Chicago Sun Times: Big Ten's "next move will be adding the 15th & 16th schools"

[GGGG]

The Big Ten did not really need to bring in Rutgers and Maryland to gain access  to the New York Metropolitan market. Gaining access is nothing more than a matter of price. There is an enormous embedded alumni base from the existing schools in the region. In fact having an increased presence of Rutgers and Maryland on the BTN network dilutes the overall quality of the product. Ohio State, Michigan, Penn State Nebraska  Michigan State and Wisconsin are the schools that matter. The rest is filler.

It's not just about New York, it's about the whole eastern seaboard.  This article estimates that the B10 just made $48M annually on this deal alone, and could net about $200M when all is said and done.  You don't accomplish that without a significant presence on the east coast.  Think about that... considering that the B10 owns half of BTN, that's over $7M per school annually just in BTN cable rights fees on the east coast.

And this figure does not include the new television rights agreements that will be negotiated in 2016.


http://awfulannouncing.com/2014/big-ten-network-hits-the-nyc-jackpot-worth-tens-of-millions-of-dollars.html

Let's do a little quick "back of the napkin math" on this massive victory for BTN.  At last check, the channel charges a $1.00 fee per subscriber per month for those customers within the conference footprint, which NY/NJ now falls into thanks to Rutgers.  Much like the "Is Andy Murray British or Scottish debate," New Jersey gets to be a part of the NYC metropolitan area seemingly only when it's convenient to someone looking to make money.

Cablevision has 3.1 million subscribers in the area.  Time Warner has a little more than 2.6 million subscribers in New York state, many of them concentrated in the city.  New Jersey has a fraction of that at just over 40,000.  Let's just be extra conservative and put the total number of subscribers that will now get BTN at 4 million.

Just from this deal alone, the Big Ten just pocketed an extra $48 million per year.

Forty.  Eight.  Million.  Dollars.  Per.  Year.

And that's just from one carriage agreement in New York City.  Let's not forget Baltimore, Philadelphia, Washington DC, and the rest of the I-95 corridor that BTN will look to expand into.  Back in 2012, Sports Illustrated prophetically estimated that the Big Ten could make $200 million annually from television money on the east coast.  And that number may now be on the low end of the spectrum."

[Tugg Speedman]

The Big Ten did not really need to bring in Rutgers and Maryland to gain access  to the New York Metropolitan market. Gaining access is nothing more than a matter of price. There is an enormous embedded alumni base from the existing schools in the region. In fact having an increased presence of Rutgers and Maryland on the BTN network dilutes the overall quality of the product. Ohio State, Michigan, Penn State Nebraska  Michigan State and Wisconsin are the schools that matter. The rest is filler.

TW:

Read what CBB and Slurpery are saying carefully.

The BTN has completely changed the economics of college sports.  Everyone needs a lobotomy so they can forget everything about college sports economics before June 21, 2006 (the day the BTN started).  This is why the SEC ran to ESPN to create the SEC network.  

Here are the six most important issues with college sports and picking the schools in your conference ...

1. TV market and carriage access
2. TV market and carriage access
3. TV market and carriage access
4. TV market and carriage access
5. Everything else
6. If that schools football team has a winning program or history

[Canned Goods n Ammo]

TW:

Read what CBB and Slurpery are saying carefully.

The BTN has completely changed the economics of college sports.  Everyone needs a lobotomy so they can forget everything about college sports economics before June 21, 2006 (the day the BTN started).  This is why the SEC ran to ESPN to create the SEC network.  

Here are the six most important issues with college sports and picking the schools in your conference ...

1. TV market and carriage access
2. TV market and carriage access
3. TV market and carriage access
4. TV market and carriage access
5. Everything else
6. If that schools football team has a winning program or history

7. The school's academic standing
8. The school's basketball tradition

And just to repeat it again, "conferences" aren't "conferences" anymore.

They are content creators/networks. This is about the flatscreen in everybody's livingroom, guys. It's about eyeballs and $. That's it.

