Art of the deal: How Swofford, ACC, ESPN reached agreement to launch ACC Network

ESPN president John Skipper gestures as he talks about the new ACC/ESPN Network during a news conference at the Atlantic Coast Conference Football Kickoff in Charlotte, N.C., Thursday, July 21, 2016. ACC commissioner John Swofford listens at rear right.
ESPN president John Skipper gestures as he talks about the new ACC/ESPN Network during a news conference at the Atlantic Coast Conference Football Kickoff in Charlotte, N.C., Thursday, July 21, 2016. ACC commissioner John Swofford listens at rear right. AP

For nearly seven years they’d been talking, in varying degrees of seriousness, about an ACC channel – first about if it was possible and then about the details, financial and otherwise, after it became clear that it had to be. And now John Swofford and Dean Jordan had reached the end.

They needed to eat. It was a Friday night, June 24 – still nearly one month before the ACC announced the ACC Network, the ESPN-backed channel that is scheduled to launch in 2019. Most of the details had been finalized. It was pretty much done, finally.

Swofford, the ACC Commissioner, and Jordan, a longtime friend who is the conference’s chief television consultant, were on Ocean Isle Beach. It was the last night of Jordan’s annual vacation, the one time of year he tries to go off the grid. It was impossible this year.

That Friday night, the most difficult labor was in the past. There was going to be an ACC Network, after all. The ACC and ESPN had agreed to extend their long relationship through the 2035-36 college sports calendar.

It’s impossible to say how much revenue the ACC Network might generate. That answer will come in time, yet Jordan said with confidence recently that if the network “performs even moderately, it’ll put the ACC in a situation where they’ll be very, very competitive financially” with the SEC and Big Ten.

On Ocean Isle, Swofford and his wife, Nora, joined Jordan and his wife, Gail, at The Isles Restaurant & Tiki Bar, where white cloths cover the tables inside and the deck out back offers a view of the sand and waves. The gathering was part celebration, part decompression.

It must have felt something like victory. For years questions about an ACC channel had chased Swofford and often consumed Jordan, a Raleigh-based executive with the Wasserman Media Group. Now it was happening. And so the dinner at The Isles, Jordan said, provided a moment “just to relax.” A moment to celebrate, too.

“You have to remember,” said Jordan, a former Carolina Hurricanes executive. “It’s a long grind.”

It had been so that week, even at the beach. It had been a grind, really, for the past three years and perhaps even longer, ever since Swofford approached Jordan in August 2009 with a simple question: Is an ACC channel feasible?

Jordan didn’t hide his uncertainty then. He said he responded with a “maybe.”

“I said I’m not being wishy-washy,” Jordan said. “But I think it might need a couple more things. And (there) wasn’t really anything you could do about it at the time.”

For a long while after that first discussion, Swofford and Jordan didn’t speak about a network. The thought was there, in the background, yet both men knew the ACC and ESPN weren’t yet ready to build a TV channel from scratch. It wasn’t the time. They believe now is.

A league in transition

Between 2011 and 2013 the ACC’s future evolved quickly. The league expanded from 12 to 14 teams with the addition of Pittsburgh and Syracuse. In 2012 the ACC announced the addition of Notre Dame in all sports except for football. Maryland announced its decision to leave for the Big Ten. The ACC added Louisville.

During the spring of 2013, Swofford led the ACC into a grant of media rights agreement, which gave the conference control of its members’ TV broadcast rights. At the time, the ACC appeared under siege. Rumors and speculation about its demise were relentless.

The grant of rights made it much more difficult – impossible, perhaps – for a school to leave the ACC. Swofford thought about those days on Thursday, sitting not far from where he’d announced the ACC Network. All that speculation then, and now this.

“We’re where we should be,” Swofford said. “And it feels good to be there. And the last 10 to 15 years in college athletics, there’s been a lot of instability, a lot of rumors, a lot of people who were saying things without any basis about who might be where, and why this would happen. ... But I think what this does is totally take the ACC out of any kind of conversation of that nature.”

Swofford on Thursday had reached another end point. A time for people in suits to shake hands, pose for celebratory pictures. Kevin White, the Duke athletic director and chairman of the league’s TV subcommittee, described it as a “historic day” for the ACC.

It was a day that had been seven years in the making, and one that became reality, especially, because of what happened during the previous 1,186 days, beginning with the league’s grant of rights announcement on April 22, 2013. If the ACC Network has a date of conception, that’s it.

ESPN will find way to make it work

By then, the spring of 2013, the Big Ten Network was in its sixth year. The Pac-12 Network was in its first. The SEC Network had been announced, scheduled for an August 2014 launch. And then there was the ACC, solidified but lagging behind other conferences in television revenue and, thus, overall revenue.

