How Cal/SMU/Stanford could solve the ACC’s money problem

[HailToPitt725]

Correct my math if I’m wrong, but…

The most recent revenue figures from the 2021-22 season showed the average ACC payout per school was about $40M. If Cal and Stanford come in at 60-70% of a full share, and SMU forgoes ANY shares for 5+ years (they’re not called Southern Millionaires University for nothing), that’s suddenly an additional $64-72M annually that can be shared amongst the existing ACC schools. Then, a few other revenue generators to consider:

- ESPN is willing to provide additional revenue to “existing ACC members for increasing travel costs”; to me, this is just another way to add a slight bump in the media deal without actually renegotiating the contract.
- The ACC would potentially receive additional revenue from carriage fees via the ACCN entering into California and Texas
- The Tier 3 rights contract comes up in 2027; some have estimated that this could result in an additional $8M+ per school

If you split that money between the top 4-5 finishers in the ACC conference standings, that would equate to an additional $14-18M to schools like Clemson and FSU, and that doesn’t even include the ESPN “traveling expenses” or increase in ACCN revenue. It wouldn’t match what the Big Ten and SEC are paying out, but it at least closes the gap. It would also significantly widen the gap between us and the Big 12. The math is starting to make sense on this.

 

[HailtoPitt]

If Cal/Stanford leads to the ACC being included in the same tier as the BIG Network in L.A., then they are worth adding. Otherwise, they aren't worth adding.

This ESPN meddling to get what they want is going to cause a deranged Clemson or FSU fan to show up at the CEOs home with loaded shotgun.

 

[Gunga_Galunga]

Correct my math if I’m wrong, but…

The most recent revenue figures from the 2021-22 season showed the average ACC payout per school was about $40M. If Cal and Stanford come in at 60-70% of a full share, and SMU forgoes ANY shares for 5+ years (they’re not called Southern Millionaires University for nothing), that’s suddenly an additional $64-72M annually that can be shared amongst the existing ACC schools. Then, a few other revenue generators to consider:

- ESPN is willing to provide additional revenue to “existing ACC members for increasing travel costs”; to me, this is just another way to add a slight bump in the media deal without actually renegotiating the contract.
- The ACC would potentially receive additional revenue from carriage fees via the ACCN entering into California and Texas
- The Tier 3 rights contract comes up on 2027; some have estimated that this could result in an additional $8M+ per school

If you split that money between the top 4-5 finishers in the ACC conference standings, that would equate to an additional $14-18M to schools like Clemson and FSU, and that doesn’t even include the ESPN “traveling expenses” or increase in ACCN revenue. It wouldn’t match what the Big Ten and SEC are paying out, but it at least closes the gap. It would also significantly widen the gap between us and the Big 12. The math is starting to make sense on this.

What I don't understand is... "what is a share." Is it a share of the existing pie, or is a new pie being negotiated with the new additions. A new pie would have to be negotiated, otherwise payouts will go down.

 

[TheSpecialSauce]

Correct my math if I’m wrong, but…

The most recent revenue figures from the 2021-22 season showed the average ACC payout per school was about $40M. If Cal and Stanford come in at 60-70% of a full share, and SMU forgoes ANY shares for 5+ years (they’re not called Southern Millionaires University for nothing), that’s suddenly an additional $64-72M annually that can be shared amongst the existing ACC schools. Then, a few other revenue generators to consider:

- ESPN is willing to provide additional revenue to “existing ACC members for increasing travel costs”; to me, this is just another way to add a slight bump in the media deal without actually renegotiating the contract.
- The ACC would potentially receive additional revenue from carriage fees via the ACCN entering into California and Texas
- The Tier 3 rights contract comes up on 2027; some have estimated that this could result in an additional $8M+ per school

If you split that money between the top 4-5 finishers in the ACC conference standings, that would equate to an additional $14-18M to schools like Clemson and FSU, and that doesn’t even include the ESPN “traveling expenses” or increase in ACCN revenue. It wouldn’t match what the Big Ten and SEC are paying out, but it at least closes the gap. It would also significantly widen the gap between us and the Big 12. The math is starting to make sense on this.

