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ESPN completes purchase of Longhorns with $300 million deal

UT

Back in November, the Texas Board of Regents gave UT president William Powers the authority to pursue the creation of the Longhorn Network.

That months-long flirtation reached its climax Wednesday, and presumably there will be many a UT official puffing on a Marlboro in the consummation’s money-green afterglow.

First reported by the Sports Business Daily Tuesday, and later confirmed by the Austin American-Statesman, Texas has reached an agreement with ESPN on a 20-year, $300 million deal that will create a 24-hour television channel devoted to all things Texas Longhorns.

As the agreement was negotiated by IMG College, the Longhorns’ multimedia rights holder, UT will actually realize annual compensation of roughly $12.5 a year from the ESPN deal after IMG takes their cut.  The first years, however, UT will be forced to “get by” on “just” $10 million a year.  Combined with the Big 12-ish’s network deals — UT’s share is not impacted by the new side deal with ESPN — UT stands to rake in at least $30 million a year just from those two deals.

“We see this as a very important part of sort of continuing to reinvent the models through which we do business,” Powers said. “This is reflective of being much more creative in how public higher education positions itself as we go forward, even aside from the athletics.”

Unbelievably, ESPN is paying $15 million a year — plus committing $400 million in production value according to the SBD — and will only televise one, maybe two football games a year.  Other programming on the Longhorn Network (ESPNUT?) will include, the American-Statesman writes, a larger but unspecified number of men’s basketball games and a variety of other men’s and women’s sports, including volleyball and swimming.  Then there’s this beauty:

Non-athletic fare is likely to run for about three hours a day and include musical performances, plays, and documentaries by faculty members and students, Powers said. Details are yet to be worked out.

“This will be high-level, entertaining cultural, music, scientific, Discovery Channel, History Channel kind of stuff,” Powers said. “And we have a team put together working on it, and that will be done in collaboration with ESPN.”

What, no “Austin City Limits” or “Walker, Texas Ranger” reruns?

The new network is scheduled to officially launch this coming fall.  As far as distribution is concerned, it’s expected to appear on basic cable platforms in Texas, Oklahoma and possibly parts of Louisiana, and in premium packages throughout the rest of the country.

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22 Responses to “ESPN completes purchase of Longhorns with $300 million deal”
  1. kenbercheval says: Jan 19, 2011 12:51 PM

    I’ll bet my local Brighthouse Networks cable company will have ESPNUT as soon as its available.

    Now… if they could just apply the same logic and figure out how to reach an agreement with the NFL to show NFL Network….

  2. Slim Charles says: Jan 19, 2011 1:06 PM

    We can’t pay players because college football isn’t about the money!

  3. mrcowpatty says: Jan 19, 2011 1:23 PM

    ESPN owns the University of Texas? What school are they going to buy next?

  4. burntorangehorn says: Jan 19, 2011 1:34 PM

    I can only hope I’ll be able to get this network here in Maryland. I might actually find ESPN worth watching for more than just actual football games.

  5. wvuandsteelers says: Jan 19, 2011 1:53 PM

    Here’s an idea: Sorority Cam.

  6. rcali says: Jan 19, 2011 2:13 PM

    That sound you hear is your cable/Sat. bill going up.

  7. edgy says: Jan 19, 2011 3:45 PM

    rcali says:

    That sound you hear is your cable/Sat. bill going up.

    ********************

    It always does with ESPN. The sad thing is that they’ve got so many “channels” that they’ve started covering a lot of non-sports so they can fill up the time. I’d rather watch some form of minor league sport than poker or the spelling bee or a SPORTS channel (Nothing against the spelling bee. I’ll watch it on a NORMAL channel but I won’t watch it on ESPN on general principle and the same goes with poker). Hell, it’s like the Syfy channel and their wrestling on Monday and Friday.

  8. eep says: Jan 19, 2011 4:41 PM

    wvuandsteelers says:

    Here’s an idea: Sorority Cam.

    *****************************

    The reality show where Cam Newton dresses on as his sister. :)

  9. burntorangehorn says: Jan 19, 2011 8:36 PM

    edgy–totally agree. I’d rather watch a non-conference volleyball game between two D-I teams than poker. Shows like PTI, Rome, and Cold Pizza may be pretty horrible, but at least they’re about sports.

