You would think that risk adverse university presidents wouldn't make a move that risky without thinking they could increase their yearly revenue share by at least 20 percent. That requires increasing the Big 10's total revenue to over $422 million.
That's a 75 percent increase in total revenue for the Big 10 simply by adding teams like Pitt, Syracuse, Missouri, Rutgers and UConn. Why not mention Notre Dame? Because if they could get Notre Dame, they wouldn't keep adding teams.
TV Revenue is based on eyeballs. Let's look at some numbers.
- Currently there are about 303 million people in the US.
- The Big 10 state by state footprint includes 67 million people. That's 22% of the nation's population.
- Adding Missouri, UConn, Pitt, Syracuse and Rutgers would increase their coverage by 37.5 million homes. Or about 56 percent.
But I digress. About 3 weeks ago, Dennis Dodd pointed out this math:
Cable television analyst Mike Reynolds of Multichannel News estimated that the Big Ten is getting a subscription fee of 70 cents per month per subscriber within that eight-state Big Ten region. Outside of that area, he says, the fee drops to 10 cents.*UPDATE: I blew the math big time. Here's the better math. Adding Missouri changes the Big 10 revenue opportunity to $15 million in the state of Missouri. However, they need to add $22 million for the league to break even. The math isn't terrible for the Big 10 in theory (unlike what I wrote in the 2 paragraphs I'm striking below). But it's not clear that residents of New York, Connecticut and New Jersey will put the same value on the Big 10 Network that residents of Michigan and Ohio do.
Take the state of Missouri as an example of the profit potential for the Big Ten. The state had an estimated 2.2 million households in 2008. Let's assume that almost all of those have satellite or cable or both. If the Big Ten added the University of Missouri, it could potentially increase those subscriber fees from 10 cents per person to 70 cents. That's the difference between a gross of $220,000 and $1.54 million per month.
To make the math work, you'd basically have to double the value of the TV deal in the *existing 8 states* to $1.40 per household *and* double the non-Big 10 states fees to $0.20 per household to get to numbers that make sense for expansion.
As point of comparison, the NFL Network charges Comcast $0.40-0.45 per household (update: per month) for viewers of the most important sport in the United States (as of 2009). That's down from the $0.70 asking price that the NFL Network put in front of Comcast.
Now...can you get the massive revenue needed if Notre Dame is one of the 16? Maybe. But like I said earlier. Why go to 16, if you get Notre Dame in the fold. You're in a less risky position to just stop at 12.
Like I said...I don't think the 16 team Super Conference is coming. Not right in the next 2 years anyway.
PWD
18 comments:
I doubt they pay out the $22 Million on a monthly basis. Therefore, the subscriber fees of 1.54 million a month should be multiplied by 12. You get a much better figure if you do that (and one that would make more sense). It would still be under your $22 Million per team point, but adding over $10 million a year in TV revenue alone isn't shabby, considering the ADDED bonus that the Big 10 Title game would bring in monetarily, especially if the Big 10 network licensed it to a major network for the first couple years to draw interest.
Will - Yeah, I blew the math. lol.
Hang on.
Will - the SEC title game adds about $14 million per year. So yeah...adding Missouri could make sense.
But I still think the weight of a 16 team league is too much.
YAWN
One thing Michigan and others probably are considering is the "depopulation" of that state and manufacturing in general from the Midwest. Eventually, it will mean less money, from contribution to the number of eyeballs in the TV count.
There's always the possibility--which doesn't get mentioned very much--of a move to a 14-team league. For the SEC, in particular, it could be a very good deal if they could poach the right teams. Texas would be a no-brainer, and Va Tech might be as well. That would not require adding another conference game, as teams could play all schools in their division and two from the other side.
Chris,
Politically, Texas can't go anywhere without A&M. Especially, not with an Aggie in the Governor's mansion.
PWD
Paul,
Why do the Aggies require being in the same conference as UT? We manage to get the Nats on the schedule every season and they haven't been conference mates in like 50 years.
Baylor and Texas Tech might have a say in where Texas and A & M would go. If memory serves me correct, there were quite a few of their alums in the state legislature who made sure that the first two schools would be taken care of when the new Big 12 was formed.
This especially applies to Baylor. What other reason would the Big 12 have taken that school rather than TCU or Houston.
Comcast got a good deal. The NFL Network screws small operators like the one I work for to a tune of $.93 per subscriber. I guess having 10 million subs to offer is a little better that 10,000 though.
Deep down inside Gerogia Tech knows it's an inferior program. A&M has deluded itself to the core. A&M is entirely dependent on Texas to provide it with any sort of perceived clout. Separating the two would be the equivalent of a small child telling the Aggies they're wearing no clothes. Texas A&M and Texas are inseparable for that reason. The Great State of Texas will hamstring the Lognhorns just to keep the Aggies from self-realizing their true mediocrity. On top of that, the Great State of is going to try to convince anyone looking at Texas and the Aggies that Baylor and TT are mandatory, too. But when push comes to shove, I imagine Baylor and TT will be the ones shoved.