It all comes down to the financials.

 

[HailToPitt725]

What I don't understand is... "what is a share." Is it a share of the existing pie, or is a new pie being negotiated with the new additions. A new pie would have to be negotiated, otherwise payouts will go down.

From everything I’ve seen online from CFB writers and reporters, the ACC/ESPN contract would be increased pro rata for any school(s) that are added, meaning this wouldn’t decrease the per-school payout for existing members. I also don’t think this would require having to re-negotiate anything, although my interpretation could be off.

 

[pafootballguy]

From everything I’ve seen online from CFB writers and reporters, the ACC/ESPN contract would be increased pro rata for any school(s) that are added, meaning this wouldn’t decrease the per-school payout for existing members. I also don’t think this would require having to re-negotiate anything, although my interpretation could be off.

I can't see ESPN pro rata for SMU

I also struggle to see how all the pieces of the PAC 12 are worth far more separately than they could get together.

 

[topdecktiger]

The one thing where I could possibly see it working would be as a means to renegotiate thr TV deal. The ACC's TV contract is below it's real market value. I could see it working if the goal was to add a couple of teams simply to unlock the contract really just as a means to renegotiate to get the payout for the original schools up to market value, and the give the new schools a reduced share. That's just speculation though.

 

[pafootballguy]

The one thing where I could possibly see it working would be as a means to renegotiate thr TV deal. The ACC's TV contract is below it's real market value. I could see it working if the goal was to add a couple of teams simply to unlock the contract really just as a means to renegotiate to get the payout for the original schools up to market value, and the give the new schools a reduced share. That's just speculation though.

Why would ESPN/Disney give them more money for something they control for 13 years?

 

[HailToPitt725]

I can't see ESPN pro rata for SMU

I also struggle to see how all the pieces of the PAC 12 are worth far more separately than they could get together.

Assuming the Pac-12’s baseline payout was $23M/share:

- Pac-12 staying intact (if they added SDSU, SMU, and Tulane) = $276M total
- Cal/Stanford at $24M per school, UO/UW at $30M per school, and UA/ASU/CU/UU at $32M per school = $236M total

It likely came down to less cost while still retaining mountain/pacific time slots. Also have to consider that brands such as Oregon and Washington are likely more valuable playing Big Ten teams in eastern/central time zones.

Edit: As for SMU, the contract (likely) goes both ways. If it just says the media deal increases pro rata, then ESPN is contractually obligated to uphold it just like the schools are. Again, just going off my interpretation of what I’ve read. Obviously, there appears to be interest from ESPN’s end. We’ll see what becomes of it.

 

[Joe Magarac]

I can't see ESPN pro rata for SMU

I also struggle to see how all the pieces of the PAC 12 are worth far more separately than they could get together.

The parts greater than the whole Happens all the time in corporate raids.
When asked why he wanted to wreck Bluestar Gordon Gekko replied:
“Because it’s wreakable”.

 

[HailToPitt725]

The parts greater than the whole Happens all the time in corporate raids.

Yup. They got who they wanted at discounted valuations while “trimming the fat” that was Oregon State and Washington State (no disrespect to those guys, hope they land on their feet).

 

[topdecktiger]

Why would ESPN/Disney give them more money for something they control for 13 years?

I don't know that they would, but the did do it for the Big 12 after Nebraska and Colorado left.

Also, once you add (or lose) teams, the contract is up for renegotiation. It doesn't mean you will get more money, but it does open up the contract.

 

[Sean Miller Fan]

1. The ACC doesn't have a money problem until pay for play becomes legal. This is all monopoly money until that happens.

2. Adding ANYONE wont make the ACC anything considerable. Maybe you add these teams and Pitt makes an extra $5 million per year, maybe. Its insignificant.

This is absolutely NOT a money play.

 

[The Ole Six-Fiver]

Good heavens. If bringing in these three Bluto Blutarsky schools (as in, adding 0.0 dollars or eyeballs) leads to the ESPN contract being reopened, then everyone finally has a reason to buy some Disney stock, because ESPN will be gaining a new windfall. The ACC might actually owe money to ESPN after the new negotiation.

