UCF celebrating the 2018 American Athletic Conference championship.

A notable undercurrent of all the discussion around Texas and Oklahoma reportedly heading to the SEC is ESPN’s role in this round of realignment, with one Big 12 athletic director telling The Athletic’s Bruce Feldman and Sam Khan Jr. “ESPN has been right in the middle of it.” That can be seen on a couple of different levels. It could be only an ESPN bid to get 100 percent rights to the Sooners and Longhorns (rather than their current split with Fox) and enhance their SEC rights (where they’ll have 100 percent of the rights from 2024-25 on), which would still be quite impactful.

Alternatively, this could be part of an even larger ESPN effort to maximize their college football coverage. That could see them truly dominate the sport’s broadcasting picture (as compared to the current situation; ESPN/ABC networks lead on overall tonnage, but as AA’s Ben Koo noted Friday, they only had three of the top nine most-watched games in 2019), and minimize what Fox has left. And if that second strategy is what’s actually happening here, that would provide some more legitimacy to the recent quotes from American Athletic Conference sources about the AAC trying to add remaining Big 12 teams (in an Athletic article from Nicole Auerbach published Saturday). Here are some key parts of that piece:

What has become apparent over the past 48 hours is that the AAC does not expect to sit back and wait for its best teams to field interest from elsewhere. The AAC plans to act as an aggressor, multiple high-ranking sources within the conference tell The Athletic. It will try to poach the Big 12’s leftovers, perhaps as a group.

…“The Big 12 appears to be weakened and in a state of panic because their two anchor schools are gone and can’t be replaced,” one AAC source said Friday night. “I do think we can be an aggressor. I feel like our league is pretty stable.”

…After Oklahoma and Texas officially declare their intention to leave the Big 12, the source expects the remaining eight schools to gauge interest from the Pac-12. The AAC could get its own crack at the eight leftovers if the Pac-12 opts against making any additions, or it could try to grab whoever is left if the Pac-12 does pick off a few.

Multiple sources believe [Mike] Aresco, the AAC commissioner, is committed to trying such a tactic.

…One source believes that the AAC’s relationship with ESPN should help, assuming the league can pull in a few teams and get up to a 16-team conference. “We’ve already got ESPN at the table,” the source said, adding that it would be easier to engage media partners for a league that has one exclusive partner (plus a small package of games on CBS/CBS Sports Network). 

Of course, that source has at least somewhat of a point. It does appear easier to work out a revised deal when your rights are mostly with one broadcaster rather than split more or less equally between two. But “easier” wouldn’t really seem to be the key term here, especially as this is a discussion about long-term deals that won’t even kick in for several years. There’s plenty of time to handle complex negotiations involving multiple partners, and whatever travel and legal costs come with more complicated meetings and contracts would likely be a pretty small drop in the bucket compared to the overall revenue numbers under discussion. And the overall revenue numbers are extremely unfavorable to the AAC compared to anything in the Power 5. (And this is the real definition of the Power 5; the AAC has often been as good or better on the field, but the money its schools make is minuscule in comparison to counterparts in Power 5 leagues.)

The truly interesting scenario with the ESPN/AAC relationship and AAC expansion isn’t really about it being “easier” to deal with a league that’s mostly with one partner. It’s about ESPN having control of most of that league’s TV rights, and about if that then makes it worth it for them to pay a premium for new additions to it. And, in the scenario where ESPN is actually trying to go at Fox with their moves in this round of expansion, a premium becomes much more worth it. And a pretty hefty premium is likely going to be needed to convince former Big 12 schools to head to the AAC, unless they wind up with no other options.

Let’s examine this with some numbers. As Max Olson wrote at The Athletic earlier this week, the Big 12’s annual per-school distributions (which come mostly, but not entirely, from TV deals) were “approaching $40 million” before the pandemic. The numbers are actually even better for those schools because the Big 12 deal unusually allowed its schools to retain their third-tier rights and sell those separately (the compromise that was required for Texas to launch the Longhorn Network, and for Oklahoma to make money from a separate third-tier deal with Fox). That doesn’t mean that each Big 12 school is actually worth $40-plus million to a TV network independently; Texas and Oklahoma would be worth more, while some other schools would be worth less. But that number matters as an indication of what these schools are currently getting; they may wind up forced to take less, but they’re probably not going to choose to take less.

Meanwhile, the AAC currently distributes much less money to its members. In 2020, the conference gave UCF (seen at top celebrating the 2018 football championship) $7.47 million from 2018-19 revenues, the most amongst its schools. (The lowest distribution there was UConn with $1.08 million; the Huskies have since left the conference to go independent.) Yes, that’s based on the old TV deal, and the conference signed a new and shiny $1 billion 12-year deal with ESPN in 2019 (which kicked in for 2020-21 and runs through 2031-32). But that deal was estimated to boost the average payout to just $6.94 million; that’s a “quadrupling” on average, but even a top-end quadrupling (likely not what’s actually going to happen) would mean just $30 million for a top performer like UCF, still $10 million below what Big 12 schools got in 2019 before their third-tier rights. It’s also not clear if that deal has dropped (and if so, by how much) following UConn’s exit.