Between July 1, 2012 and June 30, 2013 – that hectic year that included the Notre Dame, Maryland and Louisville news, as well as the grant of rights – the ACC generated $146.6 million in TV revenue. That ranked behind the Pac-12 ($252.7 million), SEC ($204.2 million) and Big Ten, which doesn’t itemize its TV revenue on the federal tax form it files as part of its non-profit, tax-exempt status.

The question then for Swofford and the league was not whether an ACC channel was possible. It was about when it would become reality and how lucrative it would have to be for the ACC to remain financially competitive with other conferences.

Swofford, other ACC officials and Jordan spent much of the past three years trying to answer those questions. John Skipper, the ESPN president, and other network executives were on the other side, figuring out what made sense for them in a time of perceived uncertainty in the cable TV industry.

Maybe it was fitting, given the ACC’s journey: Just as the conference had stabilized itself with the grant of rights in 2013, ESPN and the cable business entered a period of instability. Millions of people dumped their cable subscriptions, opting for streaming services like Netflix. ESPN began losing revenue.

It created one of the great challenges the ACC and ESPN had to overcome: How do you work toward building a cable channel when no one knows what the cable industry will look like in five years, or 10, or even two?

“All the questions and debate about live content, whether it’s through a cable subscription, a computer, a mobile device – I don’t know,” said Bubba Cunningham, the North Carolina athletic director who was one of the four athletic directors on the ACC’s TV subcommittee. “I do know our rights holder (ESPN) will figure out a way to deliver our content to the consumer.”

Cunningham and other ACC officials are confident of that much, at least. After the network announcement on Thursday, it was a common theme among ACC’s leadership: ESPN will figure out a way to make this work, whether it’s through the traditional cable model or a streaming service or some other technology that will emerge during the next 20 years.

To start, the ACC Network Extra, a digital component of the ACC Network, will be available next month. More than 600 “exclusive live events,” as the ACC put it, will be on the digital channel, which will be available only to those who have access to ESPN’s online programming through a cable subscription.

The ACC Network’s success, though, is likely to largely depend on the traditional cable channel – the “linear network,” as it’s called – that will launch in three years. Who knows what the live TV landscape will look like then, or how the public’s viewing habits will change?

Swofford, Skipper, Jordan and everyone else are betting those habits won’t change all that much. That people will still have an “insatiable appetite” – as Cunningham described it – for live sports programming, and that they’ll watch it on ESPN through a traditional cable subscription.

Skipper, after the announcement Thursday, answered question after question about the long-term viability of a cable network, given the propensity for cord-cutting and the rise of streaming. Time after time he defended the traditional model. He came armed with data.

“Live sports is ascending,” he said. “In the last year, 93 of the top 100 television programs in the country relative to ratings were sports. Five years ago that number was 14.

“Right now in the environment we live where everything else can be watched whenever you want to watch it on a DVR or a tape delay, or Netflix – the only thing you have to watch live is sports. Sports has never been more valuable. ... I believe sports rights will continue to be the most valuable content.”

Skipper shared his confidence with ACC athletic directors and other conference officials during the league’s annual spring meetings in May in Amelia Island, Fla. A television committee meeting was among first on the agenda.

Skipper wasn’t there – not yet, anyway. This meeting was for Swofford and league officials to discuss the most obvious questions facing the ACC: those surrounding a TV network.

Swofford gave a directive: No talking publicly about what happened there that day or week. That first TV meeting was supposed to last two hours but went an hour long. Athletic directors and others emerged, Swofford’s gag order in effect.

“Any comment is supposed to come from Commissioner,” Cunningham said then.

“Urgency” for a channel

For years Swofford had been asked about a TV network – when it might start, what it might look like – and for years he hadn’t had much to say, only that the ACC and ESPN were evaluating the possibilities. Some appeared to be growing restless.

Weeks before the start of the spring meetings Dan Radakovich, the Clemson athletic director and a member of the ACC’s TV subcommittee, spoke out about how the ACC needed to get the deal done. There was “urgency” for a TV channel, Radakovich told the Clemson Insider.

At the spring meetings, though, Swofford knew it was close. One night, after the day’s regularly-scheduled meetings ended, Swofford and Jordan spent a long while talking in an upstairs room with Skipper and Burke Magnus, ESPN’s executive vice president of programming and scheduling.

Downstairs, out on the lawn between the hotel and the beach, other ACC officials, coaches and administrators mingled with bowl representatives and others at an ice cream social. Upstairs, Swofford, Jordan, Skipper and Magnus finalized what would be announced as the ACC Network.

“We worked through, for the most part, all the business parts (of the deal),” Jordan said.

By the time their own small meeting ended, the social was over. The ice cream had been carted away, much to the dismay of Swofford and Jordan, both of whom are “huge ice cream lovers,” Jordan said.

They had just finalized, for the most part, anyway, the most important media rights deal in the history of the ACC, and one of the most important in the history of college sports. Now they just wanted some dessert.

