Follow the Money to Understand Why Texas and Oklahoma Want to Move to the SEC

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It’s the talk of the college sports world – two top football programs shifting alliances towards a superior football conference. And the most notable sports network is waiting to reap the benefits of a significant investment.

The University of Texas and the University of Oklahoma have joined forces and officially applied for admission to the NCAA’s Southeastern Conference on Tuesday.

The news came after they informed the Big 12 that the schools would not renew media contacts after they expire in 2025. If Texas and OU join the SEC, the conference could result in higher media costs, given the schools’ marketing power in college football and basketball.

The SEC’s $55 million package with CBS expires after 2023. Last December, ESPN reportedly agreed to pay the SEC $300 million per season beginning in 2024. The package includes higher SEC games in a deal that will last 10 years. runs. Disney’s ESPN also owns the SEC Network, a cable network dedicated to SEC sports.

The finger pointing has already started and other Big 12 schools are not happy. But invitation meetings are planned, and this step is about positioning for what’s to come.

When discussing the move, several executives used an old quote from legendary sports TV executive Don Ohlmeyer: “The answer to all your questions is money.”

ESPN anticipates the future

The Texas and OU move is the first step towards creating super conferences in college sports. The SEC, Atlantic Coast Conference and Big Ten have elite football programs including Alabama, LSU, Ohio State, Michigan, Florida and Clemson. These conferences would almost mimic a mini-NFL development league by adding more powerful programs, with highly regarded prospects from the schools every year.

ESPN would benefit from the reshuffle.

The network has a stake in the Longhorn Network, dedicated to the University of Texas sports, and has the Big 12 streaming rights. But the LHN has failed to attract subscribers because of the cord cutting and because Texas has not been dominant in the past ten years.

Adding Texas and OU to the SEC would also provide access to high-quality matchups for ESPN’s Saturday afternoon and prime-time slots during the college football season. Additional advertising dollars would also flow for the annual UT vs. Texas A&M game, if the A&M Aggies remain in the SEC.

“That would renew an old rivalry and it’s a high-intensity game,” said former CBS Sports chairman Neal Pilson. He added that “national matchups … would have more value – Texas vs. Georgia, Texas vs. Florida, Alabama-Oklahoma.”

Expanding the conference could allow ESPN to justify its $3 billion investment in the SEC.

There is still a lot to discuss for lawyers, but the move could happen even earlier than 2025.

In their joint statement rejecting the extension of the Big 12 rights, Texas and OU said they “intend to honor existing deals.” “However,” she added, “both universities will continue to monitor the rapidly evolving collegiate athletic landscape as they consider how best to position their athletic programs for the future.”

While discussing the new SEC deal last December, Burke Magnus, ESPN’s executive vice president of programming, was asked about buying out CBS’s remaining years.

“We’re open to that possibility,” Magnus replied, “but of course it should be a circumstance that works for everyone involved. It’s not for me to comment because it’s an existing relationship, but we feel totally fine.” at ease to let it run its course.”

On Wednesday, Big 12 commissioner Bob Bowlsby sent a strike letter to the network, accusing the network of interfering with efforts to get the teams to the SEC faster. ESPN denied wrongdoing, telling The Associated Press, “The allegations in the letter are of no value.”

Always follow the money

Texas and OU each received about $34 million from the Big 12 in the past year, according to the AP. That figure could rise to more than $60 million a year if they move to the SEC.

In addition, early speculation already points to the SEC eventually asking for an even higher rights fee if things align. According to USA Today, the SEC is already getting about $497 million in TV and radio costs. The newspaper estimated that figure could be more than $500 million in 2024-25, taking into account a 3% increase.

“A company like Disney doesn’t throw money around,” Pilson said. “If you’re talking about big numbers, they’ve done the math, analyzed the market, and calculated revenue forecasts (subscriber growth, advertising, and new distribution opportunities). Adding Oklahoma and Texas creates additional value, and they’ll put a number there as well.” on.”

Name, image and likeness licenses provide additional revenue opportunities.

Athletes can now benefit from their intellectual property following a Supreme Court ruling last month. Therefore, top football schools must create competitive marketplaces to recruit the best recruits who can then benefit from their exposure. When Alabama coach Nick Saban hinted that quarterback Bryce Young hit the $1 million milestone through NIL odds, that comment almost served as a recruiting pitch.

The message behind the message: Play football in Alabama and earn top dollar with NIL.

“I agree with that idea,” said sports attorney Edward Schauder of law firm Phillips Nizer. “The better the school, the more valuable the name and likeness rights.”

Also, programs could use the extra money by joining summits to fund repayable items that student-athletes can now receive. Things like premium Apple Macbooks and other education-related items are up for grabs, and the National Collegiate Athletic Association can only sit and watch thanks to the Supreme Court.

Schauder, who has endorsed endorsement deals with top athletes, including Tiger Woods, predicts the NCAA will eventually get some of the action.

“I see the NCAA’s offer to handle the NIL rights of certain players or other collegiate sports (outside of football and basketball),” Schauder said. He predicted multi-licensing deals in college sports where companies would add team logos to their NIL rosters.

“The conferences and NCAA will catch up and benefit in the same way that professional leagues benefit from deals made by the players’ associations,” said Schauder.

The future of college sports is starting to take shape. To determine the next steps, all you need to do is follow the money, media deals and NIL odds. The SEC, Texas and Oklahoma started the new path.

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