up at least $10mm in that revenue for leaving.  So, over years of equal partnership, then MU loses $4mm in the new conference deal.  If as an alternative, MU invested the $10mm today, they would reasonably have at least $20mm in the bank in ten years.  Equal revenue sharing is a horrible deal for MU, despite what the puppy dog society led by DeCourcy is railing about.

--Tiered scenario:  The C7 gets $5mm per year, they clear $50mm.  If you subtract then $10mm MU has to give up to leave, you are left with $40mm, which is $15mm better than staying in the legacy BE and a bit better than investing the $10mm MU has today in the bank.  MU takes that deal.

--If I am Dayton, I will make $5mm over ten years staying in the A10.  Or I can take $25mm by joining at the C7 with $2.5mm in media revenue per year.  I will have to pay $1mm in exit fees and give up, let's say another $1mm in NCAA credits.  So, in 10 years Dayton is $18mm better off...or in the same range as MU in a tiered structure.  Dayton takes that deal.

--The puppy dog society says MU is greedy, that the partnership is unfair.  It simply isn't the case financially if all alternatives are considered.  If new members insist on it, MU should stay put as insane as that sounds.

It makes all the sense in the world and I think a short term inequity in revenue with a 8-10 year sunset is how it is going to all go down.  Keep in mind the only article I've seen that at all makes it seem like the inequity would be permanent is one floated by ESPN who has a vested interest in the C7+ league not forming and especially having it not go to Fox.  So once again, ESPNs reporting interests are conflicted by their corporate interests, is anyone shocked?

At the end of the day, I think everyone needs to just realize this whole deal if you lay it out just makes entirely too much sense not to work out.  The chicken littles screaming about fairness don't understand the word and just like to cause trouble.

[GGGG]

I wouldn't blame ESPN for this.  They legitimately stated, and I am paraphrasing, "a source said that it could include inequitable revenue."  Since tweets have followed up stating this position does not represent everyone, you could easily deduce that this position does exist among the C7 group.  That is factual reporting.

[mu03eng]

I wouldn't blame ESPN for this.  They legitimately stated, and I am paraphrasing, "a source said that it could include inequitable revenue."  Since tweets have followed up stating this position does not represent everyone, you could easily deduce that this position does exist among the C7 group.  That is factual reporting.

Sultan, I agree with you, but ESPN could have added a simple addition, "there is no indication if this would be permanent or temporary" or something to that effect.  The folks at ESPN are pretty smart and should know that distinction is important in this kind of atmosphere.  A lot of times it's not what is in the story but what is not in the story that tells the tale.

Perhaps it's a jumping at shadows, but my ultimate point was for those that were carrying on about fairness, there is no reporting it won't be fair....just an absence of definitive statement that it will be fair

[GGGG]

This is specifically what Rovell said:

"One source said it is likely the new schools wouldn't share the same amount as the "Catholic 7," which would allow the former Big East basketball schools to earn in the $5 million range. It's thought that free agent schools such as the ones in the Atlantic 10 would be fine with making less than half of that on an annual basis because they currently pull in $400,000 a year."

I would agree that this is somewhat incompetent reporting because it doesn't touch on the cost aspect of it.  But hell, it's Rovell so I wouldn't expect much from him anyway.  However I don't think it was nefarious. 

[Benny B]

This is specifically what Rovell said:

"One source said it is likely the new schools wouldn't share the same amount as the "Catholic 7," which would allow the former Big East basketball schools to earn in the $5 million range. It's thought that free agent schools such as the ones in the Atlantic 10 would be fine with making less than half of that on an annual basis because they currently pull in $400,000 a year."

I would agree that this is somewhat incompetent reporting because it doesn't touch on the cost aspect of it.  But hell, it's Rovell so I wouldn't expect much from him anyway.  However I don't think it was nefarious. 

Never underestimate the shill-factor when it comes to "ESPN reporting."

