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Apr 30, 2010 8:44:25 AM

The NCAA News

 

The NCAA recently announced a 14-year, $10.8 billion television, Internet and wireless rights agreement with CBS Sports and Turner Broadcasting to present the Division I Men's Basketball Championship.

The agreement will begin in 2011 and continue through 2024 for more than $10.8 billion.

NCAA Interim President Jim Isch addressed questions of particular interest to the membership in an interview with The NCAA News.

NCAA News: What is the status of the corporate-partner contracts since the new deal concerns only Division I men's basketball?

Jim Isch: The new agreement incorporates the comprehensive marketing programming across all 88 championships, as has been the case under the current/outgoing contract. The Division I men's basketball element relates only to the broadcast and Internet coverage. Once fully in place, the going-forward program will be enhanced to cover broad activation across all NCAA championships.

NCAA News: Does the NCAA continue to adhere to its philosophy about limited signage in championship venues under the new agreement? Are title sponsorships for championships a possibility?

Jim Isch: No changes are planned in this regard. Title sponsorship of NCAA championships is not permitted in the agreement.

NCAA News: The 14-year agreement provides security, but high inflation could devalue the contract. How will that be addressed?

Jim Isch: If we have inflation, it certainly will devalue the contract – there's no doubt about that. But that would have happened with 8 percent increases, too. That's a risk you take with any long-term contract. The benefit is that it also provides long-term security, especially in a climate in which technology is ever-changing.

NCAA News: The NCAA seems to lock up longer contracts than other sports entities (the last two, for example, have been 11- and 14-year deals). Is there something unique about the NCAA that makes such an arrangement desirable?

Jim Isch: Because the NCAA provides educational and competition benefits for more than 400,000 student-athletes, stability is important for the organization. The rights agreement is our primary source of revenue, so when we have an opportunity to extend this to 14 years, the membership should feel good about it.

NCAA News: Are there risks in negotiating this far out when the technology to deliver these events is ever-changing?

Jim Isch: No one has a crystal ball on technology – in fact experts caution about predicting any environment beyond 12 or 18 months. All companies bidding for this agreement wanted to protect themselves as much as possible – they were saying that March Madness On Demand was going to continue to be part of their plan. Well, will it, really? May we eventually all have Internet TV and download the games to a computer instead of viewing the games as most of us do today? This is just one of the nuances to contemplate in this area. The championship has proven itself to be the ideal multi-platform property because of its unique schedule and structure. We're convinced that the involvement of Turner and CBS will result in a variety of other forward-thinking technology  advancements over the course of this agreement....

Our broadcasters have committed to making live telecasts available, regardless of the delivery platform used. It could be Internet, it could be cable – the live games will be distributed in a manner that evolves with the way viewers want to access the games. For instance, when CBS offered March Madness on Demand without a fee, some thought it would cannibalize television ratings, but instead its theory was proven correct that MMOD captured an audience in addition to the television audience.

Another benefit, though, with this contract, is that Turner and CBS are among the best in cutting-edge technology. Turner has been able to employ some outstanding features in its NBA, NASCAR and PGA productions. So we get the stability and quality of production with CBS combined with Turner's leadership position on the technology side.

NCAA News: Is there an opt-out in the new agreement similar to the one the NCAA just executed?

Jim Isch: There is not an opt-out arrangement in this contract. It is a firm 14-year commitment.

NCAA News: What is the status of the television contracts for the NCAA's other championships?

Jim Isch: We have an existing television contract for the NCAA's other championships with ESPN that runs through 2012-13. As we have been studying the various configurations for prospective future media rights, we have amassed a significant amount of strategic perspective on these assets and will be pursuing similar long-term agreements for many of these assets before the end of the ESPN agreement.

Further, we will be working with Turner Broadcasting to develop a dedicated, robust digital platform to be a "playground" of sorts to showcase various NCAA championships and programming, as well. Plans for this work are just beginning and will be laid out in the coming months.

