Expansion Talk: Everything's Bigger in Texas
The Big Ten caused minor tremors around NCAA Division I conferences in December 2009 when announcing it was doing the waltz with prospective conference expansion. Within several months , however, it was the University of Texas doing the Texas two-step with the Pac-10 that had created a full-blown quake.
When the dust settled, Texas and their Big 12 cohorts Texas A&M, Oklahoma and Texas Tech remained affiliates after a last-ditch, 13-year broadcast rights agreement was reached with Fox Sports, a 10-team Big 12 conference and a 12-team Big Ten conference was left standing.
As expansion rumors subsided, the Pac-10, Big Ten, WAC, Mountain West and Big East were among the conferences effected by change. However, the feared expansion armageddon never came to fruition.
For the past year, conferences returned to business as usual. This month marks the official debut of Nebraska in the newly-minted Big Ten which will boast unusual divisional names "Legends" and "Leaders" beginning this fall on the gridiron. Meanwhile, the Pac-10 will settle for Rocky Mountain tenants Colorado and Utah to grow to 12 teams rather than last summer's rumored inhabitants from the Great Plains.
Perhaps understandably, the college athletics world was lulled into a false sense of security. That sense was abruptly eroded the past few weeks as rumors have again surfaced of Texas A&M's ongoing flirtation with the SEC. In reality, further expansion has always been a near foregone conclusion.
Let's go back to 2009 where this all began.
The Big Ten's stated purpose of expansion was to grow their inventory and increase their presence on the Big Ten Network. The network, of which is half-owned by the conference members themselves, receives as much as $0.75 more per subscriber per month within the conference boundaries. This means adding new states to the charter increases the number of eyeballs watching on basic/expanded cable packages and boosts the revenue from the homes already having the network on its package.
Ultimately, the conference Vis`-a-vis´ the network, had ambitions of landing a big-market fish. Syracuse, Maryland or even the grand prize: Texas, would expand the geographical footprint leading to a dramatic increase in profits.
Considering commissioner Jim Delany's ambitious goals, Nebraska still feels like merely an appetizer before the main entrée.
The Huskers wound up the Big Ten's twelfth member after an unexpected ultimatum from the Big 12 forced their hand prematurely. While Nebraska may ultimately have been invited later in the process in an expansion to 14-16 teams, they likely weren't expected recipients of such an invite that quickly. Nonetheless, having a population of 1.7 million according to the U.S. Census Bureau, the Huskers will sell ratings but certainly not a high number of cable subscribers to the network.
Simply put: don't expect the Big Ten has fully suppressed their appetite for expansion.
Delany has craved Notre Dame for several years. He still assuredly has Texas president William Powers on speed dial if (read: when) the Big 12 begins bickering again. Lastly, rumors repeated last week by SI's Jon Heyman that the Big Ten has North Carolina and Duke on its radar serve as a reminder that Delany is still thinking outside the box.
While the Big Ten was seen as creating the expansion the last time around, it has reportedly assured it won't be the one to disrupt the landscape this time around. The underlying assumption here is that they'll let someone else start it, but they'll most certainly finish it.
With rumors surfacing of unhappiness by Texas A&M with the new Texas television network arrangement--a deal worth $300 million over 20 years--the Big Ten might not have to wait long to pounce.
The rescuing of the Big 12 was more of a patch for a flat tire than getting brand new wheels. The underlying resentment created with inequality in revenue sharing and a Texas ego the size of, well, Texas, will forever cause instability. With many of A&M's prominent trustees, boosters and executives craving the attention from the SEC, it's only a matter of time before they create the next wave of expansion.
But this time, conference musical chairs could be the death of the NCAA.
If Texas A&M bolts for the SEC, it will necessitate at least one other team following them and probably three. With a 16-team SEC stealing from the Big 12 or ACC, a domino effect will occur where Big 12 leftovers and the Big East schools scramble to find homes. When the music stops, there will likely be 4-5 major conferences of 16 teams. When that happens, it might be only a matter of a few years before the relationship with the NCAA becomes tenuous.
It seems only a very talented faith healer can undo the damage created from 13 years of bad blood in the Midwest. The latest rumors might simply be a false alarm, but the day of reckoning is coming soon.