 

[CrazyPaco]

Correct my math if I’m wrong, but…

The most recent revenue figures from the 2021-22 season showed the average ACC payout per school was about $40M. If Cal and Stanford come in at 60-70% of a full share, and SMU forgoes ANY shares for 5+ years (they’re not called Southern Millionaires University for nothing), that’s suddenly an additional $64-72M annually that can be shared amongst the existing ACC schools. Then, a few other revenue generators to consider:

- ESPN is willing to provide additional revenue to “existing ACC members for increasing travel costs”; to me, this is just another way to add a slight bump in the media deal without actually renegotiating the contract.
- The ACC would potentially receive additional revenue from carriage fees via the ACCN entering into California and Texas
- The Tier 3 rights contract comes up in 2027; some have estimated that this could result in an additional $8M+ per school

If you split that money between the top 4-5 finishers in the ACC conference standings, that would equate to an additional $14-18M to schools like Clemson and FSU, and that doesn’t even include the ESPN “traveling expenses” or increase in ACCN revenue. It wouldn’t match what the Big Ten and SEC are paying out, but it at least closes the gap. It would also significantly widen the gap between us and the Big 12. The math is starting to make sense on this.

What Raycom had will revert to ESPN. "Tier 3" won't bring any additional revenue, or not appreciable new revenue. That is WVU/B12 fan kook talk.

However, if the ESPN contract pro rata is real for adding new teams, and you add to that the ACCN would not get in-network rates in CA and TX, and if it is true Stanford, Cal, and/or SMU are going to take reduced shares of conference disbursements, you could potentially see a bump of over $5m per existing football playing school if going by some back of the napkin math. It's not going to fix the gap, but it is not negligible.

 

[HailToPitt725]

What Raycom had will revert to ESPN. "Tier 3" won't bring any additional revenue, or not appreciable new revenue. That is WVU/B12 fan kook talk.

However, if the ESPN contract pro rata is real for adding new teams, and you add to that the ACCN would not get in-network rates in CA and TX, and if it is true Stanford, Cal, and/or SMU are going to take reduced shares of conference disbursements, you could potentially see a bump of over $5m per existing football playing school if going by some back of the napkin math. It's not going to fix the gap, but it is not negligible.

And that’s why I think it should be some performance-based method of distribution instead of an equal disbursement. If FSU and Clemson can get upwards of $18M, that might quiet them down for a bit.

 

[Baddest Cat]

If FSU and Clemson can get upwards of $18M, that might quiet them down for a bit.

They have nowhere to go though.

As far as these new members coming in "discounted" now, what happens when they are full members when the next TV deal is being negotiated? I can't see how they don't just water down the overall value.

Then again, college football as we know it may not exist then.

 

[Joe Magarac]

And that’s why I think it should be some performance-based method of distribution instead of an equal disbursement. If FSU and Clemson can get upwards of $18M, that might quiet them down for a bit.

Why should any ACC school accept one cent less just to “quiet them (FFSU & Clem) down”.
If they leave then they leave. Life will continue to go on for the rest of the ACC. With several hundred million dollars extra I might add.

 

[caleco's]

And that’s why I think it should be some performance-based method of distribution instead of an equal disbursement. If FSU and Clemson can get upwards of $18M, that might quiet them down for a bit.

Screw FSU they suck.

They LOSE eyeballs with their Gasparilla bowl seasons. They hurt their own value.
If this happened in their bowden peak The sec and big 10 would be beating down their doors.....not now because they aren worth what they think they are worth

 

[HailToPitt725]

Why should any ACC school accept one cent less just to “quiet them (FFSU & Clem) down”.
If they leave then they leave. Life will continue to go on for the rest of the ACC. With several hundred million dollars extra I might add.

Screw FSU they suck.

They LOSE eyeballs with their Gasparilla bowl seasons. They hurt their own value.
If this happened in their bowden peak The sec and big 10 would be beating down their doors.....not now because they aren worth what they think they are worth

I’m not saying it should go to them exclusively, because then you’d be creating the same issues that the Big 12 had. The ACC appears to be in favor of performance-based revenue models, which is why I think they’d consider dispersing a potential $64-72M windfall of cash based on football standings. If FSU is as good as they think they are, this will benefit them because they’ll theoretically be near the top of the payouts.