  10. gatorprof says: Jan 19, 2011 10:19 PM

    I don’t see how this makes ESPN money in the long run.

    UT has a great athletic program,

    http://elite50.stack.com/top50.aspx

    but not the best. This is especially true when you look at the major revenue sports.

    If history is any indicator, they aren’t likely to be a title town type of program in the major revenue sports in the near future.

    Their football team has 1 title in the past 40 years.

    Their men’s hoops has 1 final 4 and no titles in the past 40 years.

    Anyway, good for UT. Glad they could get the $$$.

  11. edgy says: Jan 19, 2011 10:28 PM

    I hate to tell you, gatorprof but Texas was #1 in the Forbes list of most valuable college football programs at $119 million while the Gators were 6th at $88 million (Alabama was 5th at $92 million. Even with all their problems, Notre Dame was second at $108 million so I don’t expect that Texas will take a big hit unless they have 4 or 5 season in a row of less than 10 wins. This will be a major recruiting tool for Texas.

  12. burntorangehorn says: Jan 19, 2011 10:31 PM

    gatorprof–success isn’t measured by national titles alone. Texas was the most successful football team in the nation in terms of wins from 1998-2009, weren’t they? But more to the point, Texas is by far the most profitable athletics program in the entire country, which is really the most important factor in a network. TCU could have five national titles in the past decade, but it wouldn’t matter, because no one cares about TCU except their tiny alumni base. Texas has the profitability and the most numerous fanbase in sports

  13. burntorangehorn says: Jan 19, 2011 10:51 PM

    Texas’ 2008 football revenues were $87M, with actual profits of $65M. To put things in perspective, Ohio State was second in revenues at $68M, and Georgia was second in profits at $45M. 2008 was the fifth year of the past six to that point that Texas led the nation in both categories. 2009 was the same story, putting Texas at six out of seven, and 43% more profitable than SEC-leading Florida. We’ll have the 2010 figures eventually, but despite the losing football season, Texas memorabilia still sold like hotcakes, and the home attendance was over 100k every week.

    Source: http://money.cnn.com/2009/12/31/news/companies/college_football_money/index.htm

    gatorprof, if you’re truly a prof at that fine institution, I’m sure you had to perform a bit of analysis and critical thinking en route to your PhD. If you were to do even a small amount of same here, you’d see that Texas is by far the most fitting school for this type of move for ESPN.

  14. gatorprof says: Jan 20, 2011 6:38 AM

    burntorangehorn,

    Go back and reread. I wasn’t advocating this for any school, but was puzzled as to how this is a wise business move for ESPN.

    How does ESPN make a profit off of this? I don’t see it. ESPN isn’t going to get a cut of the ticket sales, merchandise, etc. I just do see it.

    Like I said, good for UT.

    Re: “success isn’t measured by national titles alone.” No, but it should be the ultimate measure of success, not profit.

  15. burntorangehorn says: Jan 20, 2011 9:53 AM

    No, it shouldn’t be the ultimate measure of success. A national title is a matter of being hot at the right time, not having the most success.

    Anyway, ESPN will make money hand over fist on this. They’ll get subscriber fees for first- or second-tier within the Texas footprint, and likely premium subscriber fees outside that footprint. Crunching the numbers a $0.30/subscriber, that offsets around $8M–more than half of what ESPN will pay Texas annually. On top of that, ESPN doesn’t have to pay to “upgrade” any Texas games to ABC, ESPN, or ESPN2 anymore, which is a big offset. Exclusivity mean ESPN/Disney/ABC doesn’t have to bid against FOX for those games, either, which drives down costs. Finally, advertising revenues will constitute a large amount of the returns. While Longhorn cross country coverage will likely be riddled with Sham-Wow commercials, football, basketball, and baseball games will have legitimate advertising. The 2-3 football games alone will put ESPN well into the black.

  16. edgy says: Jan 20, 2011 11:35 AM

    burnt, I would question the not paying to upgrade to ESPN for football games statement because I don’t believe that it really affects many of their games. ESPN would hold the rights to a game or two a year but only on this channel, which will NOT be ESPN but it’s own channel (and contrary to what they might think, I’d be hard pressed to believe that ANY Oklahoma company would put this on their basic cable lineup unless ESPN employed their standard bullying tactics). It’s a great deal but from what I gather, it’s not going replace any existing contracts so the content won’t be as much of the sports that people want to watch but whatever is left over.