One minor movement could create a seismic shift. If Oklahoma follows the Aggies eastward, suddenly Delany might do a line dance right down toward Austin. Texas is a cultural fit for the Big Ten athletically and academically. However, more than geography, they have a network revenue that would need to be reconciled for the Big Ten to do the tango with them. After all, the Big Ten has an even sharing agreement, and it remains to be seen if Texas would be willing to accept a lesser share to balance their revenue from their own network.
With or without Texas, the Big Ten will look at Missouri to the west, south toward Georgia Tech, Vanderbilt, North Carolina and Duke; and eastward they'll keep an eye on Virginia, Maryland, Rutgers and Syracuse in hopes of capturing the Washington D.C. and/or New York markets. When Notre Dame finally sees the writing on the wall with megaconferences, the Irish will surely acquiesce to becoming members.
The Aggies' happiness has a lot riding on it: Delany's self-fulfillment; Notre Dame's independence; the Big East's survival or, at very least, not becoming geographically challenged; and schools like Iowa State and Baylor hoping not to turn into a pumpkin overnight.
If history hasn't taught us already, they do things a little bit differently in Texas. It's also taught us expansion is just getting warmed up.
36 comments
|
0 recs |
Do you like this story?
Comments
The ultimate swoop for the Big Ten would be bringing in Texas and Notre Dame. With that move, you’d have some of the most historically powerful football powers in all of football: Ohio State, Michigan, Penn State, Nebraska, and Texas. However, as you’ve pointed out, the Texas ego, in my opinion would prevent them from joining the B1G. They would not want to get into a conference they couldn’t have a significant influence on despite the opportunities the B1G offers. frankthetank.wordpress.com provided extensive coverage on conference expansion when that was still ongoing.
My thoughts- I don’t see Texas or Notre Dame giving up their revenue streams, Texas with the Longhorn Network, ND with NBC deal. Right now, Texas is actively working to blow up the Big 12 (again) just to feed the LHN beast. ND is going to be worth much more when they renegotiate their TV deal. ESPN is virtually handing out checks to keep conference armageddon from happening (LHN, Big 12, BYU), when they have to start writing really big checks. The Big 10 membership would have to accept a lot, likely too much, to bring in Texas and ND.
I think ND remains independent and UT become independent in the next 3 years.
Should expansion happen, the SEC would go to 16, because they don’t want a&m alone. They’d need to bring in OU and an eastern team (Clemson") with them. The PAC-12 could bring in the Big 12 south, too as they almost pulled off in 2010.
The Big 10 would likely look to the ACC – Maryland, Virginia, and UNC. But could UVa, or more specifically, the Va. legislature, leave Va. Tech in the wind? Same with UNC-NC State. I think the NY market is a pipe dream (without ND, that is). I doubt Duke, and other private schools for that matter, would be considered as they move no needles in the $$$ sport, football.
The ACC and the Big East would be toast. The Big East would likely have to drop its basketball only schools and combine with the remnants of the ACC and the Big 12.
I think ND remains independent and UT become independent in the next 3 years.
Should exapnsino happen, the SEC would go to 16, because they don’t want a&m alone. They’d need to bring in OU and a eastern team (Clemson") with them. The PAC-12 could bring in the Big 12 south, too as they almost pulled off in 2010.
The Big 10 would likely look to the ACC – Maryland, Virginia, and UNC. But could UVa, or more specifically, the Va. legislature, leave
With major conferences coming
No team will be able to afford being independent. Thing is, Notre Dame’s revenue stream doesn’t even remotely compare to teams like Indiana or Northwestern, so their deal with NBC does them little good if it’s about money.
Now I’ll agree Texas is in a different position. With this new network deal, they’re making money similar to the Big Ten teams, if not more. However, they also won’t be able to survive on that money alone, especially if mega-conferences happen, so the question is: do they surrender the extra revenue to join the Big Ten (which will probably match the revenue in total) or do they accept slightly less to join the Pac-10 but likely keep their own piece of the pie?
There are a number of ways the Big Ten could go. When this all started, I was a huge proponent of Texas. However, the way they handled themselves turned me off a bit to them. Now I’m somewhat more in favor of an East/South expansion along with Notre Dame. Still, if Texas is interested, the Big Ten has to listen provided they’re willing to play by the Big Ten’s equality principles.
To put some names to it...
At another site we merged information to get a rough financial projection.
We only looked at programs west of the Rockies (geography has some limits)
We only looked at programs with AAU affiliation or previously extended offers (may not be true in the future).
We only looked at independents and BCS AQ members – there just aren’t strong candidates that meet the above in the mid majors.
