Michael Smith discusses John Kosner's work on the value of NCAA media rights in the Sports Business Journal
Original Article: Sports Business Journal, by Michael Smith, October 31st, 2022
College Basketball: The Times, They Are A-Changin’
The face of college basketball is changing.
Two of the game’s winningest coaches and greatest ambassadors, Mike Krzyzewski and Jay Wright, have retired and no longer will be marching up and down the sidelines. College basketball’s most familiar voice during March Madness, CBS Sports’ Jim Nantz, will say goodbye after the 2023 Final Four.
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Some of the best teams in the nation, like preseason No. 1 North Carolina, will be led by veteran returning players who are juniors and seniors, not the talented one-and-done passers-through who use college basketball as a way station before matriculating to the pros. And schedules are being assembled to accommodate the shifting conference alliances that so often are dictated by the strength of football.
And change isn’t just happening between the white lines. It’s happening off the court and in NCAA meeting rooms in Indianapolis as college leaders contemplate the future of March Madness, the composition of Division I, the expansion of the men’s and women’s basketball tournaments, a new media rights deal for the women’s basketball tournament and new offseason playing opportunities.
All of these transitions are intended to make the game more equitable, appealing and sustainable to the players, the fans and the stakeholders that rely so heavily on its success, while also keeping pace with so many of the shifts in the college landscape — from name, image and likeness to massive player movement through the transfer portal.
“Our business is like that now — everything is a balancing act,” said Dan Gavitt, NCAA senior vice president of basketball. “We have to start thinking about things a little differently. We’re all trying to develop new fan bases, younger fan bases, and engage with fans in different ways. To do that, you have to step out of your comfort zone sometimes, try new things or take events to new places.”
Gavitt will play an instrumental role in many of the college basketball decisions across the horizon. New men’s Final Four sites will be selected next month for 2027-31. A summer series of basketball exhibitions, starting as soon as August, could help college basketball reach a broader audience and provide its players with new NIL opportunities.
Other shifts in the landscape, such as the make-up of Division I and modified championship brackets, will be driven by the NCAA’s Transformation Committee and the Division I Council.
“There’s probably not a lot different that’s above the water this year that a fan would notice,” Big East Commissioner Val Ackerman said of the primary issues in college basketball. “Most of the rules are the same; the tournament format is the same. But there is a lot going on just beneath the surface of the water that administrators and coaches are paying a lot of attention to.”
With that as the backdrop, what follows is a deeper dive into the biggest issues and storylines facing men’s and women’s college basketball, ranging from tournament expansion to media rights and possibly some new innovations that might generate new revenue, as the season tips off this week.
Demonstrating the shift from one-and-done for the top players in college basketball, North Carolina stars Caleb Love (left), R.J. Davis, Leaky Black and Armando Bacot are back this season to lead the preseason No. 1-ranked Tar Heels.
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NCAA BRACKET MADNESS
Does tournament expansion bring enough financial benefits to merit the growth?
Expanding the NCAA men’s basketball tournament from 68 to 75, 96 or even 128 teams is a discussion worth having, but nothing formal has emerged out of the governing body. Commissioners Jim Phillips from the ACC and Greg Sankey from the SEC have floated the benefits of growing the tournament by 28 or so games — theoretically creating more opportunities for teams that ordinarily would be living on the bubble.
The coaches are becoming more vocal as well. Baylor’s Scott Drew and Missouri’s Dennis Gates advocated for tournament fields of 128 teams last week. The thinking is that there are 363 teams in Division I and a 128-team field would put 35% of the teams into the championship. Other informal proposals have recommended 25% of the teams should make the postseason. In Division I basketball, that would equate to 90 teams in the tournament.
Former Duke coaching legend Mike Krzyzewski will be missing from the Blue Devils’ sidelines, and March Madness, for the first time in more than 40 years.
COURTESY OF DUKE UNIVERSITY
What does that bracket look like? Would CBS Sports and Turner agree to that? Are there any provisions in the NCAA’s media rights contract for additional revenue for an expanded tournament?
Sources indicate that more games would not guarantee more media revenue.
That has prompted a range of reactions about March Madness, most notably that it shouldn’t be fixed if it’s not broken.
It's understandable that those who direct the Power Six leagues (the Power Five plus the Big East in basketball) would push for a larger bracket, the thinking goes. Most of those teams that are on the bubble come from those larger conferences and more at-large bids would most likely increase the chances for teams in the P6 to make the tournament.
There are multiple scenarios that would accomplish the goal of expansion. Going to 96 or 128 teams, while somewhat watering down the product, provides opportunities for conference champions to retain their status as automatic qualifiers while also providing more spots for at-large teams.
Another scenario involves growing the tournament field just slightly — to 75 teams or so — and creating more of the play-in games. That raises the question of whether teams mired in perpetual play-in games are actually part of the tournament or not, and it scares the schools in the smaller conferences because they worry that their automatic bids might be in jeopardy.
For a commissioner like the Big West’s Dan Butterly, access is everything. So, when NCAA committees start talking about taking away automatic qualifier spots for conference champions — no matter the sport — he gets nervous.
“Automatic qualifier spots represent opportunities,” Butterly said. “That would have a pretty big impact on every conference that’s not a high-resource conference. Fortunately, what I’m hearing is that the transformation committee is doing everything they can to protect the automatic bids [for the conference champions].”
Both retired Villanova coach Jay Wright and Jim Nantz of CBS will no longer be a part of March Madness after Nantz calls his last Final Four in 2023.
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BEEN DOWN THIS PATH BEFORE
More games doesn’t guarantee more tournament revenue.
