Conference Realignment

[Augusta_Jacket]

The problem could be ESPN doesn’t have the money to make it profitable for the ACC. Travel cost would be a lot higher and some of the other sport could use that money up and it wouldn’t be profitable the ACC or PAC 12-10-9 schools.

Travel costs difference is negligible. A flight is a flight for the most part. Everything else is the same.

As @forensicbuzz said the issue is not in the travel, it's in the financial ability of ESPN, who is bleeding cash and laying off employees, to increase the agreement in such a manner that current teams don't lose money just to gain new members.

For instance, currently ESPN pays ACC teams $40 million a year (rounded to make this exercise easy) which means they are paying $560 million a year to the ACC. (Leaving out the partial payment to ND to again make the math easy)

If we were to add 4 teams, we would need to have ESPN increase the payout by $160 million just to stay static. We would need ESPN to raise the payoff to $900 million a year to increase payouts to $50 million per school, which would put us on par with where the SEC currently is and $10 million less than the B1G schools are getting.

To sum up, ESPN would have to increase the payout by $40 million per school added to stay static, which would already be a significant outlay for them in their current situation, or almost double their outlay to get us in the current payout ballpark. Being that ESPN is struggling financially, this seriously impedes our ability to add new teams at the moment.

Finally, all this is not to say I don't believe we will be adding teams. I think it's quite possible we could work out a deal with Apple and ESPN where we utilize Apple TV to cover home games involving the west coast teams and maybe even some content not picked up by ESPN to make adding teams worthwhile. My prediction, should we go this routhe, is we still will not eclipse $50 million per school bu might be able to bump it to $45 million per school.

 

[orientalnc]

As @forensicbuzz said the issue is not in the travel, it's in the financial ability of ESPN, who is bleeding cash and laying off employees, to increase the agreement in such a manner that current teams don't lose money just to gain new members.

For instance, currently ESPN pays ACC teams $40 million a year (rounded to make this exercise easy) which means they are paying $560 million a year to the ACC. (Leaving out the partial payment to ND to again make the math easy)

If we were to add 4 teams, we would need to have ESPN increase the payout by $160 million just to stay static. We would need ESPN to raise the payoff to $900 million a year to increase payouts to $50 million per school, which would put us on par with where the SEC currently is and $10 million less than the B1G schools are getting.

To sum up, ESPN would have to increase the payout by $40 million per school added to stay static, which would already be a significant outlay for them in their current situation, or almost double their outlay to get us in the current payout ballpark. Being that ESPN is struggling financially, this seriously impedes our ability to add new teams at the moment.

Finally, all this is not to say I don't believe we will be adding teams. I think it's quite possible we could work out a deal with Apple and ESPN where we utilize Apple TV to cover home games involving the west coast teams and maybe even some content not picked up by ESPN to make adding teams worthwhile. My prediction, should we go this routhe, is we still will not eclipse $50 million per school bu might be able to bump it to $45 million per school.

If ESPN goes to a streaming model doesn't the addition of those four make bumping up the ACC deal a good financial deal for the network.

 

[RonJohn]

The Pac12 (with Oregon, Washington, Cal, Stanford) can’t get a media contract that approaches the ACC’s current contract. Why do you think adding any of those schools would increase the payouts to the ACC schools? You don’t water down your league for the next 10 years because you’re afraid you might lose a school or two to the SEC/Big10 in 2036.

I'm sure that there are talks going on, and that all of the conferences are looking at multiple possibilities for adding teams and revenue streams for adding those teams. It has been reported that the ACC has run numbers for adding West coast teams in the past, and that the numbers didn't work out.

Adding those schools would automatically raise the revenue from the ACCN. It probably would not be enough to cover the entire per-team payout, but it is a start. I do not think that the ACC would add teams if it reduced the per-team payout over the contract. (I worded it that way, because they might would take a temporary hit if it improved the long term outlook.) If the numbers don't work out, nothing will happen. I just think they likely exploring ways to make things work out financially and from a conference realignment logistics standpoint.

 

[Root4GT]

The Pac12 (with Oregon, Washington, Cal, Stanford) can’t get a media contract that approaches the ACC’s current contract. Why do you think adding any of those schools would increase the payouts to the ACC schools? You don’t water down your league for the next 10 years because you’re afraid you might lose a school or two to the SEC/Big10 in 2036.

Why would the ACC want 4 West Coast teams at all. The 10pm EST games would draw miniscule ratings. GT at Cal and 10pm EST in early November. No thanks! Having lived in Monterrey, CA and Tacoma, WA, football interest simply is not the same as it is in the Southeast. That's a big reason the PAC 12 couldn't get a decent contract. Add in most of the US isn't watching games at 10pm. No thanks to any West Coast tema!

