1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Big 12 Buyout: $15 million+

Discussion in 'Colorado Football Message Board' started by ScottyBuff, Feb 15, 2010.

  1. ScottyBuff

    ScottyBuff Well-Known Member

    Joined:
    Mar 28, 2008
    Messages:
    2,619
    Likes Received:
    91
    Yep that is the estimated buyout for CU to withdraw from the Big 12 Conference.

    I recently e-mailed the sportswriters at the Denver Post about their articles information about the 2-year notice required by CU to withdraw, as it was contrary to what the published Big 12 bylaws state.

    To make a long story short, the articles were all wrong, as one of the writers confirmed to me via e-mail after checking with their Big 12 sources.

    In order to withdraw from the Big 12 we would need to give notice by July 1, 2010 with an 80% penalty of the conference revenues we earned during 2009-10 (not yet published) and 80% of the conference revenues we will earn in the 2010-11 season. The best estimates I can come up with is that we should receive a distribution of about $9-10 million from last season from the conference, and thus a $7-$8 million penalty. I would expect a similar number for the upcoming season.

    If we wait until January 1, 2011 then we would have to forfeit 90% of those revenues, and if we wait until July 1, 2011 then it would be 100%. If we do not give notice by then, we roll forward into a new 5-year additional term, and would have to wait until two years prior to that term's ending to give proper notice and a face a 50% penalty for those remaining 2 years (notice given by July 1, 2014).

    So those are the cold-hard facts about leaving the Big 12. That is money that would need to be reserved and paid prior to moving to the Pac-10, if such an offer existed.

    Can we fork over that kind of cash when the politicians squashed a $3 million buyout of our coach? Or do you think there has been a plan in place to make this move for quite a while, and the money is there (as Chris Fowler would say)?

    It really is chump change. Each of the 44,341 known CU alumni in Pac-10 states would just have to contribute at least $338.29 a piece! :smile2:

    I'm still in favor of going to the Pac-10, but the reality is pretty sobering.

    And yes, the penalty would still be in effect if another team left the conference during the same time frame.
     
    absinthe likes this.
  2. Darian3Hagan

    Darian3Hagan '89 Player of the Year Club Member

    Joined:
    Dec 15, 2007
    Messages:
    11,930
    Likes Received:
    1,380
    I am skeptical. CU received $8 in 2007-2008 and I just dont see how we are pulling in more than that. I am guessing the number is closer to 10-12 mil. Either way it will seem like chump change down the road.
     
  3. CUBFLOS

    CUBFLOS New Member

    Joined:
    Feb 6, 2010
    Messages:
    2
    Likes Received:
    0
    The cold hard facts as you say are that $$$ talks and a new deal negotiated with TV networks and the Pac-10 will more than make up for the short term losses. Ultimately there is no deadline. Whenever CU leaves there will be a penalty, that penalty will be roughly the same whether they give 2 years or 6 months notice. There will also be negotiations, and CU leaving will, in all likelyhood, be part of a larger exodus from the Big XII.

    Basically, by the time it gets down to brass tacks, the Big XII bylaws ain't gonna be worth, or mean ****.

    This issue is waaaaaayy overblown.
     
  4. ScottyBuff

    ScottyBuff Well-Known Member

    Joined:
    Mar 28, 2008
    Messages:
    2,619
    Likes Received:
    91
    In 2007-08 the Big 12 distributed a total of $113.5 million and in 2008-09 it was $130.1.

    While CU also played a good portion of nationally televised games last season to help our sharing in the "Appearance Fee Pool" go up.

    Just an estimate of course, but the TV contracts are on a graduated escalating scale, so each year should be more than the last one. However, the Big 12 only placed 1 team into the BCS in 2009-10 as opposed to 2 in both the previous years.
     
    Last edited: Feb 16, 2010
  5. Darian3Hagan

    Darian3Hagan '89 Player of the Year Club Member

    Joined:
    Dec 15, 2007
    Messages:
    11,930
    Likes Received:
    1,380
    TV payout are on a graduating scale? Curious to where you found that tidbit.
     
