Broadcast rights and expense limit coverage
By Rod Bates
We are often asked why NET does not provide broadcast coverage of more Husker athletic events. After all, they say, taxpayers support both. Unfortunately, the answer is complex. To understand why, you must first understand how broadcast rights for intercollegiate athletics work.
The National Collegiate Athletic Association (NCAA) was organized in 1905. Forty years later their charge was expanded to include the sale of television broadcast rights for college football games. Contracts negotiated by the NCAA as the exclusive selling agent for college football television broadcast rights led to growth in revenues of college and university athletic departments from 1951 through 1984.
Incidentally, in my research on the subject I found that the first live college football game was broadcast in 1938 to six viewers. As the number of households with televisions grew, individual universities increasingly arranged to televise their games. These broadcast contracts created conflict among NCAA members.
Several universities contended that when games of other institutions were broadcast into their local markets during one of their games, gate receipts declined as fans stayed home and watched television rather than buy a ticket to a home game. Today’s research shows that televised games add exposure to the sport and helps to generate ticket sales.
In 1951 the NCAA revoked its policy allowing each individual institution complete control over the marketing of its athletic events.
The NCAA signed its first Association-wide college football television contract with a broadcast network in 1952. It was a one-year contract with NBC to pay the NCAA $1.14 million, in return for which NBC could select a game to broadcast on Saturday afternoons with assurance that no other NCAA college football broadcast would appear on a competitive network. Exclusivity was the key to the agreement.
The NCAA restricted the games to one per week to add value to the broadcast rights.
The NCAA received between 4 percent and 12 percent of the revenues to defray the expenses that otherwise would have been covered by member dues; the bulk of the rights fees were distributed to the schools that appeared on television and were chosen by the network. In order to broaden support among the NCAA’s members for the centralized sale of the rights, the contracts limited the number of times an individual institution could be selected for the game of the week, thereby expanding the number of different teams appearing.
Beyond appearance limitations, the selection of games to be broadcast was left to the networks in order to maximize the value of the contract to the winning bidder. The result was a concentration of appearances among a limited number of "big-time" football programs. Many teams never appeared on the game of the week. The distribution of the rights revenues created tension among member institutions from the beginning, but more complaints arose from the teams that appeared frequently than came from those that seldom or never appeared. The teams whose games were selected frequently were the ones constrained by the maximum appearance limitations. They argued that they were the attraction of the contract and should receive an even larger proportion of the revenues than was allocated to them.
Over time, appearance limitations were relaxed to appease the institutions with big-time football programs, but not relaxed sufficiently to placate the institutions with popular teams. The numerous smaller and less popular programs coalesced to maintain the appearance limitations in the democratic NCAA. They understood that uncapping appearances would divert almost all of the rights fees to a few popular programs with a large following.
In 1977, 62 of the largest college football programs formed the College Football Association (CFA). All CFA members were also members of the NCAA. The initial purpose of the CFA was to coordinate internal NCAA lobbying efforts on behalf of major college football interests.
The CFA included the universities who were members of the Southeastern Conference, Atlantic Coast Conference,Western Athletic Conference, Big Eight Conference and the Southwest Athletic Conference, as well as many independents. The group thus included Penn State, Pittsburgh, Syracuse, Miami, Nebraska, Oklahoma, Texas, Texas A & M, Arkansas, Louisiana State, Alabama, Auburn, Tennessee, Florida, Florida State and Clemson. Because Big Tell and Pac Ten Conferences did not join, Ohio State, Michigan, Southern California and UCLA were not in the CFA.
The CFA hoped to increase the demand for college football and to insure that the most popular programs received a larger share of the revenues.
The power shifted back to the large conferences and subsequently led to the formation of the super conferences, like the Big 12. Today, there is a good deal of interest not only in football and basketball, but baseball, volleyball and other Olympic sports. Each conference was empowered to negotiate its own television rights packages. Individual schools continued to control radio
rights for the regular season. The CFA also negotiates the bowl coverage— including the BCS.