We looked at the team’s home state’s number of expanded basic subscribers (subscriptions outside the state don’t generate only a fraction of the subscription revenue)
We looked at the state population, number of other FBS programs in the state, and the campus size to get an idea of the fan base.
We viewed Missouri as a known program under the bar.
We only looked at interest from the Big Ten’s perspective, not the interest of the candidate program.
The list we ended up with:
1-2-3-4. (In no particular order) Texas and TA&M (from released Gee e-mails), ND (invited in the past), Florida (I noted we were looking at interest from 1 side) For these programs, the key is under the map, you know the requirements, if interested, the key’s under the mat – let yourself in.
5. Syracuse They could have nearly met their portion of shared revenue just with in state BTN subscriptions.
6. Rutgers
7. Georgia Tech was marginal and likely below the bar. They may not even be the 7th strongest candidate as fan base size is hard to measure.
The rest of the AAU membership came in under Missouri.
If you expand out to look at programs without AAU affiliation and throw in the brand value, you can add a lot of programs to this list.
On the other hand, with each addition the bar is raised as long as the addition adds to each portion of the shared revenue. A major obstacle to conference expansion is that with each addition, the number of candidates decreases.
Syracuse is no longer in the AAU
I thought your criteria was only “programs with AAU affiliation or previously extended offers”. I think you meant previously extended offers from the Big Ten, not from the AAU here. Anyway, Syracuse withdrew from the AAU in May after they saw Nebraska become the first to be expelled. Syracuse saw the writing on the wall and knew they were next.
So how does this affect your ranking?
http://chronicle.com/article/Facing-an-Ouster-Syracuse-U/127363/
by KilmarnockFC on Aug 3, 2011 10:00 AM EDT up reply actions
Ranking viable options by $$$
I think a better way to rank them might be by annual revenue. I’m not sure it’s fair to rank Rutgers so highly if they’re not popular enough within NYC to make people watch them. In order to rank their popularity/brand (mass appeal to a nationwide television audience), then what better way to do so then by overall athletics revenue? Hooray capitalism!
1. Texas $143.5 million
4. Florida $116.5 million
12. Notre Dame $90.8 million
15. Virgina $81.8 million
27. Texas A&M $71.8 million
30. Duke $68.5 million
31. North Carolina $67.6 million
46. Missouri $55.7 million
47. Rutgers $55.6 million
52. Maryland $52.0 million
55. Vanderbilt $50.0 million
57. Syracuse $49.3 million (not an AAU member though)
61. Georgia Tech $47.0 million
http://www.ensbsn.com/2010/11/sec-revenue-2009-10-the-alabama-money-machine/
by KilmarnockFC on Aug 3, 2011 10:25 AM EDT up reply actions
I’m not sure it’s fair to rank Rutgers so highly if they’re not popular enough within NYC to make people watch them.
That’s not actually the point with a possible Rutgers invite. The current Big Ten teams need a way to insert themselves into the New York market, and Rutgers could offer that way. Whether anyone cares about Rutgers matters little as long as the Big Ten Network becomes attached to television packages in the New York area.
ND is going to be worth much more when they renegotiate their TV deal.
Is that certain? Or to put it another way, is it certain that the NBC contract will be worth more in 2015 than the Big Ten’s renegotiated first-tier rights contract in 2016?
The Big Ten’s first-tier rights contract with ESPN and the second-tier contract with the Big Ten Network combine to be more lucrative for each Big Ten team than the Notre Dame NBC contract, e.g. Northwestern makes more than Notre Dame from television revenue right now.
Notre Dame’s ratings the last decade were pretty tepid, and while that coincided with an awful decade for ND football, I’m not sure it matters all that much.
The Longhorn Network works for Texas because it’s in addition to a stable first-tier rights contract negotiated through the Big 12. Texas combined that Big 12 contract with a second-tier rights contract with ESPN, which makes Texas the prince of college football. They get the benefits of a first-tier conference contract with a side order of individual wealth.
Notre Dame will remain valuable in 2015 no matter how they do on the field, but I don’t think they have the negotiating power of Texas, for quite a few reasons, the most obvious being that they don’t belong to a conference. While Texas is the most valuable asset in the Big 12, they still benefited from having other assets in the first-tier negotiating package. Everything Notre Dame negotiates will be about Notre Dame’s worth only, reducing their value to any network.
At this point, it seems the only thing keeping Notre Dame from joining the Big Ten is not the money, but the pride of being an independent school.
