Conference Realignment

[LawTalkin Jacket]

Long post follows, sorry for the brain dump.

The above is a great post. I've said for some time that in the expansion discussion, perception is one thing and reality is another.

1st misalignment of perceptions and reality: the assumption that The Big 10 and SEC's revenue is going to break even further away from the rest in 2030, or whenever their contracts expire. I believe this could happen, but is unlikely - due to a couple of factors:

1) ESPN and FOX bought in a bull market. Similar to buying a house in the past couple of years, you almost definitely overpaid. Buyer's remorse has for sure set in. The question is, will the house be worth the same thing to buyers in 2030? Will FOX and/or ESPN or the other networks be willing to pay more than they are now? Difficult to say. It might be, but they might very well not be willing to.

2) The buyers might not be able to afford to pay more. Even if they want to - which isn't guaranteed - the networks might not be able to offer the same thing or even a little less than they did this go-around. This could be due to financial mismanagement, dwindling viewership due to accelerated cord cutting, or any other number of factors. But assuming the Big 10 and SEC are going to continue to rake it in when the networks are losing their guaranteed recurring revenue in the form of cable fees is a bad move, IMO.

2nd misalignment of perception and reality: FSU and Clemson and their self-perceived brand value.

This one is a big "if" - but as you said, the Big10 not vetting them says a lot. Both seem to think that they have suitors waiting in the wings - and maybe they do. But it seems that conferences are now about following the money (as they probably should be in this environment, if they want to remain competitive - but that's another discussion). The SEC already has Florida and South Carolina media markets locked down. The Big 10 has neither, but also has the possibility of Washington DC, Atlanta, and Charlotte in the mix - all of which are more attractive in terms of population growth and current subscriber dynamics.

Will that change with the advent of more cord-cutting? Almost indefinitely. But for now, the size of the market is much more important than the size of the fan base, as it's a guaranteed revenue stream. And neither FSU or Clemson are well-positioned in that regard.

NOW. As my former calc prof liked to say, "What does that have to do with the price of tea in China?" Simple: If the Florida and South Carolina media markets have value, but aren't valuable to the Big10 or SEC, then FSU and Clemson and their ilk have 2 options:

a) Campaign to join the Big 12. I'm sure the Big 12 would love to take them, but they might not be able to after recent expansions. Not to mention that their payout is smaller than the ACC's.

or b) Make the ACC home, and work to help it get the most out of its valuable media properties (that we undervalued and undersold in the last go-around).

Seems like B is the answer, for now. And it's really been the logical choice all along. But will be interesting to see what happens as 2035 approaches.

is this true "....the possibility of Washington DC, Atlanta, and Charlotte in the mix - all of which are more attractive in terms of population growth and current subscriber dynamics." ?
I would think that the Florida market is growing rapidly, particularly in Orlando area and middle fla. AND there are a lot of people who went to B1G and SEC schools moving there. I know the city of Tallahassee isn't as big and growing as ATL, DC or Charlotte but Orlando, JAx etc all together could be a big market

 

[forensicbuzz]

I believe our recruiting would be better and more consistent if we were in the B1G or SEC. Back in 1978-1980 time period, I recall an AJC reporter saying that GT being in the ACC would " wear like an old leather coat". I believe the reporter was David Kindred. That seemed true for several years, particularly during the Bobby Cremins and Homer Rice era. However, the Georgia and Atlanta
fans have never really embraced many of the ACC football teams as we had hoped. The SEC in particular uses the ACC's general perception against us, "Cup Cake Conference or JC League".

We are identified with those we run with. After the last expansion and the retirement of Bowden and Beamer the conference has lost a lot of it's luster in Georgia. Unfortunately, GT has helped
add to that problem with the last coaching experience.

Also, we have not been able to create the kind of Rival games like we had in the SEC, exception being Clemson when we have competitive teams.

Collins didn't do that (didn't help), Chan Gailey going 0-7 did that. O'Leary had just won 3 in-a-row and got Donan fired. We were relevant to uga and their fans.