Don't be fooled into believing stuff said or done in the past makes a difference. It doesn't.

[Tugg Speedman]

7. The school's academic standing
8. The school's basketball tradition

And just to repeat it again, "conferences" aren't "conferences" anymore.

They are content creators/networks. This is about the flatscreen in everybody's livingroom, guys. It's about eyeballs and $. That's it.

Don't be fooled into believing stuff said or done in the past makes a difference. It doesn't.

See the bolded part.  If you're unsure on how little a good basketball program matters in the new world order, see Uconn.  Despite basketball success (I believe they are a blood-blood program) the ACC and B1G are not interested.  The reason is Uconn fails on numbers 1 through 4 above (TV market and carriage access).

[Texas Western]

It's not just about New York, it's about the whole eastern seaboard.  This article estimates that the B10 just made $48M annually on this deal alone, and could net about $200M when all is said and done.  You don't accomplish that without a significant presence on the east coast.  Think about that... considering that the B10 owns half of BTN, that's over $7M per school annually just in BTN cable rights fees on the east coast.

And this figure does not include the new television rights agreements that will be negotiated in 2016.


http://awfulannouncing.com/2014/big-ten-network-hits-the-nyc-jackpot-worth-tens-of-millions-of-dollars.html

Let's do a little quick "back of the napkin math" on this massive victory for BTN.  At last check, the channel charges a $1.00 fee per subscriber per month for those customers within the conference footprint, which NY/NJ now falls into thanks to Rutgers.  Much like the "Is Andy Murray British or Scottish debate," New Jersey gets to be a part of the NYC metropolitan area seemingly only when it's convenient to someone looking to make money.

Cablevision has 3.1 million subscribers in the area.  Time Warner has a little more than 2.6 million subscribers in New York state, many of them concentrated in the city.  New Jersey has a fraction of that at just over 40,000.  Let's just be extra conservative and put the total number of subscribers that will now get BTN at 4 million.

Just from this deal alone, the Big Ten just pocketed an extra $48 million per year.

Forty.  Eight.  Million.  Dollars.  Per.  Year.

And that's just from one carriage agreement in New York City.  Let's not forget Baltimore, Philadelphia, Washington DC, and the rest of the I-95 corridor that BTN will look to expand into.  Back in 2012, Sports Illustrated prophetically estimated that the Big Ten could make $200 million annually from television money on the east coast.  And that number may now be on the low end of the spectrum."

I think the carriage agreements have less to do with Rutgers and more to do with content provider carrier pricing negotiations. For example where I live we have a very high end( probably the highest)demographic for golf and Cablevison refused to carry the Golf Channel until they had the deal they wanted. Same with BTN it is all about the deal. People could care less about Rutgers football in NY NJ.

[Canned Goods n Ammo]

See the bolded part.  If you're unsure on how little a good basketball program matters in the new world order, see Uconn.  Despite basketball success (I believe they are a blood-blood program) the ACC and B1G are not interested.  The reason is Uconn fails on numbers 1 through 4 above (TV market and carriage access).

Agreed.

I'm just listing it to illustrate how far down the list it actually is.

Now, there is a weird/outside chance that as the B10 network continues to try to find revenue, that it would absorb limited members to generate more winter content. In that case, hoops/hockey would matter.

However, that scenario is probably 10-15 years away from even being a pipe dream. The B10 is going to grab all of the large revenue generators (football schools with lots of TV viewership), and then work down the list from there.

Basketball/hockey will come into play after all of the football $ and content has been squeezed to the absolute max.

[Tugg Speedman]

I think the carriage agreements have less to do with Rutgers and more to do with content provider carrier pricing negotiations. For example where I live we have a very high end( probably the highest)demographic for golf and Cablevison refused to carry the Golf Channel until they had the deal they wanted. Same with BTN it is all about the deal. People could care less about Rutgers football in NY NJ.

Rutgers is one of the highest enrollment schools in the country, and certainly on the east coast (ditto Maryland).  Their first two football games this year are Penn State and Michigan ... only available on the BTN.

