Big Ten and other Conference Expansion

[MrNuke]

I agree, which is why I never viewed Rutgers as some magic bullet to the NYC market. I think it would take a combination of a couple of strategically located East Coast schools + Notre Dame + the lure of games against the traditional Big Ten schools to begin making an impact. The BTN will never displace pro sports as top dog in the Boston to Washington corridor. It could begin having enough impact and success though to get ESPN's panties in a bunch.

I think you'd need to decide if you are trying to annoy ESPN or trying to do what is best (profitable) for your existing schools.

The NY-NJ-CT-PA metro statistical area includes about 22.2 million people. Using the national average of 2.6 persons per household, that is about 8.5 million households. I'll assume 80% of the households have cable, or 6.8 million. At 90 cents a month, that is $73.8 million a year, or just over $37.6 million for the conference's 51% ownership. Ignoring for a moment the serious doubts about Rutgers or UConn delivering that area on their own, assuming they did it is an easy decision. I agree with you though that Rutgers isn?t a ?magic bullet? as you put it. What if it took both schools? You are down to $18.8 million per school, a nice chunk of change for sure but already to the point where the subscribers fees alone didn't pay for the expansion. What if you had to add Syracuse as well to "lock up" that area? Then you?re down to $12.5 million from each of the three schools. We?ll see what the perceived value of these schools is within a couple of years when the Big East tries to negotiate their new television deal.

Missouri has about 2.7 million households, again assuming 80% have cable, the math comes out to $23.3 million in annual subscriber revenue, or $11.9 million for the conference. It is certainly a nice starting point towards economic viability, but it again doesn't get you there completely. Maryland has similar numbers.
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As it stands as of 2009-2010 each of the 11 schools made $6.5 from the BTN rights fees and $8.4 million from the ABC/ESPN and CBS rights fees, or 56% of the television money was still coming from the traditional ABC/ESPN and CBS contracts. Add in the conference championship game revenue and shifts slightly further towards the traditional contracts. Obviously when the BTN turns profitable for the schools that formula shifts significantly. At the same time, in 2017 the conference is due for a huge payday from the re-negotiating of the existing ABC/ESPN and conference championship game contracts. My point is it is possible even probable that in 2017 the traditional contracts will still be bringing in more money than what the conference is getting from the BTN. At that point, you need to factor in traditional things like how many people actually watch your games and not just potential households into expansion decisions. And I think that is what the conference did in round 1.

 

[Jaxbuck]

I think you'd need to decide if you are trying to annoy ESPN or trying to do what is best (profitable) for your existing schools.

The NY-NJ-CT-PA metro statistical area includes about 22.2 million people. Using the national average of 2.6 persons per household, that is about 8.5 million households. I'll assume 80% of the households have cable, or 6.8 million. At 90 cents a month, that is $73.8 million a year, or just over $37.6 million for the conference's 51% ownership. Ignoring for a moment the serious doubts about Rutgers or UConn delivering that area on their own, assuming they did it is an easy decision. I agree with you though that Rutgers isn?t a ?magic bullet? as you put it. What if it took both schools? You are down to $18.8 million per school, a nice chunk of change for sure but already to the point where the subscribers fees alone didn't pay for the expansion. What if you had to add Syracuse as well to "lock up" that area? Then you?re down to $12.5 million from each of the three schools. We?ll see what the perceived value of these schools is within a couple of years when the Big East tries to negotiate their new television deal.

Missouri has about 2.7 million households, again assuming 80% have cable, the math comes out to $23.3 million in annual subscriber revenue, or $11.9 million for the conference. It is certainly a nice starting point towards economic viability, but it again doesn't get you there completely. Maryland has similar numbers.
---
As it stands as of 2009-2010 each of the 11 schools made $6.5 from the BTN rights fees and $8.4 million from the ABC/ESPN and CBS rights fees, or 56% of the television money was still coming from the traditional ABC/ESPN and CBS contracts. Add in the conference championship game revenue and shifts slightly further towards the traditional contracts. Obviously when the BTN turns profitable for the schools that formula shifts significantly. At the same time, in 2017 the conference is due for a huge payday from the re-negotiating of the existing ABC/ESPN and conference championship game contracts. My point is it is possible even probable that in 2017 the traditional contracts will still be bringing in more money than what the conference is getting from the BTN. At that point, you need to factor in traditional things like how many people actually watch your games and not just potential households into expansion decisions. And I think that is what the conference did in round 1.

