Conference Realignment

RonJohn

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Just a hypothetical...

The ACC has 15 teams. ND deal is weird so let’s just throw them out. ACC has 14 full members making $36M / year and we are wanting to get another $20M / year to close the gap with BIGSECY teams.

$20M x14 = $280M / year to get the rest of the conference to $56M. THEN, the four teams coming in want the same payout... another $224M. Big round number, those four teams have to be worth $125M each annually to move the needle like that.

Similar math for BIG... assume each school gets a $20M bump, that’s $280M. They’re already making $50M plus each and UCLA and USC will want that $70M too... that’s $420M total. UCLA and USC are worth $220M a piece, annually?!?

I don’t do anything media related nor do I claim to know a thing about subscriber fees and ad revenues but I just can’t believe current contracts are that undervalued! If the numbers are moving that fast, the ACC ought to be able to threaten to blow it up and get more money without adding or subtracting anyone. They also should get a renegotiation of the term... no one should be agreeing to more than a five year deal, right? BIG may renegotiate twice before our GOR runs out!
I don't understand your math. In your example, if each team in the Big10 is making $70 million, USC has to bring in an additional $70 million for the conference to break even. Not an addition $220 million.

The problem with the ACC is that it made the same deal that the Big10 and SEC did, but 10 years later than they did. The ACC signed the 10 year old deal for 20 years. The ACC will be thirty years behind the Big10 and SEC when the current contract expires.
 

RonJohn

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Same difference. Fewer people would leave because fewer people are watching.
I see a big difference. ESPN was smart and scheduled their distributor contracts to never end at the same time and to end at big moments in sports. If ESPN were to disappear from a cable/sat package two weeks before college football starts a large chunk of that providers subscribers will move to a different provider. It might only be 20%, but the providers can't afford to lose 20% quickly. Whether they actually watch games or not, they want access to college football. Compare that to something like Judge Judy. There might be 30% of subscribers who watch Judge Judy, but if that station disappears, they will just watch something else. They won't change providers because of it.

This whole business model is going to implode. The only reasons that live TV packages still exist are: Live sports, live awards shows, live news, and older people who have always had and always will a TV subscription package. You can find live news without a subscription now. Eventually that business model will fail. Unless something happens, ESPN will probably be divested from Disney at some point. ESPN will either have to find new sources of revenue (probably something like sports betting), or it won't be able to keep up with it's contractual obligations to pay for broadcast rights.

I have thought 10 or more years ago that the change would have occurred before now. My impression is that the Big10 and SEC are milking the current system for all they can while preparing for the next business environment. My impression of the ACC is that they are following on the coattails of the other conferences and not looking at what is next.
 

bobongo

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If ESPN were to disappear from a cable/sat package two weeks before college football starts a large chunk of that providers subscribers will move to a different provider.
And more of them would move due to a loss of SEC games than ACC games, because more of them watch the SEC than the ACC.
 

WreckinGT

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I see a big difference. ESPN was smart and scheduled their distributor contracts to never end at the same time and to end at big moments in sports. If ESPN were to disappear from a cable/sat package two weeks before college football starts a large chunk of that providers subscribers will move to a different provider. It might only be 20%, but the providers can't afford to lose 20% quickly. Whether they actually watch games or not, they want access to college football. Compare that to something like Judge Judy. There might be 30% of subscribers who watch Judge Judy, but if that station disappears, they will just watch something else. They won't change providers because of it.

This whole business model is going to implode. The only reasons that live TV packages still exist are: Live sports, live awards shows, live news, and older people who have always had and always will a TV subscription package. You can find live news without a subscription now. Eventually that business model will fail. Unless something happens, ESPN will probably be divested from Disney at some point. ESPN will either have to find new sources of revenue (probably something like sports betting), or it won't be able to keep up with it's contractual obligations to pay for broadcast rights.

I have thought 10 or more years ago that the change would have occurred before now. My impression is that the Big10 and SEC are milking the current system for all they can while preparing for the next business environment. My impression of the ACC is that they are following on the coattails of the other conferences and not looking at what is next.
Yeah, it seems unsustainable. The number of ESPN subscribers is dropping every year. Presumably FOX subscribers are as well. The number of people watching college football on TV is dropping every year. The TV ratings for the college football playoff are dropping every year. Yet, conferences are going to be getting these new contracts with massive payout increases. Doesn't really make much sense.
 

