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@rtXC1 @JRsec Yeah, if the ACC doesn't come out of the ESPN talks a huge winner, like doubling their contract, its not going to take long for the other three to come door to door with a sales pitch.
2 years, 9 months ago on Update on Big 12 Expansion | March
@Stemp @Hihoze For the record, networks never open pay. This isn't sitting down at the craps table, these companies know what they are doing in valuations. They estimate what they'll make at a low level and spread out risk over the course of a contract.
Don't assume they won't pay bucks for those non-marque games either. The Big12 sells well in cross promotion, e.g. they watch the other teams play. Everyone is interested to see if someone knocks someone off or how someone plays prior to coming to see you, etc. The Big12's inventory is deeper than you think
@Stemp market reach, or the amount of people in your market, is a metric, but what is also important, and often overlooked by everyone, but media companies, is penetration (along with frequency, crossover, etc, but I don't have all the numbers). The ACC has a market of 95M, but only gets 3M to watch. The Big12 has a market of 40M, but has 3M watch, the penetration is twice that of the ACC's within market and it pretty much says that the Big12 turns TVs on. The SEC is harder to gauge casually on penetration because their Tier1 is always national, so their potential viewer numbers are higher, but the penetration would be obviously lower.
Also, one of the things being tossed around in this contract leaks that doesn't get a lot of repeat traffic is that FOX is negotiating to carry Big12 games on the main Fox channel, not FX or another sister station, which ups the ante.
The "sharing" thing you brought up means a lot more if you have a branded cable network you're launching (like the SEC network or the B1G network) where you get carriage rights, paying you some flat fee to be carried on the subscriber's cable package. That's just head counting, but currently only B1G uses it with any degree of success. If you're not doing that, then it is gauged on penetration.
Assuming it is a pie in the sky land grab and assuming the main tobacco road universities are not available I'd move down the list in order:
1 - FSU - the main power and in Florida
2 - GTech - Atlanta market
3 - Clemson - Good Football brand, Georgia/SC markets
4 - Miami - History and the Miami area
5 - VTech - Good Program, limited market
6 - Maryland - Weak Program, big market
7 - Pitt - Weak Program, so-so market since its a rabid pro sports town. You could argue there are more WVU fans in Pittsburgh than Pitt fans.
2 years, 10 months ago on Update on Big 12 Expansion | March
@Stemp @chrispy I'm with Stemp on this one. A&M will out alumni OK in Texas, but at the same time, just adding A&M doesn't have the same impact as having UT and it pales when you add the other three Texas schools. The SEC now has a foothold in Texas, much like the Big East does, but the Big12 still owns Texas.
@IveyLeaguer Look in clauses are the little brother of "open" clauses. They don't have to do anything, but look. Usually its to make sure you don't make less money through expansion. (For instance if they didn't look the SEC would stand to lose almost $3M per school by moving to 14) An open clause makes them go to market with a change. The media partner then has right of first refusal, using a mediator if both sides don't agree. Of course, without seeing the contract, its all speculation. But, fun-time-wasting-instead-of-working speculation. :)
2 years, 10 months ago on ...like the 47 cents in your Camry's ashtray." | March
@ecdawg LOL true!
@ecdawg Hahaha, nothing wrong with asking for more, we agree there. I don't believe the market will pay 5-7B for 1&2. It should be interesting to see how it plays out this summer.
@ecdawg I know they have higher viewership, but $40-50M is just way too much. That's a $700M per year pay out...you're just not selling enough ads at a 4.2 rating to justify that. The SEC had the higher viewership in 2009 when they signed that deal. A&M and Mizzou didn't add that much except a potential higher value in Tier 3 since the SEC games are already national. Keep in mind too that the networks don't want it getting too unbalanced, so they'll keep payouts around 1-3M per team between the football power conferences. Moving to 20-22M in a "look in" is reasonable. Its on par with B1G, Pac12, slightly ahead of the Big12 and considerably more than the ACC and BigEast who really don't have much football content even if they have a higher population.
Now, I'm not saying that they shouldn't be worth more at all, just that we need to temper excitement on if we're going to hit the lottery. I think the jump the Big12 saw, who has a horribly undervalued Tier 1 deal currently, doesn't mean that a look in on a new contract will demand the same jump. Adding $5M per team is an $110M per year increase, which would be $1.65B more over 15 years. That's more than the entire Big12 combined just by adding two teams who, if they were worth that, would have crushed the Big12 with their departure.
Since Texas makes $15M on their Tier3, Kansas makes 8-10M, UNC makes $11M (the three biggest tier 3 draws in their respective conference who would lose money if they split it evenly) and the Pac12/B1G make around $10M per year on 3, I can see something similar in a SECnetwork. This would put total pay out if it was done this summer at somewhere around $20-22M for 1&2 and $30-32M total with 3 added. That seems much more achievable to me than a half billion raise per year.
