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Will NCAA Opt Out of March Madness Contract with CBS?

Richard Sandomir reported today that the multi billion dollar contract between CBS and the NCAA that has been at the heart of CBS Sports winter programming for years and is the foundation of the NCAA's financial success, contains an option clause allowing the NCAA to opt out of the contract following the 2o10 tournament. Will the NCAA run the risk of opting out in an economy that is far different than the one that existed at the time the contract was signed in 1999? Can the NCAA afford to run the risk that it might not receive the $545 million it has come to count on to smooth over any major dispute among its members?

The answer to these and other questions prompted by the opt out clause are not easy ones. The specter of the possibility of a bid for the tournament by ESPN no doubt hands heavy over both the NCAA and CBS. The NCAA probably is not enamored of the idea of moving its centerpiece off three weeks of prime time national network exposure, even for the WWLS billions. CBS, of course, is rightfully afraid of those billions and concerned about what the loss of the tournament would do to CBS Sports. Not only is March Madness a big moneymaker, even at the current inflated price, but it anchors winter programming by giving CBS the hook for its season long coverage of college basketball. No doubt that coverage would be significantly scaled back should CBS lose the tournament. In addition, March Madness is a major boost to CBS' coverage of The Masters, as the network fills the tournament with promos for "the tradition", "the Masters" to a point that is just shy of turning everyone off.

So, what is likely to happen next year? While I think that the NCAA will shop the tournament aggressively, and they would be foolish not to, ultimately they would like to stay at CBS. Expect an aggressive bid from ESPN, a less aggressive bid from NBC and CBS will have to try to figure out a way to keep the property while not losing their shirt. I think a new deal will be cut at a higher number that is probably lower than that proposed by the WWLS but keeps all of the games on the broadcast network in prime time, insuring the widest possible audience. CBS' excellent digital efforts will continue and the NCAA will share in what should be a rapidly growing revenue stream. Don't expect March Madness On Demand to remain free forever.

Full post as published by Sports Biz on March 17, 2009 (boomark / email).