Techster

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One of my friends here is the Fox Sports programming lead who has an office at the Auburn Athletic complex. I asked him what he thought and he just shook his head. GT is one of many schools who are used for programming content. It really doesn't matter if we win, lose or have anyone in the stands. They are furnishing a product that their subscribers can sell local advertising against. That's it.

I think we have largely walked away from our history. Talk to almost anyone outside of the South and GT is treated about the same as Holy Cross. When I was younger (much younger), West Georgia was still fertile recruiting land for Tech. The Auburn Wreck Tech parade was huge, as was the rivalry with Alabama. We have largely turned away from all of that. We have been "going national" and one outcome is that we have almost no base to call our own. We aren't number one in Georgia, number one in Atlanta, number one in the South ...

I'm hopeful for the new staff. But I'm still looking for evidence that we have a plan to compete in this environment. It must be very challenging for AD's everywhere.

EVERY is school is "used for programming content". That is literally why media agreements exist. Some years schools are chicken and rice fillers, other years they're five star main courses. When GT was good (2008-2009, 2014) we had more prime time slots and nationally televised games. When we weren't we played at noon on a regional station.

Look at Texas/USC/UCLA. All blueblood targets for SEC and B1G. They have been relegated to non-prime time slots and regional broadcasts for a majority of their games because they just haven't been doing that well. Outside of a few matchups with traditional rivals (UT-OU, USC-ND, UCLA-USC, etc), their games just haven't generated that much attention.

It's like anything else. When you're good, no matter what school you are (see Cinncinnatti, UCF), people want to watch you. When you're not, not many care.

Whether you want to believe it or not, GT still has name recognition. It's starting to fade as the years go by, but GT does mean something to the college sports world. There's a reason GT is probably the top 2-3 targets for B1G if the GOR ever gets worked out.
 

iceeater1969

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I don't understand your math. In your example, if each team in the Big10 is making $70 million, USC has to bring in an additional $70 million for the conference to break even. Not an addition $220 million.

The problem with the ACC is that it made the same deal that the Big10 and SEC did, but 10 years later than they did. The ACC signed the 10 year old deal for 20 years. The ACC will be thirty years behind the Big10 and SEC when the current contract expires.
I did a calc on this long ago.
The SEC was pulling away big time $ for a long time due to early ESPN sign up.
ACC being slow to react had to sign up WITH ESPN for very long term to get close to current SEC money.
Then SEC got a new deal and kept pulling away.
 

Techster

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Yeah, it seems unsustainable. The number of ESPN subscribers is dropping every year. Presumably FOX subscribers are as well. The number of people watching college football on TV is dropping every year. The TV ratings for the college football playoff are dropping every year. Yet, conferences are going to be getting these new contracts with massive payout increases. Doesn't really make much sense.

I think what people are confusing is the buildup to streaming. That will be the future. I linked to an article earlier in the thread where ESPN is on record saying that all of their programming will be exclusively streaming in the future. I would venture to guess that will be what Fox Sports, CBS Sports, NBC Sports will also all do. Then you have the Amazon Prime and Apple who want to get in on streaming sports. Why is that? Because they know they are going to make money. More competition, more money for the conferences.

Sports has the most loyal viewer following. That's why media companies are willing to pay so much money for broadcast rights. In the future, viewers won't have a choice but to pay for sports. It won't be like pay per view where you have to pay per game, but if you want to watch ESPN, it will cost you...and if you want to watch certain games, it will only come with an additional paid enhanced package (SEC network package, B1G network package, ACC network package, etc.). We're already seeing some of that now...in the future, it will be 100% that.

A viewer's choice will be either pay to watch sports, or don't watch it at all. Sports fans are loyal, so a good portion will pay for it. After about 5-10 years, this model will be normal...much like how internet became normal, paying for MLB package or NFL network package became normal.
 

CEB

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I don't understand your math. In your example, if each team in the Big10 is making $70 million, USC has to bring in an additional $70 million for the conference to break even. Not an addition $220 million.

