New College Football Playoff rights TV deal cements ESPN as network of champions

The news that ESPN and the College Football Playoff have agreed to a six-year, $7.8 billion extension will bring to a close the quest to secure the rights to one of the most lucrative properties in college sports history.

The deal, reported by The Athletic, still needs to be ratified once the College Football Playoff’s Board of Managers and Management Committee settles a variety of outstanding issues, most notably the revenue distribution model and the structure of the expanded 12-team tournament.

The financial details – $1.3 billion per year through the 2031-32 season – were not unexpected considering ESPN reported the night of the national championship game that the network had been engaged in negotiations to be the sole rights holder of the CFP for the next eight years, including the final two years of the current deal. 

The deal further cements ESPN’s foothold in broadcasting college championships.

It will have the rights to nearly all Division I championships, except for the NCAA men’s basketball championship, which is broadcast on CBS and Warner Bros. Discovery networks through 2032. Last month, ESPN and the NCAA announced an eight-year, $920 million deal to broadcast 40 championships, including the women’s basketball tournament.

ESPN has controlled the rights to every College Football Playoff game since its inception 10 years ago. As the CFP negotiated a long-term media rights package for the expanded event – beyond the two years remaining on the current contract – the conventional wisdom had been that the lucrative property would be divided among multiple broadcast partners.

The possibility of ESPN retaining exclusive control of the event was at odds with the College Football Playoff Management Committee – 10 FBS conference commissioners and Notre Dame Athletic Director Jack Swarbrick – signaling that they wanted the tournament to be divided between two broadcast partners.

Several TV and media rights veterans also told On3 in recent months that multiple TV partners made the most sense for the expanded tournament. The playoffs in MLB, the NBA, and the NFL are broadcast on multiple networks, as is the NCAA men’s basketball tournament.

That said, some CFP games, perhaps first-round games, could still land on a different network, or perhaps a streaming platform.

CFP deal includes option for ESPN to sublicense games

The deal reportedly includes the option for ESPN to sublicense games to another broadcast partner at its discretion, perhaps FOX Sports, which has a firm stronghold on college football inventory as well. 

Justin Beitler, Director, Global Media Rights Consulting, Octagon, told On3 on Tuesday that the ability to sublicense offers ESPN the flexibility to potentially cut costs down the line. It’s also important to keep in mind, he added, that ESPN’s parent company, Disney, continues to work towards a $7.5 billion cost reduction goal.

Additionally, he said, ESPN can now be in “full control” of the CFP and dictate which games are made available to which broadcasters. 

“And finally, it potentially offers ESPN additional upside,” Beitler said. “If they can build the value of the expanded CFP early on in the next rights cycle, they can potentially sublicense the rights at a premium further down the road, if they choose.”

What is the potential value of ESPN’s option to sublicense games?

“Further analysis would be required to place a proper value on the option, but it’s important to know that it may not be purely monetary,” Beitler said. “In 2022, it was reported that ESPN sublicensed a Big Ten game to Fox in exchange for Fox letting Joe Buck out of his contract one year early to depart for ESPN’s Monday Night Football. So similar intricacies could always be involved.”

 One veteran TV source has told On3 that the deal would, first and foremost, enable ESPN to maintain “complete control” of a bigger property.

What’s more, the source said, ESPN (likely) would get the rights to broadcast some of the earlier round games exclusively on ESPN+ (and perhaps more in later seasons).

“Sub-licensing is a way, I suspect, to hedge bets, save some money and horse trade with other networks for other things,” the source said.

Bill Hancock, the College Football Playoff’s retiring executive director, had told ESPN that if the network were to sublicense games, the CFP’s Board of Managers – which includes 11 presidents and chancellors – would need to approve it. 

The prevailing notion has been that if several suitors were to get involved in CFP negotiations, it would serve only to drive up the value of the property, likely resulting in the event being broadcast on multiple networks. Several potential partners made presentations to College Football Playoff stakeholders.

“If the CFP becomes available for all TV suitors,” one former Power Five commissioner had told On3, “you’d probably wind up with a two-network approach because the money would be so high.”

$1.3 billion annually ‘seems light to me’

In its current 12-year contract, which expires after the 2025 season, ESPN has paid the CFP an average of $470 million annually. That payout increases to at least $600 million per year because of separate contracts the network has to broadcast the Rose, Sugar and Orange bowls, the Associated Press first reported.

The price for the expanded 12-team event has been a much-debated topic in recent months – with some entities expecting a higher figure than $1.3 billion annually.

Navigate, a Chicago-based firm that specializes in professional and college sports rights valuations, projected that a 12-team CFP would garner $1.9 billion annually in a television rights deal. Add in ticket sales and sponsorship deals, and the total value of the expanded format would grow to $2 billion annually, according to Navigate.

Bob Thompson, the retired FOX Sports president, posted on X on Tuesday that the $1.3 billion average on the new deal “seems light to me … Maybe no other bidders.”

ESPN securing rights to the expanded College Football Playoff also stands as a significant development in the network’s battle with FOX over which network has vise-like control over college football, a duel that extends even to their competing Saturday morning pregame shows.

FOX is the leading rights holder for the soon-to-be coast-to-coast Big Ten. ESPN broadcasts the soon-to-be expanded SEC. Several stakeholders have joked that in a future world of two super conferences, we may as well just rename the leagues ESPN and FOX.

Revenue distribution model, structure still in question

College Football Playoff stakeholders still have plenty to sort out, starting next week when they meet in Dallas.

The existing revenue distribution model calls for 80% of the CFP revenue to be disbursed to Power Five conferences, with about 20% going to Group of Five conferences. What will and should it be moving forward, given that the Pac-12 will no longer exist as we know it and the expanded SEC and Big Ten are likely to send the most teams to the tournament?

The demise of the Pac-12 has also prompted a change to the originally agreed-upon structure of a 6+6 format, consisting of the six highest-ranked conference champions along with six highest-ranked at-large teams.

The move to a 5+7 format – one fewer automatic berth for a conference champion – appeared to be a formality but Washington State President Kirk Schulz, the Pac-12 representative on the Board of Managers, has pushed back, Yahoo Sports! reported. The vote from the Board of Managers needs to be unanimous to change from the 6+6 format.

What is not in question at the dawn of the 12-team CFP era is where college football stands in the U.S. sports hierarchy. It is clearly a strong No. 2 – ahead of the NBA – behind only the NFL, whose grip on the nation’s sporting soul is only getting stronger.

Ninety-three of the top 100 broadcasts in 2023 – not merely sports broadcasts – were NFL games, according to Sportico. College football (three games) was the only other sport that made the top 100. Ohio State–Michigan (19.1 million) was 58th; Alabama–Georgia (17.5) was 71st; and last season’s national title game rout between Georgia and TCU (17.2) was 74th.

And now ESPN will maintain exclusive rights to the highly anticipated expanded College Football Playoff.