The college sport conferences in today’s television media industries.

The college sport conferences in today’s television media industries.

Many college sports conferences perform and act like large media conglomerates in today’s television sports broadcasting environment. There are a number of significant historical, economical and technological factors, which have dramatically shaped the current college sports conference industry in the United States. Indeed, a number of landmark legal challenges against the National Collegiate Athletic Association (NCAA) have altered the conference’s destiny. Economic pressures with shrinking revenues have increased conference competitiveness in the college sports market place. And the proliferation of technological advancements in media distribution has contributed considerably to the fate of many conferences.

The formalization of the athletic conference system was established in 1870s, when a group of eastern universities formed the American Intercollegiate Football Association.  Twenty years later the Western Conference, (Big 10) was established. According to Carl Abbot in his article “College Athletic Conferences and American Regions”, there was a sense of a cultural and regional identity, which needed to be addressed within colleges and universities (Abbot 1990).

The conference system helped establish a natural rivalry between competitive regions. Abbot describes this expression as a symbol of American cultural regionalism, which helped eliminate athletic isolation among colleges and universities (Abbot 1990). As the conferences matured, the college sports system went through a soul-searching period in 1903. President Theodore Roosevelt and many college presidents became concerned with the brutality, violence and winning at any cost mentality-surrounding intercollege sports programs. Roosevelt orchestrated a conference with 62 colleges to bring civility and sportsmanship to the playing field. This conference established proper sportsmanship rules and regulations, which became the impetus for the National Collegiate Athletic Association. (Hanford 1979). However, another foreshadowing event occurred in the mid-1920 when the Carnegie Corporation commissioned a study concerning the state of affairs in intercollegiate football. The author, Dr. Howard Savage, focused on nine general areas of apprehension about the direction college football was going, including the hiring of non-academic coaches, which he believed to have an undesirable affect on the student athletes (Hanford 79). Ten years later, Harvard University hired Dick Harlow, the first coach who did not graduate from Harvard University, signaling the end of amateur and alumni coaches (Hanford 79). These seemingly obtuse and trivial events in early conference history laid the foundations for commercialism by injecting professionalism and winning at any costs attitudes in the college sports industry, freeing the universities and freshly formed conferences to seek and expand their economic fortunes and financial boundaries.   

To aid the expansion of the already growing conference system in the 1960s, commercial jet travel was available, which allowed the conferences to explore and recruit universities and colleges beyond their natural boundaries (Abbot 2012). This technological advancement made movement between states and cities easier for teams to travel greater distances. But jet travel was another piece of the complicated puzzle, which led to the development, expansion and growth of the sports conference systems, which would blossom and grow to substantial economic proportions in the coming years.

 Moving forward to 1972, Congress passed the historical and landmark amendment, Title IX of the Higher Education Act, which was instrumental in altering the landscape of college sports (Thelin 2000). Title IX required women to receive equal treatment in higher education in all academic areas including sports. Indeed men and women needed to be treated equally on and off the playing field, which was clearly not demonstrated prior to this morally significant event according to some scholars, including George Hanford in his article “Controversies in College Sports”. Hanford identified this groundbreaking decision as a mechanism that would eventually lead to financial stress in terms of general funding for college and university programs (Hanford 79). John R. Thelin from the University of Kentucky also pointed out that some in higher education objected to the interpretation of Title IX and thought it would inject requirements that would strain women's sports programs, which were already stressed under current athletic programs (Thelin 2000). Actually revenues were falling at this time, for universities across the country, even without the addition of women’s sports programs, which Title IX required. But Title IX gave athletic directors and university presidents an alibi for their financial misfortunes. Their economic situation fueled the need for universities and conferences to be in control of their financial destiny and monetize college sports. To increase their revenues colleges and universities did not have to look to far.