  6. ScottyBuff

    ScottyBuff Well-Known Member

    Joined:
    Mar 28, 2008
    Messages:
    2,619
    Likes Received:
    91
    The penalty would escalate to a full estimated $20 million+ if we gave less than 6 months notice, and it doesn't matter what the other teams do, if they leave the Big 12 the penalty still applies. Whoever is left in the Big 12 would collect all the penalties. It might just be Iowa State and Kansas State, but they would get a big payday for 2 years!

    We can't even spend $3 million to buyout our coach, despite the fact we wanted to fire him, but now you think an extra $5 million+ is no big deal?
     
  7. Darian3Hagan

    Darian3Hagan '89 Player of the Year Club Member

    Joined:
    Dec 15, 2007
    Messages:
    11,930
    Likes Received:
    1,380
    The difference is the politicians can spin this buyout.
     
  8. Sexton Hardcastle

    Sexton Hardcastle Club Member Club Member

    Joined:
    Jul 11, 2005
    Messages:
    17,472
    Likes Received:
    367
    Good Lord. I'd take a permanent indoor facility for both football and basketball rather than giving it back to the B12 just to bail.
     
  9. Liver

    Liver modded mod Club Member Junta Member

    Joined:
    Jul 8, 2005
    Messages:
    22,853
    Likes Received:
    2,675
    CU may not have to front the money itself. if it is done in conjunction with a new tv deal for the new p12, the money may come from the network.
     
  10. ScottyBuff

    ScottyBuff Well-Known Member

    Joined:
    Mar 28, 2008
    Messages:
    2,619
    Likes Received:
    91
    I understand what you are saying, but I think the timing is such that the payout has to be done first. As the "new" TV contract wouldn't start paying out until the 2012-13 season. Everything would need to be negotiated prior to then, but the payments wouldn't start until then.

    If our season ticket sales and donations go the way they are going, I don't see how any of this can get done.

    If CU could receive and accept a formal Pac-10 invite before July 1, make the notice to the Big 12 to avoid further penalty, and then kick-start a fund-raising campaign this season then the "juice" for the program might come back. If nothing is done then which ever way it goes we will be setting ourselves back pretty severely financially.
     
    Last edited: Feb 15, 2010
  11. Liver

    Liver modded mod Club Member Junta Member

    Joined:
    Jul 8, 2005
    Messages:
    22,853
    Likes Received:
    2,675

    the p10 could cut a deal w/ a network, on a high level... that would include assurances of financial contribution toward acquiring the 2 new markets. this could occur before the current deal ends. also, the p10 members could agree to take a smaller cut each for a year or 2 to defray the expense of adding the teams. there are a million ways to skin this cat. and, in such a case, it is then just a timing issue, not a cash issue--- CU gets a bridge loan, basically, from the foundation or the school or whatever to cover the time until the payments from the new p12 kick in.

    if i had to guess, it will be a combination of sources of funding.

    the buyout only matters if we end up jumping for purely non-financial reasons and i don't see that happening. CU will be looking for a soft landing, money-wise.

    it is all very do-able.
     
  12. ScottyBuff

    ScottyBuff Well-Known Member

    Joined:
    Mar 28, 2008
    Messages:
    2,619
    Likes Received:
    91
    I'll be in your boat, as that accomplishes what I would want for CU: to join the Pac-10.

    The more expensive change is, the less likely the Pac-10 feasibility study will point to our favor. With declining attendance, donations, and fairly low TV ratings we don't look as good as we should. Hopefully they can see the potential is there.

    For the Pac-10 going to 12 teams adds a Conference championship game ($5 million for the ACC, $12 million for Big 12, and $15 million+ for the SEC) and a greater chance of having two teams selected to BCS bowls ($4.5 million); so the benefits are there in addition to the increased TV package to help offset the travel costs and Big 12 buyout.

    A new Pac-10/12 TV package depends upon if they contract with an existing carrier (ABC/ESPN, Fox, etc) or form their own network or both. If they follow the BigTen model they would have a primary rights deal that would be lucrative but the conference network would take several years to develop revenues.

    I think the recession will force the university presidents of the Pac-10 to be much more open to change and increased revenue streams than they ever have in the past.