The problem with the ACC is that it made the same deal that the Big10 and SEC did, but 10 years later than they did. The ACC signed the 10 year old deal for 20 years. The ACC will be thirty years behind the Big10 and SEC when the current contract expires.
No... each team in the BIG is making $50M and the value of the new deal with USC and UCLA is $70M to all, so that’s $70M for new members plus $20M each to existing members.
Big round numbers and assumptions here- no knowledge of what the BIG deal Actually pays...

Yes, we can presume that the existing value of the conference has increased some amount based upon the fact that the deal is being renegotiated, but if the existing BIG is bringing in new teams you have to believe those new teams carry their own weight in terms of value PLUS the incremental increase to the other 14 existing teams... whatever that increase is. If you could get the increase without them, why incur the additional scheduling issues and logistics of adding more teams? And if all they add is their own value with no incremental increase to other members, again, no reason to bring them on.
 

SimpleGT

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I think what people are confusing is the buildup to streaming. That will be the future. I linked to an article earlier in the thread where ESPN is on record saying that all of their programming will be exclusively streaming in the future. I would venture to guess that will be what Fox Sports, CBS Sports, NBC Sports will also all do. Then you have the Amazon Prime and Apple who want to get in on streaming sports. Why is that? Because they know they are going to make money. More competition, more money for the conferences.

Sports has the most loyal viewer following. That's why media companies are willing to pay so much money for broadcast rights. In the future, viewers won't have a choice but to pay for sports. It won't be like pay per view where you have to pay per game, but if you want to watch ESPN, it will cost you...and if you want to watch certain games, it will only come with an additional paid enhanced package (SEC network package, B1G network package, ACC network package, etc.). We're already seeing some of that now...in the future, it will be 100% that.

A viewer's choice will be either pay to watch sports, or don't watch it at all. Sports fans are loyal, so a good portion will pay for it. After about 5-10 years, this model will be normal...much like how internet became normal, paying for MLB package or NFL network package became normal.
I tend to agree, but under that model the ESPNs and Fox Sports don’t get paid for the passive non viewers currently paying small amounts for cable or broader streaming packages but not really valuing the content enough to pay to watch. Almost a seesaw effect as package payments decline and subscription income increases. The subscription cost would need to be significantly above the $1.30 per month for cable ESPN.
 

slugboy

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EVERY is school is "used for programming content". That is literally why media agreements exist. Some years schools are chicken and rice fillers, other years they're five star main courses. When GT was good (2008-2009, 2014) we had more prime time slots and nationally televised games. When we weren't we played at noon on a regional station.

Look at Texas/USC/UCLA. All blueblood targets for SEC and B1G. They have been relegated to non-prime time slots and regional broadcasts for a majority of their games because they just haven't been doing that well. Outside of a few matchups with traditional rivals (UT-OU, USC-ND, UCLA-USC, etc), their games just haven't generated that much attention.

It's like anything else. When you're good, no matter what school you are (see Cinncinnatti, UCF), people want to watch you. When you're not, not many care.

Whether you want to believe it or not, GT still has name recognition. It's starting to fade as the years go by, but GT does mean something to the college sports world. There's a reason GT is probably the top 2-3 targets for B1G if the GOR ever gets worked out.

He's talking about the difference between the broadcasts that you bring GameDay to vs the ones that get TacShaver and Spurtle ads. His ESPN contact is saying we're in the latter category.
 

Techster

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I tend to agree, but under that model the ESPNs and Fox Sports don’t get paid for the passive non viewers currently paying small amounts for cable or broader streaming packages but not really valuing the content enough to pay to watch. Almost a seesaw effect as package payments decline and subscription income increases. The subscription cost would need to be significantly above the $1.30 per month for cable ESPN.

I can see a charge of $9.99 per month for ESPN, then an additional $5.99-$9.99 for a specific conference package which will show secondary and tertiary matchups we wouldn't be able to watch unless we have that package (think of the crap we have to go through for Bally Network). For a LOT of fans, that's still cheaper than paying for cable or Youtube TV where the vast majority of the channels aren't watched anyhow.

Also, streamers like Amazon and Apple will probably increase their fees to be able to carry a portion of a conferences games.

