Note: This post is the work of our friend Spadilly and full credit for what you read here should be given to him. We have simply offered up our blog space to him to be able to share with everyone what he had found in an Open Records Request sent to the University of Texas. This work is his, and we were very happy to work with him in this. He has taken all the right steps here, even contacting the Office of the President at Texas A&M last week. We suggest you follow Spadilly on twitter because he is a great guy; that is unless you dislike good music, better food, and showing you how to live the good life.
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Through an open records request I sent to the University of Texas on July 8, 2011, I was able to acquire a redacted version of the License Agreement between ESPN, The University of Texas at Austin, and IMG Communications, Inc.
This agreement is dated December 24, 2010, and has been signed by the following individuals:
Marie P. Donoghue
SVP, Bus Affairs & Bus Dev
ESPN, Inc.
William Powers, Jr.
President
THE UNIVERSITY OF TEXAS AT AUSTIN
Thomas J. Stultz
Senior Vice President & Managing Director
IMG COMMUNICATIONS, INC.
I have pulled out certain quotes from the document that caught my eye below.
*Considering this document was received legally via an open records request (and is a redacted version), it is my understanding that this information is now available to the general public.
So let's get straight into some juicy details --
Remember a few weeks back when it was made known that the Longhorn Network planned to air a Big XII football game this coming season (2011) and the fuss from media and other conference members that came with that? Well, it was planned all along. In the signed agreement, the Longhorn Network HAS to show 1 live football game a year (This year it will be the first home game of the year against Rice to fill the requirement) but BOTH the University of Texas and ESPN have a "mutual desire" to show NO LESS THAN 2 live football games a year on the Longhorn Network.
So where does the network and ESPN stop at? Four live Texas Longhorn football games? The entire home schedule? And if the network does in fact air that many live football games, how does this affect the overall value of the 1st and 2nd tier media rights of the conference as a whole? Less money for the entire conference on the table when 1st tier rights become available in 2015-2016? I guess this also makes void Chip Brown and the Longhorn's spin that "Texas had no idea what ESPN was doing, it was their fault". It's not ESPN alone when there is a "mutual desire" is it?
“This was ESPN acting on its own,” one high-ranking administrator in the Big 12 said. “I don’t think Texas even knew where ESPN was in the process of trying to get this conference game secured. DeLoss Dodds has been very open and forthcoming with all the schools in the Big 12.Right.
If that isn't unsettling, ESPN and the University of Texas is also in an agreement to get live sporting events when the Longhorns play AWAY from home and say in Norman or Stillwater.
How many Red Raider fans will favor a nice large, burnt orange "Longhorn Network" TV truck rolling into Lubbock to televise a softball game? I hope Columbia doesn't mind Longhorn Network cameras in the stands as their Tigers play basketball.
One of the major topics that has been brought up not only on fan message boards but in the national media as well has been the airing of Texas high school content. Would it be surprising to anyone that UT Athletics and IMG would put forth their "best effort" to help ESPN secure the rights to airing all state UIL Championships? Fox Sports owns those rights until 2017, but anything after is fair game when the contract expires. And when the University of Texas owns the UIL, who do you think will be televising every Texas state football championship in all classifications, the UIL Basketball State Tournament already held in Austin as well as the softball and baseball tournaments? It is also not hard to imagine the state football championship games being played in Austin instead of Cowboys Stadium where they are located now when that time comes. Unfair advantage for Texas?
What happens if this unfair advantage drives the breakup of the Big XII one way or the other? Well, this agreement between the University of Texas and ESPN would live on no matter what conference Texas is in, or if it is an Independent. They have already prepared for that.
And if If University of Texas does in fact become an Independent in the near future for whatever reason, ESPN would have an already written in "Right of First Refusal" for Texas' media rights that are now currently held by the Big XII conference, which is basically their 1st and 2nd tier rights. ESPN would have a 60 day window of negotiations to become the only carrier of University of Texas content, and then 48 hours to match any kind of offer from a competitor. In the long run, that may be worth $300 million to ESPN alone.
One thing that could keep Texas from becoming an independent is the stability of the Big XII. It is no secret that the Big XII conference and it's other members would love to have their own conference network, similar to the Big 10 and Mountain West Conferences. However, the University of Texas and IMG has agreed that no content featuring Texas would be made available to that conference network and would violate the agreement with ESPN. The other nine conference members would have to put together a network without Texas and it's content.
And of course we all know by now that the University of Texas has the ability to fire any ESPN on-air talent that doesn't represent the university in the best light. Texas gets to determine it's "quality and reputation" to all who view the network by threatening pink slips to those anchors who wish to express perhaps an honest opinion. Don't turn on the network and not expect a very slanted view of what is actually happening. 5-7 football team a year before? Don't worry, a Top 25 team in the preseason polls the next season. Anyone who disagrees is shown the door. But ESPN hasn't been interested in telling viewers the whole or honest story at least since the Mike Leach and Adam James incident have they Mr. Joe Schad?
Something else that should alarm everyone is that the University of Texas can simply submit a "request" to ESPN to produce any kind of video. Texas will pay the bill, but ESPN will produce. Maybe the Longhorns need propaganda against another Big XII conference member. Ask ESPN to make it. Worries surrounding the Longhorns the week before the Red River Shootout? Ask ESPN to make a short clip showing everything is just fine behind "closed doors".
And these video tapes I just mentioned? HAVE to be to the "benefit of UT" Why must they benefit the Longhorns? The contract says they must.
How much money will it take per year to run the Longhorn Network? ESPN is committing $26 million dollars per year to run the network, and that number will increase between 3-4% each year, with the calendar year beginning each July 1st. ESPN estimates $15 million per year will be used for production costs and the other $11 million will be used for overhead.
And how much will the University of Texas be putting into their pocket? Exactly $10,980,000 per year. IMG will collect the other $4,020,000 per year. But get this -- once ESPN receives back exactly $295,000,000 in profit from the network at any point in the length of the contract, Texas will receive 70% of any profits thereafter made as a royalty payment. Not bad potential to be making some serious cash by 2028.
And finally, what kind of outs are there in the contract? Well for one, the contract can be terminated if the university can not meet ESPN and the network's demand of 200+ live sporting events per year, and included in that is most likely its 2+ live football games. Either Texas makes available what ESPN wants or they back out. How does that impact relations within the Big XII? Also, if anything legal changes regarding new rules say made by the NCAA making the obligations to fulfill the contract "impractical", either party will have the right to terminate the contract giving a 30 day notice.
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