Some nine years later the conference system went through another seismic shift with the NCAA vs. The University of Oklahoma Board of Regents Supreme Court decision. Many universities and conferences felt the NCAA’s monopolistic practices were unfair and economically stifling. In 1981, the universities of Oklahoma and Georgia sued the NCAA for violation of the Sherman Antitrust Act under a restraint of trade theory (Scully 1985). The NCAA controlled the exhibition and distribution of all college sports programming and they believed television broadcasts might decrease attendance at games. In addition the NCAA had limits on the number of games that could be broadcast, and restrictions on the amount of money received and number of times each school could appear (Scully 1985).

 The Supreme Court ruled in favor of the University of Oklahoma. This favorable decision stimulated conference hopping, which increased competition amongst the academic institutions in athletic events. Universities and colleges could now pick and choose what conferences they wanted to belong to. And for a short period of time, this caused a price drop in rights fees for all college-televised events. Eventually rights fees rose and television audiences did not erode attendance of college sporting events as the NCAA had predicted. A significant occurrence did happen; television revenues did turn college football and basketball into multibillion-dollar industries. According to Lawrence M. Kahn Professor, of Labor Economics and Collective Bargaining at Cornell University, the money, which is now behind college sports, is remarkable. In 2005, college men’s basketball and football broadcast revenues exceeded the broadcast revenue of professional basketball. And earlier in 1999, ticket sales of college football and basketball generated $757 million, which exceeded ticket sales of professional, basketball, football and hockey of that year (Kahn 2007).

 With so much money at stake, the conferences had to change their business models and their positions in the broadcast market. To grow efficiently and seek market dominance, the conferences had one choice. The only logical decision was to migrate to a media conglomerate business model. At the time of this unique upheaval, there were approximately 12 1-A athletic conferences with about 100 universities and colleges. Granted, this unlikely cabal of commissioners and athletic directors had little intention of becoming the next Walt Disney Company or Comcast Corporation. But as time passed their unique position in the market place became evident. They were poised to create, television, digital media and entertainment products for the college sports industry, just like ESPN or CBS Sports. At this point the conferences were aligned for an economic strategy which controls every stage of the media business including, production, distribution and exhibition. In other words the conference are perfectly poised for vertical integration.   

For example the Pac-12, the Big 10, Notre Dame and the Longhorn networks have created their own media empires by controlling the presentation, distribution and           exhibition of their athletic events. These conferences have their own contracts and terms with a variety of providers. In addition they have also created a quasi-vertically integrated businesses model, which has lead to some contractual agreements, which have been very financially beneficial to these academic institutions.

The Pac-12 network, which represents universities in the western part of the United States, created a media network recently to distribute college basketball, football, baseball and other university athletic programs, through a multitude of providers. The Pac-12 network is replacing the traditional contractual business model of broadcast and cable television. And is also using the Internet as a delivery system with its own network brand and services. The Pac-12 media package is worth an outstanding amount of money, an estimated $3.1 billion, distributed amongst all the Pac-12 schools. Money aside, this conference plans to present a staggering amount of programming. With its launch, the Pac-12 was presenting 35 football games, 120 men’s basketball games as well as hundreds of hours on non-marquee sports.

The Pac-12 is a perfect example of a vertically integrated conglomerate, the formulation and foundation of which was established by using a spirited approach to business. It then hired Larry Scott as their commissioner; his mandate was to build a successful enterprise, based on increasing revenues and exposure. Scott and Pac-12’s new president Gary Stevenson was quoted as saying in a recent article in USA TODAY “we don’t think just about a television network or a digital network, but rather, we’re creating a content company” (Martin 2012). Clearly the administrators of the Pac-12 are trying to control every aspect of their burgeoning media business, with their sights on production, distribution and exhibition of their network product. They also hired Bill Cella from the ABC Television Network as chief revenue officer. He has a history of packaging advertising opportunities beyond traditional tactics like commercials into areas like sponsorships, events and integrating brands into programming (Elliot 2012). Cella also recognizes the schools he represents have a great brand, but more importantly, if we read between the lines, Cella is promoting the conference as a brand.

