February 23, 2024
by site owner Todd Helmick (BIO)

THE FUTURE OF COLLEGE ATHLETICS - Terms you need to know.

GoR, 5+7, Streaming Distribution, P2, G5, Media Rights, NIL, The Wild West, Transfer Portal, Collective, AAU, Private Equity...it's all new world and it's all of magnified significance.

This will be an attempt to predict where college athletics will be five to ten years from now. Strap yourself in.

Before tackling such a prediction there are dozens of basics that have to be understood with what's currently shaping this landscape as the grapple for fame/money and the differentiation between the have's and have not's reaches a revolutionary peak.

College athletics are being historically redefined in and out of the courtroom, starting with the king pig of all sports - football. All the other sports will be structured based on football alone. Why is that? Because football is the cash cow. Football and to a much lesser percent basketball, subsidize all the other sports (see chart).

NIL
In the simplest of terms...Name, Image and Likeness (NIL) is a term that describes the means through which college athletes are allowed to receive financial compensation. Most fans know the basics of what the NIL and Transfer Portal have meant to college athletics. Student-athletes from the average age of 17-23 are now in the business of making money...their amateur status has been removed. They don't get paid through the university, they get paid through private funding. Despite its original intent, NIL really has nothing to do with selling your name, image or likeness to companies so they can pay for those services. PFP (Pay For Play) is better terminology compared to NIL. The student-athlete is getting flat out paid to play sports, not represent or be employed by a private entity. The entire NIL process is currently unregulated for the most part and has been referred to nationally as "The Wild West" due to the craziness that surrounds trying to land the best student-athletes by any financial means available with no limits and no contracts in place.

COLLECTIVES
Collectives (or NIL Collectives) are independent, third-party organizations that fundraise money for various universities and give it to attending college athletes in the form of NIL agreement payouts. NIL Collectives pool money together from boosters and businesses. Some NIL collectives employ a subscription-based payment system, while others simply accept one-time donations. Since some NIL collectives manage money in the tens of millions, these NIL agreement payouts can be incredibly lucrative for college athletes.

TRANSFER PORTAL
The Transfer Portal creates an open window for student-athletes to transfer to other schools as they see fit. The Transfer Portal is also currently unregulated thanks to the legal system. Athletes can transfer from school-to-school whenever they wish to play a sport for five different schools in five years if they so choose. No student-athlete is under contract. Throw in the fact they get paid to transfer with NIL monies only adds to the chaos.

While these two terms (NIL & Transfer Portal) have drastcially sculpted college athletics already, they will not be the foundation of change that's about to come. Television revenue and how that income is distributed will be that foundation. Of course, that translates to who and how much institutions are able to pay for the higher caliber players, which in turn generally results in the more competitive valued product.

P2
No understanding of P2 can be complete without the knowledge of what P5 currently respresents. In college football, the term "Power Five conferences" is often shortened to as "P5". Those are the five big boy conferences. Those are the five conferences and teams with all the marbles. The P5 in 2023 football consisted of the ACC, Big Ten, Big 12, SEC and Pac 12 conferences.

Heading into the 2024 season the Pac 12 has disbanded and all but two of their members (Oregon State & Washington State) joined up with another P5 conference.

USC, UCLA, Oregon, and Washington have decided to go to the Big Ten. Colorado, Arizona, Arizona State, and Utah have chosen to head to the Big 12.

Then news broke that Cal and Stanford would be going to the ACC in 2024.

In addition, powerhouses Oklahoma and Texas have left the Big 12 to join the SEC in 2024.

Given such, the term P5 now becomes P4 to start the 2024 season with the Pac 12 no longer being a part of that make up. That creates four power conferences in college football now. Here is that breakdown to assist in the new P4 realignment:

THE 2024 P4 ALIGNMENT

Pay attention, because the term P2 is what what will drive the entire machine. The term P2 (Power Two conference) is a new term that does not even exist in substance yet. The term P2 in simplest form is the Big Ten and SEC. The global thought process is that the Big Ten and SEC are not finished expanding while waiting to pluck more of the big name teams from the remaining conferences. Even if the Big Ten and SEC never add another team, they are the biggest revenue producing conferences. Both the Big Ten and SEC have announced a partnership that will likely govern how the two biggest boys on the block operate. The scuttebut with much substance is that this P2 will eventually separate from the NCAA completely for football. The P2 will have roughly 40 teams with their own playoff format, their own national champion and their own set of rules to regulate the NIL/Transfer Portal. The rest of the college football world not in one of the P2 conferences will have to form their own football set up and championship format. Those schools will be regulated to a lower tier level of football much like the FCS is a lower tier distinction. Most important, the P2 will have their own Media Rights.

MEDIA RIGHTS
Media Rights are the contracts every conference and team has agreed to for the right to broadcast their games. These rights extend beyond just television, but television is the bus driver...the money maker.

