Texas' Contract with ESPN for the Longhorn Network

Texas’ Contract with ESPN for the Longhorn Network

Now that the contract between University of Texas and ESPN for the Longhorn Network is public, conspiracy theories abound everywhere outside Austin. So, I’ve decided to put on my lawyer hat and dispel some of the myths.

I rarely call out others specifically, but one blog on this topic raised a number of issues I think aren’t issues at all. I use this person’s comments as an example, because I think it’s representative of what many who oppose the Longhorn Network think. Although I applaud the person who wrote the blog over on The Midnight Yell for putting forth the effort to obtain a copy of the contract, I think he let his mind run away with him.

The first issue he raises is over the number of football games ESPN will show:

In the signed agreement, the Longhorn Network HAS to show 1 live football game a year (This year it will be the first home game of the year against Rice to fill the requirement) but BOTH the University of Texas and ESPN have a “mutual desire” to  show NO LESS THAN 2 live football games a year on the Longhorn Network.   

So where does the network and ESPN stop at?  Four live Texas Longhorn football games?  The entire home schedule?  And if the network does in fact air that many live football games, how does this affect the overall value of the 1st and 2nd tier media rights of the conference as a whole?  Less money for the entire conference on the table when 1st tier rights become available in 2015-2016?

Okay, let’s remember how this works. The Big 12 already has first (ESPN) and second (FOX) tier rights holders. ESPN/ABC has rights to 19 games and no one team can appear more than 6 times. They’re the first-tier rights holder, so they choose first. Unless ESPN can make a deal with FOX, who gets second pick each week as the second-tier rights holder, ESPN is going to choose the biggest game of the week to show via its first-tier contract, even if it includes Texas. Without some sort of arrangement whereby FOX agrees to pass the game up and let it fall to the Longhorn Network, ESPN isn’t going to risk not choosing a Texas game and allowing FOX to snap it up. And why would FOX agree to pass on a big Texas game? FOX is paying $1.17 billion over thirteen years for second-tier rights.

All those who have been following this as it unfolds know that FOX did agree to a limited waiver which would allow ESPN to air a second Texas football game in 2011. However, don’t think they gave ESPN something for nothing. The agreement between the networks hasn’t been made public, but FOX isn’t some second-rate operation. I assure you they got something in return. Sports Business Daily’s John Ourand explained it like this:

Fox, which holds the Big 12′s cable rights, granted LHN a limited waiver to allow ESPN to shift the games from ABC to Longhorn Network this season. A source said Fox agreed to the change when ESPN offered certain selection considerations for college football games, including the possibility of relaxing its broadcast exclusivity and allowing Fox to televise Big 12 football games on its broadcast channel starting in ’12.

Back to the unfounded fear that the Longhorn Network would end up with four live games or “the entire home schedule.” Texas has contracted away its third tier rights (i.e., games that aren’t chosen by ESPN as the first-tier rights holder or FOX as the second-tier rights holder). Yes, there’s some room for negotiation between ESPN and FOX, but FOX isn’t going to just give away all its rights to Texas games when it’s paying $1.17 billion for second-tier rights. Does it mean ESPN will pay less for the Big 12′s first-tier rights when the current contract with the conference is up? Of course not. The last thing ESPN wants is for FOX or NBC/Comcast or anyone else to come in and control first-tier rights in the conference.

Many are also concerned because the language of the contract state that it is the “mutual desire that the Network telecast no less than two (2) such regular season games per college football season.” ESPN wants two games a season on the Longhorn Network. Why is that shocking to anyone? Not to mention, every game that falls to the Longhorn Network makes room on ESPN and FOX to broadcast another Big 12 team pursuant to their rights as first- and second-tier rights holders. The “mutual desire” language is common in contracts. It simply means Texas is acknowledging it will do what is within its power to make this happen. It is not a covenant irrespective of conference rules, regulations or agreements. As we all now know, plans to air a second game have been put on hold per an agreement between conference members, and in order for a second game to air both institutions and the conference office would have to agree.