 

[The Ole Six-Fiver]

I’m not saying it should go to them exclusively, because then you’d be creating the same issues that the Big 12 had. The ACC appears to be in favor of performance-based revenue models, which is why I think they’d consider dispersing a potential $64-72M windfall of cash based on football standings. If FSU is as good as they think they are, this will benefit them because they’ll theoretically be near the top of the payouts.

Conceptually it is a good idea.

One item (of many): Everyone would have to agree to a stipulation that they can’t schedule 4 Duquesne-quality OOC home games, though. Giving themselves a 4-0 jump every season.

Sounds obvious to fans of a program that often over-schedules in the OOC… but I bet a minimum strength OOC metric would be a big stumbling block here.

 

[caleco's]

I’m not saying it should go to them exclusively, because then you’d be creating the same issues that the Big 12 had. The ACC appears to be in favor of performance-based revenue models, which is why I think they’d consider dispersing a potential $64-72M windfall of cash based on football standings. If FSU is as good as they think they are, this will benefit them because they’ll theoretically be near the top of the payouts.

My point is they won't because they suck.
8 wins this year.

 

[HailToPitt725]

Conceptually it is a good idea.

One item (of many): Everyone would have to agree to a stipulation that they can’t schedule 4 Duquesne-quality OOC home games, though. Giving themselves a 4-0 jump every season.

Sounds obvious to fans of a program that often over-schedules in the OOC… but I bet a minimum strength OOC metric would be a big stumbling block here.

I’d imagine it’d go off ACC standings in this case. For example, take the two schools playing in the conference championship game and then the next 2-3 runner ups.

 

[revampedpanthers]

Why would ESPN/Disney give them more money for something they control for 13 years?

They have done it in the past when they have added schools ESPN has added more than just what it takes to pay those schools the same amount. For instance when nd joined partially they increased everyone's payout. If say PSU joined tomorrow they would give the acc more than the 40 million that everyone else's share is. For instance if they are currently paying the acc 40 million percent team so a total of 560 million they might add 80 million a year for adding PSU

 

[pafootballguy]

They have done it in the past when they have added schools ESPN has added more than just what it takes to pay those schools the same amount. For instance when nd joined partially they increased everyone's payout. If say PSU joined tomorrow they would give the acc more than the 40 million that everyone else's share is. For instance if they are currently paying the acc 40 million percent team so a total of 560 million they might add 80 million a year for adding PSU

I get that but Fox told the Big Ten that Cal and Standford were not worth a half share and SMU is coming from the AAC. I just struggle to see where this extra money is coming from for 3 schools that are not worth that much.

 

[Sean Miller Fan]

And that’s why I think it should be some performance-based method of distribution instead of an equal disbursement. If FSU and Clemson can get upwards of $18M, that might quiet them down for a bit.

No it wont. FSU and everyone else is gone the second they have an offer. Even Pitt, if a P2 offers, we are gone. Send us the bill.

 

[Joe Magarac]

I’m not saying it should go to them exclusively, because then you’d be creating the same issues that the Big 12 had. The ACC appears to be in favor of performance-based revenue models, which is why I think they’d consider dispersing a potential $64-72M windfall of cash based on football standings. If FSU is as good as they think they are, this will benefit them because they’ll theoretically be near the top of the payouts.

Agreed.
$$$ for performance.
Zero for keeping quiet.

 

[cashisking884]

But if you’re one of the teams carrying the conference in tv ratings, why would you agree to tie in extra added money to non-tv ratings criteria?

What does it help the ACC if Wake goes 12-0 but nobody tunes in to watch?

 

[pittchagg]

I get that but Fox told the Big Ten that Cal and Standford were not worth a half share and SMU is coming from the AAC. I just struggle to see where this extra money is coming from for 3 schools that are not worth that much.

The money for SMU comes from the fact that they’re willing to come to the league for free, and accept no revenue in return.