 You can observe the branding during any Pac-12 game. Between the Ford F150 truck commercials and the Anheuser-Bush beer ads, the airwaves are inundated with Pac-12 promos promoting images of campus life and sporting events in the west. In addition the athletic field is lathered with their and insignias. You definitely know you are watching a Pac-12 game, but you may not know what teams are playing.

The Pac-12 also has no partners in its ownership. All the decision making, expenses and start up costs are on its shoulders. But all the revenue will go to the Pac-12 and its university partners, roughly providing up to $30 million annually, which is an increase of 60% for some Pac-12 schools. It represents the new model for production, distribution and exhibition of college sporting events. With their new multi-million dollar 70,000 square foot television facility in San Francisco and internal digital network, the Pac-12 controls every televisual aspect of the 12 universities they represent. It’s an enterprise, which oversees creative content and intellectual property. It decimates news and information with the accuracy of a White House press conference, and guards its commodity like it was a state secret. But this scenario of market domination and vertical integration does not end on a positive note at this time for many of their viewers and customers.

Indeed, the college sports audiences were disgruntled at Pac-12’s inability to negotiate with DIRECTV. This was the point of no return for many of the subscribers. Thousands of customers of DIRECTV were not able to watch their favorite west coast university teams, because of a contractual disagreement with the Pac-12. A number of customers, once loyal to DIRECTV, canceled their annual contracts. And according to Andy Staples of Sports Illustrated, the fans have a fierce loyalty. Disgruntled viewers don’t call in when they can’t see Mad Men or Breaking Bad, but if a viewer thinks he may miss his favorite college football team, he will threaten to cancel his cable service for a provider who can deliver his desired collegiate game (Staples 2012). Clearly the Pac-12 is showing a stronger position by holding firm to their price offer to DIRECTV, and by refusing to negotiate a lower rate with DIRECTV. The Pac-12 executives are demonstrating their market dominance by controlling the costs of distribution. As the representative of 12 major universities, the Pac-12’s vertical integration position allows them to control the momentum of contract negations, even at the risk of losing customers. Eventually, DIRECTV will accept their offer, due to customer demand and the availably of conference’s products on alternative media outlets. Jim Carlisle echoes this statement in his Ventura County Star article, “The Pac-12 wanted to take better control of its TV revenue and increase exposure by moving a significant number of events to its in-house networks”(Carlisle 2012).   

The Pac-12, the Big 10 and the ACC are conferences that resemble media conglomerates. They control the production, distribution and exhibition of college sports presentations. Indeed, these organizations dominate all sectors of college sports television. This type of media control can be seen as limiting, repressive and stifling (Jenkins 2004). These super conferences act as a single entity controlling a vast number of university sports programs, which are subordinate in many ways to the conference. The conference maximizes profits through a number of commercial enterprises including television revenues, clothing, carriage fees, concessions, advertising opportunities and ecommerce. They are in business to market and distribute a commodity that can be sold, rented, streamed, traded, branded and blogged (Jenkins 2004). As history has shown the conferences are adept at change and have no fear of legal or political challenges. They are predatory in many ways. Looking for economic and leveraged opportunities, which will in turn increase their market share and capital value. Conferences dominate the college sports market place, acquiring the weak and crushing the strong.

The University of Maryland, according to today’s headlines, would be considered weak, vulnerable and a perfect example for a conference take over. Once very well funded and having a number of successful seasons from revenue-producing football in the ACC conference it now faces desperate economic times. In an alarming article from The Washington Post, Steve Yanda identifies the University of Maryland as an institution, which cannot keep up with its athletic department expenses (Yanda 2011). The president of the University of Maryland, Wallace D. Loh, echoes this devastating news, “seven sports programs had to be eliminated due to financial hardships” (Thamel 2012). But unlike other economically challenged educational institutions, the University of Maryland currently has a safety net, the Big 10 Conference. After 59 years the Maryland Terrapins are leaving the ACC (Atlantic Coast Conferences) for the Big 10, the oldest college athletic conference in Division 1-A. The Big 10 is the multi-million dollar life preserver for Maryland.  The Terrapins will share television and media revenues of  $200 million annually. This move is a financially sound decision for the University of Maryland even though the Terrapins must pay the ACC $50 million in exit fees (Thamel 2012).