 

[CEB]

One other thing to go along with this. FSU is basically saying that the ACC does not provide enough revenue and they are leaving as soon as possible. Then they say that they want the rest of the ACC to take sacrifices to give FSU equivalent revenue to be on par with the two big conferences. --- I am leaving as soon as I can. In the mean time, you need to live on as little as possible and give me everything that you can. --- To that the rest of the conference should tell them to F off.

I can’t like this enough!!! Spot on!

Two things we know:
1. FSU is stuck here until we (a) let them leave or (b) 2036.
2. At the earlier of 1(a) or 1(b) happening, they’re gone.

Nothing we do in the interim should be for the purpose of making their stay more pleasant.

 

[Techwood Relict]

Who else here hopes, this year more than any other, that FSU has a losing season?

Every week gonna be like.....

 

[stech81]

I can’t like this enough!!! Spot on!

Two things we know:
1. FSU is stuck here until we (a) let them leave or (b) 2036.
2. At the earlier of 1(a) or 1(b) happening, they’re gone.

Nothing we do in the interim should be for the purpose of making their stay more pleasant.

I do find it funny that in 2017,2018,2019. 2020.and 2021 they thought equal revenue was fine.

Let's see 2017 ( 7-6) 2018 (5-7) 2019 ( 6-7) 2020 ( 3-6) and 2021 (5-7) I do believe that you may need to give some revenue back? And don't let the door hit you in the A*S

 

[g0lftime]

That back to back trip would be brutal.

I would make them make two trips. They would probably just stay a week in Cali between games.

 

[stinger 1957]

I have argued this for some time on another board, mainly with a UGAg fan. His take is neither SEC or B1G is going to add any team that doesn’t add to the collective take for all conference teams. Which went out the window just now with the PAC team additions to B1G. In addition, he maintains that due to streaming, markets do not mean as much now than 10 years ago. He is right to a degree, but he is looking at from a SEC $$$ perspective and assumes the B1G is thinking the same way, but he doesn’t understand what B1G is looking to do.

I think it is still significant when regular B1G fans living in Atlanta start attending games and watching on TV. Atlanta is too big and growing rapidly for the market to be a non factor. I argue that markets specifically Atlanta coupled with recruiting areas are still relevant In the long run as well. So B1G adding GT and Miami are not just possible, but also likely in the future. Coupled with world class academics and AAU along with Hartfield Intl Airport right there next to us, I think it is just a matter of time before we make the move ((decade).

I am ambivalent on it. I have no interest in playing Rutgers or Wisconsin, but I would love to see us shove foot in a** against the Terps. And follow up the next few weeks against UVA UNC, Miami. But we still need Ohio State and Penn a state to visit. That will draw some eyes.

it all hinges on Brent Key and what attraction football wise he can garner in the next decade. We need everyone to be talking about how adding GT would be good for B1G football, nit FSU or Clemson.

I would have to add SC and UCLA to those that would draw interest visiting ATL, not because of CA people here as is the case with upper midwestern people living here but just because they are SC and UCLA and maybe even OR possibly WA. I don't know a lot about TV/media stuff but it seems to me that the BIG having CBS, FOX, NBC as their carriers is much more powerful than what the other conferences presently have. I agree with you that the basis for the SEC versus the basis for the BIG are built on two different sets of principals although there is some overlap IMO with both. I think over the long run the BIG survives, not sure about SEC. I think some of the SEC rural schools that are not strong flagship schools in good TV mkts could become a drag to SEC in out years. Certainly I could be wrong, will be interesting to see how it all plays out over time.

 

[forensicbuzz]

From what I have seen, they are not arguing to be paid based on on-field performance. They are demanding to be paid based on "value" by a formula that they dictate. I haven't seen any actual formula, but they have talked about TV viewership and total athletic spending. When I have seen people try to use such arbitrarily drawn up "measurements" before, they usually try to set up the formula to ensure they are on top. Then if other people start passing them on that formula, they make arguments that it isn't an accurate measurement of "value" and should be modified. (always in such a way as to make them on top again.) If the formula was as simple as on-field performance, then the FSU fans would go nuts when they have another 5-7 season and get the bottom half of the distributions. What they are shooting for is for FSU to get the largest distribution of ACC money, no matter how that is calculated. They don't really care what the calculation is, nor what it takes into consideration, as long as they get the largest piece.