Look at this in context of what the networks are doing – throwing millions at every school and conference to keep things from getting to the super conference point, where they’d have to write billion dollar checks. ESPN gave UT beaucoup dinero for a channel that won’t be seen outside of Texas except for satelite or cable sports tier for a nickle.
Consider this scenario – new NBC comcast cable network gets ND broadcast rights (for NBC) and primary and/or secondary Big East and secondary ACC broadcast rights (no more Jefferson Pilot Sports:)). That’s a credible sports network for college football (maybe they’ll even create a few bowls get even more money). Even including ND, it’s also very likely cheaper that having to bid on combined Big East/ACC, SEC/Big 12, or Big 10 superconferences.
Much like the Big 12 for Fox Sports (90 mil/year), ND becomes a loss leader for NBC (and their new cable sports network) at 20+ mil/year. 90 million here, 20 million there, 300 million everywhere is way cheaper for networks than 600 million-1 billion for 16 team mega conferences.
I also think that unless the money is that much greater in the Big 10 (like 10+ million), ND – who already rejected the minimum 5-8 million more that the Big 10 could have offered – is perfectly content to remain independent (assuming they have a scheduling relationship with the Big East in other sports).
One thing is for sure, the next three years are certainly going to be fun to watch.
Consider this scenario – new NBC comcast cable network gets ND broadcast rights (for NBC) and primary and/or secondary Big East and secondary ACC broadcast rights (no more Jefferson Pilot Sports:)). That’s a credible sports network for college football (maybe they’ll even create a few bowls get even more money). Even including ND, it’s also very likely cheaper that having to bid on combined Big East/ACC, SEC/Big 12, or Big 10 superconferences.
But how would Notre Dame benefit from that situation? Their football television package is separate from every other conference’s, and basketball just isn’t worth much. It sounds great for NBC if they’re willing to outbid ESPN and Fox for the ACC and Big East, but it doesn’t change the situation for Notre Dame.
I also think that unless the money is that much greater in the Big 10 (like 10+ million), ND – who already rejected the minimum 5-8 million more that the Big 10 could have offered – is perfectly content to remain independent (assuming they have a scheduling relationship with the Big East in other sports).
Do we know that Notre Dame rejected the Big Ten last season, or was the timing just not right? When the NBC contract runs out in 2015, Notre Dame and the Big Ten may have another discussion, and this time with less obligation tieing ND down.
I guess what i’m saying is that I think the network money will be there for Notre Dame just so they (the networks) won’t have to pay a king’s ransom for a Big 10 plus ND and say UMd., Uva., and UNC.
I think you’re right that 2015 will be incredibly interesting (if Texas even lets us get that far) when the TV deals come up for bids. Which leads me to my unanswered question – why didn’t the BIg 10 renegotiate when Nebraska came on board? Seems like they could have gotten an additional 5o mil/year minimum.
why didn’t the BIg 10 renegotiate when Nebraska came on board? Seems like they could have gotten an additional 5o mil/year minimum.
I don’t know, but my hunch is that Nebraska just isn’t worth much to the network. From a prestige perspective, Nebraska was appealing to the Big Ten, but the small native viewer base they brought can’t be a huge bargaining chip.
Nebraska didn’t bring the Big Ten into any new lucrative markets, which is what the the other conference members really want. So while the Cornhuskers made the Big Ten more appealing as a national brand, they brought very few direct dollar opportunities with them.
I think we’ll see the value of Nebraska when the Big Ten expands again, this time into prime media markets. Nebraska becomes a nice bargaining chip then, but right now their inherent value is low. Syracuse, crazy as it seems, may be worth much more than Nebraska in television dollars.
For what it's worth
Someone I trust told me they’d heard Nebraska will add roughly in the neighborhood of $30 million to the network in total value considering advertising and new TV homes.
That seems like a lot on paper, but to your point, Tyler, considering the extra ‘share’ of the revenue (which was somewhere around $21 million per school last season), i.e. 12 shares instead of 11, $30 million will only add about $750k to each of 12 shares.
So I agree with your point wholeheartedly… Nebraska is definitely a solid addition, but not a financial windfall. Now those numbers could be somewhat low since they don’t take into account basketball, gate-sharing in football and a few other revenue sources such as academic fund in the D-1 distribution plan, but the point definitely stands.
No question the Big Ten still has work to do on the economic side of things.