    Scott/Weiberg really hold the keys to our Pac-10 future, if they can create enough value by including CU in their negotiations or not.
     
  13. Junction

    Junction Moderator Club Member

    Joined:
    Jul 8, 2005
    Messages:
    47,534
    Likes Received:
    1,000,005
    If that's true, I'll get the buyout myself. I need to cut out a fast food meal for a week or two anyway... :smile2:

    :yeahthat: The whole reason the Pac-10 is starting this whole deal is because they stand to make a ****load of TV money with a 12 team conference. But to make it happen they are going to have to add a couple significant programs, and that is going to cost them some money. You have to know that has all been taken into account before the Pac-10 ever floated this idea. And since there is a former Big XII conference administrator in the Pac-10 offices, this whole buyout issue is not anything they haven't considered...
     
  14. ScottyBuff

    ScottyBuff Well-Known Member

    Joined:
    Mar 28, 2008
    Messages:
    2,619
    Likes Received:
    91
    It isn't something I've seen directly linked to the Big 12, just in general with the conference deals, but I'll try to dig up the info on that.
     
  15. buffs04

    buffs04 Well-Known Member

    Joined:
    Oct 5, 2008
    Messages:
    2,484
    Likes Received:
    223
    Sounds like this is never going to happen.

    What makes anyone think CU is the sort of school to make a big move like this when we didn't have the balls to dismiss the coach who has made us a national laughingstock? We are talking about a LOT more money here.

    If $3 million to get rid of Hawkins is out of the question there is no way we are going to fork over 8 figures just to leave the B12. I can't believe some of you think that it is an even remote possibility. CU is plainly and clearly not about making big moves - or any moves, for that matter - in the football program.
     
    Last edited: Feb 16, 2010
  16. PhillyBuff

    PhillyBuff Club Member Club Member

    Joined:
    Jul 8, 2005
    Messages:
    6,987
    Likes Received:
    293
    Why would you say that? I think it HAS to happen and my hope is that CU can position itself to be in the PAC-10 instead of a mix Mountain West/ WAC.

    I think the BCS format is actually forcing this to happen. By not having a true playoff, there is now a natural progression to get as close as possible to a "playoff" because there is so much money to be made in a college football playoff system. So a realignment of conferences and having conference championship games is really creating this "playoff."

    It is interesting to see that the Big 12 is really the conference that will get split. It has been top 3 in football performance but it has the worst TV markets collectively. Who knew that because we are located so close to Denver that we would be the second most attractive team to join a conference.
     
  17. 96 Buff

    96 Buff Resident Commie Bastard Club Member Junta Member

    Joined:
    Jul 8, 2005
    Messages:
    13,153
    Likes Received:
    1,166
    @buffs04, as was stated earlier in this thread, a conference move could be far more easily spun by the politicos, whereas ****canning the coach is not. The retention of Hawkins was NOT a financial move: it was 100% political.
     
  18. Buffarino

    Buffarino Math - how does it work? Club Member

    Joined:
    Jul 8, 2005
    Messages:
    24,553
    Likes Received:
    783
    I'm with Liver on this. CU won't do it unless it makes sense financially. Therefore the buyout can not only be negotiated, but payment can be worked out as well because it's all part of a package.

    Any word on when a formal invitation might be expected?
     
  19. tante

    tante Club Member Club Member

    Joined:
    Jul 21, 2009
    Messages:
    25,787
    Likes Received:
    1,359
    I'm sure the PAC:10 could easily say that CU gets paid back 50% of the amount they lost each year for two years BEFORE a revenue split with all the teams in the conference.
     
  20. Razorbuff

    Razorbuff Member

    Joined:
    Nov 3, 2009
    Messages:
    406
    Likes Received:
    11
    Yeah it is a financial hit in the short term, but with the current Big 12 revenue system, CU would suffer far more then losing $15 million over 2 years if they stay in conference. Better to take the financial hit now if it will benefit the program in the long run.
     