The writer over on The Midnight Yell also pointed out the portion of the contract that calls for Texas to assist in getting away games on Longhorn Network:

If that isn’t unsettling, ESPN and the University of Texas is also in an agreement to get live sporting events when the Longhorns play AWAY from home and say in Norman or Stillwater. 

This just says Texas will assist in whatever way they can in helping the network get access to away games – in accordance with NCAA and Conference rules. Basically, ESPN wants assurances that Texas will assist in getting the rights for these games, if possible. Does it mean ESPN will get the rights? No. Texas is just agreeing to do what they can to help. Standard contract language. ESPN is building $13 million studios and paying out over $10.98 million to Texas and $4.02 million to IMG. Of course they’re going to want Texas’ full cooperation in getting them as much desirable programming as possible. It doesn’t mean they can circumvent other tv rights deals or conference rules.

Another provision which is misrepresented on The Midnight Yell is one regarding “Videotape Services”:

Something else that should alarm everyone is that the University of Texas can simply submit a “request” to ESPN to produce any kind of video.  Texas will pay the bill, but ESPN will produce.  Maybe the Longhorns need propaganda against another Big XII conference member.  Ask ESPN to make it.  Worries surrounding the Longhorns the week before the Red River Shootout?  Ask ESPN to make a short clip showing everything is just fine behind “closed doors”. 

And these video tapes I just mentioned?  HAVE to be to the “benefit of UT” Why must they benefit the Longhorns?  The contract says they must. 

You can’t discuss this provision without looking at the definition of “Videotape Services” in the contract. Here’s what UT can ask for:

  •  Highlights of selected men’s football Games and men’s basketball Games to be produced immediately following a Game designated by UT. 
  • A compilation of highlights from men’s football Games and men’s basketball Games, to be produced at the end of the season in each sport. 
  • Weekly sports highlights required by the Conference for material advertising and promoting the purchase of tickets for specified University athletic events.
  • Promotional announcements and material encouraging participation in fund-raising efforts for the benefit of Men’s Athletics and/or Women’s Athletics.
  • Other material reporting on or promoting Men’s Athletics or Women’s Athletics.

ESPN isn’t going to be creating some sort of expose on Oklahoma the week before the Red River Rivalry. And the videotapes produced are for the “benefit” of Texas, because they become the copyrighted property of Texas. This use of the word “benefit” does not mean the material has to make Texas look good, it’s legal terminology to indicate it will become property of Texas.

Other provisions of the contract that have been attacked:

Right of First Refusal: Built into the contract is a right of first refusal in favor of ESPN to all television rights currently held by the conference if Texas becomes an independent. Any lawyer worth his salt would put this into the contract. ESPN is investing tens of millions of dollars into building studios and starting up the Longhorn Network. Why would they let Texas walk away from the Big 12 and sell its first- and second-tier media rights to FOX or NBC/Comcast or CBS?

Exclusion from Conference Network: The contract essentially excludes Texas from any Big 12 Network that might be created. Personally, I don’t see that network ever coming to fruition. Regardless, any ill will over this should be directed at the conference, not at Texas or ESPN. The conference could have prevented teams from forming their own network. It’s one of the reasons floated around for why Texas didn’t go to the Pac-12. Why didn’t the Big 12 prevent the Longhorn Network? Because Texas would have left.

Power to Replace On-Air Talent: Many of you know that Texas has the power to demand on-air talent be replaced if they do not “reflect the quality and reputation desired by UT.” Well, duh! Why would Texas allow someone to speak negatively about them on their own network? I don’t think they’ll be replacing an announcer who criticizes a running back having a bad day, but of course they want the power to demand replacement of someone who is routinely painting them in a bad light. If I badmouth one of my firm’s clients on here, don’t you think there would be repercussions?