My thinking is along this line – -the Big 12 lost two teams and their media rights went up. I don’t know if it contractual – like outside the renegotiation window, but you’d have thought the Big 10, seeing the money being thrown at conferences (i think the ACC had an increase before Nebraska joined), would have jumped on that train. While it might not have been that much overall, even 750k would support a few non-revenue sports at each school.
Come to think of it, perhaps their is another round of expansion coming that would allow for conference windfall…
RE: the Big 12
I’ve seen and heard in several reputable places that the Big 12’s new deal was more a product of the powers-that-be convincing the networks to save the conference for fear of rapid expansion.
I heard it was basically to stunt the inevitable growth into super-conferences. If the Big 12 had broken up, that was going to happen last summer with the Pac-10 expanding to 16, then the Big Ten and SEC would have gone to 16, etc.
So really I think the value of the deal the Big 12 got was on account of the arm-twisting done by the heavy-hitters that didn’t want to see that next step taken so soon and so abruptly.
I would be surprised if Nebraska added $30 Million to the BTN
The Husker faithful are dedicated, but a smaller enrollment in a smaller state doesn’t translate to a lot of subscriptions. The Huskers probably won’t find a lot of games on the BTN diminishing advertising revenue gains.
A 9 game conference schedule would wipe out most of the inventory increase.
Viewing their addition from the competitive or prestige angle would go against Delany’s philosophy. He has been critical of the expansion of other conferences which look at non-revenue aspects. In answering a question after the Big Ten had a lousy bowl season, he viewed 6 bowl losses as an issue for 6 individual programs to address, not an issue for the conference. His view is the conference’s role is to provide an environment for the programs to excel.
We missed Nebraska as a candidate because their primary revenue contribution comes from sources not as readily accounted for. After the expansion, representatives kept referring to Nebraska’s brand. For example, having them a regular in your house increases individual game ticket demand, which increases demand for other games as the Nebraska game sells out, which increases demand for season tickets, which increases booster contributions to ensure they get better games. Every additional 20,000 tickets sold at $50 each, or 2,000 new boosters at $500 each, equates to another $1 Million for the program.
Multiply this several fold per program, times 11 programs, and you begin to see why Nebraska jumped the other candidates. Syracuse, Rutgers, etc. just wouldn’t add as much fan interest as Nebraska, and certainly not as much to the next broadcast contract.
In NCAAF math, interest = revenue
Following the “Brand” implications, Nebraska’s primary contribution isn’t their own fan base, but their interest from other fan bases.
I think $30 million is quite possible
It is possible the $30 million figure included total revenue added from Nebraska and not just the BTN, and perhaps that was not accurately stated to me as I heard it. I can’t vouch 100% for the veracity of the comment.
But that aside, let’s look at it and simply assume that every household in Nebraska currently pays ten cents per month to carry the Big Ten network on average. Now that they are part of the network, let’s assume that to be 85 cents (based on the additional reported 75 cents extra). According to 2011 Nielsen numbers, Nebraska has about 700,000 television homes. That works out to be roughly $6.4 million from subscribers.
The question, though, is how much would be earned from advertising? I’ve heard, which is consistent with my broadcasting background/training, that ad revenue accounts for 70% of the network’s profit margins currently. IF that’s the case, we could surmise that Nebraska would be worth roughly $14 million in advertising. This is actually a sound number given at least 2-3 additional appearances created by the network (excluding conference games) as well as an upgrade over conference game ratings on a national basis by Nebraska’s participation. Further, you have to count an extra half-dozen basketball games which would become inventory.
So even in a very rudimentary approach, we find ourselves realistically at about $20 million without regard for the championship game which was added the day the Big Ten expanded to 12 teams.
It’s certainly possible, as mentioned, that the $30 million figure I heard had to do with additional gate-sharing and D-1 basketball fund distribution on top of the network revenue. But I do think that figure is likely a representative total.
Absolutely - if you go past the BTN
From what I could find, the total advertising revenue for 2010 was around $227 Million. This is about $20.5 Million per program.
In the longer run, expecting Nebraska to add about 2/3 the average advertising revenue with enrollment (used as measurement of alumni base) well under the average B10 member and less than 3% of the total state populations with members is a lot to ask.
Overall about 56% of US homes pay for cable, the number getting the BTN will be less, the 700K households is accurate but counting all as BTN subscribers is high – the actual amount is likely less than 1/2 of this.
