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Big 10 revenue exceeds expectations. $54 million per team
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Hokie Mark Offline
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Post: #79
RE: Big 10 revenue exceeds expectations. $54 million per team
(05-29-2019 09:07 AM)JRsec Wrote:  
(05-29-2019 06:04 AM)Hokie Mark Wrote:  
(05-29-2019 04:32 AM)XLance Wrote:  
(05-28-2019 10:27 PM)JRsec Wrote:  
(05-28-2019 10:02 PM)random asian guy Wrote:  I believe you.

Still, FSU to SEC is unlikely. It's unclear whether FSU would deliver enough revenue for the SEC, which is already very popular in Florida. FSU agreed to extend the GOR in 2016, implying 1) it knows it's not going to receive an invitation from the SEC and/or 2) the ACCN would be sufficiently successful.

I think this is mostly true. What I would add is that even if F.S.U. would add to the SEC's bottom line the other impediment, and it's a big one, is that ESPN doesn't want to devalue its investment in the ACC by having F.S.U. (or Clemson) leave, which is probably why the renegotiation clause of the SEC's 2011 contract required two new markets. I know that since they control the valuations of incoming members to the SEC that ESPN has a control over the SEC via the valuation. In other words if they aren't willing to pay us more for F.S.U. then we aren't likely to ask them. It's that control over the SEC by ESPN that keeps F.S.U. from counting on an invitation, even if they desired to leave which is certainly in doubt.

Everyone wants to think that one conference raids another. But most of the time it was one Network either raiding another, or seeking fuller control over a school in which they only had a partial stake in rights. FOX stole Maryland. They wanted to have a greater presence in the South and destabilizing the ACC might have made that more of a possibility. Missouri was a market grab by ESPN and a defensive move. A&M to the SEC and the LHN were ESPN moves for greater control in the state of Texas where they had shared those properties 50/50 with FOX in the original Big 12 rights deal. FOX wanted Nebraska's national appeal. The stripping of the Old Big East was because of friction in rights negotiations between ESPN and the OBE and an earlier dispute between ESPN and Delany. ESPN feared Delany's intent to move East with his then independent BTNetwork. Moving the best properties to the ACC protected them in the Northeast and enhanced their investment in the ACC.

Conferences make the moves for more money, but as in all things its the man with the open purse who controls the action.

Florida State is not viable to the SEC because ESPN doesn't want it and won't pay for it.

Now that FOX has reduced or is reducing their collegiate exposure we'll see how wide ESPN is willing to open their wallet in the upcoming negotiations with the B1G and the Big 12 (and to a lesser extent the PAC).
Without competition, ESPN was able to scoop all of the T3 for 8 Big 12 schools, plus the broadcast rights for 3 Big 12 championship games for $40 million.
That doesn't bode well for the three conferences that were expecting huge increases with their next contracts.

TRUE. Whatever happens with the Big Ten, Big XII and SEC rights will determine whether college football as we know it lives or dies. If ESPN or CBS (or some other entity) pays what JR thinks they'll pay it could rip the sport apart. If the networks have no stomach for paying that much, it could usher in an era of stability... or not?

Maybe. What is pretty clear is that the SEC will get way more than 55 million per year for their T1 and it's going to be hard for CBS not to be pushed for the SEC's T1. FOX is flush right now and they've wanted broadcasts in the Southeast for quite sometime. It is the #1 time slot for ratings in all of college football. I suspect the floor is 275 million, but we'll see. The problem however is that the Big 10 is already at 54 million. The SEC will catch that if they get $200 million for their T1 and that figure is significantly lower per viewer than what the Big 10 got for theirs in their FOX contract. 200 million puts the SEC at 53.5 million. The expected 275 puts us at 58+. But if we didn't earn another dime the Big 10 will still be at 54 and that's 24.5 million more than the ACC or roughly the same for the PAC which is close to doubling the payouts of both of those conferences. It's also 18 million more than the Big 12 which is a total that eclipses all of Texas's revenue by 3 million.

While competitively the 5 P conferences were closing the gap a bit, economically things have never had greater disparity and that is the current reality regardless of what the SEC gets for their T1 renewal. And remember the media rights are just a quarter to a third of total revenue depending upon the school.

So while I agree that hitting a ceiling will help tamp down the disparity initially, what it also does, which is destabilizing, is to lock in the current disparities. Where we could wind up is a payout world where the Big 10's extra TV revenue equalizes the total revenue gap with the SEC which last year was an average of 11 million more per school than the Big 10, and with the ACCN hitting peak in a few years having the next run down be the 35-38 million range for the Big 12 and ACC while the PAC lagged another 6-8 million behind that (and all of that is assuming the SEC doesn't get an increase at all for a 15 year old undervalued contract renewal).

Now to the other part of your assumption. It could well be that FOX and ESPN have determined that the Big 12's next 8 are grossly overpaid and that each hopes to cut overhead by only paying well for the two top products. Even a little bidding war for Texas and Oklahoma wouldn't deter the long range benefits of not overpaying Baylor, Iowa State, Oklahoma State, Kansas State, Texas Tech, T.C.U., and West Virginia. Think the 10-12 million range per school the AAC might make as being in line with where these should be, rather than 36 million.

Coming out of the Spring Meetings of several P5 conferences is a growing consensus on moving to divisionless scheduling. Should we go there expansion to only 15 becomes quite feasible. In that environment the Networks would be quite willing to cull the Big 12 and that would explain why ESPN low-balled their T3 at AAC levels and FOX demurred. But just because FOX demurred on the Big 12 rights don't forget they are flush and ready and if they have a shot at the SEC T1 it gives them what they have wanted since entering the college sports arena, a big slice of the Southeast.

So Mark, the instability that FOX created with the Big 10's last contract may well be exacerbated by FOX again should they make a serious run at the SEC's T1.

No doubt - I didn't mean to imply that ESPN was at fault here, when clearly Fox started this trend (even earlier when they overpaid the Big XII and the Pac-12). The market will eventually reach equilibrium - but given the length of these contracts, that could take decades. Meanwhile the damage is being done.
05-29-2019 10:37 AM
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RE: Big 10 revenue exceeds expectations. $54 million per team - Hokie Mark - 05-29-2019 10:37 AM

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