The one thing not being taking into consideration here is that the Big12 deal was an old deal. The SEC's deal is still pretty new at 2009, so they were already set for the market, where the Big12 was making only $60M per year off their Tier 1. Most of this is market correction and feeding less mouths. Remember, the SEC needs to gain $40M more per year just to break even with adding 2 teams. A&M and Mizzou aren't worth a billion combined, so lets say the the growth is more reasonable around what the Big12 used to make at $60M a year, still a pretty good pull. That's enough to pay for the new teams and put about $1.5 (ish) into everyone's pocket. $5B seems a bit of a stretch for 3 years into a contract and 2 new teams. My guess is closer to 4.
The only kicker is if they add Tier 3 to the mix. Usually this means a game, per team, per year in football and the Olympic sports, not to mention other programming. This is why the B1G/Pac12 agreement happened...content. With Tier 3 Pac12 is paying out $30M total, B1G should be similar when they renegotiate in 4 years. If the SEC gives up their tier 3 and a lot of content (including radio, internet, etc), I can see the total deal going up to $30M per team too. (The ACC has all tiers with Disney and they are around 15M per year, so this is still a crap ton of money) That's great for the Mizzou's and the Vandys of the world, but the big boys in the SEC may be able to make more in Tier 3 if they go it alone.
At the end of the day though, while TV is nice, its not even the bulk of most of the big school's budgets. Bama's budget is 100M a year, Texas is 150M a year, and its primarily due to ticket sales. That's still where the real money is.
I'd love to see how this "look in" is going to be structured. If you just go on the fact that the Big12 got money, you'd expect a windfall, but the Big12 was way under market being the only conference not to update yet. Their Tier1 only paid $60M a year and even the new contract is "only" 100M. In order for the SEC to break even with moving to 14 they need to add $40M a year, to add $5M to everyone's pockets they need to add $110M a year. Considering A&M and Mizzou weren't the crown jewels of the Big12 (great schools yes, but not the top producers) can they bring this value to the table? Where they worth it in the Big12? I hope so, as the SEC is definitely worth more, but I'm not going to get too excited yet.
2 years, 10 months ago on Slive Talks Scheduling And Television
@danny393 Kansas made $7.5M off their Jayhawk TV in 2010 and, until TLN, they led the Big 12 in Tier III revenue. You can grab it here:
"Broadcast, television, radio, and internet rights" in the line item is Tier III, the NCAA one above them is Tier I and II. Granted its three years old, but its still telling how much there is to be made in Tier III. Even ISU made nearly $3M.
@rtXC1 Yeah, some factor that allows games in Texas will have to be there, whether its a pod format or different split or like you say, guaranteed games. It happens in other conferences too. In the Pac12 its all about SoCal. One of the reasons UT/OK got the veto was because they demanded games in SoCal and the Colorado/Utahs of the world said "whatever". I seriously believe though that the Big12 is happy where they are because they get to play everyone. Expansion will have to occur because it generates crazy money now.
@Stemp The SEC will renegotiate their contract with the addition of A&M and Mizzou, which will drop what they make per school if they don't since they are feeding more faces now at 14. But remember, it probably won't be as huge of a gain as the Big12's because the SEC already negotiated a new deal that goes until 2025. The Big12 was last to negotiate, which has the downfall of you're not making as much at first, so you can get raided, but you can make more when your time comes because its the newest deal. B1G will have the next huge jump in 2016. What you're seeing is the end of market settling, not the beginning of it.
No, I agree with you, hence the "lawsuit" comment, but it probably is an indication of escalator clauses in the contract. Just like we knew they'd renegotiate $4M more per school but not the exact details It doesn't make sense that if you expanded in a specific way that there wouldn't be incentives to do so. And if the networks want you to expand to a conference game their has to be a lure. Currently the Big12 has zero incentive to expand. UT will make $35M a year after Tier 3, Kansas will make almost $30M...even ISU, who doesn't have much tier 3 is going to get a raise from $9M in 2009 to $20M in 2012. Why do you need to expand if not for more?
As for the stability/recruitment part. I'm not buying that. Texas gets way more blame than they deserve to be honest. Granted, they are the big cheese as there are very few schools nationally that rival them in size and scope. Those that do tend to win their battles too. When Big 12 schools play against Texas and OK, they have higher ratings, which generates more recruits. If the league is stable for 13 years that's not a noose, that's an invitation to show case your school inside Texas. There aren't many schools out there that have that pull. Its also why the round robin is favored by all, ISU gets to play in Texas. Any split of conference won't happen if the north teams don't play down south. That's what doomed them the first time.
Caught some wind that the contract they are talking about has riders in it that increase the total by about $2M per school if specific schools are added in expansion. BYU is reportedly on the list, as I'm sure FSU and Clemson are. These tiers are 11, 12, 14, and 16 for inventory reasons.
