What has been reported and we think we know:
ESPN put an offer of $130 million/year on the table.
Safe to assume a 3x improvement on CBS' college basketball deal, taking it to $25 million/year
This equals 130/(17+9) = 5 per school per sport + 25/17 = $1.5 per school for basketball. This brings us to $11.5 million per all sports program (5+5+1.5) and $6.5 million per hoops only. Competitive, guaranteed, albeit a little light from the other leagues. Blaudschon reported $11 per school, consistent with my math.
But ESPN offered something else, that only ESPN can offer. They offered to push up the deal 2 years. The existing ESPN Big East deal is $35MM/year, so this is a $95 million a year improvement, RIGHT NOW, guaranteed, for TWO YEARS. That is $190 million of found money for the Big East, that no other network can match.
NPV = $180 (actually could be a little better than this because ESPN can start before any other network so there are 2 years of time value of money, but maybe a little less because these deals are all back-ended)
Periods = 8 (ESPN 10 year deal starting next year = to 8 year deal for Comcast starting in 2013)
Discount Rate = 20% (given how back ended most of these media deals are, this is a modest discount rate)
PMT = $49.5 million a year
Per team = $49.52/26 = $1.9/year/sport, or $3.8 per all sports program.
That is the incremental number Comcast would have to match, on top of the $150, for the Big East just to break even on the deal that ESPN offered. You can argue some of the assumptions (NPV is probably less than $180, discount rate should be higher), but I am in the ballpark.
Effective value of ESPN offer to Big East = $11.5 (face amount) + $3.8 (value of accelerating contract's start) = $15.3 million per all sports program.
And the Big East got up and walked out of the room. And Marinatto is all smiles about it.
I have been in a lot of negotiations in my life, and with few exceptions, when one party gets up and walks out on what is objectively a pretty fair deal, that means they already have a better one lined up. There is no way the Big East walks out on $15 million per all sports program, guaranteed, starting immediately, unless Comcast has offered $20 million.
The reason this is possible? Notre Dame. Due to their unique relationship with the conference, they are not beholden to the exclusive bargaining agreement with ESPN. Due to this, it makes entirely too much sense that they are acting as a go between for Marinatto and NBC. Another motivation for this deal is that if NBC does give the Big East boatloads of cash, not only will it entice Notre Dame to stay with them for however long, it will guarantee that the Big East will be unlikely to split, thus saving Notre Dame from having to deal with basically being forced to join the Big Ten for their other sports or otherwise join a very small, not nearly as prestigious conference. It's a win-win for them, they secure their independence, the Big East secures its existence.
(Credit for the numbers and insight go to WaylonSmithers of The Boneyard)