FanPost

NBC/Comcast Would Like To Make You All Very Rich

                                                    Nbc-comcast_medium

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.

If you apply a NPV formula to it, solving for PMT, you have...

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)

X
Log In Sign Up

forgot?
Log In Sign Up

Please choose a new SB Nation username and password

As part of the new SB Nation launch, prior users will need to choose a permanent username, along with a new password.

Your username will be used to login to SB Nation going forward.

I already have a Vox Media account!

Verify Vox Media account

Please login to your Vox Media account. This account will be linked to your previously existing Eater account.

Please choose a new SB Nation username and password

As part of the new SB Nation launch, prior MT authors will need to choose a new username and password.

Your username will be used to login to SB Nation going forward.

Forgot password?

We'll email you a reset link.

If you signed up using a 3rd party account like Facebook or Twitter, please login with it instead.

Forgot password?

Try another email?

Almost done,

By becoming a registered user, you are also agreeing to our Terms and confirming that you have read our Privacy Policy.

Join Troy Nunes Is An Absolute Magician

You must be a member of Troy Nunes Is An Absolute Magician to participate.

We have our own Community Guidelines at Troy Nunes Is An Absolute Magician. You should read them.

Join Troy Nunes Is An Absolute Magician

You must be a member of Troy Nunes Is An Absolute Magician to participate.

We have our own Community Guidelines at Troy Nunes Is An Absolute Magician. You should read them.

Spinner.vc97ec6e

Authenticating

Great!

Choose an available username to complete sign up.

In order to provide our users with a better overall experience, we ask for more information from Facebook when using it to login so that we can learn more about our audience and provide you with the best possible experience. We do not store specific user data and the sharing of it is not required to login with Facebook.

tracking_pixel_9347_tracker