    BTW, one thing that I’ve gleaned from this is that while IMG will make money from this, they are also going to give Texa$ $10 million per year for media rights so this deal could end up being worth $25 million per year from ESPN and IMG alone.

  17. gatorprof says: Jan 20, 2011 11:46 AM

    Re: “No, it shouldn’t be the ultimate measure of success. A national title is a matter of being hot at the right time, not having the most success.”

    What is the ultimate measure? Profitability? Winning percentage sans titles?

    There is no doubt that in any sport, the number of championships is what matters most. In football, it is BCS, followed by conference titles.

    Tell me how it feels to have 11 or 12 wins but no title? In Tebow’s last season, UF was successful according to your metric, but underachieved according to the fan base since we lost the SEC title game. They had ONE loss!!!

    In Texas’ case, they have one BCS title and 3 Big 12 titles in the BCS era. OU has 7 big 12 titles…

    You tend to ignore these things and point to the most wins. One can beat up on poor teams in your conference and pad your record, while losing the big game to a rival each year or when you get to the title game.

    Simply put, the facts show that UT is the second best team in their conference

  18. edgy says: Jan 20, 2011 12:48 PM

    gatorprof, this means nothing to the bottom line. Texas was #1 last year and Oklahoma #10 on Forbes’ list. It’s all about brand and brand loyalty. The Dallas Cowboys, for example, went through a moribund stretch under Bum Bright and recently, Jerry Jones and YET, they were still in the Top 5, in most years, in merchandise sales. Texas and Notre Dame have loyal followers that buy their children and grandchildren their school gear from the moment of birth and they get them hooked young and it takes an act of God to change them (My nephew, who was born and raised in Oklahoma and where Dallas is the team of choice, is a Packers fan because his father is).

    Suppose that ND’s contract was up and Florida decided to take their games elsewhere. Who do you think that NBC chooses: the program that has no NC in years but has given them consistently high ratings, even during the bad years or the one with three NC but not as big a national following? Gravitas trumps championships every time and this is what happens in the case of Texas (and why I said that Nebraska would ultimately be the Big 10′s top target after Notre Dame. They bring a record string of sellouts and loyal fans).

    Whether Texas is second best by wins, is of no consequence because they’re EASILY the ones with the most eyes on them (no pun, intended) in the Big 12ish. Fox is probably slightly happy with a chance to get sloppy seconds with OU but they would have killed to get this package instead.

  19. burntorangehorn says: Jan 20, 2011 5:55 PM

    gatorprof says:
    Jan 20, 2011 11:46 AM

    You tend to ignore these things and point to the most wins. One can beat up on poor teams in your conference and pad your record, while losing the big game to a rival each year or when you get to the title game.

    Simply put, the facts show that UT is the second best team in their conference

    ==============
    1. You’re obviously trying to flame with that last comment.

    2. The same could be said about Florida with the first quoted part.

  20. gatorprof says: Jan 20, 2011 8:54 PM

    BOH,

    Yes, but I am speaking the truth. You are the 2nd best team in your conference in football and barely on the radar screen nationally with hoops given your single final four in the past 60 years.

    Re:”The same could be said about Florida with the first quoted part.”

    Surely you jest or you haven’t been paying attention national titles… 2 BCS titles, 2 hoops titles in the past 5 years First team ever to win both in the same year.

    Like I said, congrats on the money, but money doesn’t equal = elite programs performance wise.

    Please note….UF isn’t the best football program in the SEC, nor is the best hoops team.

  21. edgy says: Jan 21, 2011 12:09 PM

    gatorprof says:

    but money doesn’t equal = elite programs

    ********************

    That’s funny. So you think that they give out this kind of money to Vanderbilt or Minnesota? Money DOES equal elite program because the networks aren’t going to give this kind of money out for a program that won’t allow them to recoup their costs (Or else the Arena League would be getting NFL money for their franchises).

  22. gatorprof says: Jan 22, 2011 7:29 PM

    edgy…two words, “Notre Dame”.

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