The Big Ten currently paid every school in their conference aproximately $58 million for the year 2022. The ACC paid every school in their conference aproximately $38 million. That is a considerable gap that continues growing. The Big Ten announced a seven-year, $8 billion media deal with CBS, NBC and Fox, allowing the three networks to broadcast their games starting in 2023 and running through the 2029-30 season. Fox had already been showing Big Ten games, while CBS and NBC are new.

ESPN and the SEC reached a 10-year deal beginning in 2024 that will make the network the exclusive rights holder of SEC football and men's basketball. Under the new ESPN agreement, the SEC will reportedly take home a whopping $300 million annually in revenue to be divided between the member schools.

Media rights are contracts that steer the television money flow.

G5
Referred to as the "Group of Five" or "G5" that represents the five college football conferences that are not a part of the Power 4 or "P4". Those conferences include the American Athletic, Conference USA, Mid American, Mountain West and Sun Belt.

5+7 MODEL
In 2024 college football will expand to a 12 team playoff format. The CFP (College Football Playoff) System that utilized a four team playoff has existed since 2014 and will be replaced with the 5+7 model for now it appears.

The 5+7 model determines the 12 teams in the playoffs. Five (5) automatic playoff bids go to the highest rated conference champions of the P4 (ACC, Big Ten, Big 12, SEC) and the highest rated conference champion from the G5. The five conferences composing the G5 each have their own league champion. The highest rated champion from that group is guaranteed a spot in the new playoff format. Last year in 2023 that team would have been Liberty. It gives the so-called "little guy" a chance. The other remaining seven (7) playoff bids go to the highest rated teams that are not a conference champion. That means there could be upwards of five or six teams from just the SEC or Big Ten alone in the new 12 team playoff system on any given season.

GoR
GoR is an abbreviation for "Grant of Rights". The GoR agreements are contracts that confer exclusive media rights to televised game broadcasts from football-member institutions to their respective conferences. This Grant of Rights allows the conference to negotiate as one entity in the best interest of its individual institutions. The term GoR became more widely known when Florida State made legal moves to get out of their GoR contract with the ACC so the Seminoles could leave for another conference. Per that GoR, each ACC school gives ownership of its broadcasting rights to the league in a deal with ESPN that runs through 2036. Every conference has a GoR contract between its schools and a broadcast partner other than Notre Dame football, who as an Independent (not in a conference) has its own TV broadcasting contracts.

AAU
The Association of American Universities (AAU) is an organization of American research universities devoted to maintaining a strong system of academic research and education. It's a very exclusive club that requires extravagant levels of spending on research to become a member. Currently, all Big Ten member schools that have joined were an AAU member at the time they joined. This academic aspect could be an important prerequisite if the Big Ten decides to add more teams.

STREAMING DISTRIBUTION
ESPN, FOX and Warner Bros. just recently formed a partnership to develop a sports streaming service, much like currently exists with ESPN Plus, Peacock and Prime for NFL Thursday night games. Those games are only available through internet television subscriptions. Many CFP (College Football Playoff) and NFL regular and post-season games will be streaming only at some point. It's already happening. The Chiefs vs. Dolphins 2023 NFL Wildcard playoff game on Peacock's streaming subscription platform was the single biggest subscriber acquisition moment ever measured and the biggest live stream event in the history of the US with 28 million viewers. Read that last sentence again. The Big Ten has a good many games on Peacock as does Notre Dame with its NBC contract. How that new money gets distributed (STREAMING DISTRIBUTION) is currently under a giant microscope with great financial ramifications down the road.

PRIVATE EQUITY
This one gets a little deeper. The future of the ACC Grant of Rights (GoR) and what it means for college football realignment media rights is at the forefront of every institution's interests. In the quest for more power move money, Florida State University administrators are in talks with at least two private equity firms about the possibility of providing financing to help fund the athletic department. While it's common practice for universities to budget and borrow for significant expenditures such as real estate purchases and construction, working with JPMorgan Chase - the world's largest bank by market capitalizaton - to explore larger sized institutional investment for the FSU athletic department is a first for college athletics. FSU will soon issue nearly half a billion dollars in bonds and a large handful of financial institutions will submit interest rate bids on those bonds. The lower the interest rate the more money that can be borrowed. Think of the process as taking out a second mortgage on your home to finance sending the kids to college. For big time college football programs, the home being refinanced is your future revenue earnings. It will now be possible to purchase bonds on those potential earnings. If the state where the institution is located steps in and backs the borrowing with tax funds, which is common for university expansion negotiation, the risk to investors drops dramatically as do the interest rates for the bonds. In simpler terms, the private investment door to fund college athetics/athletes is about to be opened.

The old adage that "you need money to make money" is in full play at P2 level football. The conception that a billion dollar bond market investment strategy could be in play to pay athletes and establish a higher competitive value goes beyond how most professional leagues function, not all however.

If you’re paying attention to what WWE just pulled off with a $5 billion Netflix exclusive streaming deal then you have an idea of what a partnership with a private equity firm can do when negotiating media rights...especially in the future as STREAMING DISTRIBUTION continues to boom.

CONTINUE TO THE FUTURE OF COLLEGE ATHLETICS (Part II)