 

[Roswellgoldmember]

I'm sure that there are talks going on, and that all of the conferences are looking at multiple possibilities for adding teams and revenue streams for adding those teams. It has been reported that the ACC has run numbers for adding West coast teams in the past, and that the numbers didn't work out.

Adding those schools would automatically raise the revenue from the ACCN. It probably would not be enough to cover the entire per-team payout, but it is a start. I do not think that the ACC would add teams if it reduced the per-team payout over the contract. (I worded it that way, because they might would take a temporary hit if it improved the long term outlook.) If the numbers don't work out, nothing will happen. I just think they likely exploring ways to make things work out financially and from a conference realignment logistics standpoint.

I feel pretty confident that Oregon and Washington at least would be upper tier ACC teams in terms of media value. Probably the Arizona schools as well.

 

[RonJohn]

If ESPN goes to a streaming model doesn't the addition of those four make bumping up the ACC deal a good financial deal for the network.

I don't think ESPN can afford to go to a streaming only model. They currently get more than $8 per month from every single TV subscriber in the nation. (For the main ESPN channel only, reportedly over $15 for all channels) I do realize that the number of TV subscribers is falling, but in order to make the same amount they make now ESPN would have to get 125 million subscriptions at over $15 per month. Those subscribers would have to remain subscribed all year long instead of adding/dropping when the sport they are interested in is in season.

I do think ESPN will move towards a subscription model, but it will be slower than an immediate move. They already have content on ESPNxtra that you can't get on the linear channels. I think they will just keep pushing more content in that direction as the TV subscribers keep cutting the cord.

 

[g0lftime]

I don't think ESPN can afford to go to a streaming only model. They currently get more than $8 per month from every single TV subscriber in the nation. (For the main ESPN channel only, reportedly over $15 for all channels) I do realize that the number of TV subscribers is falling, but in order to make the same amount they make now ESPN would have to get 125 million subscriptions at over $15 per month. Those subscribers would have to remain subscribed all year long instead of adding/dropping when the sport they are interested in is in season.

I do think ESPN will move towards a subscription model, but it will be slower than an immediate move. They already have content on ESPNxtra that you can't get on the linear channels. I think they will just keep pushing more content in that direction as the TV subscribers keep cutting the cord.

Isn't Disney shopping to partner or sell off ESPN? The long term ACC deal that Swofford setup with ESPN gives them no reason to even be concerned with the ACC right now. They have bigger $ fish to fry.
A new ESPN partner or buyer might be willing to deal with the ACC if they feel threatened by the other networks but now ESPN has the SEC as their golden goose.

 

[slugboy]

Apple or Amazon for streaming could be partners. Both are firm on measurement before they pay out.

If ESPN goes to a streaming model doesn't the addition of those four make bumping up the ACC deal a good financial deal for the network.

If they overpaid for existing deals like the SEC, the additional revenue could be a smart financial decision, but they might not take it.

Sometimes, a company freezes spending and they set the threshold very high for what they’ll commit to. (I’d say “IRR”, but I’ve never seen anyone using that, and no one I know really believes ROI. They do look at costs and revenue projections separately)

 

[CEB]

Isn't Disney shopping to partner or sell off ESPN? The long term ACC deal that Swofford setup with ESPN gives them no reason to even be concerned with the ACC right now. They have bigger $ fish to fry.
A new ESPN partner or buyer might be willing to deal with the ACC if they feel threatened by the other networks but now ESPN has the SEC as their golden goose.

This is where it gets interesting to me. If ESPN is being marketed, potential buyers / partners are going to start seeing the valuation of the ESPN assets. That exercise could be telling. Maybe we even get a peek behind the curtain.
I know everyone has this perception of SEC being crown jewel but i have a suspicion that it may not cash flow the way the ACC deal does (for ESPN). Not that ESPN will want to lose the SEC, but I think they and the new buyer will have a vested interest in holding on to the ACC.
Just a hunch... because it sure looks like ESPN gets a ton of programming out of an “at” or below market deal with the ACC.

 

[Augusta_Jacket]

If ESPN goes to a streaming model doesn't the addition of those four make bumping up the ACC deal a good financial deal for the network.

Maybe, but it still doesn't mean they could afford it. I could have someone offer me a Gulfstream for $10 million dollars, and while that would be an amazing deal, I still couldn't afford to pull the trigger.

Right now the jury is still out on whether a streaming model would generate more money. Some experts believe that ESPN could actually lose money by going to a streaming heavy platform.

 

[TooTall]

IMHO, college sports are on a course that will be pay per view before too long.
Example, want to watch March Madness? $150 will get you all games including the final four and championship game (just getting those two $100).
In person season tix at GT, about $400. All games streaming, $200.
Bowl schedule, full, $200, individual bowls $50. Playoffs are $100 per game with championship at $150 or all 3 games for $200.