High School Championships: A much debated aspect of the contract is the provisions which states Texas and IMG will use best efforts to get the UIL (the Texas high school sports league – run by UT) championship games on the Longhorn Network when the current television contract for those rights is complete. In my opinion, this is an NCAA issue. The language was obviously put in the contract under the belief it was allowed under the NCAA regulations. UT runs the UIL, so I don’t find it surprising that ESPN asked to make this a part of the contract. It’s up to the NCAA now. 

The bottom line is that Texas has every right to contract away its third tier rights. As does Texas A&M, Texas Tech and all the other members of the conference. If you’re a school that doesn’t like the advantage Texas has by having its own network? Go get your own. Wait, that’s right…not everyone can do it. Not everyone can become a lawyer either. Should we just hand bar licenses out to everyone to make things fair and equal? This is what I call an “uncomfortable truth” in college football. Watch out for more of them in my upcoming book, Saturday Millionaires: why college athletes will never be paid and other uncomfortable truths about the business of college football.

38 thoughts on “Texas’ Contract with ESPN for the Longhorn Network”

  1. Nice objective writeup, but as I said on twitter, the issue isn’t necessarily the terms of the contract in a vacuum – the issue is what UT/ESPN said the network would be versus what it’s turning out to be. Texas agreed, as did the other nine schools, to be in a conference, yet it’s doing things detrimental to the conference as a whole (ie we’ll never have a Big 12 network per the LHN contract) in order to promote its own interests. That would be fine if it were independent…but it’s not and it agreed not to be.

    I can’t blame Texas for doing it what it does. I can’t blame A&M for standing up on issues it believes are important (FWIW, the only problems A&M brass has with the LHN are the high school sports and additional games). IMO, the blame lies at the leadership of the conference. Schools should not have to be at each other’s throats this way – we’re supposed to have some sort of mediator. The Big 12 will not fail because of Texas or the LHN or A&M – it will fail because the person in charge failed to keep it together.

  2. “… mutual desire that the Network telecast no less than two (2) such regular season games per college football season.” ESPN wants two games a season on the Longhorn Network. Why is that shocking to anyone?…”

    Maybe because, in 2010, the Longhorns led the rest of the Big XII to believe that only ONE game was in play, hence the nature of the agreement and press releases.

    You did a legal analysis, but there’s a conference “partner” analysis at play here, too: It’s not about the contract, it’s about how UT has mishandled it and misled the Big XII …

  3. While I appreciate your “legal” view, I do disagree with much that you have said. You have to live in Texas and have experienced “them” for a time before the clear intent is revealed. I am sorry you cannot see what “the intent” truly is.

  4. The issue from my perspective is that Dodds and UT have been lying in the media about what the network’s intentions are when it’s clearly laid out in the contract. Paying money to a HS for their broadcast rights is an inherent conflict and “we didn’t know” doesn’t work anymore for Dodds.

  5. Why does Texas have to be so mean? And why do they get all of this attention? We’re the ones winning all these titles in non-revenue sports. We should have our own network!

    1. Why should I have to be an equal partner in the conference? Remember, I’m special. The rules don’t apply to me. At least that’s what Dan Beebe keeps telling me. Why won’t A&M allow us to continue cheating and ruin another conference? We want to broadcast our recruits, and we want ESPN to do all of our cheating for us while we’re the innocent victim. It’s all for the kids, right?

  6. Dodds invited A&M to launch a joint network, A&M turned it down.

    The leftover Big12 schools offered the exit money, coming from CU/NU, to UT, OU, and A&M, OU & UT declined to the money, A&M accepted it.

    The leftover Big12 schools agreed to a fee structure guaranteeing OU, UT, and A&M $20M/yr, while the leftover schools would take $14-17M.

    Keep lecturing on “equal” and “conference partners.”

    1. “Dodds invited A&M to launch a joint network, A&M turned it down.”

      Right, and I’m sure you have a link to those invitation details. What? You don’t?

  7. ” This is what I call an “uncomfortable truth” ……. ”

    Yeah, and its why the NFL has a salary cap. Without rules that create parity, the entire NFL goes down in smoke.

