American Athletic considers grant-of-rights for schools to sweeten next media rights deal

Back-to-back AAC champion Central Florida’s football success the last two seasons has made it an attractive target for both media rights deals and bigger conferences. Photo: getty images Back-to-back AAC champion Central Florida’s football success the last two seasons has made it an attractive target for both media rights deals and bigger conferences. Photo: getty images Back-to-back AAC champion Central Florida’s football success the last two seasons has made it an attractive target for both media rights deals and bigger conferences. Photo: getty images

The American Athletic Conference’s schools are considering a long-term commitment that will keep the AAC intact and make its media package more attractive.

The conference is asking schools to sign a grant-of-rights agreement that theoretically would lock them into the conference for the duration of the next media rights deal.

The AAC’s current seven-year, $126 million package with ESPN expires in 2020. A new deal could be three to four times higher, but only if the top AAC schools commit to stay in the conference, sources said.

By committing to stay in the AAC, those schools sacrifice the opportunity to jump to a more lucrative arrangement if a power five league like the Big 12 decides to expand. In return, those schools will get a bigger share of the conference’s revenue from its next media deal. The schools also get the stability that comes with a long-term commitment.

It is not known which schools will commit to a grant-of-rights deal. Emerging football power Central Florida, winner of 25 straight games, is the highest-profile AAC school and the most likely target by another league. AAC administrators want to make sure it isn’t lured away by another conference, which could be a draw for UCF after missing out on the College Football Playoff during both of its undefeated seasons in the AAC.

American Athletic Conference Media partner ESPN Terms 7 years, $126 million through 2020 Members: Central Florida Cincinnati UConn East Carolina Houston Memphis Navy* South Florida SMU Temple Tulane Tulsa Wichita State* * Navy is football only, while Wichita State is all sports but football.

Memphis, Cincinnati, Houston and South Florida are the other candidates most likely to be targeted by the power five, according to several well-placed sources.

If conference brass is able to lock up those top schools, they would create a level of stability the five-year-old AAC has not had before. Conference backers believe this move could be pivotal in Commissioner Mike Aresco’s quest to make the AAC part of the autonomy conferences, or the power six as he calls it.

Part of the negotiations have explored the possibility of top AAC schools making more revenue than others, which is drastically different than the conference’s current deal in terms of revenue distribution. Currently, the conference splits revenue evenly among its members. It’s unclear how a new distribution system that pays more to certain schools would be received by the rest of the conference, but the presence of UCF is expected to lead to a bigger media rights deal for the conference.

Having certain schools receive more conference revenue than others would be a marked difference than virtually every other conference, which share revenue evenly.

For a media company like ESPN, getting higher-profile schools to commit long term takes a lot of the uncertainty out of its rights negotiations. ESPN does not want to commit to a media rights deal only to see other conferences pick off the best teams. UCF’s Florida location, thriving Orlando market and on-field success would make it a prime target if the Big 12, the smallest of the power five leagues with 10 schools, revisited expansion. The Big 12 looked into expansion two years ago before deciding to stand pat.

While a grant of rights would provide that certainty, one source suggested that it may not be ironclad, saying that the possibility exists that such an agreement could be struck down in the courts.

AAC Commissioner Mike Aresco indicates that the conference wants to stay with ESPN. Photo: marc bryan-brown AAC Commissioner Mike Aresco indicates that the conference wants to stay with ESPN. Photo: marc bryan-brown AAC Commissioner Mike Aresco indicates that the conference wants to stay with ESPN. Photo: marc bryan-brown

Almost everyone in the business acknowledges that the AAC’s current deal, a seven-year agreement with ESPN that pays it an average of $18 million per year, is well below market value. This final year of the deal is worth about $23 million, or a little less than $2 million per school.

“Six years ago, we were in bankruptcy reorganization, with all the nonsense that went on with the realignment,” Aresco said at the Learfield Intercollegiate Athletics Forum in New York last week. “People gave us up for dead.”

The conference has had plenty of on-field success, highlighted by UCF’s undefeated run in football over the last two seasons. Seven teams will play postseason bowl games this season: Central Florida, Cincinnati, Houston, Memphis, South Florida, Temple and Tulane.

Aresco said that the conference was close to entering a negotiating window with ESPN, a partner that he clearly wants to keep.

“We understand the marketplace,” Aresco said. “We know what’s there. We know also that other networks are making bigger commitments to sports. We understand all that. But we think we’re in a good spot with a great partner. We’ll see what happens.”

Editor’s note: This story is revised from the print edition.