Excellent analysis. Learn to work in a scUM joke to posts like that and you'll have more green chicklets than you can ever spend.

 

[MrNuke]

The issue is that the carriage agreements between the BTN and the cable operators stipulate that the cable co must move to the upper-tier pricing and place the channel in basic-expanded in the states where a Big Ten member institution resides.

The BTN/Big Ten/FOX/Nebraska are going through this right now with the local cable companies. Publicly at least, Time Warner in Lincoln is still maintaining they shouldn't have to pay a higher rate. As a result, the conference hasn't officially assigned Nebraska's first two games to the BTN http://www.huskers.com/SportSelect.dbml?DB_OEM_ID=100&KEY=&SPID=22&SPSID=3, and they are threatening to black them out to any cable provider refusing to play ball in Nebraska. Omaha and Cox Cable are reportedly much closer to a deal as Cox was already paying something in between the in-market and out of market rates.

I don't think the contracts with cable companies say if we take your team you automatically must pay us the in-market rate though. What is going on in Nebraska is an example of that. It is more like the Big Ten/BTN/FOX are going in and saying if you are an in-market cable operator you need to pay us the in-market rate and put us on expanded-basic.

Right now the Big Ten gets a couple cents from the people in NY who order the premium digital package that includes BTN. Add Syracuse, and in a year TWC make BTN .88 cents for every single person that lives in the state of New York, even if they never watch one second of the channel.

This is why so many people think Syracuse & Rutgers joining the Big Ten is a fait accompli.

Yeah and what I'm saying is that taking Syracuse doesn't automatically mean every person in the state of New York is going to be delivered on a silver platter. It isn't the same situation as trying to negotiate (hint there is very little to negotiate from the cable company's perspective, they have no leverage at all.) about Nebraska football games in Omaha or Lincoln or Ohio State games in Columbus, Dayton, or Cleveland. Try and pull that with Syracuse for New York State or a Rutgers, or a UConn and you'll likely have cable companies simply saying no thanks. At a fundamental level you still have to have enough interest in the target area to force the cable operator's hand.

 

[MrNuke]

Excellent analysis. Learn to work in a scUM joke to posts like that and you'll have more green chicklets than you can ever spend.

Thanks, and noted. Was going to try and work a Domino's pizza joke in there somewhere, but nothing came to me.

 

[TDunk]

Thanks, and noted. Was going to try and work a Domino's pizza joke in there somewhere, but nothing came to me.

*Hint* look up Larry Harrison and think pizza delivery.

 

[Buckeye737]

Rights fees in the context of the BTN actually means something different than the ~$1 carriage or subscriber in market monthly fee. The conference makes money in 3 ways from the Big Ten Network.

It obviously owns 51% of the joint venture with Fox. So 1) Ultimately they will get 51% of the subscriber/carriage fees 2) They will get 51% of the advertising revenue. 3) the BTN deal with Fox includes a traditional rights fee from Fox for the right to broadcast games. This part of the deal is exactly like the traditional Big Ten deals with ABC/ESPN and the CBS basketball deal. This is also the widely reported $2.8 billion/25 year aspect of the deal. the $2.8 billion is what Fox is paying for the rights (and it may include some of the advertising revenue as well). Through at least 2009-2010, part 3 is also where the all of the $65 million+ a year revenue the conference got from the Big Ten was coming from.

Once Fox's initial investment in the BTN is recouped, the conference will start seeing it's share of the 51% profit. At that point a significant chunk of the revenue from the network will be coming from that $1/subscriber/month fee will represent a significant chunk of the revenue. But you still have the advertising revenue and the traditional rights fee components, which are more tied into how may people are predicted to/actually are watching.

Very well put. Just to add to your point - the rights fees that Fox pays to the conference for the BTN games will undoubtedly go up with Nebraska, and by more than a 1/12 increment IMO. Also, the rights fees going up is particularly important since the conference gets all of that cash before Fox gets to stick their hands in the cookie jar for 49%.

There are some smaller points that I can add to your three main ways the BTN makes money. First off, the ~$1 per month subscriber fee is not equal in all Big10 states. I doubt the conference will shoot for the moon right now when trying to get BTN on TimeWarner's expended basic package, but in the future, the BTN could become so popular in Nebraska that closer to a $2 subscriber, if not more. I admit that is totally conjecture, but it wouldn't surprise me in Nebraska.