Financially Paul, Texas and A&M are worth it, even if a mandatory pair.
I'd be more than happy to add them, or for that matter North Carolina plus a mandatory Tobacco Road partner (not all 3, but at least 1).
Your overall premise though, is sound in my mind. Any conference adds ND or Texas, but without them >12 is unreasonable.
Dante, I must admit I find it hard to believe there is a more deluded fanbase out there than Tech's.
But I see your points.
PWD - where did you get your HH #'s for the Big 10 picking up UCONN, Pitt, Syracuse, Rutgers & Missouri. Nielsen list the HH in those markets as
NYC - 7.5 mil
St. Louis - 1.2 mil
Pitt - 1.1 mil
Hartford - 1 mil
Syracuse - 385k (or 2.7 mil for all markets in Upstate NY)
That is just 12.4 mil TV HH.
Also, I heard something on Sportscenter last night that I had never heard before - should some of initial four schools (ND, Missouri, Nebraska, and Rutgers) turn down the Big 10.
Apparently, the Big 10 is prepared to make overtures to some outside the box schools - Maryland, Ga Tech and Vanderbilt.
My first thought is no way that makes no sense, but a marriage between any of those three makes sense for all parties. Heck they probably make more sense than NE, UCONN, Syracuse & Pitt.
1. Maryland gives the Big 10 the DC TV Market which is a Top 10 market. They would be a natural rival for Penn State and they have football & basketball credibility. Maryland receives about $6 million a year from the ACC. The Big 10 can pay them $22 million.
If the Big 10 adds MD & Rutgers, they would have 4 Top 10 TV markets and 7 of the Top 20.
2. Vanderbilt does not makes as much sense from a TV market standpoint (although Nashville is growing) or football standpoint. But they have the right type of academics, they are centrally located for travel and they have a well-rounded athletic department. I am not certain of the relationship between Vandy and their former president (OSU Pres. Gordon Gee) but they would make more $$$ in the Big 10 than the SEC by about $5 mil.
3. GA Tech sounds like the outlier but probably makes more sense than Vandy. Atlanta is easy to travel to and from, the academics are right. Tech would make more money in the Big 10. The Big 10 picks up another Top 10 TV market. The only knock on Tech is that it does not have as well-rounded female athletic program.
If Tech joins the Big 10 with MD, Rutgers, & Missouri, then the Big 10 would have the following Top 35 TV markets:
#1 - NYC
#3 - Chicago
#4 - Philly
#8 - ATL
#9 - DC
#11 - Detroit
#15 - Minneapolis
#18 - Cleveland
#21 - St. Louis
#23 - Pittsburgh
#25 - Indianapolis
#27 - Baltimore
#32 - Kansas City,MO
#33 - Cincinnati
#34 - Columbus
#35 - Milwaukee
That is 31,629,820 TV HH according to Nielsen.
Also, you could probably argue that adding Pitt does not help you gain more eyeballs because Penn State already gives you part of the Pitt TV market. Would you really need to add Rutgers, Syracuse and UConn? Unless those schools are negotiating as a complete package, you could probably take one or two of the three to get NYC market. Syracuse probably is linchpin to the rest of the 2.7 mil HH in Upstate NY. If that was metered as one market it would #5 in the US.
Anon 10:23,
I used *total population* as a proxy for the audience size. However, the cable networks are paid on # of households. Which is an obviously much smaller number.
It's a confusing mix and match of information / stats in my article. I tried to acknowledge that above, but I didn't do a great job of that.
PWD
PWD - No worries. I was just trying to figure it out. You are doing a good job as always and I appreciate the time you devote to the site.
In light of other off-season discussions that focus on bad behavior, recruiting and the like, I find these topics to be far more interesting.
Also, the war gaming aspect of this is fascinating. Given that we added USC and Ark nearly 20 years ago, I would have expected that additional expansion of the conference would have happened by now. The fact that they either did not see the feasibility of digital televions networks back then (when I had UGA journalism professors harping on it in the late 80's) or they ignored it is interesting.
If the SEC moved to a Super Conference, I would hope they would incorporate these SEC east out of conference in state rivals, Clemson, FSU, Ga Tech, and maybe Miami. Just to get an annual tilt with Clemson would be worth it for the Dawg Nation. And who wouldn't want a UGA FSU home and home in the divisional rotation. Of course Miami and VT could be interchangeable Miami is to FSU and UF as VT is to UT. I li,e these back yard brawls, border wars make college football great.
The same argument holds true for the SEC. If they were to expand to 16 teams, total revenue would have to increase by $68 million just to keep the per-team payouts at the current level of $17 million. I don't see how adding teams like FSU, GT, Clemson and Miami, all of whom are located in states where the SEC already has a strong presence, gets you the extra eysballs you'd need. The only way I can see the SEC making the numbers work in a 16-team league is by looking to the west (Texas, Texas A&M, Oklahoma, Oklahoma State) and/or to the north (Va. Tech, WVU)
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