Is Longhorn Network Roadblock to Texas Joining Pac-12?

Smoke is pluming over Norman like the aftermath of an atomic bomb. And where there’s smoke, there’s usually fire.

Multiple reports are surfacing that Oklahoma is on the verge of joining the Pac-12. The next logical question is: What about Texas?

It was widely reported that University of Texas didn’t join the Pac-12 last year because it wanted to form its own network. We now know that the Pac-12 was planning regional networks across its footprint. A school with its own network didn’t fit into those plans.

The seemingly obvious choice for Texas is to go independent. Texas can control its own destiny. The last time numbers were released, Texas took home $11.8 million for the 2008-2009 school year in conference distributions. Texas’ share of LHN revenue for the 2011-2012 school year will be $10.9 million, increasing by 3% each year thereafter.

According to the LHN contract, ESPN would have the right of first refusal to all television rights held by the conference if Texas became an independent, which is currently rights to all but one home football game. If Texas is getting $10.9 million a year for one, and possibly two, home football games (and some other sporting events that essentially have nothing to do with the dollar figure put on this contract), it’s safe to assume they could make up what they’re losing in conference distributions by contracting with ESPN for the remainder of their home games.

Two other issues arise with independence: scheduling and no automatic BCS berth. Scheduling is a tough one for sports outside of football, but they could simply join another conference for every sport except football. No longer being in a conference with a BCS bowl berth isn’t much of an issue either. They’re the Longhorns. It’s not like they’ll be left out if they have a record deserving of BCS bowl inclusion.

Let’s say independence isn’t appealing, however. Could the Longhorns join another conference? The Pac-12 perhaps?

There’s been a lot of speculation that Texas would be precluded from joining the Pac-12 because of the Longhorn Network. After all, the contract has been signed and the network is on the air.

I pulled out my copy of the Longhorn Network contract (obtained by Twitter user @spadilly via open records request and posted on Midnight Yell) and here’s what I found. First, the entire agreement is subject to the rules and regulations of any conference of which Texas is a member. Not surprisingly, there’s also a provision that covers Texas going independent or changing conferences. Here’s what it says in terms of Texas joining another conference:

…in the event that UT determines during the Term to become a member of an athletics conference other than the Big 12 Conference or not to participate in any athletics conference, UT agrees to continue to grant and provide (or cause IMG to continue to grant and provide) to ESPN the Television Rights set forth in this Agreement.

What exactly are these Television Rights? Let’s look at just football for the 2012 season and beyond:

With respect to the college football season commencing in 2012, and each season thereafter during the Term, UT will use its best efforts to provide ESPN all play-by-play and commentary rights for a minimum of one (1) regular season and/or post-season intercollegiate men’s varsity home football game and will provide ESPN all play-by-play and commentary rights for the Annual Spring Football Game.

The provision goes on to say the parties have a “mutual desire” that LHN televise no less than two home football games per season. For this discussion, that essentially means nothing.

What does the rest mean? Basically, it means Texas is only contractually obligated to allow LHN to air the Annual Spring Football Game. Texas has to use “best efforts” to supply LHN with one home football game. Essentially, however, if they can’t…well, they can’t. No harm, no foul.

For all other sports, the provision begins, “As permitted by Conference regulations and agreements…” And that means…you guessed it, no obligation.

There is also a termination provision that gives ESPN the ability to terminate the contract if a “material portion of the material athletic events” cannot be provided under the terms of the agreement. There are a few sections of the contract that were redacted before the contract was provided pursuant to the open records request, but none of the provisions I see specifically require Texas to pay any sort of fee or penalty upon termination.

The practical effect of all this is that LHN will have nothing to air if Texas goes to the Pac-12, absent some sort of concession by the conference. Since ESPN and the Pac-12 are already partners, ESPN would likely be a part of the discussion before Texas is added and everything would be worked out by mutual agreement. I do not believe the Pac-12 would allow Texas to keep LHN.