NCAA News: What are the expectations for the postseason NIT now?

Jim Isch: We are proceeding with the NIT as we have since assuming its operation in 2005. The event has continued to grow in ratings and attendance, and we are committed to continuing that trend.

NCAA News: What are the annual payouts of the new deal? How do we deal with the adjusted figures for the next three years (since those were the back-loaded years of the previous agreement)?

Jim Isch: While the annual payouts won't be finalized until later (after the new distribution and finance committee has had a chance to meet), I can say that we're going to be able to hold the first year very close to what had been planned. Years two and three, where we would have had 8 percent increases, we'll now have between 2 and 3 percent increases. The good news is that those increases will extend through the life of the contract anywhere from 2.5 to 3 percent. Even in years two and three and beyond, the payment will still be no worse than what we experienced in 2010. In other words, there's never a regression.

NCAA News: The 1999 agreement was heralded in part for its being a "bundled" rights agreement. Now we've untied the knot. What changed in the last decade to make "un-bundling" the more prudent course?

Jim Isch: We have radio, international and licensing rights that can be monetized separately more than we can with a bundle. The fact is that we're going to be able to pursue ways to maximize the return on these elements in addition to the $10.8  billion to try to diversify our revenue streams.

NCAA News: How will the Division I Men's Basketball Selection Show be affected?

Jim Isch: No changes are planned, except it is possible that there will be increased coverage from Turner.

NCAA News: Is there anything in this agreement that would affect the legislated allocations for Divisions II and III?

Jim Isch: No.

NCAA News: Does this new agreement extend the Student-Athlete Opportunity Fund?

Jim Isch: We're committed to maintaining this fund and are exploring ways to allocate more dollars to directly supporting student-athletes.

NCAA News: Regarding the 68-team field, some writers are saying we either manipulated the system by overplaying the likelihood of a 96-team option or we relented once it appeared to be unpopular. How much did media reaction factor into the decision (if it did at all)?

Jim Isch: It didn't. From day one, we stated that we were "doing due diligence regarding the current men's tournament structure and considering the options of 68 and 96, and ultimately may choose to do nothing further at this time" – nothing else. In fact, until April 1, the Association said nothing publicly otherwise. Anything beyond that straightforward statement was not made by any member of the negotiating team.

Our strategy all along was to initiate a request for proposals to current and potential broadcast partners that included expansions of 68, 80 and 96, and all the responses came back initially wanting 96 and no other options. So as we went through the process, we had to explain the various expansion models. Obviously 96 required the most explanation because few were familiar with that model. And in the process of negotiations, the media companies themselves came to the position where they saw value for either a 68-team or 96-team format, and that's what they presented in their final bid.

The reason that CBS and Turner found the 68-team model valuable is in part because they had two partners and four times as many platforms (four channels instead of one) to deliver programming. That increases the number of broadcast windows. Also, under the new arrangement, an advertiser can essentially lock up the whole country all the way through the tournament.

The piece that has consistently been mischaracterized is that the volume of conversation about a 96-team format meant that was what we were committed to. On the contrary, if you say nothing about it, everyone is left to their own devices to decide what it means. So we had to be in a process of going overboard on explaining the 96. Otherwise, how does anyone make a decision about it? 68 is pretty easy. 65 is really easy. But 96 took a lot of explanation because of the sheer complexity. But in doing so, the media incorrectly assumed that the NCAA had made up its mind.

NCAA News: Can you amplify on how the new agreement will affect NCAA.com and other NCAA digital communication?

Jim Isch: These platforms are being finalized in the near future. Both will be significantly improved in partnership with Turner, which has had major success with the PGA, NBA and NASCAR, among others. 

NCAA News: What are you proudest of in this contract?

Jim Isch: The fact that throughout the negotiations we were always focused on what was in the best interests for the total membership and for the student-athlete. We did not look at a segment of membership – or the national office – and say what was in the best interests of that particular group. It was always the Association as a whole and the student-athletes.