Expanding will not equal more money because the current channel's can't afford to give more money.

 

[GoJacketsInRaleigh]

The Pac12 (with Oregon, Washington, Cal, Stanford) can’t get a media contract that approaches the ACC’s current contract. Why do you think adding any of those schools would increase the payouts to the ACC schools? You don’t water down your league for the next 10 years because you’re afraid you might lose a school or two to the SEC/Big10 in 2036.

That would be like saying the Pac-12 shouldn't take Clemson or FSU because the ACC can't get a great deal. Oregon and Washington aren't the TV problem. Oregon St, Wash St, etc.... are

 

[cpf2001]

Streaming apps are still pretty sports-unfriendly. I think this is going to be a big hurdle.

Part is a blind spot: A lot of product managers at the companies making them aren’t exactly big sports fans.

Part is “user friendliness”: instead of getting hit with a channel and commercials the second you turn on the TV, you have to do a lot more searching, even if all you wanted was to flip back on and see what the 7PM ESPN game is looking like after watching the noon game earlier. Or even “real” user-friendliness that results in lower engagement and lower money for the channel - like being able to cancel easily instead of having to deal with hardware and all that so you have access all year.

Part of it is territorial corporate crap - imagine having to jump entirely out of the ESPN app to the Fox app to the Apple app to check scores on three different games. Nah, you’ll just check on your phone instead, and that means less ad money for the broadcasters, and maybe you don’t need all those other subscriptions long term if you’re just a GT fan… vs just changing channels.

It all works together to make more friction for just casually leaving the games on in the background all Saturday even if you’re not super invested in who is playing in any given one. And that’s gotta be terrifying money-wise for the schools and networks. This PAC stuff is probably a wake up call to a lot to schools that it’s not just a Disney problem.

 

[Randy Carson]

The ACC as we know it is done.

As the link above reveals, FSU is gone no matter what.

 

[Roswellgoldmember]

That would be like saying the Pac-12 shouldn't take Clemson or FSU because the ACC can't get a great deal. Oregon and Washington aren't the TV problem. Oregon St, Wash St, etc.... are

I would imagine the uncertainty around the league isn't helping either.

 

[GTRX7]

The ACC as we know it is done.

As the link above reveals, FSU is gone no matter what.

Probably true . . . assuming the SEC or Big10 wants them. If those conferences don't expand, FSU isn't going anywhere.

 

[CEB]

The ACC as we know it is done.

As the link above reveals, FSU is gone no matter what.

Its all about the timing. I think FSU has wanted to be gone almost since they joined. Bobby and the administration liked the ACC, not sure anyone else in Tally wanted to be here. FSU certainly wants out, but.... timing, timing, timing.

I have gotten caught up in this too. The rumblings certainly are interesting. The notion that they have a “work around” for GOR is VERY interesting. The statements being made by some representatives of the university are pretty darned interesting.

That said, if the GOR is “the last thing” they’re worried about and “won’t be the document that prevents them from leaving,” then why are they still here?

Maybe they don’t have a landing spot? Wouldn’t that be something... the SEC hasn’t seemed interested in more teams (or even adding conference games) because ESPN won’t pay. FSU just missed AAU membership, which is a big deal to Big Ten. How big? That’s for Big Ten to answer... just funny that the GOR is the last thing they are worried about but it’s seemingly the only thing in their way. FSU will leave, I have no doubt, but I don’t see it being soon. I almost get the feeling they are talking like this to try to get BIG / SEC engaged in talks.

 

[Oldgoldandwhite]

What do they bring to the SEC that they don’t already have?
And I don’t think the BIG is interested at this time.

 

[cpf2001]

Assuming the SEC wanted FSU (or any other ACC school)...

That would be an interesting test of who holds the real power these days, the SEC or ESPN.

When all the money was getting better all the time, it seemed like the SEC had all the power, and ESPN threw money at them to lock up more games. But in a world where there's no longer infinite free money, this would seem like a bad move from ESPN's side: pay more for a team you already have in your broadcast portfolio, while weakening the value of another conference in your portfolio. And ultimately I think the power comes from where the money comes from, which is ESPN here, and I don't think they have an incentive to help this along.

The TV money calculation for the Big 10 would be different, of course, in which case: take us with you, FSU!

Or FSU can go independent with all their games on Apple or Amazon Prime. Which would be amazing and hilarious.

 

[BilldGopher]

Mods delete if already posted. I say "meh" myself.

Sources: Big Ten has begun preliminary talks to potentially add Oregon, Washington, Cal and Stanford

The Big Ten has been reluctant to move to 20 teams, even if many in college athletics believe expansive superconferences are inevitable.

sports.yahoo.com