There was a time in 2010 when the NCAA proposed expanding the men’s basketball tournament field to 96 teams. There was an expectation that the media rights would grow exponentially, creating a windfall of new revenue for the governing body and its members.
The response from the networks who saw the presentation never matched up with the NCAA’s expectations. It turned out that there just wasn’t much interest in paying more for a handful of games that pit mediocre teams against one another, even if they played under the March Madness banner.
“The money just isn’t there to make the leap to 96,” Ohio State Athletic Director Gene Smith said when he chaired the basketball committee at the time. “A lot of us assumed more inventory would mean more money, but that just wasn’t the case.”
That’s one reason many college basketball stakeholders don’t expect the men’s tournament to grow to 96 teams in this next iteration of the championship. Ultimately, though, the revenue will have to match up with the larger field.
“The NCAA’s championships really have not been right-sized for a long time,” West Coast Conference Commissioner Gloria Nevarez said. “We haven’t taken a lens to the championships unless it was for cost savings or cost cutting. How are we traveling teams? How do we seed in regionalized brackets? It’s not just what we can afford to do, but if we’re going to be transformational, let’s look at what should these championships look like.”
The men’s and women’s NCAA tournament fields have had 68 teams for years, but there is steady talk about adding schools.
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UNBUNDLING MEDIA RIGHTS
Could separate negotiations help women’s basketball break out?
The NCAA is considering an unbundled approach when it takes its championship events to the media marketplace, which would enable the governing body to sell media rights to the women’s basketball tournament separately. That’s a significant change to the way the NCAA has negotiated in the past.
“We are very seriously considering breaking up the package and exploring whether there’s greater value in selling the championships individually rather than as a bundled package,” Gavitt said. “Time will tell, but that’s the work we’re doing now — how best to position those rights to take them to the market.”
One stop, then another.
In this new era of player movement, athletes are bouncing from one school to the next. A look at stats related to men’s and women’s basketball player transfers in Division I in 2021.
Source: NCAA Get the data Created with Datawrapper
The current media rights agreement with ESPN for all Division I championships, except men’s basketball, pays the NCAA about $40 million annually. The way the deal is structured, though, has been the source of considerable debate, especially the past two years. For as long as the NCAA has taken these championships to the marketplace, it has sold them as a package, believing that a bundled set of rights was the most efficient way to sell them. There is growing skepticism about that now.
As more fans began showing up for the women’s Final Four and watching the games on TV, the growing popularity of the women’s basketball tournament became more evident. What finally shed some light on the championship was the 2021 event in San Antonio, where Oregon’s Sedona Prince shot a video of the meager workout facilities at the team hotel, compared to what the men had in Indianapolis. That led to the Kaplan Report, which evaluated the media arrangement as part of its analysis.
The NCAA was leaving millions of dollars on the table by going to the marketplace with all of those championship rights bundled, Ed Desser and John Kosner wrote in the report.
ESPN’s media rights contract runs through August 2024. The network and the NCAA will begin negotiations about this time next year. The NCAA’s Gavitt and Lynn Holzman — vice president of women’s basketball — will take the lead for the governing body, supported by media consultants who have not yet been hired.
Endeavor’s Karen Brodkin and IMG’s Hillary Mandel have done some analytical work for the NCAA in the past. Separately, consultants Desser and Kosner wrote the analysis for the Kaplan Report.
Ackerman: “We’re closing in on the time to make these decisions. Sometime next year, the NCAA is going to have to figure out what sports it’s going to take to the market separately versus bundled."
“There are tremendous opportunities if we unbundle,” Nevarez said.
An unbundled approach would enable the NCAA to take some of its most valued championships, such as baseball and softball, ice hockey and volleyball to the marketplace individually.
The potential drawback would be whether there’s enough competition for those media rights to truly drive the prices higher. Whether the championships are bundled or unbundled, the media rights’ value might be dictated by a lack of interest beyond the walls of ESPN.
Butterly: “It would be a positive step” to unbundle the rights. “You see the growth of women's basketball and women's sports overall. I mean the emphasis being placed in that area. … I think that would be a positive to be able to separate it and allow it to be a standalone event, so you’d really provide that opportunity for continued growth at the event.”
INNOVATIONS FOR THE FUTURE
Changes could provide new opportunities, fresh ideas as college basketball adjusts and adapts.
Summertime basketball, midseason conference tournaments, conference all-star games, revenue units from the women’s basketball tournament. These new or developing concepts along with name, image and likeness, the transfer portal and tournament expansion, could give college basketball a much-needed refresh in the next few years in an overall landscape driven more than ever by college football.
South Carolina women’s basketball coach Dawn Staley, whose team won the 2022 national championship, is interviewed by SEC Network sideline reporter Steffi Sorensen in March at the SEC tournament.
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None of the ideas are slam dunks, though, and most would require an unprecedented level of cooperation among schools, conferences and media partners.
But concepts like a midseason all-star game, out-of-season contests between conference foes who are not scheduled to play one another in a given season, and summertime basketball certainly sound like further “professionalism of the college game,” said Brooks Downing, whose agency, BDG Sports, runs basketball events throughout the season.
There’s an NIL factor involved in these schedule modifications and neutral-site games as well. In the past, event promoters would pay a fee plus expenses to secure teams in their events. Now, sources say, schools are demanding that payments go to the NIL collectives that funnel the money to the players as NIL income.
It’s the end of an era and the beginning of a new one. The game is changing on a variety of levels and it could look different in the next few years.
Ackerman: “Innovation is all around us, especially if you look at what the pro leagues are doing. So, I think the challenge for college sports leaders is to keep a good thing going, but also how to keep it from backsliding or getting stuck.”