$20 Million added to the BTN is a bit much – around 2x or more higher than what you would expect. It might be reasonable in the short term where all of Nebraska’s home games represent additional BTN inventory – I am not certain how much an additional mid level B10 game earns for the BTN, but if it is around $2M, $30M is achievable.
In the long run, the best projections I can make for the shared revenue is huge, detailed —> HERE
Couple things…
The 56% figure you mention does not include satellite and FIOS services. Combining all those services, it’s now estimated that nearly 90% of homes have cable service. Now of course not all of them are going to have expanded basic packages. However, keep in mind in the case of Nebraska that because of the passion for NU football, the network will be able to leverage more out of cable operators than most states.
Second, you’re underrating the national appeal of Nebraska. Looking at the state population is misleading for starters because it’s said that Nebraska averages often 80% of the entire state watching games. That’s a huge number. More than that, though, Nebraska consistently rates among the top 5-10 programs nationally in average ratings per game according to most business journal studies I’ve seen.
This means if they average a 5 rating, assuming 5 million viewers, at 30 CPM (which is a standard starting point for a sporting event like college football), you’re looking at $150,000 per 30-second spot (6 mil / 1,000 * 30). So let’s assume just 15 30-second spots per quarter for simplicity and ignore halftime. That’s 60 spots right? That’s 9 million in advertising for a single football game.
Now that’s going to be admittedly a little inflated, as the average rating will probably be somewhere around 3-4. Point is… $14 million is not going to be a problem for Nebraska given their national appeal. After all, that’s, according to Big Ten insiders, the biggest thing Nebraska had going for them in the financial discovery process.
I think $30 million is much more possible than you’re giving credit for. There is some wiggle room for these numbers, no question, but I think $30 million from cable rights fees and advertising combined is very plausible.
Could be. but...
You are still taking a University with well below the average Big Ten enrollment, and whose state population is less than 3% the total, and valuing their addition to the BTN advertising at 2/3 the average Big Ten program. Even 80% viewership is only equal to less than 25% for the average Big Ten program.
While Nebraska draws a lot of interest and viewers, most of the big drawing games won’t be on the BTN. It isn’t their large audience that is important to the BTN, it is the audience of the middle tier that get bumped down to the BTN. In citing recent ratings, you are looking at the better games which the broadcasters chose just like they will in the Big Ten. The BTN is closer to the B12 pay per view broadcast games that weren’t picked up.
While Nebraska draws a lot of national interest (the value of a Brand compared to a program like Syracuse or Rutgers), you would not expect people outside their immediate fan base to add the BTN to their satellite package just to get a couple more Nebraska games. Switching to the Nebraska game is a different issue if you have to pay for additional channels rather than selecting from the offerings of all of the channels.
$30M to the BTN is about what the average program adds – this is a lot to expect from 2.7% of the regional population, smaller than average university size, and some more middle tier Big Ten team games (which mostly disappear with a 9 game conference schedule).
It is going to be a substantial boost. We coukld soon be looking at shared revenue of $40M+ (comparable to the entire budget of mid major programs)… but don’t look for most of that coming from Nebraska’s addition to the BTN.
While the bar has been raised, there is still room, candidates, and time for expansion before the next broadcast contract is negotiated. Nebraska is entering on a faster time table than Delany would have liked, but the upside is that the Big Ten can develop their revenue potential before looking at more additions.
Let's come at this from a different perspective
I think we agree on some of the basic circumstances. You cited the $227 million in advertising figure: that’s actually extremely similar to what I’ve heard. I think we’re on the same page there. We both seem to buy into advertising accounting for 70%, and if it does, that means a total network revenue of roughly $324 million. This makes sense, after all, because as asserted, it means the average Big Ten team is adding about $29 million in inventory to the network.
OK so we’re on the same page there.
So my assertion was that Nebraska would add about $30 million. That’s where we differ, as you believe it would be less.
Again, I think the difference is that you’re focusing on the number of Nebraska fans where I’m pointing out the high number of people that have been watching Nebraska games the last several years despite so precious few homes in the Nebraska TV markets. Nebraska is a national draw. Many college football fans nationally, who have the network, will tune in to watch their games when they’re successful.
However, there’s an anecdotal reason I believe strongly that my estimation is accurate.
Let’s first look at non-network revenue.
There’s the Big Ten gate-sharing agreement in football. This is capped at $4 million if memory serves me correctly. Ohio State received $2.3 million, meaning they paid in probably something like $1.7 million. Let’s assume this will be the case for Nebraska too.
