CLEMSON -- In July of 1980, Georgia football coach Vince Dooley informed Clemson athletic director Bill McLellan that the fledgling cable network ESPN hoped to televise their football game in the fall. Dooley proposed the two programs split the $3,000 offered by ESPN. McLellan agreed to the terms.
Thirty-one years later, Clemson and other Atlantic Coast Conference schools will begin enjoying their first checks from a 12-year, $1.86 billion deal with ESPN and ABC. Today major conference schools like Clemson and South Carolina, which has an even richer television contract in the Southeastern Conference, earn hundreds of thousands of dollars in broadcast revenues per football game.
Perhaps the force most influencing college football the last three decades is television. Rights fees have made coaches rich and turned college football into big business.
The television gold rush in college football began in 1984 when the U.S. Supreme Court ruled the NCAA was violating the Sherman Antitrust Act by restricting the number of telecasts (in fear of hurting attendance), fixing prices and holding exclusive network contracts. Following the ruling, schools and conferences were able to negotiate their own television deals.
Initially, the majority of power-conference schools joined together in the College Football Association to negotiate television deals. But the Big Ten and Pac-10 never joined and the SEC left to sign its own five-year,
$85 million deal with CBS in 1996. The Big East and ACC followed with their own deals, and most independent programs were compelled to join conferences. The CFA collapsed and rights fees soared.
Sports Business Journal reporter John Ourand said sporting events, especially pro and college football telecasts, are increasingly in-demand commodities. They are rare television programs that continue to draw large audiences in an age of DVRs and hundreds of cable channels fracturing audiences.
According to ESPN, 99 of the 100 highest rated television programs last year were live events that consisted of sporting events, award shows, or programs like American Idol.
"It is appointment television or viewers lose a big part of that experience," Ourand said. "Advertisers are looking for large audiences. (The deals) are based on future growth, the idea that live competitions are not going to draw less people as DVR (proliferates) and more people watch shows over the Web."
Even in a stagnant economy, the rates continue to increase.
Last spring, the ACC signed a new deal increasing revenue from $37 million per year in its previous contract with ESPN/ABC to $155 million per year in the new agreement. While it marked a financial windfall, the deal still fell short of the SEC's 15-year, $3 billion deal with ESPN and CBS reached in 2008.
These deals were trumped this year by a surprising 12-year, $3 billion deal for the Pac-12, tripling its rights fees.
"It surprised me greatly," Ourand said of the Pac-12 deal. "I did not expect money to go nearly as high as it's going. ... I'm pretty certain the ACC has to be kind of kicking itself when looking at what the PAC-10 received. But the ACC was hailed for getting a much better deal than many thought possible (last spring). It illustrates reasons why the market is so hot: (with the Pac-12 deal) three networks needed that live sports programming. It's like three bidders on one house."
Like the housing collapse, some have wondered if television has its own bubble forming as contracts continue to double each negotiating cycle. But speaking about the market for sports as a whole, Bill Koenig, the NBA's executive vice president of business affairs, told Ourand that the deals "reflect the value" of sports programming.
"I don't think it's a bubble," Koenig said.
If the market is a bubble, considerable cutting could be painful in the future at programs like Clemson, where television revenue in the coming years ($13 million per year on average) will nearly match its primary revenue stream, football ticket sales, which brought in $14.2 million in 2010-11.
Perhaps no one has benefitted more from the rising TV rights fees than head coaches.
In 1980, Danny Ford made $50,000 in base salary as Clemson's coach. This year, Clemson coach Dabo Swinney will make the median salary of ACC football coaches, which is $1.7 million. South Carolina's SEC rival Alabama has a $4 million coach in Nick Saban. The Gamecocks' Steve Spurrier will make $2.55 million.
The television money also helps fund non-revenue sports and facility projects. At South Carolina, athletic director Eric Hyman said a third of the television revenue goes to the university.
"We've tried to really build our infrastructure," Hyman said. "You can't point to one project (the television dollars have aided): the baseball stadium, academic center … locker rooms for football. It's pretty widespread."
These are advantages not enjoyed by colleges that aren't in major football conferences.
The greater the television deals, the greater the divide between power-conference schools and smaller Division I programs like the College of Charleston, said Cougars athletic director Joe Hull.
"Wow, does it create a clear system of have and have-nots," Hull said. "I don't know where it will go, how it will impact competitiveness."
Perhaps the only threat to slow these television riches is television technology itself. Clemson assistant athletic director Katie Hill sees a la carte programming as a potential risk down the road, while high-definition and 3-D technology has greatly enhanced the in-home viewing experience.
"(New television technology) is a potential threat in the future," Hyman said. "But in the same light … the tailgating, the socialization, the cheerleaders, the atmosphere, you can't get that on television."
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