ESPN Pro Rata Clause with SEC

[MDUte]

Learned something new today. Here’s a clip from a Brett McMurphy report back in 2023 (link below) on the SEC’s deal with ESPN:

And then there’s the SEC. In 2020, the SEC signed a 10-year media rights deal with ESPN worth around $300 million. The deal starts in 2024 and includes a pro rata clause requiring ESPN to pay the SEC the same amount per school for any new members, sources said.

I haven’t heard anyone talking about this. But the whole idea of schools needing to be additive and not dilutive in order for the SEC to consider adding them doesn’t apply. The SEC can add anyone they want and ESPN automatically increases their payout to provide the same amount to the new members.

This now makes sense why the SEC is all the sudden interested in adding basketball schools that aren’t big football brands such as Kansas, UNC, and Virginia…because they can!

2023 Brett McMurphy Article on SEC Contract

[2008 National Champ]

Big-12 had the same clause for incoming P5 schools which is why the former PAC schools got full rations immediately.

It’s also why I’m skeptical on FSU, Clemson, et al coming in for higher shares. the unpronounceable four letter network is already going to be saving money by not re-upping the ACC deal. why pump it into the Big-12 when they can expand the SEC for an already agreed upon rate? especially if pumping it into the Big-12 would require a full renegotiation.

[MDUte]

Agreed. But the pro rata clause appears to only be part of ESPN’s contracts. When the B12 added the 4 corners, the B12 still needed to get Fox to agree to increase their payout (which they did) so that the 4 corner schools would receive the same share as everyone else without other schools needing to take a pay cut.

And this is also true when looking at the B1G’s contract with Fox. Apparently no such pro rata clause exists or else Oregon/Washington wouldn’t have had to come in at 1/2 shares.

[AlohaUte]

Yeah, all this talk this week that the SEC and B1G aren’t going to be bringing in FSU or other big market teams is just them not wanting to give the ACC any legal windows to sue for tampering or whatever.

It’s no different than a coach saying he’s not leaving for the bigger job, only to leave a month later.

[MDUte]

Exactly Aloha! They can’t run any legal risks of tortious interference so they will sit back and wait for FSU/Clemson to break themselves out and/or ESPN to exercise their right to not renew the contract, thus ending the GoRs in 2027.

Edit: and btw, there’s smoke out there that ESPN is going to be announcing that they won’t be picking up the option to extend the ACC’s GoR past 2027 thus ending the GoR June 30, 2027. The rumor is that this is going to get announced July 25th or 26th. If this does happen, this will be huge news and make way for the next round of realignment to take place.

[2008 National Champ]

pretty sure it’s already been announced

Looks like I didn’t read the articles correctly. Best I can find now is that ESPN has until Feb 2025 to decide if they want to opt out.

[UofU Fanatic]

MD UTE
Wouldn’t it be better for ESPN to just let the contract be locked up how it is since they will make a bigger profit and not have to pay ACC schools as much with a lesser media deal vs letting it break up and then have to pay all these ACC schools with higher amounts in SEC etc?

Hopefully my question makes sense

[MDUte]

I think what you’re saying is ESPN has FSU/Clemson and other ACC schools under contract for a lot less than what they’d be paying them in the SEC so why not lock up that contract through 2036 vs letting them out, correct?

Good question. ESPN stands to make a lot more money through consolidating their best brands and letting the dead weight go. ESPN might only move 2 or 4 brands over to the SEC paying anywhere from $60 (2 brands) to $120M (4 brands) more to have them there. But then they drop all the rest of the cost of the ACC which costs around $500M/year. So net-net ESPN comes out way ahead. Then by adding 2 or 4 more big brands to their premier league, they get that much more premium inventory to offer up to viewers driving even more ad revenue than before.

[Central Coast Ute]

Yep. It’s a done deal. Whatever the deal is, it’s already been decided behind the scenes. There’s no way these schools are going through all of this just to go to the B12. I don’t claim to know who is going where, but the schools putting up a fight, already know they have a landing spot in the P2.

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