  21. BlackNGold

    BlackNGold Club Member Club Member

    Joined:
    Jul 8, 2005
    Messages:
    4,489
    Likes Received:
    605
    Everyone acts as if the PAC 10 Television deal is already done. Here are few sobering items to consider. The PAC 10 has not yet negotiated their TV contract and they are not in a position of power from a negotiating standpoint - that is why they are looking at expanding before they negotiate...unfortunately for a team like CU you are asking them to commit to a change before they know the financial reward - this is called buying a "pig in the poke". Right now the PAC 10 has about the same number of TVs as the Big 12. Right now Big 12 TVs are more valuable than PAC 10 TVs - why you may ask. Because the average demographic in Big 12 country is much more passionate about their sports than their counterparts in the PAC 10 so they are going to get better ratings. Time zone also works against the PAC 10. I think there are more obstacles to overcome.

    The best idea I heard so far was for the PAC 10 and the Big 12 to form a joint network - that is the only way that CU will approximate the revenue of the Big 10.
     
  22. buffaholic

    buffaholic Club Member Club Member

    Joined:
    Oct 5, 2008
    Messages:
    10,150
    Likes Received:
    1,609
    This isn't that complicated. The PAC12 or PAC14 will lay down a number on the table that says here's your allocation for the next N years - do you want in?

    CU will look at their expected NET revenue from their Big12 contract, with penalties incurred, over that same N years.

    Then they will look at what the long term TV revenue picture looks like for both conferences. And they will have a clear financial option imo.

    Based on what the SEC and B10 have done, compared to the B12 and the fact that the population bases for Kansas, Oklahoma, Iowa and Nebraska are what they are and will only shrink going forward, while the states of AZ, UT, CO continue to grow..... The expected TV revenue from here to Infinity is not going to be close imo. As such, the state can certainly bankroll the short term losses for future contract guarrantees.

    PAC10 if they will have us. Period. No questions need be asked about philosophical and academic alignment, blah, blah, blah.

    The Big12 is the state of Texas, plus St. Louis, Kansas City and Denver markets. The Univ of Texas dominates that number in Texas, with the Aggies roughly having a poplulation following similar to the other markets listed for TV viewing. But the aggregate pales in comparison to:

    SoCal, NorCal, Portland, Seattle, Salt Lake, Phoenix, Tucson, and Denver..... That constitutes a powerhouse for TV.

    My only question is whether Univ of Texas will panic and try to join the B10 or PAC10 first, making this complicated.
     
  23. SINKRATZ

    SINKRATZ Club Member Club Member

    Joined:
    Jun 27, 2008
    Messages:
    5,175
    Likes Received:
    1,159
    The TV deal and the realignment are dependent on eachother, but that doesn't mean it can't be done. CU could commit to moving and assisting with negotiations on a new deal provided there was an out clause for them if a deal can't get done. This isn't rocket surgery.

    And there is more than one way to skin the cat when it comes to the Buyout penalty. The conference needs to expand in order to have a CCG, and if it does there will be some big company that will want to sponsor that game - let's put these pieces together. CU agrees to move which helps create the Verizon Pac 10 Championship Game. I think a title game sponsor might just benefit from this move and should be expected to participate in tying up loose ends to make it happen.
     
  24. Liver

    Liver modded mod Club Member Junta Member

    Joined:
    Jul 8, 2005
    Messages:
    22,853
    Likes Received:
    2,675
    this an excellent post.
     
  25. Lt.Col.FrankSlade

    Lt.Col.FrankSlade Well-Known Member

    Joined:
    Jul 11, 2005
    Messages:
    12,553
    Likes Received:
    207
    And where is all this money from the Pac-10 supposed to come from?

    I have never seen anything to indicate that the Pac-10 is somehow making a fortune off television contracts. If someone is aware of a link showing a comparison of the television contracts for the various conferences, I would certainly like to see it. I was able to find an article indicating that the Big 12 television contract with ABC/ESPN, which was extended in 2007 - runs through 2016, and is worth about $60 million per year. The Big 12's television contract with FSN runs through 2012, and was worth $78 million when it was signed.

    Also-- while the TV contracts in the Big 10 and the SEC are split evenly amongst all of the conference schools, the Big 12 television package is based on the number of appearances a team has on television. (You can bet Colorado was leading this charge, given their OOC schedule) i.e. a team which is on television more often gets more $$$ from the Big 12 television package.
     
