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Could ESPN lose Big Ten media rights?

Perhaps more importantly, is the Big Ten shortsighted enough to let that happen?

Jerry Lai-USA TODAY Sports

Could there be trouble brewing in the world of Big Ten media rights? According to Teddy Greenstein of the Chicago Tribune, yes. In a story published a little earlier today, Greenstein shares quotes he received from Northwestern AD Jim Phillips that he interprets as a sign the Big Ten might offer the second half of their TV rights to a bidder besides ESPN/ABC:

"The Big Ten will do what’s best for the Big Ten, and ESPN has to take that same position. Everyone is watching what’s happening in the television world, the un-bundling that’s taking place, different platforms available now that maybe weren’t in the last go-around for TV contracts. This isn’t pointing a finger at ESPN in any way, stating you have to or don’t have to participate as a partner of the Big Ten. It’s more about: Can the two groups come together?

"No one has amnesia about the relationship we have had with ESPN. John Skipper and that group, they have been a wonderful partner. But we’re at a different place and I think they’re at a different place in 2016 than we were in the last round (of negotiations). That doesn’t mean we can’t get to the altar together and get married again. But we’re at the dating stage right now. And that’s a process. You’d love to continue to stay married with that partner but ultimately you have to do what’s in the best interests of the 14 institutions and that’s where Jim (Big Ten commissioner Jim Delany) is tremendous. He has the support and confidence of not only the athletic directors, but more important, the presidents. He will move us forward."

Also per Greenstein, here's what Jim Delany had to say on the subject:

Could this really happen?

Is it possible that the Big Ten sells the remaining rights to another broadcaster? Certainly. Sports Business Journal has continued to report on this subject since breaking the news that Fox might pay $250 million for 1/2 of the Big Ten's football and basketball games. In a post back on April 25th, they John Ourand & Michael Smith discuss what might be happening with ESPN:

ESPN’s lowball bid is the most shocking part of these negotiations and could be the first sign that the network’s cost-cutting measures are starting to affect its rights deals. This isn’t like NASCAR or the Olympics — two properties that ESPN didn’t seek — which kept it from being aggressive in the bidding process. ESPN likes Big Ten programming for its reach and demographics, and its executives have not been shy about saying that they want to keep it. Though it hasn’t happened a lot, ESPN has been outbid before, like on the NCAA tournament, which went to CBS and Turner, and World Cup, which went to Fox.

But we can’t think of another time that ESPN did not place a competitive bid for a property it really wanted. Sources said ESPN’s offer was well below Fox’s. This is the network that has set the parameters for sports rights negotiations since the late 1990s, and it should send shock waves to sports leagues that ESPN is more cost-conscious with its rights fees. The question is how long this belt-tightening will last given that most major sports rights aren’t up for several years. Word is that ESPN already has set up meetings to bid on what remains of the Big Ten’s rights. But if ESPN’s bid wasn’t competitive for the first package, we’re skeptical that it will be competitive on the second one.

That's a worrisome paragraph to be sure. However, I'm not terrified by anything I'm reading yet.

Why I think ESPN and the Big Ten make a deal

For me the key paragraph comes right after the part I excerpted above:

ESPN’s noncompetitive bid was an attempt by the network to "skim the cream" from the top of the package and try to create a smaller package with the best games, one source said. ESPN will continue to negotiate with the conference for the second package. The big question is: What other networks are serious about doing a deal?

As I noted in my previous post about the potential Fox deal, ESPN is clearly looking to shed costs as they lose subscriber revenue. I would argue that the lowball offer was designed to do a couple of things:

1) Make sure ESPN only ends up with a smaller rights package. They don't want to own all of the Big Ten's games and pay the money that costs.

2) Strengthen their bargaining position for the 2nd half of the rights. In other words, John Skipper is playing hardball.

3) Let Fox overpay. There is one constant in Fox's current battle with ESPN, and that is Fox's willingness to pay a premium to pick up rights/talent from ESPN.

The Big Ten is clearly comfortable with #3 by all reports. They key becomes whether they will prioritize Scrooge McDuck money over the long term health of the Big Ten's brand and viability.  Ourand & Smith end their 4/25 story with the following quotes:

Will coaches freak out if their games aren’t on ESPN?

Yes, and so will administrators throughout the conference. Years ago, when the ACC flirted with leaving ESPN for Fox, some of the conference’s powerful basketball coaches were not shy about voicing their displeasure, believing that the lack of ESPN coverage would hurt their recruiting efforts. It’s too early to know how Big Ten coaches and athletic directors will react. But consider this: When school administrators asked at the recent league meetings if it’s possible for ESPN to get shut out, they were told, "Anything is possible." One senior official at a Big Ten school said his peers "were scared to death" at the prospect of not having games on ESPN, which could eat into their recruiting.

Jim Delany doesn't work alone. He answers to the university presidents and (to an extent) the athletics directors. Every threat/comment that suggests ESPN could be out of the running that is shared by Jim Phillips to Greenstein or the unnamed administrator to SBJ can easily be seen as a negotiating tactic. ESPN is clearly playing hardball so why wouldn't the Big Ten do the same?

This is the part where I expect folks will remember "consider them rolled" and the origin story of the Big Ten Network. It is completely true that Delany and the B1G have walked away from ESPN before. The difference is that the creation of the Big Ten Network meant that ESPN lost out on lower profile games while signing a new deal with the Big Ten. The B1G got the best of both worlds with the sweet BTN money pile and the ESPN exposure. If they leave ESPN/ABC in a lurch, they won't get a soft landing. They'll get the NHL treatment, where ESPN covers the Big Ten as infrequently as possible. That would be long term suicide for the Big Ten's brand, image, and exposure and I think Delany and the conference leaders are smart enough to realize that.

My prediction

I think the Big Ten and ESPN/ABC sign a deal for the second half of the media rights. The B1G will get less than they'd like, but ESPN will come up from their lowball offer. As much as ESPN wants to cut costs the Big Ten rights are not the British Open, MLS, NHL, or even the World Cup. They are a dependable ratings source that fills programming slots for nearly 1/2 the calendar year. Add in the fact that the upcoming Neilsen "out of home" viewing data could stem the tide of their losses and I think they make a fair deal.

What would the deal be worth? No idea. What I do expect is that a deal with ESPN will mean a slightly smaller deal from Fox. $250 million is the money you lay out for a rights package that has all of the best games. I don't think ESPN signs a deal that doesn't include access to the best games. So while I think Fox will still overpay, I wouldn't be surprised to see their final number be lower than $250 million. In the end, the Big Ten will still earn a sizable bump in yearly revenue while maintaining visibility on the country's premier sports network.