They want more than the largest piece. They want a share that puts them on par with what the B1G and SEC schools are getting. Screw the rest of the conference.

 

[forensicbuzz]

Carriage fees are still a thing, and large markets like Atlanta and Miami are still a big deal.

Remember who they're arguing with...not everyone understands carriage fees and how TV markets work.

 

[bobongo]

One other thing to go along with this. FSU is basically saying that the ACC does not provide enough revenue and they are leaving as soon as possible. Then they say that they want the rest of the ACC to take sacrifices to give FSU equivalent revenue to be on par with the two big conferences. --- I am leaving as soon as I can. In the mean time, you need to live on as little as possible and give me everything that you can. --- To that the rest of the conference should tell them to F off.

Yes, just call their bluff and tell them to F off. They aren't going anywhere, but if they did that would be okay, too. Whatever.

 

[GTNavyNuke]

Yes, just call their bluff and tell them to F off. They aren't going anywhere, but if they did that would be okay, too. Whatever.

Hope they go too and we take their share.

Talked to an NC State guy today. He thinks the N C Board of Reagents made the decision.

Also thinks if UNC gets offer without NC State at so!e point, NC State will be screwed.

So we have Clempy, FSU and NC Board of Reagents who want to weaken the ACC. **** them.

 

[bobongo]

Hope they go too and we take their share.

Talked to an NC State guy today. He thinks the N C Board of Reagents made the decision.

Also thinks if UNC gets offer without NC State at so!e point, NC State will be screwed.

So we have Clempy, FSU and NC Board of Reagents who want to weaken the ACC. **** them.

I'm just talking about FSU's effort at extorting money from the rest of the conference. If they carry out their hollow threat, the rest of the conference will get their money for the next 13 years.
No reason to entertain anything they have to say about leaving, one way or the other. They may do as they wish.

 

[Papa Foxtrot]

Talked to an NC State guy today. He thinks the N C Board of Reagents made the decision.

Also thinks if UNC gets offer without NC State at so!e point, NC State will be screwed.

So we have Clempy, FSU and NC Board of Reagents who want to weaken the ACC. **** them.

Slow down there Nuke! Does your NCSU friend have any evidence that the NCBoR was involved. I haven't seen that reported anywhere.

 

[GTNavyNuke]

Slow down there Nuke! Does your NCSU friend have any evidence that the NCBoR was involved. I haven't seen that reported anywhere.

Lol, no evidence provided elsewhere. I don't believe most of what I read either. He is connected and I believe him.

Remember Duke and Wake are private.

 

[LT 1967]

Jon Wilner of Mercury News believes momentum to Add Cal and Stanford to ACC is increasing. He believes answer will come in 24 hours. He is a PAC 4 reporter, so who knows.

 

[cpf2001]

My disagreement with the idea that “markets don’t matter for streaming” is that you gotta get new customers from somewhere. You’ve always got new students, but if you have these hundred-million-a-year TV money ambitions, you’re gonna need a lot of fans out there ready to buy subscriptions.

Can’t beat having somewhere in the real world within an hour of millions of people to go check out games. And to give all those grads from all your other schools road games to go to to keep them engaged.

With cable, the individual networks/conferences never had to think about the customer acquisition funnel and lifecycle process, that much. But with streaming it’s all going to be super relevant since people will have to opt-in much more deliberately … and potentially opt out and cancel more easily too. I bet you’ll see stuff like “buy a pack of four tickets, get a free subscription for a year (that auto-renews if you don’t cancel)”.

