Street and Smith's Sports Business Journal announced today that the ACC is on the verge of signing a new deal with ESPN that will bring the league 155 million dollars per year for its football and basketball TV rights. This is a significant increase over the ACC's current combined revenue of about 67 million per year, and though it doesn't put the league on the same level as the Big Ten or the SEC, the ACC is now within shouting distance. The ever-shifting landscape of conference realignment just changed again.
The deal is not formally announced or signed yet, and the SBJ referenced unnamed sources, but it's worth pointing out that the SBJ is a respected publication, not a Bleacher Report blog. Details were quickly released in the Triangle Business Journal (click here), and here are the basics:
The new deal with ESPN brings the league's football and basketball rights under one umbrella for the first time in many years, and means that ACC TV rights will now be held by a single entity. In terms of tracking the dollars and responsible parties, it's a much cleaner, neater deal.
The ACC's new deal is much better than I thought it would be. The benchmark is the SEC's $2.25 billion, 15-year contract ($150 million per year) with ESPN, which was signed back in 2008. In addition the SEC added another $55 million a year from CBS, giving the SEC TV contracts worth a total of $205 million per year for the next 15 years.
Conventional thinking is that the SEC deals consumed so much money -- and by extension, programming time -- that the ACC would never be able to come close. Not to mention that right around the time the SEC deal was struck, the economy melted down like Mike Gundy, making a lucrative deal for the ACC even more unlikely.
But, surprise-surprise, the ACC managed to get a smidge more from ESPN than the SEC, and the ACC's total take will now be about 75% of what the SEC gets from its ESPN and CBS contracts combined. Not bad. Every day that goes by, ACC commissioner John Swofford looks smarter and smarter.
It helped that FOX got in a bidding war with ESPN, pushing the contract from an estimated $120 million up to $155 million.
What does this mean for Virginia Tech, and what does it mean for the ACC?
For Virginia Tech, all else being equal, the extra $7.3 million a year will boost overall athletics revenue from its 2008-09 level of $60.9 million to $68.2 million, and athletic department profitability from $2.0 million to $9.3 million. (2008-09 figures were taken from our most recent financial report by Randy Jones.)
The revenue and profitability figures had both been sliding in recent years, and this shot in the arm comes at the right time. It means that current Virginia Tech AD Jim Weaver and future VT ADs can service debt better, continue to take care of the football program, keep growing the men's basketball program, and continue the rise in Olympic sports performance and facilities that the university has enjoyed in the last decade.
For the ACC, it makes the league's TV package a clear #3 in per-team revenue ($12.9 million), behind the Big Ten ($22 million per school per year) and the SEC ($17.1 million). Other leagues languish far behind, as Chris Coleman noted in a recent article, with none coming in higher than $6.5 million per team under their current deals.
More directly, the new deal means the ACC is better equipped to fight off a raid from the SEC, should it come to that.
One possible scenario in conference realignment is that the SEC might poach teams from the ACC, most notably some combination of Clemson, Florida State, Georgia Tech, Miami, and Virginia Tech. In world where the SEC's $205 million per year dwarfed the ACC's old $67 million a year, that was a scary scenario.
But now, the gap is just $4.2 million per school, per year, instead of $11.5 million. The ACC could close that gap even further, or perhaps eliminate it, by either starting its own TV network, Big Ten-style, or combining forces with another conference to form a network.
The SEC could also start its own network, but as the joke goes, they've already got one: ESPN.
So the SEC's ability to steal teams from the ACC just got significantly weakened. And the truth is that most or all ACC schools view moving to the SEC as a last resort. Putting it nicely, the cultures of the ACC and the SEC are very different, and though ACC schools would like the SEC's money, it would require getting down in the muck and rolling around with pigs to get it. No thanks.
Should the SEC decide it needs to respond to Big Ten expansion, it's now more possible that the SEC will look west and pick up some combination of Texas, Texas A&M, Oklahoma, Oklahoma State, etc. That's always been the more likely scenario, but now, even more so.
The most vulnerable leagues in conference realignment are the Big East and the Big 12, and the heat just got turned up on those two leagues. If the move to 16-team conferences is on, it now looks like -- at least for today -- that the Big Ten, SEC, ACC and PAC 10 will be the only four leagues left with a seat when the music stops.
But I tend to think the 12-team model just got a shot in the arm, at least from the ACC's viewpoint. The league just doubled its TV money, and going to 16 schools by poaching from the Big East would likely mean dilution, not enhancement of their new deal.
In any event, the new deal, if it unfolds as reported, is great news for Virginia Tech and for the ACC.