There's a reason why ESPN and Conferences can project $100 million/team payouts 10 years from now for the B1G and SEC.
 

CEB

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I tend to agree, but under that model the ESPNs and Fox Sports don’t get paid for the passive non viewers currently paying small amounts for cable or broader streaming packages but not really valuing the content enough to pay to watch. Almost a seesaw effect as package payments decline and subscription income increases. The subscription cost would need to be significantly above the $1.30 per month for cable ESPN.
I agree with this... I know they have run the numbers and obviously it makes some sense but it’s simply an evaluation of whether you want a little from everyone or a lot from fewer, and which one generates the most revenue.
My guess is there is also a cable company premium that they can avoid if they do go full streaming with their own service.
But the bottom line is how bullish they are on the size of the three groups who are currently paying via cable services:
Group 1: doesn’t watch sports, never will - those subscription fees are lost
Group 2: sports fans who watch, will pay to watch regardless - they get a much bigger cut of this group
Group 3: casual fans who may be viewers now but won’t care enough to pay for streaming. If they are truly in the process of elevating 30- 40 teams and in the process demoting nearly 3/4 of college football to something less, group 3 could be larger than they are anticipating.

Finally, my gut says they are already viewing traditional cable subscriptions as a diminishing (if not dying) model so the “lost” subscription fees maybe aren’t really lost in terms of financial projections... they would be gone regardless.
 

WreckinGT

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I can see a charge of $9.99 per month for ESPN, then an additional $5.99-$9.99 for a specific conference package which will show secondary and tertiary matchups we wouldn't be able to watch unless we have that package (think of the crap we have to go through for Bally Network). For a LOT of fans, that's still cheaper than paying for cable or Youtube TV where the vast majority of the channels aren't watched anyhow.

Also, streamers like Amazon and Apple will probably increase their fees to be able to carry a portion of a conferences games.

There's a reason why ESPN and Conferences can project $100 million/team payouts 10 years from now for the B1G and SEC.
That isn't much more than ESPN currently charges in subscriber fees for their 76 million subscribers. You would need to nearly match that in streaming subscribers which isn't going to happen. Not to mention if you move to streaming, users will choose when they want to subscribe. It wont be year around for most. ESPN will have to charge substantially more than 10-20 a month to bring in the kind of revenue they are currently getting.
 

Vespidae

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I think what people are confusing is the buildup to streaming. That will be the future. I linked to an article earlier in the thread where ESPN is on record saying that all of their programming will be exclusively streaming in the future. I would venture to guess that will be what Fox Sports, CBS Sports, NBC Sports will also all do. Then you have the Amazon Prime and Apple who want to get in on streaming sports. Why is that? Because they know they are going to make money. More competition, more money for the conferences.

Sports has the most loyal viewer following. That's why media companies are willing to pay so much money for broadcast rights. In the future, viewers won't have a choice but to pay for sports. It won't be like pay per view where you have to pay per game, but if you want to watch ESPN, it will cost you...and if you want to watch certain games, it will only come with an additional paid enhanced package (SEC network package, B1G network package, ACC network package, etc.). We're already seeing some of that now...in the future, it will be 100% that.

A viewer's choice will be either pay to watch sports, or don't watch it at all. Sports fans are loyal, so a good portion will pay for it. After about 5-10 years, this model will be normal...much like how internet became normal, paying for MLB package or NFL network package became normal.
A big problem with streaming is latency. The bigger the audience, the longer the lag time. Right now, it averages 44 seconds for big games.
 

SimpleGT

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Simpsonville SC
I think what people are confusing is the buildup to streaming. That will be the future. I linked to an article earlier in the thread where ESPN is on record saying that all of their programming will be exclusively streaming in the future. I would venture to guess that will be what Fox Sports, CBS Sports, NBC Sports will also all do. Then you have the Amazon Prime and Apple who want to get in on streaming sports. Why is that? Because they know they are going to make money. More competition, more money for the conferences.

Sports has the most loyal viewer following. That's why media companies are willing to pay so much money for broadcast rights. In the future, viewers won't have a choice but to pay for sports. It won't be like pay per view where you have to pay per game, but if you want to watch ESPN, it will cost you...and if you want to watch certain games, it will only come with an additional paid enhanced package (SEC network package, B1G network package, ACC network package, etc.). We're already seeing some of that now...in the future, it will be 100% that.

