Blackout Lifted

More March Madness

Written by Synergy Legal, Inc. on 4:45 PM

March Maddness on CBS has been as much a staple of televised sports as Monday Night Football on ABD was for 36 years. But according to a New York Times article, that could come to an end after next season. As part of the 11-year deal that went into effect in 2003, the NCAA has the option of voiding the remaining three years after the 2010 Tournament, presumably to seek a more lucrative deal. But would that be a wise thing to do?

Options like the N.C.A.A.’s exist to permit leagues or other sports organizations to capitalize on better financial markets than existed when a deal was signed.

But the economy is so weak that only the most optimistic forecaster can spot more than vague stirrings of a recovery by March 2010. If the N.C.A.A. opts out, then it will exchange the certainty of CBS’s fees in 2011, 2012 and 2013 — above the annual average $545 million — for the hope of a March Madness free-agent payoff. Tough choice.

The financial world has changed drastically since the deal was signed on Nov. 18, 1999 (although it did not go into effect until 2003, after a previous deal expired). The Dow Jones industrial average stood at 11,035.70 that day, but it closed Monday at 7,216.97; Citigroup stock was at $56.25 and is now at $2.23; Bank of America has fallen from $65.38 to $6.18; and General Motors from $69.81 to $2.52. -NY Times

Even the most optimistic predictions I've heard regarding our economy state that we will only be in the early stages of recovery by March 2010. Deciding whether or not to walk away from nearly a half-billion per year for a 10-day event might still seem very risky for the NCAA. Presumably, ESPN would be the one major player to try and wrest conrtol of the Tournament from CBS. Ironically, CBS and ESPN were broadcast partners for March Madness from 1982 - 1990, with ESPN broadcasting early round games until CBS obtained the broadcast rights to the entire tournament in 1991 (although ESPN has broadcast the #64 vs. #65 play-in game since 2002). Could we see something like that again?

Still, the option gives the N.C.A.A. a chance to test ESPN’s avidity. Its dual flow of revenue from advertisers and subscribers enabled it to outbid Fox by $100 million in November to carry the Bowl Championship Series from 2011 to 2014, but the economy has worsened since then.

The price for the tournament, even a year from now, may make even the mighty ESPN blanch, especially if it cannot raise its industry-high subscriber fees or charge enough for advertising to justify an enormously expensive deal.

Even in a better economy, ESPN is not likely to get the whole tournament if all the games were on cable (where B.C.S. games will be). The N.C.A.A. likes the exposure that broadcast television provides and it is unlikely ESPN would put many, if any, games on ABC.

Another way to lure ESPN after 2010 — and provide CBS some financial relief from the last three years of onerous rights payments — is to expand the tournament to 72 or 96 teams. The N.C.A.A. could then sell ESPN some games (though not all the new, least valuable, early rounders) and still satisfy CBS with the Final Four and other games. -NY Times

Given that ESPN has a license to print money, I could see them stepping up if the NCAA opts out. A CBS/ESPN partnership could potentially be a boon to basketball junkies who prefer a wider range of viewing options for early round games. With additional outlets like ESPN2, ESPNU, and ABC, The Leader could bring as many as 4 different games at a time to your living room.