 

[RonJohn]

My disagreement with the idea that “markets don’t matter for streaming” is that you gotta get new customers from somewhere. You’ve always got new students, but if you have these hundred-million-a-year TV money ambitions, you’re gonna need a lot of fans out there ready to buy subscriptions.

Can’t beat having somewhere in the real world within an hour of millions of people to go check out games. And to give all those grads from all your other schools road games to go to to keep them engaged.

With cable, the individual networks/conferences never had to think about the customer acquisition funnel and lifecycle process, that much. But with streaming it’s all going to be super relevant since people will have to opt-in much more deliberately … and potentially opt out and cancel more easily too. I bet you’ll see stuff like “buy a pack of four tickets, get a free subscription for a year (that auto-renews if you don’t cancel)”.

I think it is even deeper than that. Most people who say markets don't matter it is all about streaming are just talking about hype and using buzzwords.

Is streaming conference direct-to-consumer, with a service like Netflix, or with a streaming TV carrier like YoutubeTV?

• YoutubeTV has the same "market" cost to the consumer as cable. If you get YoutubeTV in Atlanta, Youtube pays more to ESPN for the ACCN than it does for someone who lives in Texas. The conference would make more money from YoutubeTV if SMU and at least one of the Bay area schools were added to the conference.
• Netflix, Hulu, Disney+, and Apple+ are all reaching a stage of looking for profit instead of looking for additional subscribers. They aren't spending the same money they have spent in the last several years to acquire content. They are raising prices to the consumer. That is all in an effort to realize a profit instead of minimizing profit or losing money in order to gain subscribers. The open spicket is closing in that area.
• The direct-to-consumer streaming service seems like a good idea. However, there are some issues that have to be worked through. Google, Netflix, Hulu, etc are backed by really large companies. (Yes much larger than the universities) They have computers, bandwidth, and media distribution infrastructure that conferences would have to build, or partner with someone like Amazon, Google, or Cloudflare. Partnering would be the much better choice, but it would carry costs. The conference and/or schools would have to have staff for announcing, mixing, and broadcasting the content. I have no clue what the costs will be compared to the revenue, but if they charge $20 per month for the ACC network, that will not all be profit. The profit will be some percentage of that $20. Also, if each conference has a direct-to-consumer streaming service, what happens when GT plays at Colorado? Do all of the GT fans have to sign up for the Big12 streaming service in order to watch that one game? Will the streaming services require a one-year subscription, so that a GT fan has to pay $240 to watch that one game? I think this is very likely to happen at some point, but I don't think it will be in the next few years.

Streaming will be the main distribution eventually, but "markets" will still matter for another 5-10 years at least.(And I don't consider YoutubeTV, HuluTV, etc to be streaming) I think it is very likely that in 15-20 years, linear channels will not be available any longer. Why would companies continue to spend money to produce linear programming when most people are used to picking what to watch and when to watch it? Live sports and awards shows will still have a lot of people watching them at the same time, but you don't need 24/7/365 managed continuous programming if everyone just picks the game the way you do on ESPN+ and wait for it to start.

 

[Papa Foxtrot]

I think it is even deeper than that. Most people who say markets don't matter it is all about streaming are just talking about hype and using buzzwords.

Great post. I think the biggest challenge in the transition to a streaming model is pricing & packaging(the same thing actually). In the cable model, there are a huge number of customers that don't care about sports subsidizing ESPN. If Aunt Joannie wants to watch Hallmark Channel, but the cable package also includes ESPN, a chunk of her cost goes to ESPN. That's basically why cable has been so good to ESPN - you're correct that YouTubeTV is the same model as linear cable; just slightly different distribution. Properly pricing the product and subscriber retention are huge issues for streaming content providers - DIS+ is a perfect example. The next few years are going to be rough for ESPN....

 

[roadkill]

I think it is even deeper than that. Most people who say markets don't matter it is all about streaming are just talking about hype and using buzzwords.

Is streaming conference direct-to-consumer, with a service like Netflix, or with a streaming TV carrier like YoutubeTV?