Stanford and Cal don’t bring as much into the Big Ten because they already got in-network rates for the whole state of California for the Big Ten Network when they added USC and UCLA. They already got their .75 cent bump per month per cable subscription for every cable customer in the state. So Cal and Stanford don’t add that for them.

These two states combined have about 25M households. If half of those households are cable subscribers (and I have no idea if that’s correct, it’s totally a guess), then that’s about 12M new in-network customers for the ACC Network. If that’s worth $9 more a year, that could be as much as $100M just from ACC Network revenue. ESPN takes 50%, and the rest goes to the conference. So it’s a $50M automatic infusion from nothing more than adding them - and that’s before you include any additional ESPN or ABC revenue that would flow back to the league, or the actual revenue generated from the content on the ACC Network.

 

[Chem95]

But if you’re one of the teams carrying the conference in tv ratings, why would you agree to tie in extra added money to non-tv ratings criteria?

What does it help the ACC if Wake goes 12-0 but nobody tunes in to watch?

If little old Wake is going 12-0 with less resources and higher academic requirements why should they agree to increase the resources to the school that has the most?

 

[cashisking884]

If little old Wake is going 12-0 with less resources and higher academic requirements why should they agree to increase the resources to the school that has the most?

Don’t know. Maybe the shouldn’t.

But I don’t think Wake is trying to leave the conference. And the future of the conference isn’t really dependent upon Wake.

So why would anybody care what they should or shouldn’t accept?

 

[FireballZ]

I get that but Fox told the Big Ten that Cal and Standford were not worth a half share and SMU is coming from the AAC. I just struggle to see where this extra money is coming from for 3 schools that are not worth that much.

That's why you couldn't get into Pitt and been hating ever since.

 

[pittdan77]

The pro rata stuff is tricky. The Big12 could be getting themselves in trouble with that one. When they wanted to add everyone and their grandmother years ago, ESPN sort of told them not to because it would impact their next contract. So yeah, you could add someone but you could devalue the overall product. That's why the numbers have to "make sense" for all parties and you can't be shortsighted about them.

I think the assumption that everyone is incorrectly making is that the math is static and not changing as conditions change.

 

[pafootballguy]

The money for SMU comes from the fact that they’re willing to come to the league for free, and accept no revenue in return.

Stanford and Cal don’t bring as much into the Big Ten because they already got in-network rates for the whole state of California for the Big Ten Network when they added USC and UCLA. They already got their .75 cent bump per month per cable subscription for every cable customer in the state. So Cal and Stanford don’t add that for them.

These two states combined have about 25M households. If half of those households are cable subscribers (and I have no idea if that’s correct, it’s totally a guess), then that’s about 12M new in-network customers for the ACC Network. If that’s worth $9 more a year, that could be as much as $100M just from ACC Network revenue. ESPN takes 50%, and the rest goes to the conference. So it’s a $50M automatic infusion from nothing more than adding them - and that’s before you include any additional ESPN or ABC revenue that would flow back to the league, or the actual revenue generated from the content on the ACC Network.

There would be some pushback from cable companies in both Cali and Texas about an increase in the rate for teams that have very little fan interest in them.

 

[Gunga_Galunga]

There would be some pushback from cable companies in both Cali and Texas about an increase in the rate for teams that have very little fan interest in them.

You mean a team like Rutgers?

 

[pittchagg]

There would be some pushback from cable companies in both Cali and Texas about an increase in the rate for teams that have very little fan interest in them.

Pushback? Maybe. Is the statewide in-network increase built in as part of the contract that they signed with ESPN anyway? Absolutely.

 

[pittdan77]

You mean a team like Rutgers?

No no, didn't you see the "article" that claimed Rutgers was the most popular program in NYC?

 

[pafootballguy]

You mean a team like Rutgers?

Rutgers has bigger following in NJ that either Cal or Stanford has is California.

 

[cashisking884]

Rutgers has bigger following in NJ that either Cal or Stanford has is California.

Charles Manson had a bigger following in California than Cal or Stanford has.

 

[Sean Miller Fan]

Rutgers has bigger following in NJ that either Cal or Stanford has is California.

Not sure what this is saying. None of those teams have significant followings.