“We went all over the hotel to look for ice cream,” Jordan said. “And there was no ice cream to be found.”

Men’s basketball conference schedule expanded

On the final day of the spring meetings, Swofford scheduled time for Skipper to address the ACC’s athletic directors. Except it wasn’t as simple as having Skipper just show up. He’s tall and recognizable and, undoubtedly, the sight of ESPN’s president at the ACC meetings, during a time of great speculation about the league’s TV future, would have created a story.

So they scheduled the meeting for 7 a.m. Skipper accessed the conference room through a hidden utility hallway. Any reporters who’d been snooping around the Ritz that early would have been none the wiser.

“So we got him in and out without anyone noticing,” Jordan said. “It was the first time that Skipper had sat down in front of the athletic directors and said, ‘Hey, we’re going to do this, this is going to be great.’”

For White and Cunningham, who’d spent so much time talking about TV in recent years, Skipper’s presentation offered little in the way of new information. Still, Cunningham said later, “I think that John Skipper wanted to show how important the network was (to ESPN).”

For many athletic directors and conference officials it was the first time they learned of the full details of the network – what the plan was and how Skipper and Swofford hoped it would work. Other ESPN executives, from finance and distribution, attended the meeting, too, to answer questions.

By then the deal was essentially done. To provide more inventory for ESPN, the ACC agreed to expand the league’s men’s basketball conference schedule. It will go from 18 games to 20 for the 2019-20 season, in time for the debut of the ACC Network.

ESPN also reacquired the long-term rights to lower-tier football and basketball games that had been awarded to Raycom Sports. That was part of the delay, too, in announcing the network.

When it launches the ACC Network will include 40 regular-season football games and more than 150 men’s and women’s basketball games. Outside of live game coverage, the ACC Network’s other programming is unclear.

Will there be an ACC version of Paul Finebaum, who in some ways is the public face and voice of the SEC, and whose star has risen since the launch of the SEC Network? Skipper and his colleagues at ESPN have three years to figure it out.

In addition to questions about on-air talent and programming, there are ones of location — it seems clear but isn’t yet official that the network will be based in Charlotte — and finances. How much financial risk is ESPN taking on in launching a new network? What’s the potential revenue stream for the ACC?

In its first year the SEC Network helped that conference generate $311.8 million in television revenue – an increase of more than $100 million from the previous year, and nearly $100 million more than the $217.9 million in TV revenue the ACC generated during the same period. How would the ACC Network affect the ACC’s bottom line?

“We don’t announce the numbers on the rights fees but the rights fees, obviously, go up and there’s a more significant jump during the years before we launch the linear network, the ACC Network, in ’19,” Swofford said Thursday. “And then we’re very confident in what the network will bring financially.”

Meeting at Ocean Isle

When Swofford and others left Amelia Island in May, the deal between ESPN and the ACC was in place. A little more than a month later, Jordan went to the beach with his family, seeking an escape after a long, hectic work schedule.

Jordan had been working so much, and for so long, with the ACC that during the 2014-15 fiscal year, which runs from June to July, the conference paid his consulting firm nearly $625,000. Nearly a full year into the next fiscal year, Jordan’s work load hadn’t decreased.

“It would go in spurts,” he said late last week. “The last six months have been the most hectic. They’ve been fun, too.”

Like many, Jordan tries to disconnect when he goes to the beach. He doesn’t like to answer his phone and tries not to return emails. Early into his trip last month, though, Swofford reached him. It was time to make everything official.

Jordan preferred not to go back to the ACC headquarters in Greensboro for days of conference calls. So Swofford and his wife traveled to meet Jordan on Ocean Isle.

They have homes on the island less than one mile apart. Between June 20 and June 24, Swofford and Jordan finished the deal during a series of daily meetings at Swofford’s beachfront house, where they worked the phones to finalize everything.

Every morning, Jordan put on a backpack and rode his bike to Swofford’s place. They were in the nitty-gritty then, calling ACC presidents, athletic directors and faculty athletic reps to take a vote on the network. The vote was a formality but it had to happen.

The work lasted a couple of hours before Jordan biked back. Then they’d do it again the next day. The votes in, the network secure, the ACC then agreed to extend the grant of rights. Like the deal with ESPN, the grant of rights now expires after the 2035-36 academic year.

Finally, there were no more calls to make, no more work to be done. There was only a free Friday night at the beach, the dinner at The Isles – a moment to exhale, seven years after Swofford casually asked Jordan for his thoughts on a TV channel.

A little less than a month later came the announcement. The night before the press conference, officials from both the ACC and ESPN stayed up into the early-morning hours, finalizing the paperwork, Jordan said. In the morning, Skipper signed the contract moments before he walked out on a made-for-TV stage.

One grind ended and now another, three years before the launch of a new channel, begins.