I think LHN would morph into the Pac-12’s Texas regional network. Either the Pac-12 could make an exception to their policy of solely owning its regional networks and work out a joint ownership arrangement with ESPN, or perhaps the Pac-12 could purchase LHN (which would likely mean facilities and receiving an assignment of any agreements with cable/satellite providers) from  ESPN.

The bottom line is that the Longhorn Network will not prevent Texas from joining the Pac-12 if that’s what all the parties involved want.

This article offers the personal observations of Kristi Dosh, and does not represent the views of her law firm or its clients. Any information contained herein does not constitute legal advice. Consult your own attorney for legal advice on these matters.

Posted on September 3, 2011, in Big 12, Pac-10, Television. Bookmark the permalink. 19 Comments.

  1. I read through the redacted contract that was provided on MidnightYell.com and I remember reading a section that talked about the Longhorns NOT being allowed to have their teams appear on any conference network, so, basically, if UT joined the PAC 12, their basketball teams, track teams, baseball team, etc. could not be shown on the PAC 12 Network that is currently in design. To me, that seems like it would be a huge roadblock to UT joining the PAC 12 without significant restructuring of the LHN contract. Did I misread that?

    • In one of the opening paragraphs it states the contract is expressly subject to the tv contracts of any conference Texas is a member. It says they won’t allow the creation of a similar network, but having a Pac-12 regional network in Texas would be enough different not to be an issue. Plus, I think ESPN will be involved in this conference move if it happens.

  2. incredulous reader

    I thought this article had some cred til I read the disclaimer at the end and realised it was written by KD, who these days is non cred deep south college football booster.

    Sad part is that her grind it out analysis can be extensive and thorough, so it’s a shame she’s such an SEC homer. Examples: openly rooting for A&M’s Big 12 defection (just reread the tweets, oh and good luck w/ that addition strengthening your conference by the way unless women’s basketball and equestrian are what you’re lacking), continually discussing the Big 12′s demise/hoping the SEC can pull a decent 14th team that would actually add real value (note; if you’re a Va Tech reader, that means that your football program, while competitive, brings nothing else to the table).

    But the really over-the-top bit is the continually delusionally referencing college football as 2nd biggest sports ad sales property after the NFL – her signif other Chad actually blogged last week, a post she repeatedly promoted, that the SEC (the conference that shares an acronym w/ a poorly though of gov’t regulatory agency) was the 2nd most valuable brand in sports after the NFL; in the same post he used the Nazi invasion of Poland for a college football analogy; seriously….

    Newsflash to both: a) college football is an impressive ad sales genre, and b/c of its sheer volume of teams and games, it hangs large numbers, but while the headline tv rts contract revenue numbers are big, the contracts are very long, and the per school payments are ALL sub $22m/yr, and most are way less than that. Stack these granular stats against a number of pro sports – team or individual – and it lags; Stack it against int’l sports (e.g. look at global soccer ad sales or F1 which only has 12 teams and generates over 1.5billion usd/yr) and it absolutely pales in comparison. This is not a knock on college football, rather a repudiation of silly, amateurish ‘reporting’ trying to make it something it is not.

    B) As for the value of the SEC brand, sorry to break this news, but it’s not even the most valuable college conference brand in terms of recognition and reputation. Pull some of the myriad national market research from the last 5 years and see how the Big 10 and Pac 12 do head to head w/ the SEC. Outside of the deep south amongst the gen pop, the SEC isn’t recognised as the #1 conference; just isn’t, and certainly never, ever in the ‘athletics academics = true success’ terms. (Terms that matter to both the Big 10 and Pac 12, by the way.)

    Now stack that SEC vs the NBA, MLB, NaSCAR, in brand terms and this assertion begins to look downright foolish.

    Yes, the SEC is a dominant football conference today, but these winning runs are always cyclical and it is a geographically tight regional conference made up of small markets – go ahead, throw in Atlanta; one legit city doesn’t change the math, it just gives the SEC one big city.

    Know this post won’t matter, doubt it even gets published, but someone has to say it. KD is too smart to operate like this

    • Wow…..for someone who slams the writer for having a bias, yours shines right through. Sorry to burst your bubble, but I live up in Seattle, in the heart of PAC 12 country and even they recognize the SEC as the best football conference.