You don't think the pressure those Rutgers alum (many of which live in the Trio-state area) putting on local operators matters?  It matters a lot!

And, as Chicos said, it is about getting on basic cable without cutting your fee.

[Aughnanure]

TW:

Read what CBB and Slurpery are saying carefully.

The BTN has completely changed the economics of college sports.  Everyone needs a lobotomy so they can forget everything about college sports economics before June 21, 2006 (the day the BTN started).  This is why the SEC ran to ESPN to create the SEC network.  

Here are the six most important issues with college sports and picking the schools in your conference ...

1. TV market and carriage access
2. TV market and carriage access
3. TV market and carriage access
4. TV market and carriage access
5. Everything else
6. If that schools football team has a winning program or history

So tell me how TCU and Nebraska fit into this...

[GGGG]

I think the carriage agreements have less to do with Rutgers and more to do with content provider carrier pricing negotiations. For example where I live we have a very high end( probably the highest)demographic for golf and Cablevison refused to carry the Golf Channel until they had the deal they wanted. Same with BTN it is all about the deal. People could care less about Rutgers football in NY NJ.

Look, you can't be a east coast conference without schools on the east coast.  The BTN can't make as compelling an argument to the providers on that coast without having a presence there.  Penn State alums that I know always had a tough time in their relationship with the B10.  They felt that they were an eastern school in a midwestern conference.  That isn't the case any longer.

[GGGG]

So tell me how TCU and Nebraska fit into this...

Nebraska was basically a free agent that is a traditional college football powerhouse that draws eyeballs to the sets. 

But don't ask me about TCU.  The B12 is so UTexas-dependent, and so frightened of a departure to a conference like the B10, that their thought processes are a little warped.

[Canned Goods n Ammo]

So tell me how TCU and Nebraska fit into this...

Nebraska is just like most other Big10 schools.

Nobody is after the Madison television market, but statewide, they draw very well, delivering Milwaukee/GB/Madison/etc.

Nebraska doesn't deliver a major market per se, but they deliver major eyeballs because they dominate a state/region, and have a good national rep.

[ChicosBailBonds]

7. The school's academic standing
8. The school's basketball tradition

And just to repeat it again, "conferences" aren't "conferences" anymore.

They are content creators/networks. This is about the flatscreen in everybody's livingroom, guys. It's about eyeballs and $. That's it.

Don't be fooled into believing stuff said or done in the past makes a difference. It doesn't.

Respectfully Guns, you're thinking about it wrong when it comes to the Big Ten.

Look, the easy answer is you put #7 up front and still accomplish #1.   This isn't hard guys.  The Big Ten can have it both ways, and they do.  They pick a school that meets the standards academically, but drives carriage based on territorial footprint.  Do we really think the Big Ten needed Rutgers football or sports?  Please.

I also don't know why this entire concept of carriage and market has been so difficult for some here (not you Guns).  It's not about whether Rutgers is popular in New York, but some people are absolutely fixated that this is somehow important.  It has very little to do with it.  It could be Sister Mary of NYC and the outcome is still the same.  I felt like I was banging my head against the wall with Aughenere and a few others.

THINK TERRITORIES and GEOGRAPHIC LINKAGE, not popularity necessarily of a specific school to a specific market, or how good they are in football, etc.  That's now what is driving this.

[ChicosBailBonds]

Agreed.

I'm just listing it to illustrate how far down the list it actually is.

Now, there is a weird/outside chance that as the B10 network continues to try to find revenue, that it would absorb limited members to generate more winter content. In that case, hoops/hockey would matter.

However, that scenario is probably 10-15 years away from even being a pipe dream. The B10 is going to grab all of the large revenue generators (football schools with lots of TV viewership), and then work down the list from there.

Basketball/hockey will come into play after all of the football $ and content has been squeezed to the absolute max.

It doesn't have to be at all, and thus far it is not how the Big Ten has acted nor is it how they are looking at the immediate future.  Basketball and hockey don't do anything.  It is 99% window dressing.