A viewer's choice will be either pay to watch sports, or don't watch it at all. Sports fans are loyal, so a good portion will pay for it. After about 5-10 years, this model will be normal...much like how internet became normal, paying for MLB package or NFL network package became normal.
I tend to agree, but under that model the ESPNs and Fox Sports don’t get paid for the passive non viewers currently paying small amounts for cable or broader streamingpackages but not really valuing the content enough to pay to watch. Almost a seesaw effect as package payments decline and subscription income increases. The subscription cost would need to be significantly above the $1.30 per month for cable ESPN.
 

WreckinGT

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3,198
I tend to agree, but under that model the ESPNs and Fox Sports don’t get paid for the passive non viewers currently paying small amounts for cable or broader streamingpackages but not really valuing the content enough to pay to watch. Almost a seesaw effect as package payments decline and subscription income increases. The subscription cost would need to be significantly above the $1.30 per month for cable ESPN.
As of 2017, ESPN subscriptions are above $9 a month for customers. Its likely higher now.
 

Techster

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That isn't much more than ESPN currently charges in subscriber fees for their 76 million subscribers. You would need to nearly match that in streaming subscribers which isn't going to happen. Not to mention if you move to streaming, users will choose when they want to subscribe. ESPN will have to charge substantially more than 10-20 a month to bring in the kind of revenue they are currently getting.

I was just throwing out a number. I'm sure ESPN knows exactly what they need to increase it to to make it work for everyone.
 

RonJohn

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I can see a charge of $9.99 per month for ESPN, then an additional $5.99-$9.99 for a specific conference package which will show secondary and tertiary matchups we wouldn't be able to watch unless we have that package (think of the crap we have to go through for Bally Network). For a LOT of fans, that's still cheaper than paying for cable or Youtube TV where the vast majority of the channels aren't watched anyhow.

Also, streamers like Amazon and Apple will probably increase their fees to be able to carry a portion of a conferences games.

There's a reason why ESPN and Conferences can project $100 million/team payouts 10 years from now for the B1G and SEC.
The main ESPN channel already gets close to that for EVERY cable/sat subscriber. The main ESPN channel alone is estimated to be over $8. Then is is a couple for ESPN2, and some for ESPN college, and over $1.30 for SECN in SEC areas, and something for ACCN, etc. Each cable/sat subscriber now is paying closer to $15 per month for the ESPN suite of channels. I have seen estimates that only 30 percent watch ESPN, so the sports subscriber is being subsidized by the non-sports subscribers. The cost per month for sports fans to get the same ESPN content without others being charged for it would be closer to $50. Plus that is only if everyone subscribes for all 12 months instead of jumping in and out the way people do with streaming services. For ESPN to have similar revenue from only people who watch sports, the cost will be close to full broadcast TV subscriptions.
 

Techster

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The main ESPN channel already gets close to that for EVERY cable/sat subscriber. The main ESPN channel alone is estimated to be over $8. Then is is a couple for ESPN2, and some for ESPN college, and over $1.30 for SECN in SEC areas, and something for ACCN, etc. Each cable/sat subscriber now is paying closer to $15 per month for the ESPN suite of channels. I have seen estimates that only 30 percent watch ESPN, so the sports subscriber is being subsidized by the non-sports subscribers. The cost per month for sports fans to get the same ESPN content without others being charged for it would be closer to $50. Plus that is only if everyone subscribes for all 12 months instead of jumping in and out the way people do with streaming services. For ESPN to have similar revenue from only people who watch sports, the cost will be close to full broadcast TV subscriptions.

Like I said, I was just throwing out a number.

Also remember this: ESPN is owned by ABC/Disney. There are packages they can offer viewers that combine everything ESPN and ABC/Disney offers. They did a promotion with exactly that when I signed up for Disney+.

ESPN's head wouldn't have made the exclusive streaming comment if ESPN wasn't confident of what their experts think they could do. Like I said, they can charge whatever amount, viewers will either pay to watch or they won't.
 
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