[mu03eng]

This is specifically what Rovell said:

"One source said it is likely the new schools wouldn't share the same amount as the "Catholic 7," which would allow the former Big East basketball schools to earn in the $5 million range. It's thought that free agent schools such as the ones in the Atlantic 10 would be fine with making less than half of that on an annual basis because they currently pull in $400,000 a year."

I would agree that this is somewhat incompetent reporting because it doesn't touch on the cost aspect of it.  But hell, it's Rovell so I wouldn't expect much from him anyway.  However I don't think it was nefarious. 

I don't think it is necessarily nefarious either.  I think at a minimum it's a "psychological blindspot".  Whether intentional or not I think there is a consistent habit or reporting sports news in such a way that it serves ESPN's best interest, not the interests of sports in general.

Either way, my point is, regardless of the source there isn't enough discussion of cost and revenue implications for the new league and what they are aiming for to really draw a conclusion.

At the end of the day some smart adults are going to sit in a room and discuss a contract that I think will ultimately be very fair from a business standpoint.  Both parties(C7 and the + teams) are incentivized to achieve this fairness.

C7 is incentivized to assure the following:
-Maximize revenues
-Minimize and/or cover costs new legal
-Promote long-term stability
-Create a league that is at least as successful as the current iteration of the BE

+ teams are incentivized to assure the following:
-Maximize revenues
-Promote long-term stability
-Create a league that is at least is a level above their current leagues

Those goals line up, a good deal gets struck and I think 5 years from now we are talking about a really good league and what a great position

[ChicosBailBonds]

This is specifically what Rovell said:

"One source said it is likely the new schools wouldn't share the same amount as the "Catholic 7," which would allow the former Big East basketball schools to earn in the $5 million range. It's thought that free agent schools such as the ones in the Atlantic 10 would be fine with making less than half of that on an annual basis because they currently pull in $400,000 a year."

I would agree that this is somewhat incompetent reporting because it doesn't touch on the cost aspect of it.  But hell, it's Rovell so I wouldn't expect much from him anyway.  However I don't think it was nefarious. 

Posted this in the other thread, have to agree with DeCourcey that just doesn't seem right and basically hypocritical.  Not a good way to start a league, in my opinion.  He is interviewed in the link below.

http://aol.sportingnews.com/ncaa-basketball/story/2013-01-09/catholic-7-tv-contract-rpi-ratings-cj-mccollum-kentucky-john-calipari-mid-major

[mu03eng]

Posted this in the other thread, have to agree with DeCourcey that just doesn't seem right and basically hypocritical.  Not a good way to start a league, in my opinion.  He is interviewed in the link below.

http://aol.sportingnews.com/ncaa-basketball/story/2013-01-09/catholic-7-tv-contract-rpi-ratings-cj-mccollum-kentucky-john-calipari-mid-major

This is the cause of creating a scenario and then arguing against....as opposed to arguing against the facts.  If the situation is that the C7 are creating a league with the next 3/5 members are inferior members who don't get their fair share(accounting for costs so that revenue and costs are distributed appropriately) at any point in time, then DeCourcey is correct.  However that scenario has never been reported.

The only thing reported is there a movement to have unbalanced revenues, but there is no idea if it's permanent or short-term.  It is neither hypocritical nor "unfair" to have unbalanced revenues as long as costs are unbalanced.  If cost is balanced, revenue should be balanced, just good business sense.  Now if long term costs are balanced and revenue is not then you and DeCourcey have a point, but that is report no where and is a critical distinction.

[Chicos' Buzz Scandal Countdown]

Brew caught my hyperbole.  Again, look at it in simple financial terms:

--If MU stays in the legacy BE and the current media deal is extended 10 years, MU will make $25mm in media revenue+ $10mm it has in the bank TODAY in earned and forfeited NCAA credits from departed schools and their exit fees.  That is $35mm over 10 years.