[ChicosBailBonds]

I think the carriage agreements have less to do with Rutgers and more to do with content provider carrier pricing negotiations. For example where I live we have a very high end( probably the highest)demographic for golf and Cablevison refused to carry the Golf Channel until they had the deal they wanted. Same with BTN it is all about the deal. People could care less about Rutgers football in NY NJ.

Partially right, but you are ignoring the realities of what they control. Fox owns the BTN.....now think about what that means in terms of all the other channels Fox owns.  You are right that most people could care less about Rutgers football, but many people on Cablevision care a lot about FOX News, FX, FXX, FMC, etc, etc.  The woven strands on all this stuff is where it gets complicated.  Then on the sports side you also have a bunch of Cablevision subs that are PSU grads, Michigan, Wisconsin, etc.  To keep allowing those customers to receive BTN in this new territory now represented by a Big Ten school (Rutgers), even if it is a school no one cares about, just raised the price considerably because the territory is now "IN MARKET", not out of market. 

This is fundamental in understanding how it works.   

[ChicosBailBonds]

So tell me how TCU and Nebraska fit into this...

TCU?

Nebraska fit in because it was an AAU school and they have a national football brand.  There are exceptions to every rule, but the territory expansion with Nebraska expands the footprint for BTN and gives them a highly loyal fan base.  For Rutgers, totally different...2nd rate sports school but the linkage is all about the territory and "in market" rates that are forced on to providers if they wish to carry the channel.

[GGGG]

It doesn't have to be at all, and thus far it is not how the Big Ten has acted nor is it how they are looking at the immediate future.  Basketball and hockey don't do anything.  It is 99% window dressing.

Well except for that whole Johns Hopkins lacrosse thing.

I mean I agree with you that basketball or hockey only members isn't likely, and doubtful that they would consider it anytime soon, but lets not act like they would *never* consider such a step.  They already took one.

I mean, is it *that* inconceivable that they would consider taking BC, BU, Notre Dame and North Dakota as hockey affilitates? 

[ChicosBailBonds]

Well except for that whole Johns Hopkins lacrosse thing.

I mean I agree with you that basketball or hockey only members isn't likely, and doubtful that they would consider it anytime soon, but lets not act like they would *never* consider such a step.  They already took one.

I mean, is it *that* inconceivable that they would consider taking BC, BU, Notre Dame and North Dakota as hockey affilitates? 

Could they, sure.  Question is, what would those schools get out of it?  My point is that those sports drive <1% of the television value.  Sure, it's filler for the BTN, but if I'm the BTN I'm not interested in writing a big check for that content because I don't have to.  If I'm a Big Ten school, I'm not interested in diluting my shares because of some hockey content.  Basketball, more of an argument, but it is still absolute peanuts.

Remember, the checks are coming from the network to the conference.  The valuation of these properties will be determined by the network as well, and they are not going to be in any hurry to add costs for which they have to try and preserve margins by selling what is arguably valueless content to someone that has to carry it.  Now, they will try and they can "mask" it by saying the football portion is driving the costs which will work to some extent, but gets back to shares dilution and why would the schools want to reward them.  Think Big East and the basketball only school splits vs football schools.  Totally different animal.

[Canned Goods n Ammo]

It doesn't have to be at all, and thus far it is not how the Big Ten has acted nor is it how they are looking at the immediate future.  Basketball and hockey don't do anything.  It is 99% window dressing.

Think bigger picture. You're too close, and/or too hung up on things they say.

10 years ago, they would have said "We are not an East Coast Conference". Look at where they are now. What they "say" doesn't mean anything.

Think 15 years from now. Think 20 years from now.

Not all content is created equal (in terms of viewership or $).

However, that doesn't mean (insert network) would turn down (insert programing) that can be profitable.

If BTN already owns all of the infrastructure, it's not that hard to make college hoops and hockey programming profitable. And you know what happens when 2 nights per week of hoops makes money? You want to make it 3 or 4 nights of hoops. 

