The Pac12 Innovation

The Pac-12 deal is out and as I have been arguing for some time, it is a Silicon Valley driven split-rights deal. For those of you playing along at home, split-rights are when multiple media firms have interests in the same product. The NBA does this with TNT-EPSN and others, BigTen has multiple interested partners as well. The case for the Pac-12 is clear:

• Limited Footprint, this focused conference has considerably lower travel costs can really add up. The differences between contracts are just a few million dollars which gets burned pretty fast on a 25k an hour (or more) charter flight the difference between TUS to EUG and TUS to JFK can really add up. When you are spending in five figure increments, a million dollars can blow by pretty quickly.
• Prestige. This actually matters. Unless you are getting an invite to the BigTen, you should keep in mind that your brand is going to change by moving conferences. Apple will really care about your brand as you are their premier sports property. Just wait for Colorado to discover that they are the western outpost, get ready for 2100 EST kickoffs Boulder… UCLA/USC already know they will be the weekly host of BigTen AfterDark.
• New capital. ESPN is in real trouble, we will see what happens as they pivot to direct to customer in 2025. Disney is already considering spinning them off. Apple represents new money in this market, and money where you are not going heads up with NBA and NFL for dollars. ESPN is a mirage of safety, moving to new capital is the stronger play.

New capital is the most important argument. ESPN needs the PAC to fall apart as it gooses the value of their existing contracts. The worst case is that Apple wins here and then CBS, NBC, Amazon, and Netflix get in the game. Suddenly, their duopoly with Fox looks a lot less stable.