Without media and television revenues from the Big Ten conference, the University of Maryland’s college sports programs would scarcely exist, no coliseum-size stadiums, plush locker rooms and state of the art workout facilities. Monies for all these activities are the results of high dollar contract negations with ESPN, DIRECTV, Fox Sports and the broadcast networks. According to Jeff Eisenberg from Yahoo Sports, “from a financial perspective, Maryland's potential move to the Big Ten probably makes short-term sense” (Eisenberg 2012). In the short term the University of Maryland will benefit financially from this conference’s move. The fans reactions are another component in this complex equation. “The Terps will no longer regularly play their favorite basketball rival, Duke, a matchup that once inspired students to riot on Route 1” (Johnson and Parker 2012).

In general the conferences such as the Pac-12 and the Big Ten can be seen as exploiting a number target audiences and appearing to represent a reconfiguration of media power. The conferences, which are expanding into cable and broadband markets, appear to demonstrate a corporate-driven top-down process without much concern for some consumers (Jenkins 2004). They seem to be taking advantage of the fan base by determining when a conference football or basketball game can be played and televised. Greg Hanson, the long time sportswriter for the Arizona Daily Star, feels “the charm of college football, the autumn afternoon experience, has been sold to the Pac-12” (Hanson 2012). This media conglomerate has only one thing in mind, television revenues. With practically no regard to fan-based loyalty or long time season ticket holders. It’s a familiar scenario and territory of the media conglomerate. Schedule a conference game for maximum television exposure and profit, and disregard the tried-and-true stadium audience. The conferences also understand they are focusing their marketing and branding on a niche target television audience of college sports subscribers and enthusiasts. These fans and supporters will pay almost any price for college sports programming and entertainment.

For example according to Cox cable, to watch Division 1-A college sports in Arizona, you will need to spend at least $70 a month to watch the Pac-12 conference, which is two tiers above the normal cost for Cox’s cable of about $30 extra a month for premium service. So in some instances the conferences are presenting sporting events are “pay per view;” a so-called special event. Through media convergence of sports programming and technological advancements, over the air broadcast delivery was not an acceptable form of monetization for most college sports conferences. The conference conglomerate prefers to brand, market and distribute its products in the most profitable way. Web, cable, DBS and ancillary media avenues have been the choice of most profit oriented conferences systems. Mercifully, a number of years ago television audiences were not required to pay additional sums of money to watch a televised college-sporting event. Granted, the Saturday afternoon college football game was presented on television when broadcasting was the dominant media delivery system and monetizing was in the form of advertising and broadcast revenues.

Historically sports conferences coexisted in a cohesive unit that was bound by geographical borders. Currently they’re 12 division 1-A conferences, which seem to act like media conglomerates by acquiring university sports programs across geographical boundaries. The conferences use predatory tactics to keep competitors at a safe distance and attract college sports programs, which are in need of financial assistance. Conferences also share assets and liabilities with its university partners to minimize exposure and maximize profits. In addition the conferences inspire consumerism by forcing customers to pay for additional cable fees and services for college sports programming. The conferences also use their social resources and media outlets, which applies a synergistic approach to promoting their media goods and services. Unfortunately, the conference system as we know it today might be jeopardy. The current trend for the conferences is to acquire as many university sports programs as quickly as possible. This has occurred with the Pac-12, the Big 10 and the Big 12. Regrettably this development will result in a super conference system, with just a handful of division 1-A conferences, further eroding the regional flavor and individual presence of college sport presentations in the television industry.

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