It’s also worth mentioning that the financial rewards in that deal come at the cost of ESPN being able to move a lot of games to over-the-top service ESPN+, something many conventional cable subscribers and the ADs who want to cater to them are still upset about (and part of what led UConn to leave). Yes, the Big 12 also has an ESPN+ agreement, but it’s a much less substantial one (especially in football). And that’s worth keeping in mind alongside the money; many Big 12 schools have already indicated they’re not happy with doing everything possible to maximize money and help their network partners (see the complaints about playing on Fox’s Big Noon Saturday), so there might be some pushback against further streaming-only games (perhaps especially from West Virginia, where broadband internet availability is a larger problem than it is in many other states).

So, in order for the AAC to actually poach Big 12 schools, it’s likely going to have to get its TV deal to a point where it can offer those schools something at least close to what they were making in the Big 12. (Or, at the very least, more than what they’d make if they stuck together as an eight-team Big 12, and/or poached replacement schools, including perhaps from the AAC.) And from a strict dollars-and-cents point of view, it doesn’t seem easy to get the AAC deal to that number.

If ESPN didn’t diminish the per-school payout after UConn’s departure, an average payout of $6.94 million times 11 schools would be $76.34 million annually. To keep that payout the same with two more members, they’d have to throw in another $13.88 million annually. And while that’s certainly doable (if there’s no Big 12, ESPN’s approximate half of that deal saves at least $20 million per school per year), the numbers are likely going to have to climb much more than that for former Big 12 schools to join a currently non-Power 5 conference. Consider even an average payout of $30 million a year, just 75 percent of what each school was making in the Big 12 (before third-tier rights). That would mean a total ESPN payout to the conference of $390 million per year, $307 million more than it’s currently paying.

Granted, these schools would now be negotiating on the strength of their own brands rather than as part of a Big 12 that included Texas, Oklahoma and more. So maybe they’ll be forced to take less than what they initially got. And maybe they won’t have many other options; if the Pac-12 and others choose not to expand, and if a Big 8 12 doesn’t work for TV, or a Big 12 with new members doesn’t work, maybe they go to the AAC. Or maybe whatever Big 12 members are left after other conferences pick away at the conference go to the AAC. But, under the current AAC deal, or even a significant boost to it, that doesn’t seem great for them.

But the idea of this round of conference realignment as a larger ESPN play against Fox makes this idea of the AAC poaching Big 12 members maybe make more sense than the numbers would suggest on first glance. There’s often huge value to monopolies or near-monopolies, which is why antitrust laws exist (which ESPN parent Disney knows well; they were forced to sell off the regional sports networks they bought from Fox as part of a settlement to get approval for the larger Disney-Fox deal). Acquiring more rights out of conference realignment seems unlikely to trigger antitrust legislation; it’s not an acquisition of a broadcaster, it’s more schools deciding they want to work with one broadcaster.

And dominance value goes often beyond linear growth, especially when it comes to impacts on competitors. If ESPN could go from, say, broadcasting 65 percent of Division I college football to broadcasting 80 percent of it (those aren’t actual numbers, just estimates), the gain for them would likely be more than 15 percent. The loss for Fox of losing its half rights to the Big 12 (or what remains of it) would probably be even more significant. There’s a certain level of rights needed to make serving as a sport’s broadcaster work (see the challenges Fox had during the period where they had BCS and title games, but not much else), and doing strong college football coverage with less and less rights is hard.

And the idea of an overall ESPN offensive against Fox is maybe the only thing that would make the AAC swallowing up the Big 12 more likely than the Big 12 just picking off a couple of AAC schools as replacements for Texas and Oklahoma. The latter would have a stronger previous rate (the per-school pay would likely drop significantly in a new contract without Texas and Oklahoma, but it’s still probably better for Big 8+2 AAC schools than for the existing AAC plus some or all of the remaining eight Big 12 schools), but the former’s already contractually tied to ESPN, avoiding a bidding war. It’s also possible that a reworked AAC deal with some new prominent members might include a grant of rights (rights stay with the conference rather than the school for the duration of the deal), which was notably missing from the current AAC deal. And that might convince ESPN to bump up their payments quite a bit.

With all that said, it’s important to keep in mind the sourcing of this Athletic article. The quotes here are from AAC sources, not ESPN officials (who would be the ones determining if it’s worth paying huge premiums if the conference adds members) or Big 12 ADs (who would be the ones determining if they’d even consider the AAC). They can envision as much acting “as an aggressor” as they want, but that only works if they have something the other parties want, and that would require a big boost from ESPN and willingness to talk from the remaining Big 12 schools. But it is possible to envision ESPN paying a large premium to get the rest of the Big 12 locked up through 2031-32, especially as that would be a shot at Fox. Whether they’ll actually do that is debatable, but it’s one scenario that makes this “AAC looks to add former Big 12 members” talk seem at least conceivable.

[The Athletic]

About Andrew Bucholtz

Andrew Bucholtz is a staff writer for Awful Announcing and The Comeback. He previously worked at Yahoo! Sports Canada and Black Press.