Back in 2016, the Atlantic Coast Conference agreed to a rights extension with ESPN covering the 2027-36 seasons. That was in talks around the launch of a linear ACC Network, which had been hotly debated to that point, and was reportedly at least partly in trade for ESPN actually launching that network (there was a lot of talk that they might not, although they would have had to pay the ACC to not do so). But, around Florida State’s lawsuit against the ACC to try and get out of its grant of rights, the school said in litigation that the 2027-36 deal is actually only an ESPN option:
This is new information. Per FSU, ESPN is not guaranteed to pay ACC members revenue past 2027, but the ACC schools are locked into a grant of rights that runs through 2036. https://t.co/0ezj1Xjc2l
— Nicole Auerbach (@NicoleAuerbach) December 22, 2023
In most possible-to-envision circumstances, this seems like a distinction that may not wind up being a difference. Yes, this means that ESPN is not yet locked into paying for the 2027-36 seasons. But it’s tough to imagine right now why they would choose not to pick up that option.
Indeed, most of the coverage of that ACC deal has been about how favorable it was to ESPN to have rights locked up for that long. And they did so at what looks like an even more reasonable price now, following the massive increases the Big Ten and SEC have recently received. And that’s what’s been at the heart of many of Florida State’s complaints about the ACC, both in this lawsuit and several times previously.
So it’s interesting to see FSU also complaining that this deal that they don’t like may end early, even if it seems highly unlikely that it would. And this option being there at all feels like more of an accounting and/or risk-aversion move from ESPN’s side rather than a likely path for them to take.
In that respect, this feels like the obvious team or player options sometimes included in player contracts. Some of those are actual non-trivial decisions, but some obvious team-friendly or player-friendly ones are just there because they receive some different handling from an accounting perspective.
What might actually make ESPN not exercise this option, and what could happen if they take that path? Well, one scenario is dramatic change at ESPN and/or parent company Disney. If the ACC proceeds largely on its current course (which isn’t for sure; if Florida State does find some legal victory or settlement that lets them leave at a lower price with their rights regained) and the media world as a whole stays on its course, but Disney suddenly doesn’t want that ACC inventory for some reason (maybe they do actually sell off ABC, or they have to cut more linear channels, or they face regulatory pressure over how much of college football they control, or they just decide to emphasize college sports less), they could decline this option.
But that’s maybe the best-case scenario for the ACC. That would see them go back to market ahead of 2027 with schools’ rights still held through 2036, and would let them evaluate a new range of offers (including potentially from companies like Apple and Amazon that weren’t really signing exclusive streaming sports deals in 2016, certainly not on the level they are now).
Now, the Seminoles might still be mad about their rights being bundled with these other schools, but they would likely get an increase in this scenario. So this could work out better for them than if the ESPN deal was the firm “through 2036” everyone on both sides said it was at the time.
There are perhaps some cases where this option-only deal could harm the ACC. One is where somehow this grant of rights gets invalidated by courts, Florida State (and possibly others) leave with their rights intact, and ESPN decides they don’t want what’s left of the conference (and any potential rebuild it does) at this price. Now, even the existing contract and option presumably had some modifications based on changes in conference membership, but we don’t know exactly what those are.
But it is perhaps conceivable that there’s some scenario where a dramatically-lessened ACC isn’t worth it for ESPN even at this low price (and any modifications it would receive from membership changes). And if it’s that dramatically-lessened, going to market might not help the conference.
However, keep in mind that this scenario involves court invalidation of the grant-of-rights, or some other legal resolution allowing the Seminoles and perhaps others to leave. That’s a dramatic change from the situation established when this option-only deal was signed. And that would come from Florida State’s move to blow this grant of rights up.
So in this scenario, this being an option rather than a firm deal only becomes a bad thing for the conference from its own schools rebelling, not from anything from ESPN or from any actual problem with this being an option. Of course, that doesn’t invalidate the Seminoles’ other complaints against the ACC. But the option part of this deal would seem to be pretty far down the list of problems with the conference, and it would certainly be something for it to only turn into a problem because of their own actions.
Another maybe-conceivable scenario where this hurts the ACC is if there is incredible change in the sports media rights landscape before 2027. Many have long warned about a sports rights “bubble,” or at least an inability to depend on rights continuously rising. And if there’s more media consolidation (such as WBD-Paramount), that could lead to less competition for rights and lower prices.
Alternatively, if audiences for sports suddenly collapse, or the pay-TV market dramatically collapses and is not adequately replaced by streaming, maybe rights of all kinds aren’t worth much. And that might mean that even this seemingly-great deal no longer works for ESPN (and isn’t replaceable on the open market). And that could maybe happen. The media world has certainly seen some dramatic shifts, including the recent collapse of regional sports network economics and valuations, and perhaps there’s another one coming that won’t be easily predictable. But it seems a bit farfetched at this point.
All in all, it seems relatively unlikely this being an ESPN option rather than a firm through-2036 deal matters that much. The most probable scenario (barring dramatic change to the ACC, which could certainly happen as a result of this FSU litigation) seems to be that ESPN picks this option up and this works exactly like the til-2036 contract it was billed as. But it is interesting to see it come out that this is only an ESPN option. And exactly what happens with it, and with the ACC as a whole, will be worth following in the coming years.
[Nicole Auerbach on Twitter]