    UT has to forego some of their advantage, if they wish to be in a conference where parity exists.

    But you are right, it is an uncomfortable truth, that there is no parity in college football, or college basketball. There is a handful of teams who dominate and who always will, no matter how many rules the NCAA can write.

    So don’t blame the other members of the Big 12 conference, for wanting parity.

    1. “UT has to forego some of their advantage, if they wish to be in a conference where parity exists”…..

      sorry we’re not moving the campus out to another state

  8. Thanks for the legal analysis. But it won’t be received well by the “victims”. Remember aggies crying about getting their $20M from the other, smaller schools in the conference? Yeah, they’re all about the conference.

  9. The Aggies had the chance to do what we did and their own AD said it was not viable: the below is from HIS OWN BLOG at the A&M website dated June 16, 2010.

    Statement One: Texas is going to have a cable channel like the Big Ten Network that will give them even more money and recruiting advantages. After all, it was reported in orangebloods.com and many media outlets picked it up, so it must be true.
    Here are the facts.

    The bottom line is NOTHING HAS CHANGED!

    They could have had their own network for the last 14 years of the Big 12 and so could we or any member of the conference. Our friends have been bringing their Longhorn Sports Network television mic flags around for years. Their stand alone network has still not happened yet.

    ABC/ESPN and FOX continue to have rights to the league’s vast inventory of home football, men’s basketball, and women’s basketball games. For specific’s regarding the Big 12 TV Contracts, click here.

    There are quite a few baseball and softball games, tennis matches, swim meets, women’s basketball and even a few men’s basketball and football games that are not selected by ESPN and Fox Sports. And it’s those contests, and only those contests, which may be broadcast on a school’s own network. We call it a third-tier network.

    We broadcast many of these contests for free on our Aggies All-Access website powered by CBS Sports. I’m proud to say we have more viewers of our contests than the next three CBS Sports powered websites combined. In effect, that is our Aggie Network and we offer it to you for free around the world.

    When we built the 12th Man Productions facilities, our plan was all along to eventually put together an Aggie Network. We are better positioned than any other conference school to do it. Having said that, we would still need to invest millions of dollars to hire the staff, and purchase the equipment and air time to do our own network.

    And while we would have some live programming from what ABC/ESPN and Fox Sports did not select, the bulk of programming would be replays of recent games and rebroadcasts of historical games. Even ESPN does not have enough live programming to fill its’ schedule each day. That’s why the Aggie Network is still on the internet.

    Today, the financial numbers simply do not work in our favor to produce 168 hours of TV every week. If you think about it, a separate school network does not work unless it’s public television, and they need all kinds of institutional and federal government funding. Last time I checked, the college athletic departments are not eligible.

    On the other hand, a conference television network can work. There is enough live and delayed inventory to fill the week, although, even then, the live programming would be skimpy. I would support the new Big 12 doing developing its own network.

    If you have your own network, the paradigm has shifted on how you build a conference. You ultimately want to expand your footprint to increase the number of cable/satellite viewers who pay a monthly fee to receive your network.

    Just because your admins couldn’t be far sighted enough to see the possibility of this happening is not a reason to freak out about it.

    Don’t blame us for being smart about the business of college football.

  10. As an Aggie. Non of this matters to me. Why? Because texas is no longer good in football. To expose them on their own little network will be funny as hell. As well as i know tu. They do a good job hiding their weaknesses. So when football season arrives you will see the rice game for sure. But other then that? Well lets say maybe Kansas also ………

    1. texas won a national championship 5 years ago, were in the national championship game 2 years ago, and recently had a bad year. aggy logic at its best.

  11. A solid technical analysis but the problem (as many have stated) is their intent and what they knew. Specifically, how they weren’t controlling anything and that espn was doing everything (regarding the highschool athletics).