So, to track that, if they take BYU to get to 11, the payout increases to $22M, if they get another team, its $24M. If you then dangle that payout in front of FSU and Clemson to get to 14, the payout for all schools goes to $28M for just Tier 1 and 2. (Kansas reportedly makes $9M in tier 3 and UT makes $10-15M)
If this is the case the Big12 was just handed a big gun to go hunting. Though I kind of doubt a media company would create such a list and risk a lawsuit.
@Stemp Well, there are a few different arguments here, but its really boils down to value.
When Colorado and Nebraska left, the TV partners looked at the remaining 10 schools and said, "You lost around 17% of your schools, but we believe you only lost 8% in value. If you can keep the conference together, we believe its worth the difference" Colorado didn't bring much TV wise and Nebraska had soured in recent years. They had a brand and it hurt to lose them, so my take is they were really the 8%.
When A&M left it was a blow because they were a historically high profile school, but since joining the Big12 they didn't really do much outside their rivalry with Texas. (one that took a backseat to the Red River) As far as the TV networks are concerned, as long as UT is in the conference, with their 2 million alumni, 90k students a year, etc, the Big12 owned Texas. They just needed to find product, in Texas, to give a fourth team that was competitive in football. TCU fit that bill especially since they were in DFW. From the networks' Big12 value perspective, it was seen as an even swap.
Mizzou is a different cat all together. Sure, they are the only big school in Missouri, but the KC market is flooded with KU, KSU and ISU, all within 3 hours, and the STL market was split with Illinois. No one in the Big12 is crying over Mizzou leaving, they've been begging to be out for a long time, and most believe WVU puts a better TV product into the mix. So that's a win in my book. I often wonder if the SEC took UM over WVU at the request of the Big12 to be honest. Sort of like a "we won't sue" deal.
So they lost 4 schools, gained 2, and have the same TV value they had with 12 schools - contractually. They actually increased their Tier 2 with 10, so its not like they're going down.
All of that being said, A&M and Mizzou were worth more to the SEC, due to the footprint, than they were to the Big12. The same way Clemson and FSU are worth more to the Big12 than the SEC, since they already have a grip on those states. This is almost a case of addition through subtraction. Now, would it have been better if nothing changed, perhaps, but it did. So now that you have a core of schools who are committed to each other, the question becomes how to you add value to your product.
The ACC has very little football value, which is why their renegotiated contract with 14 schools didn't provide much. Football is around 80% of the revenues, basketball is just icing. And its not like the Big12 doesn't make basketball money, they have just as many in the dance this year and Basketball cash is split.
This is about chasing B1G, SEC and Pac12. The ACC missed that boat, the Big12 has a shot, but only if they do it right. The Big East isn't even in the picture.
@Stemp OU is a national brand, they dominated for decades. Its the same as the SEC, Pac12 and Big 10...you have 2-3 national brands and many who can play ball from year to year.
The Big12 currently makes the same or more money as the ACC's new deal with the Big12's old deal....with 10 members. Their Tier 1 deal is old and comes up in 2014. It currently only pays out 60M a year...some conferences are closer to 200M. Even if it only goes to 100M it will pay out $4M more to each school, increasing them from 18M to 22M...with 10 members. This is why the Big 12 isn't just looking to add UL for the hell of it, no sense splitting the pie if they don't bring more revenue to the table.
The only deals that make sense to go to $25-$35M a year aren't for the current 10 schools, that will peak around $22ish. It is if they expand greatly in the SE (where people watch football) with brands and demographics. Now, I still don't think it will happen, but if you did add power in markets that the SEC isn't going to expand further in, giving you an additional 15M households, and national brands - that's worth adding major chunks of money from networks, plus provides you with the opportunity of launching a tier 3 network, even without UT for the next few years (or bake it in if the money is matched at 10M a year per school like the Pac12/SEC project)
@Stemp @Hihoze Easy, they don't watch football or have a football brand. The SEC has a huge contract and Florida is their biggest area with #4 in population and they split it with the ACC. Georgia is second with #9 pop. Texas is #2 and they own the state, so its not like they have nothing. If you combine Florida and TX, its a network's dream of rabid football fans.
Keep in mind, the ACC used their new strength and got a new deal, until like 2025, and it is worth about the same as the current Big12 (17-18M), which is the only major conference to not renegotiate their tier 1 yet (its up in 2014). If they stay at 10 they'll make more than the ACC (around 22M), but if they expand with a few big football schools with big eyeballs, the numbers could get staggering compared to the ACC.
- Its about the all mighty football and fans who want to watch it.
- Then it is about TV demographic and size of the states with these fans
- Then it is about academics, geography, travel, etc.
NBC is the wildcard here, as their contract with ND is up soon and they have had horrible ratings. They've also been out positioned by ESPN with other conferences and want a piece of the BCS bad.