      Also, suggesting that someone can’t accurately report information in spite of actually having personal opinions indicates you read too much Chip Brown at Orangebloods.com.

      • incredulous reader

        Sorry, but I don’t have a horse in this race at all. Take the time to read my comments fully, please.

        Plainly state that SEC is top football conference today – and that conference dominance runs in cycles. The issue I have is w/ her not true reporting that college football is 2nd biggest sports ad sales market, and the non-sensical claim the SEC is the 2nd most valuable brand in sports. These 2 assertions (one hers, the other her boyfriend’s which she promoted repeatedly) are ridiculous.

        Also have no problem w/ real reporters having opinions and biases. That’s reality. But as the old saying goes: media are entitled to their own opinions not their own facts, and misrepresenting facts to fit one’s biased narrative is bogus, and that’s the case here. Just sayin’….

  3. Pac-10/12/16 is NOT going to let Texas operate the Longhorn Network as a member of the conference, period. It will not happen, period. Pac 10/12/16 has seen the divisiveness Texas has created in the Big 12. Schools are not interested in allowing this. If so it opens the door to USC or anyone else clammoring for a better deal.

    Frankly, there is an open question of whether adding 4 more teams can bring in any additional revenue or even keep par with the contract now If Texas is included, maybe; but if Okalhoma, Oklahoma, Texas Tech, and someone else, probably not.

    If Texas wants in they will be an equal. That’s hard to swallow for Texans though, being equal. Texas ego is all about being the big shot.

  4. John Ourand of the Sports Business Journal reported as follows:

    Ourand_SBJ John Ourand
    The second strongest ad sales market after the NFL is college football. FSN is virtually sold out for Big Ten, Pac-12. http://sbjsbd.biz/oKNiNH

    He’s a nationally recognized sports business journalist. Until I see a report refuting his statement that college football is the second strongest ad sales market, I’m inclined to believe him.

    • Incredulous - and now weary of the knucklehededness - Reader

      Last reply. Please do proper research, this is a bit embarrassing. How about Kantar and Nielson for reputable sources: http://www.adweek.com/news/advertising-branding/networks-turn-nfl-lockout-big-win-134272 Total college football ad spend last year (most recent full season): $827million, up approx 7% on prior year.

      The NCAA basketball tourney alone did $614m last year: a TheStreet article republished here: http://www.mainstreet.com/article/small-business/how-ncaa-tournament-host-cities-win

      NFL, Golf and NASCAR beat it domestically, soccer and F1 beat it internationally (Nielson and Kantar have those facts in spades; you can pull that research easily at their websites).

      Within the ad sales business, the term ‘strongest ad sales market” would mean the avail inventory at the avail pricing is selling through – it doesn’t speak at all to total size of market, total ad volume, total revenue, etc. This is basic stuff; scary we are even having to define it like this…So all representations that college football is second to the NFL are incorrect, misleading, etc.

      • Incredulous - and now weary of the knucklehededness - Reader

        comment awaiting moderation…..I get it, so this one won’t be posted, rt….

    • wow, seriously Kristi?

      You don’t understand the difference between being the 2nd hottest market for ad sales and saying the SEC is the 2nd strongest brand?

      Just to use an example, Coca-Cola may not want to spend half a million dollars for a national commercial during the NBA finals, but there may be a ton of competition in Alabama to pay 10 grand for a commercial during an Alabama game. That would make the Alabama game a “hotter” market, but not a more valuable commodity.

      Big, big difference between what that article says and what you seem to think it says….

  5. hey diddle diddle

    I’m just curious after reading your article and reading at least part of the contract. Why do you think that there were no provisions for quitting the LHN contract? It seems to have been redacted? I’m assuming there must be one with some kind of penalty? ESPN paid alot of money for a new studio with state of the art equipment just to walk away from it.

    It also seems like they paid alot of money for Olympic sports and apparently the spring football game if that’s all they get.

    what did the redacted parts contain.

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