  12. Folks, with all due respect, this is not about the contract itself. As an Aggie, I could care less what the longhorns want to do with their own room, by themselves, and with themselves. However, when you ask your other 9 roomies to ingnore all the strange visitors, funny smells, weird sounds coming from your room and just mind your own business, do you really expect us not to question what’s going on in there??? The contract spells it out in orange and white, the longhorns are in it for themselves, conference be damned. Why postpone the inevitable, just go indy and save us all the drama of trying to blame someone else for it’s demise. Everybody already knows that’s what’s going on and what will eventually happen. Either bevo or get off the pot!

  13. Very biased. The lhn is clearly a huge advantage so any argument downplaying it is just nonsense. Spinning it anyways you want but (not just you but all sips, even buttertooth) you know that airing potential prospects games is a huge advantage.

  14. Very fair and well reseached artile. I believe it points out the Aggy situation very cleary. Aggy hates to be “told” how off base they are. It’s better to whine and cry about “unfair” advantages and “the bully that won’t play fair”. If the “facts” come into play, they just go nuts. Grow some A&M and be relevant, not just a one hit wonder, which is what your major sports programs have been. If you don’t like the deal- leave for SEC. I would bet that you can’t, and you won’t. You have no balls. You have no history. You have no chance. You are AGGY. Hook’em

  15. no dog in this fight, let the ncaa figure this out. players want
    to go to winners. keep winning. with all this infighting have
    you noticed their are 2 schools north of the red river that are
    better then you both. spend time kicking their tail and every
    thanksgiving texans will decide texas

  16. Your interpretation is not accurate. The Big 12 would not be allowed to include Texas in a network. Texas is exposed as selfish and arrogant. Not conference material. So please leave the Big 12 Texas and go independant..

  17. The Aggies can form their own network. Yes! All 10 teams can all create their own networks. You are right Kristi, that is completely feasible! Do you know how freaking stupid that is Kristi? You can read a contract but liime most lawyers, your business acumen is laughable.

    Here is another idea. Instead of ten individuacos bool networks, the conference could break apart. Of course then the whining from the sips will come full throttle. ” A&M cant be allowed to leave. Stop them, please mister state senator. We don’t want to compete with A&M in the SEC! We want our current uneven playing field.”

  18. I understand why aggies are upset, dolla bill told them,

    “If you think about it, a separate school network does not work unless it’s public television, and they need all kinds of institutional and federal government funding. Last time I checked, the college athletic departments are not eligible. ”

    Now they find out that the school they envy so much, did what they timid leader (who they hired for his penis-envy of The University of Texas) said couldn’t be done…laugh my ass off…it is hilarious watching ‘em squirm around in their pool of ignorant envy. As Mack Brown said, they hate Texas more than they like themselves.

  19. What people fail to realize is that UT does not have enough content to meet their programming needs. If the rest of the B12 were to form an additional network(with 9 members), then this would force UT`s hand one way or another. Either band together or go indy. This setup would make it very difficult for UT to push their programming beyond the state of texas boundaries. Also keep in mind while UT has a good market share in Texas, the Aggies, Red Raiders, Bears, Horned Frogs, Mustangs, Cougars, etc., all have loyal followings as well. Band together as a conference should and force UT`s hand, instead of standing by and watching. Let UT try and schedule their non-football sports as an independent.

  20. This has more to do with the continued unequal revenue distribution of the Big 12. Texas still gets the lion’s share of Big 12 revenue, and it’s stupid. Why should Oklahoma or A&M be happy with that. They’re better off with the SEC and it’s equal revenue sharing. Everyone flourishes, and the conference flourishes.

  21. In 2008/2009, Oklahoma received the largest big 12 revenue distribution, 12.2M, Texas #2 at 11.8M, A&M #5 behind KU and Mizzou at $10.2M, KSU last place at $8.4M.

    OU made 2.1M more than the B12 average, and KSU made 1.7M less than the avg. hardly a massive gap compared to 90M annual athletic budgets.

    as far as conference loyalty, Texas is the school that commited to stay in the Big12. A&M has been the one threatening to leave for the SEC constantly. First A&M was going to go to the SEC by itself instead of joining UT, Tech, OU, and OSU in the Pac, then A&M was only too happy to come back to the Big12 if they could receive unequal revenue in the new Big12 which would guarantee them $20M vs. $14-17M for the little 5 schools.