[GGGG]

Could they, sure.  Question is, what would those schools get out of it?  My point is that those sports drive <1% of the television value.  Sure, it's filler for the BTN, but if I'm the BTN I'm not interested in writing a big check for that content because I don't have to.  If I'm a Big Ten school, I'm not interested in diluting my shares because of some hockey content.  Basketball, more of an argument, but it is still absolute peanuts.

OK gotcha.  That makes sense.

And as I was thinking about it, Hopkins I think was added because it gave the conference the minimum six schools needed to have its own conference.

[Canned Goods n Ammo]

Could they, sure.  Question is, what would those schools get out of it?  My point is that those sports drive <1% of the television value.  Sure, it's filler for the BTN, but if I'm the BTN I'm not interested in writing a big check for that content because I don't have to.  If I'm a Big Ten school, I'm not interested in diluting my shares because of some hockey content.  Basketball, more of an argument, but it is still absolute peanuts.

Remember, the checks are coming from the network to the conference.  The valuation of these properties will be determined by the network as well, and they are not going to be in any hurry to add costs for which they have to try and preserve margins by selling what is arguably valueless content to someone that has to carry it.  Now, they will try and they can "mask" it by saying the football portion is driving the costs which will work to some extent, but gets back to shares dilution and why would the schools want to reward them.  Think Big East and the basketball only school splits vs football schools.  Totally different animal.

You're right... for now.

But, the search for revenue isn't going to stop. The search to produce and sell content isn't going to stop.

It might not be today, tomorrow or in 2020. But, I don't think the B10 will look anything like it does today in 2030. It's going to continue to evolve in way we can't imagine.

BUT, the one constant will be profitability and $. That's it. That's what I'm getting at. $.

Reputation and exclusivity are important, right up until the network says: "We can make Xmillion more per year if we add 4 hockey only schools and 4 basketball only schools"

I'm aware that "Xmillion" will be peanuts compared to what the football schools make, but that doesn't mean they won't want it.

[TAMU, Knower of Ball]

So tell me how TCU and Nebraska fit into this...

TCU in theory delivers a new market. UT is in Austin and TCU is in the Dallas Fort Worth area. In reality, UT/Baylor/Texas Tech already bring them the Dallas market.

TCU was a desperation add by the B12 back at the beginning of realignment. Remember that the B12 had shrunk to 8 members. TAMU, Mizzou, Nebraska, and Colorado had all bolted. There was talks of Texas/Oklahoma to the B10, Kansas/Iowa State to the Big East. Baylor falling to CUSA. These things obviously never happened. Partially because the conference managed to add West Virginia and TCU. Gave programs hope that the B12 could survive.

Now that the B12 has reaffirmed its existence, their next expansion will be into new markets. They won't go after a Houston, but they will probably take a Cincinnati.

If only the B12 had fallen apart. There were enough quality teams in there that the realignment monster could have been satisfied. The Big East wouldn't have had to split.

[MU Fan in Connecticut]

Well except for that whole Johns Hopkins lacrosse thing.

I mean I agree with you that basketball or hockey only members isn't likely, and doubtful that they would consider it anytime soon, but lets not act like they would *never* consider such a step.  They already took one.

I mean, is it *that* inconceivable that they would consider taking BC, BU, Notre Dame and North Dakota as hockey affilitates? 

UConn has a hockey team.  Playing in Hockey East next season.

[ChicosBailBonds]

Think bigger picture. You're too close, and/or too hung up on things they say.

10 years ago, they would have said "We are not an East Coast Conference". Look at where they are now. What they "say" doesn't mean anything.

Think 15 years from now. Think 20 years from now.

Not all content is created equal (in terms of viewership or $).

However, that doesn't mean (insert network) would turn down (insert programing) that can be profitable.

If BTN already owns all of the infrastructure, it's not that hard to make college hoops and hockey programming profitable. And you know what happens when 2 nights per week of hoops makes money? You want to make it 3 or 4 nights of hoops. 