@Hihoze Totally agree, its why I didn't mention those two schools. BYU, while having a big fan base, isn't pointed in the direction the Big12 is heading. If they wanted to go west, they would have struck a deal a year ago instead of going with WVU. The gem is ND, but it will take a HUGE upside for ND to do that, however NBC could be the sleeper in how this plays out. They've not only been out played by ESPN in every attempt they've made to start up a BCS deal, but their ratings with ND have been slipping as well (and the contract is up in 2015...same time as the Big12's). It would make sense for them to lead with a ND game and back it with a Big12 game every Saturday, including night games like ABC and CBS hold. And just like ESPN reached to make sure it kept a hand in the game with UT, WAAAAAY over paying for tier 3 rights, NBC may be willing to dangle a huge carrot to fill out their programming in the Eastern and Central time zones, if it includes big eastern football powers.
As for UL, they're a growth school, not a traditional power that the Big12 is looking to add. I can see them being a filler, but not a lead school. Doubt they'll pull it off, but if you got FSU, Clemson and Gtech, filling 14 with UL makes a lot of sense. You lose nothing to gain a 35 market with a huge BBall presence. UL and Cicni though to get to 12, eh, I doubt that will bring the extra money needed to justify sharing the pie.
Let's assume, for easy math, that the Big12 can expand their tier 1 to 100M a year in the new contract without expansion, up from 60M now. That nets each school an additional 4M a year, paying a total of around $21M a year. Not a bad take. However split that by 12 and you're making $17.5M a school, which is where you are today. In order to just break even the contract would need to grow by an additional $42M a year....to break even! I just don't see UL or Cinci seducing a half billion over a decade out of the networks, which would mean the Big12 would stay at 10.
UL and Cinci, who probably pull in close to $5-10M a year in TV now, have a lot more to gain in this than the Big12, who has a lot more to lose. Go big or go home comes to mind.
2 years, 11 months ago on Embracing Big 12 Membership: The Return of Real Football | February
TV numbers is the only reason those Clemson and FSU rumors have any life. The ACC is locked in at that new number for quite some time. The SEC just stated they paid a huge raise to its schools this year and they are locked in for a decade. Are A&M and UM worth enough to CBS to open negotiations to the tune for $40M a year that it needs to be just to break even with what they made before expanding? Probably not. This leaves everyone a step behind B1G and Pac12 who are looking to gain $25-$35M per school without more expansion, that's a $10-20M PER YEAR difference over the ACC!
The Big12 currently pays out around 17ish with 10 schools, which is more than the new ACC deal. If they could bring in some TVs in the east with national players (FSU, Clemson, etc.) they could not only open up their Tier 2, but also be ready to cash in heavy on their Tier 1. Not only would you have national marquee games within the conference, but you'd also have natural SEC/Big12 national rivalries with UT/A&M, UK/UM, Clemson/SC, GTech/UG/, FSU/Florida, that easily matches the B1G/Pac12 partnership.
With no changes, the Big12 should be able to net around $20-$23M per school with 10.
With 12 you will add about a mill per school, depending on the schools, due to the added championship game.
With 16 by adding big name football schools in states the Big12 isn't , you could get up to $25M. (Its pretty easy to absorb a $25M buyout, when you make $10M a year more over a decade. Look at the raise WVU is going to get in June)
Add a Big16 network, let NBC finally get a bid put together without being blocked by ESPN, and partner with the SEC on shared content like the B1G/Pac12 deal and you could add another $7-10M a year per school in tier 3, exactly the same way that the Pac12 is doing it, because Texas and Florida competes easily with California, Arizona, and Washington, in TVs. (Also, at $35M a year, ND starts to pay attention too, though I think that's far more unlikely than robbing the ACC)
The math is pretty simple on where the ACC is weak due to being boxed in geographically and tied more to academics and BBall. Its just a matter of time before they make a big move to stay even with, not the SEC, but B1G/Pac12.
The only issue is OK and UT won't be in the same division if they split. The whole crux of going to 12 is seeding a championship game. Having them both in the same division favors the North. Also, everyone wants games in TX, that's the power of the conference. What will most likely happen is TX in the east and OU in the west, with a 5+2 session. OK and TX could keep the red river out of division. So...
ISU (KState as a perm two)
Kansas (KState as a perm two)
UT (OK as a perm two)
OU (TX as a perm two)
KState (ISU, KU as a perm two)
They won't take Cinci. They'll stay at 10 if 2 solid candidates don't present themselves and stick with the round robin. They also own the TM for Big16 for a reason. If they do move, expect a big move. BYU and UL were in discussion when WVU wasn't available. They got the best two girls at the dance at the time, no need to expand if you don't get enough out of it to make everyone more money. The ACC learned that.
2 years, 11 months ago on Weighing In On Big 12 Expansion | February