• YoutubeTV has the same "market" cost to the consumer as cable. If you get YoutubeTV in Atlanta, Youtube pays more to ESPN for the ACCN than it does for someone who lives in Texas. The conference would make more money from YoutubeTV if SMU and at least one of the Bay area schools were added to the conference.
• Netflix, Hulu, Disney+, and Apple+ are all reaching a stage of looking for profit instead of looking for additional subscribers. They aren't spending the same money they have spent in the last several years to acquire content. They are raising prices to the consumer. That is all in an effort to realize a profit instead of minimizing profit or losing money in order to gain subscribers. The open spicket is closing in that area.
• The direct-to-consumer streaming service seems like a good idea. However, there are some issues that have to be worked through. Google, Netflix, Hulu, etc are backed by really large companies. (Yes much larger than the universities) They have computers, bandwidth, and media distribution infrastructure that conferences would have to build, or partner with someone like Amazon, Google, or Cloudflare. Partnering would be the much better choice, but it would carry costs. The conference and/or schools would have to have staff for announcing, mixing, and broadcasting the content. I have no clue what the costs will be compared to the revenue, but if they charge $20 per month for the ACC network, that will not all be profit. The profit will be some percentage of that $20. Also, if each conference has a direct-to-consumer streaming service, what happens when GT plays at Colorado? Do all of the GT fans have to sign up for the Big12 streaming service in order to watch that one game? Will the streaming services require a one-year subscription, so that a GT fan has to pay $240 to watch that one game? I think this is very likely to happen at some point, but I don't think it will be in the next few years.

Streaming will be the main distribution eventually, but "markets" will still matter for another 5-10 years at least.(And I don't consider YoutubeTV, HuluTV, etc to be streaming) I think it is very likely that in 15-20 years, linear channels will not be available any longer. Why would companies continue to spend money to produce linear programming when most people are used to picking what to watch and when to watch it? Live sports and awards shows will still have a lot of people watching them at the same time, but you don't need 24/7/365 managed continuous programming if everyone just picks the game the way you do on ESPN+ and wait for it to start.

I just realized I may be looking at the subscription models incorrectly. So, when you see “cable subscriber” trends, which indicate that traditional linear TV provider subscribers are in rapid decline, are they not counting the alternate internet-based “streaming” carrier services such as YoutubeTV and DirecTV stream? Or are these services counted as part of the alternate “streaming” services? Because an awful lot of viewers are simply substituting a streaming carrier to replace their linear TV service with the same channels, and are paying for the same list of bundled channels.

Live sports is a different animal than the usual streaming content.

 

[RonJohn]

I just realized I may be looking at the subscription models incorrectly. So, when you see “cable subscriber” trends, which indicate that traditional linear TV provider subscribers are in rapid decline, are they not counting the alternate internet-based “streaming” carrier services such as YoutubeTV and DirecTV stream? Or are these services counted as part of the alternate “streaming” services? Because an awful lot of viewers are simply substituting a streaming carrier to replace their linear TV service with the same channels, and are paying for the same list of bundled channels.

Live sports is a different animal than the usual streaming content.

Subscribers to linear TV packages are going down. You have to be very careful in looking at numbers provided in articles/blogs/Twitter/etc. If you don't understand where the numbers come from and specifically what the represent, it can lead to conclusions that aren't valid. Some people who post numbers don't understand them, and some do but intentionally skew the numbers to make points. Some people do post numbers and give actual explanations about what those numbers are and what they represent.

I think that the word "streaming" is used for multiple things and the discussion about streaming being the future is muddled by that. Linear TV will probably go away, but it won't be in the next few years. The business model for YoutubeTV and DirecTV Stream is exactly the same business model as cable/sat TV. The method of distribution is different. It is also good that the streaming linear companies don't lock people into contracts and use high-pressure tactics to keep people subscribed. However, they do pay for content the same way as cable/sat, and charge customers in the same way as cable/sat.

From what I have seen live sports and awards type programs are the only reason to have linear channels at all, and those could be accomplished without a linear channel.