John Swofford's ninja move secures ACC's future
CHARLOTTE, N.C. — ACC commissioner John Swofford had lunch two months ago with his predecessor. Gene Corrigan, who stepped down in 1997, reiterated how glad he was to have passed the baton when he did. "He said, 'I'm so glad I had that job when I had it. I wouldn't have wanted it when you've had it,'" Swofford said. "I said, 'Well, thanks a lot.'"
Thursday, Swofford ran a verbal victory lap to celebrate an agreement between the ACC and ESPN on a digital network that will launch next month and a cable channel that will launch in 2019. That deal will extend the grant of rights that binds ACC schools together until the end of the 2035–36 school year. The deal marked the end of three years of negotiations between the ACC and ESPN, but it really was the culmination of a 13-year odyssey for the Ninja Commish.
Back in 2003, the ACC and the Big East were peers. The Big 12, the Big Ten, the Pac-10 and the SEC had better football. All six were automatic qualifying conferences in the Bowl Championship Series, but Swofford sensed the ground moving beneath the leagues. "If you were paying attention, you could tell the world was changing and shifting," Swofford said. "It was moving toward football and toward your footprint and your markets. We came to the conclusion that if we want to stay in the hierarchy where we think we belong, we're not going to be able to do it with nine schools."
The Big Ten would always be O.K. because it had the best collection of brands to take to the market. The SEC would always be O.K. because its schools had the most passionate, devoted fans. Everybody else? It would depend on the decisions their leaders made.
There is an alternate timeline where the ACC stands still and gets torn apart. But in this timeline, Swofford swiped Boston College, Miami and Virginia Tech from the Big East to create a 12-team conference that had two football divisions and a championship game. Later, he snagged Pittsburgh and Syracuse. He convinced Notre Dame to move its non-football sports to the ACC from the Big East. Then, when a more powerful league—the Big Ten—finally attacked and grabbed Maryland, Swofford immediately took Louisville from the Big East to stop the bleeding.
The Big East has now splintered into the American Athletic Conference and a football-free conference that retains the Big East name. The Big 12 has nearly blown apart twice and on Tuesday authorized commissioner Bob Bowlsby to evaluate expansion candidates from a pool that will not stir the blood of network partners ESPN and Fox. Meanwhile, the ACC has a cable network on the way and an agreement in place that could keep its membership stable for a generation.
Swofford swears he won't get bored, but life will be different after an action-packed past 13 years. He said the ACC isn't thinking about adding more schools, but he is a ninja, so take that for what it's worth. For the time being, he'll be busy working with ESPN executives and television consultant Dean Jordan to get the network up and running.
Meanwhile, the leagues that don't enjoy the ACC's stability will keep pressing. Jordan, who works for the Wasserman group, once consulted for the Big 12 and helped make the deal that includes the language that caused that league's presidents to push toward expansion. If the Big 12 expands, ESPN and Fox have to kick in the same amount of money each current school receives from the league for each school added. ESPN and Fox are not excited about the prospect of paying more, but current Big 12 members could phase in new ones by giving them a smaller percentage of the TV take and pocketing the difference. We learned Thursday afternoon which school Texas wants.
This probably wouldn't inspire ESPN and Fox to offer to extend the Big 12's grant of rights past when the current contract ends in 2025, but it's possible neither Texas nor Oklahoma would agree to an extended grant of rights anyway. In other words, the Big 12 will continue to be a mess, and it's just as likely to get blown apart as it is to remain a power conference.
That isn't the case in the ACC, though. The league's place in the hierarchy is secure. Because of when they made their original deals, neither the ACC nor the SEC can take their rights to market anytime soon. Both had to extend their ESPN deals to get their networks so ESPN could guarantee cable and satellite providers that the product would be around for a while. Because the Big Ten's first- and second-tier rights deals expired at the top of the rights bubble, that league could sign two short-term (six years) big-money deals with ESPN and Fox. The Big Ten could open a huge revenue gap in 2024 if it can convince Apple, Google or Netflix to join the rights fray, or it could continue making similar money from more traditional partners. The ACC and SEC won't get the chance to chase the ultimate payday like the Big Ten will, but both have secured their places into the 2030s.
That the ACC could make the deal even after the recent changes in the cable world is a credit to Swofford and Jordan. Almost no one is trying to start cable channels now because cable and satellite subscriptions have dropped by the millions in the three years the ACC has been working in earnest on a network deal. Cord cutting is an issue, but of greater concern are "cord nevers," twentysomethings who barely remember an entertainment universe that didn't include over-the-top, streaming content available exactly when and where the consumer wants it.
ESPN president John Skipper said Thursday that the ACC Network will be a new channel and not a repurposing of an existing ESPN channel. But with three years to go until the launch, that could be semantics. The demand for ESPNNews, which has tens of millions of subscribers, is rapidly approaching zero as customers have access to virtually unlimited on-demand highlights through ESPN's app and website. The demand for ESPNU, which has more than 70 million subscribers, is rapidly approaching zero as conference networks make its content redundant. So while the ACC Network may be a built-from-scratch channel, it may slide into an opening created by the death of something else.
Besides, the ACC Network should be able to make more money for ESPN than those two channels in the 2019 cable universe. It can probably command a quarter per month per subscriber outside the ACC footprint and significantly more inside the ACC footprint. It won't get the $1.40 subscribers pay for the SEC Network inside SEC states, but that's because a Virginia fan isn't going to threaten to burn down the cable company if he can't get every Cavaliers football game. As ESPN deals with subscriber losses at its main network—which brings in more than $6 a month per subscriber—the conference networks should still be fairly reliable revenue drivers because they come with a built-in demand from the fans of the schools in their leagues. That demand is greater for the SEC Network, but the ACC should still make money for ESPN during an uncertain time in the industry.
Though there was plenty of speculation that the ACC might launch an over-the-top (direct to consumer) network similar to the HBO Now streaming service, Jordan said the plan was always to create a linear channel. "There's not an over-the-top model that has been proven successful," Jordan said. "Even ones that are successful are not what they thought they'd be." So while the ACC will have the digital capability to shift with the times, it also will have the cachet provided by its own channel. More importantly, it will have the stability Swofford has sought since he began pondering how to secure the league's future in 2003.
So what will the ninja do now that he has no fires to start or extinguish for the first time in 13 years? "My wife asked something similar," Swofford cracked.
The answer? With his league finally secure and stable, he can do whatever he wants.