    Save the sanctimonious hypocricy, A&M is, and has continually been, the most selfish school throughout these happenings.

    The current Big 12 is the best situation for OU & UT, television revenue that matches the competition with the new fox contract, with the abc contract up for renewal soon which should have the big 12 exceed SEC payouts, plus a weak, small conference. If A&M knew how to run an athletic department and leverage their natural advantages being the 2nd school in Texas, A&M would add to the strength of the Big12 athletically, and financially, and A&M would be the 3rd big fish in the small 10 fish pond.

  22. Your paragraph on exclusion does not take in to account that UTex had at least two offers for shared networks, which they declined. One on behalf of the entire conference (under Kevin Weiberg), one for a shared network of A&M and UTex Olympic sports.
    Here is a Kirk Bohls (Austin American Statesman) link to Bill Byrne quotes stating A&M was interested in the A&M/UTex Olympic sports network but Dodds wasn’t. He says “we” and “they” but those decisions rest with Athletic Directors:
    http://www.statesman.com/sports/9-things-and-1-crazy-prediction-1744914.html?viewAsSinglePage=true

    UTex turning down previous offers for shared networks, then striking up an exclusive network with ESPN is detrimental to conference stability, and neither ‘conference member’ or ‘partner’ behavior. While reminding everyone who will listen that they are the crown jewel of the BXII, they sign a contract preventing them from involvement in any network that conference attempts to start. And their defense is “If you don’t like our network, start your own.” Institutions like USC, Michigan or tOSU could start their own network if they so desired. But they are team players, and are part of conference networks. Only UTex ignores their conference affiliates. Because the only thing that outstrips their money is their hubris.

    Not faulting your assessment Ms. Dosh, but a more accurate analysis needs to take in to account established patterns of behavior and motive. (As stated by other commenters, you’d have had to have dealt with them a while to know this. Just take a look at the attitude posted by longhorns when criticized. “There’s nothing wrong with anything we ever do, because… Well… We’re Texas!”)

    And AggieLogic, The original Pac-10 offer was to the BXII South, minus Baylor, plus Colorado. So A&M was just part of the deal, not the first with a wandering eye. UTex thought twice when A&M demonstrated they had other options.

    Props to Aggies for taking a stand, albeit a year late.

  23. I’m glad to finally see someone have unbiased analysis of this contract unlike Clay Travis, Midnight Yell Blog and etc.

  24. Let he who is without sin throw the first stone. Neither are with out sin. If the truth be known, no longhorn can honestly speak about or for the aggies anymore than an aggie can speak for a longhorn, neither are without sin. In my opinion, I think the team who displays the character t I would like the rest of the world to see as Texas is NOT in the state’s capitol. Anyone who asks their opponent to take the name of their state out of their name so only they can be known by as Texas is selfish and arrogant at best. Sounds like a democrat, making up the rules as they go and they demanding that EveRyonE else compromise their standards and to just lay down and take it because they ARE Texas!!!??><< Who died and made you the football god? and oh by the way, The University of Texas Agriculture and Mechanics IS SO very much more thana one sport shool, check the records you who obviously do not know anything about their sports records that are not a shot in the dark, no accident and certainly not a one time happening. Football is all Texas University has and that is sad that they refuse to see or consider anyone else's accomplishments.Oh, I don't know your records, my bad, I sound like you!! We are you neighbors, we pay taxes in this state, we have just as much right to be proud as any other and not be called whiny when we ask that everyone play by the rules. Oh, are you offended, SO AM I, that makes us even so just get over it. Austin seems a lot like Washington lately and you can't blame this on Bush. Why can't we just agree to disagree and do what is best for the state and nation as a whole instead of contributing to the downfall of so many?

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