--if the new league equally shares revenue at $3.1 for 10 years.  MU will earn $31mm or $6mm more on the TV deal.  However, MU gives up at least $10mm in that revenue for leaving.  So, over years of equal partnership, then MU loses $4mm in the new conference deal.  If as an alternative, MU invested the $10mm today, they would reasonably have at least $20mm in the bank in ten years.  Equal revenue sharing is a horrible deal for MU, despite what the puppy dog society led by DeCourcy is railing about.

--Tiered scenario:  The C7 gets $5mm per year, they clear $50mm.  If you subtract then $10mm MU has to give up to leave, you are left with $40mm, which is $15mm better than staying in the legacy BE and a bit better than investing the $10mm MU has today in the bank.  MU takes that deal.

--If I am Dayton, I will make $5mm over ten years staying in the A10.  Or I can take $25mm by joining at the C7 with $2.5mm in media revenue per year.  I will have to pay $1mm in exit fees and give up, let's say another $1mm in NCAA credits.  So, in 10 years Dayton is $18mm better off...or in the same range as MU in a tiered structure.  Dayton takes that deal.

--The puppy dog society says MU is greedy, that the partnership is unfair.  It simply isn't the case financially if all alternatives are considered.  If new members insist on it, MU should stay put as insane as that sounds.

Great explanation.

Those advocating the same terms for each school must work at organizations where every employee is paid an equal salary?

[The Equalizer]

Great explanation.

Those advocating the same terms for each school must work at organizations where every employee is paid an equal salary?

More likely, they paid attention in b-school when the concept of "sunk costs" were discussed.

[brewcity77]

If the schools being invited don't want to make 5 times what they currently make in television revenue while increasing their national exposure exponentially in exchange for waiting a few years to increase their revenue to the same status as their conference mates, I'm sure the C7 can find 5 other schools willing to take those terms.

[honkytonk]

If the schools being invited don't want to make 5 times what they currently make in television revenue while increasing their national exposure exponentially in exchange for waiting a few years to increase their revenue to the same status as their conference mates, I'm sure the C7 can find 5 other schools willing to take those terms.

Will those "next 5" schools be any good? Worth putting on tv for a network? Worth buying tickets to see?

[ChicosBailBonds]

Great explanation.

Those advocating the same terms for each school must work at organizations where every employee is paid an equal salary?

Apples and oranges comparison.  The Dallas Cowboys are worth $2.1 billion according to Forbes.  They are the most popular football team in the NFL again according to ratings, etc.  They generate more revenue for the league, yet they get the exact same 1/32nd piece of the television contract as every other team despite driving more eyeballs, etc.

The NFL is the strongest league in this country, mostly because of the way they divide up revenues and expenses.  A little town like Green Bay can compete with New York city.  Small market Pittsburgh can be a champion every bit as much as Chicago or Philadelphia.  It works.  You can still decide to pay the QB more than the linebacker or the kicker, but from an aggregate perspective you share in the revenues and expenses for most of the cost structure (coaching salaries, employee salaries exempted).

[ChicosBailBonds]

If the schools being invited don't want to make 5 times what they currently make in television revenue while increasing their national exposure exponentially in exchange for waiting a few years to increase their revenue to the same status as their conference mates, I'm sure the C7 can find 5 other schools willing to take those terms.

They won't be nearly as good as those five. 


I have no doubt if the shoe was on the other foot our fans would be quite pissed off, and I would say rightly so.  You're inviting other schools to form a PARTNERSHIP.  Share the costs (pain) and the revenues (rewards) and the marriage will be much happier and get off on the right foot.

We'll just agree to disagree on this.

[Skatastrophy]

I have no doubt if the shoe was on the other foot our fans would be quite pissed off, and I would say rightly so.  You're inviting other schools to form a PARTNERSHIP.  Share the costs (pain) and the revenues (rewards) and the marriage will be much happier and get off on the right foot.

Well said.

[LAZER]

Well said.

If the Big East told MU in 2005 that they had to to take a smaller piece of the pie for 5 years(or however long it would have been), but they still would be doubling their revenues, I don't think we would have been that upset about it.