Also, the demand for the BTN in cities like NYC and Atlanta will continue to go up with the addition of Nebraska. It may be a small increment, but it well help. It's possible that the BTN could start demanding fees of $0.16 per NYC subscriber instead of the $0.10 they get now. Not to mention the fact that even a state like Ohio will now have a small increase in demand for the BTN.

 

[scarletmike]

Very well put. Just to add to your point - the rights fees that Fox pays to the conference for the BTN games will undoubtedly go up with Nebraska, and by more than a 1/12 increment IMO. Also, the rights fees going up is particularly important since the conference gets all of that cash before Fox gets to stick their hands in the cookie jar for 49%.

There are some smaller points that I can add to your three main ways the BTN makes money. First off, the ~$1 per month subscriber fee is not equal in all Big10 states. I doubt the conference will shoot for the moon right now when trying to get BTN on TimeWarner's expended basic package, but in the future, the BTN could become so popular in Nebraska that closer to a $2 subscriber, if not more. I admit that is totally conjecture, but it wouldn't surprise me in Nebraska.

Also, the demand for the BTN in cities like NYC and Atlanta will continue to go up with the addition of Nebraska. It may be a small increment, but it well help. It's possible that the BTN could start demanding fees of $0.16 per NYC subscriber instead of the $0.10 they get now. Not to mention the fact that even a state like Ohio will now have a small increase in demand for the BTN.

Those last few points are something I feel are actually rather major, but most might consider minor. Does the school you add have the possibility to increase demand in your current viewership area even more or abroad to increase the fees elsewhere? I don't think a lot of the current BE schools do, but the flipside is that the list of schools that would do so is extremely short, and are basically the backbones of other conferences (or think they're too good to be in a conference). Are the resulting tradeoffs worth it? Maybe, but you aren't going to change the pro-focused East Coast unless there are two or more major pro sports in lockout for more than two seasons (in other words, you have a better chance of getting subscribers on the moon before you get the East Coast to care about college athletics in any really meaningful way).

 

[Jaxbuck]

Thanks, and noted. Was going to try and work a Domino's pizza joke in there somewhere, but nothing came to me.

If all else fails just say Fuck M*ch*gan.

You can never go wrong with that.

 

[muffler dragon]

If all else fails just say Fuck M*ch*gan especially any and all traitorous bastards that turn their back on their native Ohio.

You can never go wrong with that.

FIFY (but it may be too long to remember).

 

[Muck]

Maybe, but you aren't going to change the pro-focused East Coast unless there are two or more major pro sports in lockout for more than two seasons (in other words, you have a better chance of getting subscribers on the moon before you get the East Coast to care about college athletics in any really meaningful way).

Let's keep our fingers crossed.

 

[jlb1705]

(in other words, you have a better chance of getting subscribers on the moon before you get the East Coast to care about college athletics in any really meaningful way).

Lunars & Leaders?

*in before Jim Delaney

When they rename all of the trophies they'll be sure to force in the names of some lesser figures from places like Penn State and Iowa so things are politically correct, even though everybody knows Purdue has dominated outer space.

 

[BB73]

CBS

Temple recruits: Move to Big East coming soon

Cont'd ...

 

[Jaxbuck]

CBS

Comments section:

This makes alot of sense for the Big East. Temple is a sleeping giant in the fourth largest TV market in the country. The ratings which the team drew when they played UCLA in a bowl game in 2009 , drew record TV audiances in Philadelphia.
As one can see the conference already is helping Temple to recruit with 20 verbal recruits already. Golden turned the team to where they are now competative withthe rest of the Big East. Temple has beated U Conn the last two years and U Conn went to a BCS bowl game last year.
The 12 team format makes great sense as the league looks to restablish it's football heritige.
Temple has made the commitment to stay competative scheduling teamd like Maryland Notre Dame , and Penn State. If they can protect the fertile recruiting grounds in Pa , Southern NJ , and Maryland they should stay solid. With their new Florida coaching staff, they should even be able to snag a few players from the Sunshine State.
Go OWLS

 

[BUCKYLE]

Comments section:

What's so fucking funny?

Temple has beated U Conn the last two years and U Conn went to a BCS bowl game last year.

Beated. Deal with it. Get used to it.

 

[muffler dragon]

CBS

I just wish that the Big LEast would get Ntre ame to get off the pot and join. That way I don't have to worry about those fuckers contaminating the B1G.