You are right, what they say doesn't mean anything.  It is what they DO that matters.  What they have DONE is follow a pattern tried and true for them.  In my dealings with them, the same focus in the future is there.  If they expand, which is up for grabs, it will most likely be with schools that fit a template for them.  They can get the $$ and the territory without having to sacrifice elsewhere on other standards which they also hold dear.

If they were going to expand purely because of school X, they could have done that many times over thus far, but they haven't....for a reason.  Even in the latest round.  They could have gone after Syracuse...they didn't.  Would have still given them the same NY carriage deal.  There a reasons.  Just one example.   Just as they aren't going to try and get the state of Kentucky just to have the state of Kentucky, because UK and UL don't cut it academically.  It's a border state for Ohio and Indiana, makes sense geographically, but it won't happen.

[Canned Goods n Ammo]

You are right, what they say doesn't mean anything.  It is what they DO that matters.  What they have DONE is follow a pattern tried and true for them.  In my dealings with them, the same focus in the future is there.  If they expand, which is up for grabs, it will most likely be with schools that fit a template for them.  They can get the $$ and the territory without having to sacrifice elsewhere on other standards which they also hold dear.

If they were going to expand purely because of school X, they could have done that many times over thus far, but they haven't....for a reason.  Even in the latest round.  They could have gone after Syracuse...they didn't.  Would have still given them the same NY carriage deal.  There a reasons.  Just one example.   Just as they aren't going to try and get the state of Kentucky just to have the state of Kentucky, because UK and UL don't cut it academically.  It's a border state for Ohio and Indiana, makes sense geographically, but it won't happen.

Fair points, I guess my assumption is that they are now feeding the monster, and it's not going to stop. It might slow down for a while, but I don't think it's going to stop.

They may not want Syracuse or the state of Kentucky right now (I believe that), but my belief is that they will eventually look for more revenue sources in the future.

I don't know how that will play out, but I have a feeling some/most of the rationale the B10 currently uses will eventually get modified, and they will continue to expand their reach/brand/profit centers.

Oh, and they are not following ANY sort of tried and true methodology. The tried and true pattern was 10 teams. That's how the conference was for a loooooooonnnnnggggggg time. Everything they are doing now should be considered "new".

[Texas Western]

Partially right, but you are ignoring the realities of what they control. Fox owns the BTN.....now think about what that means in terms of all the other channels Fox owns.  You are right that most people could care less about Rutgers football, but many people on Cablevision care a lot about FOX News, FX, FXX, FMC, etc, etc.  The woven strands on all this stuff is where it gets complicated.  Then on the sports side you also have a bunch of Cablevision subs that are PSU grads, Michigan, Wisconsin, etc.  To keep allowing those customers to receive BTN in this new territory now represented by a Big Ten school (Rutgers), even if it is a school no one cares about, just raised the price considerably because the territory is now "IN MARKET", not out of market. 

This is fundamental in understanding how it works.   

Fox would surely like to get all their channels on the various systems but they don't. Take for example Fox Business. There is only so much room and there are constant debates about the pricing between content providers and distributors. In our market we frequently have disputes that keep the Yankees and other prime product off the market. I have been in business with Media companies my whole career and at the end of the day it is just a dollar ans sense thing.

BTN can get on a basic cable lineup if they price it low enough.Having Rutgers and Maryland in theory gives new markets.  However lets look at reality. When Rutgers was in the Big East with a whole bunch of other local entities, they could barely get a bid. Basically I think what happened here is Rutgers and Maryland were very shrewd in making their case to the insular guys in Chicago who have become increasingly outflanked by the SEC, PAC 12 and Now ACC. I actually think it was more of a desperation move by the Big Ten than a well thought out thing. I am sure BTN is happy to have more content and maybe someday they will negotiate their way on to the more mainstream cable lineups. In the meantime the Big Ten  has taken what was already a declining product and made it worse. How does a late November game between Indiana and Maryland sound on the sex appeal meter.

All that said I think they will add a 15th and 16th team It will come down to the academic athletic fit. The resolution of the Maryland litigation will be a big factor in which direction they go.