Then, there are funds from the Division I fund from the Men’s Basketball distribution. Let’s be honest… Nebraska doesn’t often make the tournament, meaning they’re not going to be adding to this number. This means they’re actually going to be (at most) breaking even after considering what they add for the academic portions of this fund.
There will be additional bowl revenue, of course, though the Big Ten’s BCS portion is usually capped as they most often get two bids, so we can’t expect Nebraska to increase this revenue by too much.
So let’s just say for sake of discussion that Nebraska adds an additional $2 million in revenue total from these items. With me so far?
The reason this is important is because you have to remember that in the Big Ten’s research of institutions, it was imperative that they only add members who will ADD to the total revenue rather than subtract from it. This means that they did not want to add anyone that did not bring more revenue than they’d take away in distribution. In other words: they’d have to be a revenue-generator that was above average.
This is highly important because if we assume $2 million in non-network direct revenue, and the average team is generating $29 million already, then to be at or above average, Nebraska would theoretically have to bring in at least $27 million in network generated profits. Otherwise, the Big Ten would not have brought Nebraska aboard.
I’m not asking for these numbers to be accepted exactly, but clearly they are in the ballpark. The Big Ten was not going to add anyone that did not increase the total revenue above and beyond that of the average member institution. This was a huge selling point in private discussions.
So by this logic, Nebraska almost has to be at or above the average network revenue of current Big Ten schools.
It’s certainly possible in the more exhaustive research that the independent firms derived at a more generous number in non-network revenue based on the probability that the Big Ten’s bowl profits increased, but there isn’t too much more room for leeway here as the total bowl revenue added proportionately can not be more than a couple million after expenses — if that.
So in conclusion, Nebraska almost has to be in the $30 million range by the Big Ten’s own stated criteria. Otherwise, when they were given their ultimatum by the Big 12, Delany and company would likely have just said, “thanks but no thanks.”
The Big Ten didn't need a lot to bring Nebraska aboard.
The CCG exceeds Nebraska’s portion of shared revenue, but that’s almost cheating as any team could deliver this.
In the short term the BTN can expect a boost from a larger inventory.
In the long term that boost and inventory moves to the Broadcast contract, where the value of a brand moves to the front.
In the longer term, there will be a boost from ticket demand, increase booster support, etc. detailed above – another result of the value of the brand.
…but $30M to the BTN (close to the average) from an added 2.7% population and smaller campus size can’t be supported.
If you go outside the BTN, the $30M is way low (CCG alone is worth in the mid $20Ms).
I can assure you
Having a background with CPM and advertising in broadcasting, if Nebraska delivers the ratings the network is anticipating, it’s most definitely supported.
I read somewhere the average Ohio State rating the last few years on the BTN was over 4.0. If that is remotely close for Nebraska, they WILL get to that $30 million figure.
Goes back to the games shown.
The BTN doesn’t get the marquee games, they get the scrubs.
You don’t get much interest outside the immediate fan bases for games against scrubs, and virtually none outside the conference.
In the case of OSU, you have a campus well over twice the size of Nebraska, nearly 4% of the US households to Nebraska’s slightly larger than 0.6% (about 6:1 advantage).
Nebraska will add much more than $30 Million, but the numbers just aren’t there thru the BTN. 2.7% of the conference footprint population and a campus much smaller than average is just too much of a hill to overcome.
We're just going in circles now
But the ‘footprint’ is not the only ones watching Nebraska. You can keep throwing out the size of the state, but you’re missing out on the larger point… college football fans watch other large programs play.
Out of curiosity, what do you do on Saturdays? Do you only watch Ohio State or do you flip through the channels like many college football fans and watch teams like Texas, Florida, Notre Dame, etc.? Well guess what, if you do the latter rather than the former, you’re like many, many fans.
And that, my friend, is why Nebraska will have a lot more than just the “2.7% of conference footprint population” watching them. Nonetheless, while they may be just 35% of the size of Indiana, you can bet there will be more people in Nebraska watching on any given Saturday than in the Hoosier state. Same for Minnesota. Most definitely same for Purdue or Northwestern.
That said, detach yourself from the thinking that their ratings are going to come from only Nebraska residents. It’s faulty simly because it ignores the many college football fans that flip through channels to watch big programs play.