  26. Liver

    Liver modded mod Club Member Junta Member

    Joined:
    Jul 8, 2005
    Messages:
    22,853
    Likes Received:
    2,675
    you are asking some of the right questions to ask... basically, in terms of tv contract value, it goes sec, b10, b12, and then p10, with the p10 at (and i am doing this from memory, so forgive me if i have it slightly wrong) maybe 80% of b12 levels.

    if everything were to remain exactly as it was when the last b12 contract was negotiated, then it is a no-brainer for CU to stay rather than jump to the p10 (if $ is the only consideration).

    but, things aren't exactly like the last time the contract came up and the world is not static.

    for one thing, if the p10 goes to 12 teams (any 12 teams), they'll add a ccg, which will closes a lot of the b12 v. p10 gap. second, if you look at media markets (and this whole thing is about media markets), a p12 (with utah and CU) is a far more attractive television footprint than what will be left of the b12 (without CU and perhaps mizzery and/or texass).

    the thinking is that the p12's next contract will look much more like the b10's and less like a weaker version of the b12's. plus, they want their own network (again, like the b10). this will be a good revenue generator over a long period of time.

    there are a couple of tv issues that *could* bring down the value some--- one is the timezone issue... and this might impact CU directly. CU might be forced to play a lot of late games to target the p12 audience. the other is that the b12 is perceived by many as a much tougher conference than the p10 (but, on this point, i'd suggest you look at bowl records and ooc records against non-patsy opponents-- compare the b12 and p10 and then get back to me on the "tougher" argument).

    it is not a matter of what is better right this minute. it is a matter of what gives us the best prospect for success for a long time going-forward.
     
  27. BlackNGold

    BlackNGold Club Member Club Member

    Joined:
    Jul 8, 2005
    Messages:
    4,489
    Likes Received:
    605
    How will the PAC 10 be able to tell CU how much their share would be before a TV contract is negotiated?

    The State is not going to bankroll any losses of revenues - you can bank on that.

    The University of Texas will not panic - they will cut the best deal for themselves - they have tonnes of negotiating power.
     
  28. buffaholic

    buffaholic Club Member Club Member

    Joined:
    Oct 5, 2008
    Messages:
    10,150
    Likes Received:
    1,609
    The PAC-10 (or PAC-14) will have a new contract before this is done - contingent on the addition of certain teams and a CCG.
    The State (or other outside entities) will bankroll a loss of revenue if there's a contract for higher revenue. The "fee" won't hold this back.
    Panic was probably a poor choice of words. Texas will leave if they have more cash elsewhere. Period. They are a wildcard in this.

    I don't see the numbers adding up for the B12 to entice a huge TV contract going forward. There's no one they can add to fix that either. I see the B12 as very vulnerable right now to B10 and PAC10 expansion plans.
     
  29. SINKRATZ

    SINKRATZ Club Member Club Member

    Joined:
    Jun 27, 2008
    Messages:
    5,175
    Likes Received:
    1,159
    If this happens, one big question IMO will be how the new conference divides up revenue. A Pac 12 network would be a great revenue generator in part because the Pac 10 is very deep in non-football sports which would carry the network in the off-season. Would UCLA or Stanford be willing to give an equal share of revenue to CU if they only maintain the minimum number of sports? Me thinks no.
     
  30. Hank

    Hank Well-Known Member

    Joined:
    Dec 15, 2005
    Messages:
    6,511
    Likes Received:
    152
    All good points. The decision to stay or leave should be treated as any other investment. The Big 12 looks like the weak link in terms of television sets. The possibility of the conference falling apart is very real. The last thing they want is to be stuck in a conference without the Missouri and Texas markets. I think its time to dump their investment in the Big 12 and invest elsewhere. If they wait, and a major market disbands from the Big 12, there may be nowhere to go. The Big 8 would not be a major player under current economic models. Their analysis has to include the real possibility of Big 12 revenues tanking.

    Another thing to consider: The presence of a buyout/liquidated damages provision in the bylaws is one thing. The enforceability of such a provision is another. Although the circumstances were different, the Big East sought $5M from BC and the court decided they were only entitled to $1M.
     

Share This Page