The Big 12’s package is similar to most major conferences. Today there is a three-tier contract structure. Tier one
rights are currently held by ABC/ESPN. Therefore, they have first option on any Big 12 game. ABC/ESPN also guarantees that they will cover a minimum number of games, thereby guaranteeing a value to the contract. These games must be placed on the main
channels. The current contract with the Big 12 Conference runs through 2007. Negotiations began for a new network contract at the end of the season.
FOX Sports holds the tier two
rights. If ABC/ESPN passes, FOX has the option for coverage. FOX also guarantees a minimum number of not only football and basketball games but Olympic sports as well. These games show up on FOX's regional sports channels. The current agreement with Fox Sports runs through 2011. Fifty percent of the TV revenue is shared equally among the schools, the other half goes into a pool in which it’s divided based on the number of appearances a school makes.
The third tier
is currently held by the Turner Broadcast Service (TBS). The size of the contract and guarantees are progressively smaller in each tier, and logically, the quality of the events are less attractive to mass audiences.
If none of three options are exercised for the games, the television rights revert back to the university— which can then negotiate its own radio, television and broadband deals.
There are pay-per-view options in both the FOX and ESPN contracts that come into play. Revenue is not shared by other conference schools.
The NCAA controls all media rights for national
championships and tournaments. The conferences control all rights for conference
championships and tournaments.
For the Big 12, the largest contract is with FOX. FOX guarantees over 40 events involving each school in the Big 12. Most of these end up being basketball games, primarily men's but also some women's. They've hinted at expanding coverage of volleyball, baseball and softball, but the decision for those sports is left up to the regional sports managers.Nebraska is covered by FOX Sports Midwest (primarily KC and St. Louis) and another FOX regional that focuses on Denver. Because of the college football and professional sports available in those markets, there has been little interest in Nebraska content other than basketball.
The Big 12 also has a national contract with ABC/ESPN for men's basketball. They work together to set a schedule at the beginning of the year. Both the FOX and ABC contract revenues are shared equally by the conference schools.
Game rights in all sports not optioned under these two agreements revert to the individual schools. At this point, any number of scenarios emerge: (1) UNL may partner with FOX to produce games but sell the advertising. FOX is willing as long as these games count against their 40-game contract commitment. The other benefit to FOX is that they're not eating up revenue producing time on their regional network for a game that doesn’t generate a significant number of viewers. (2) UNL partners with someone like COX on a revenue- producing venture.
The University of Nebraska has a multi-year contract with Host Communications (formerly Pinnacle Radio) that covers football, basketball, baseball and volleyball, as well as the coaches’ shows.
Occasionally College Sports Television (CSTV) or ESPNU may seek rights (but their investment is minimal, if anything at all). If no one televises the event, it is because it's too expensive to cover. NET may seek rights to some events from the NCAA, the conference or the University for a small fee or even no rights fee. But before NU Athletics can grant rights, NET must acquire permission to broadcast from Host Communications.
In summary, I would say there are three significant challenges to overcome to make more sports events available on NET: technology, rights, expense.
NET has both the equipment and the talent required to produce, edit and distribute Husker athletics. That challenge has been met.
NET does not always have the legal broadcast rights to televise events. As I have pointed out, this is a separate issue that is a significant challenge.
The third significant issue is cost. Assuming the University of Nebraska has exhausted all means of generating revenue from an event, they could decide to grant the broadcast rights to NET. At this point their decision would be influenced more by exposure than for revenue. We typically pay small, if any, rights fees since we are nonprofit and have limited resources compared to an ABC, CBS, NBC, Fox, ESPN, etc.
NET has its own funding challenges. We simply don't have the resources to produce an unlimited number of events. The cost of producing a single event averages about $20,000 in out-of-pocket expenses alone.We manage to raise most of the money through corporate underwriting and voluntary donations. With limited budgets and high demand for diverse programs, we are obligated to invest in a wide variety of programs.
In the end, NET would like nothing more than to have unlimited resources and the right to unlimited events, but we do not. And this explains why you don’t see more Husker athletics on NET.