Put it this way… even at 2 million viewers at $25 CPM, one single Nebraska game would bring in between $4-5 million. Even without regard to conference games, that’s at least $12-15 million or more. Now consider the exponential effect they’ll have on ratings of conference games, then consider they’ll also add some (though not a lot) revenue in basketball and/or baseball, and we will absolutely get to that $30 million figure.
The Big Ten simply wasn’t going to add anyone that can’t add more revenue than the average conference member. That much I’m certain of. By that logic alone, Nebraska must certainly provide for close to that $30 million figure.
The Big Ten was not going to add someone that would add less to the network than the average institution. That’s one of the foremost criteria they looked at in their research. I promise you that.
Agree with Kyle that there’s no way the Big 10 brings in a team that doesn’t add more revenue than the average Big 10 team.
As for the BTN, I think they’re gouging the Nebraska cable operators for more than $2-3 a subscriber – over double what most in the Big 10 foot print pay. But this is a fanbase that pays $40 for PPV games versus South Dakota State. I guess my point is there is money to be made through subscriptions in a small state. Couple that with more advertising (Mutual of Omaha, anyone), better BTN product (ABC/ESPN can’t show all the games involving OSU, UM, PSU and Neb every week) and the BTN side of the house is set up for the future.
That's a great point
I was calculating the numbers earlier based on 85 cents per subscriber, but I did mention it’s possible cable operators will wind up paying much more than that. Even if one takes exception to some of the advertising numbers mentioned, it’s possible Nebraska clears $10 million in rights fees alone. If that is the case, I would bet my life on them being able to pick up $17 million in total advertising thanks to football, basketball and baseball.
I am not disputing most of this.
1. The foot print is very important given it determines most of the people with access to the BTN.
2. You can’t channel surf to the BTN if it isn’t part of your cable package.
3. The BTN is showing the 2nd tier games – not likely to be where someone outside the immediate fan bases stops and watches, and even less outside the conference.
4. It usually won’t be the Nebraska game added to the BTN. The networks wisely look for the brand program games 1st – it isn’t an issue of the Nebraska drawing power, it is an issue of the middle team that gets bumped down to the BTN.
5. You are adding less than 3% to the existing footprint from a University with a smaller footprint.
You are looking at the attraction of a team that will rarely be on the BTN to a potential audience where most don’t get the BTN to claim it will have a large boost in the BTN revenue.
It is false to say the B10 will not add someone that will add less to the BTN than the average member – the Big Ten is concerned with the overall revenue contributions a candidate program makes, not just the BTN.
The BTN capitalizes on the revenue potential of the fan bases in the conferences, primarily those inside the footprint of the conference who comprise most of the BTN subscriptions.
What you cite is the brand appeal to fan bases outside the B10, which relates to the 1st tier rights – in the long run this is where the real payoff for Nebraska will come from.
I have to agree with Tyler on ND
Their contract was an extension, not a long term agreement, so it should accurately reflect NDs current value.
Their result was comparable to or less than the averages of 5 of the majors. It is safe to say if they are close to the average, they would be below the value of the bigger major programs.
ND is a good example of Brand value, but their brand value is dropping fast. If they ever reach a point they look to join a major, it is uncertain how many majors would still be interested.
Sorry for partial double post. Anyone know exactly why the Big 10 didn’t renegotiate TV deals when Neb. came on board? Seems like a lot of money was left on the table.
I suspect it is how the contract is written.
When the B12 lost members, it was noted by the broadcasters they would not exercise a clause which would allow them to decrease the broadcast contract amount.
…but this is far from saying there desists a clause that would allow the conference to demand more because they added programs.
Likely the contract is for all the teams of a conference with an out clause when the conference composition changes, not a contract covering the individual members of a conference at the time of signing.
Delany tried to sell more games to the network, but from the Network perspective they weren’t buying Nebraska games, they would have been adding the worse games they had already passed on.
…but that payoff is just a few years away. If you go back 10-20-30 years and look at the top brands in NCAAF, the Big Ten believes they now have 4 of the top 10 brands. They are maxing the contract amount per game by just selling the top games to the networks, and maxing the revenue of games with less interest thru the BTN.
Should have read...
…the broadcasters they would not exercise a clause which would allow them to cancel the broadcast contract…
Unanimous or Majority ?
Aggie here.
The Pac12 has their whole unanimous vote required from all existing members in order to extend an invite to another school.
How does it work up here in Big 10 country ?
Do the schools get a say, and if so, how much ?
Thanks

by 











