Expansion Talk 2021

[RonJohn]

Ratings have to matter when it comes time to negotiate the next deal. The more viewers, the better the ratings. The better the ratings, the more subscribers it pulls in and the better the deal.

When streaming takes over sports media, then ratings might pull in more subscribers. Currently, signing up for a TV package is the only thing that gets subscribers. Just looking at DTV as an example. Every TV package includes ESPN. More ratings does not equal more subscribers, everybody gets it. SECN and ACCN is in the second package and above. Maybe some people sign up for the second tier package specifically for the ACCN, but it is going to be an extremely small number. College football fans would sign up for at least that package because they would get ACCN, SECN, and Big10 Network. You don't choose one or the other, you subscribe to all or none.

The current contract isn't set to expire for 15 more years. I don't know what conditions are in the contract for renegotiation. Maybe it is possible to renegotiate if two or more teams enter the conference, but I don't know. As poorly as the ACC has done and as little confidence I had in Swofford, I would not be surprised that the ACC is stuck in the current contract no matter what happens.

If the ACC is able to renegotiate this year if they add two more teams, what will a contract this year be based on? Will it be based on what potential streaming money might be available sometime in the future under a plan that no-one has any firm data on yet? Will it be based on what revenue those two teams add to ESPN right now? Will it be based on how enthusiastic those fans are and how exciting their tailgating scene is, even though that adds zero dollars to ESPN's revenue? I do not believe that ratings would play a huge role in a renegotiation if one occurred today. If in a few years the future of sports media(probably streaming) is more clear, then ratings might play a big role.

Take a look at UCF. I believe the entire state of Florida is already a home market area for the ACC, so the ACCN will not gain any revenue. UCF is currently in the AAC, whose media is also run by ESPN. Does ESPN gain anything? Will ESPN pay any more if they do not gain anything? They probably would move the media money for the 6 home games that UCF plays, but that will be far, far below the $32 million average in the conference currently. Will ESPN sign up for an extra $50 million per year because maybe in 10 years UCF, Miami, and FSU will have a "State of Florida" championship rivalry? No. If that is developed, then somebody will pay for it, but they aren't going to pay for a maybe, someday, might happen scenario.

I do not disagree with you that in the future things will be different, but do you want to negotiate in 10 years, or do you want to get more revenue now? I am posting numbers (rough, not exact) from media analyst's estimates. I am describing how sports media actually currently makes money, not a idealistic way of how I think sports media should work.

 

[Northeast Stinger]

Not for the last 20 years. ESPN has used sports fans to threaten to take away 30-40% of a TV providers subscribers. They have forced TV providers to include ESPN in their lowest (or just above broadcast TV only) packages. According to your statement, an 80 year old widowed grandmother with no interest in sports would not pay $8.50 per month for ESPN. However, in the real world she does. In order to get her Lifetime Movies channel, she needs a TV subscription. In order to get a TV subscription, she is required by the bundle to get ESPN. So, she pays for ESPN. She probably doesn't know how much she pays for ESPN, and she probably would pitch a fit if she did know.

I am not saying it is right. I am not saying it is a common sense business model. I am not saying it is an ethical business model. I am simply stating that this is the model that ESPN has been using. This is the reason that the TV subscriber size of a market has been much, much more important in media contracts than the size of the sports audience in that market, which is what you asked in the post I responded to. You stated that you didn't know the factors involved. That is the factor involved. Subscribers >>>>> viewers (according the ESPN's business model to this point in time)

I certainly find this to be true with other programs that are bundled so why not ESPN. How many times over the last 20 years have my wife and I remarked, “Who watches that channel!” Yet, until we cut the chord, turned off the dish, and quit getting bundled programming, we were paying for all kinds of strange channels. Of course we still pay for some but nearly as many.

 

[GoJacketsInRaleigh]

Here we go again. If nobody watches it, it's not a factor in pulling in subscribers and carriers aren't going to pay for something that's just along for the ride. In the end, the number of people who watch is the only factor. It's just common sense.

No, the number of people that subscribe is what matters. For example, if you pay for Youtube and buy the package that has the ACC Network it doesn't matter if you watch or not

 

[Northeast Stinger]

When streaming takes over sports media, then ratings might pull in more subscribers. Currently, signing up for a TV package is the only thing that gets subscribers. Just looking at DTV as an example. Every TV package includes ESPN. More ratings does not equal more subscribers, everybody gets it. SECN and ACCN is in the second package and above. Maybe some people sign up for the second tier package specifically for the ACCN, but it is going to be an extremely small number. College football fans would sign up for at least that package because they would get ACCN, SECN, and Big10 Network. You don't choose one or the other, you subscribe to all or none.

The current contract isn't set to expire for 15 more years. I don't know what conditions are in the contract for renegotiation. Maybe it is possible to renegotiate if two or more teams enter the conference, but I don't know. As poorly as the ACC has done and as little confidence I had in Swofford, I would not be surprised that the ACC is stuck in the current contract no matter what happens.

If the ACC is able to renegotiate this year if they add two more teams, what will a contract this year be based on? Will it be based on what potential streaming money might be available sometime in the future under a plan that no-one has any firm data on yet? Will it be based on what revenue those two teams add to ESPN right now? Will it be based on how enthusiastic those fans are and how exciting their tailgating scene is, even though that adds zero dollars to ESPN's revenue? I do not believe that ratings would play a huge role in a renegotiation if one occurred today. If in a few years the future of sports media(probably streaming) is more clear, then ratings might play a big role.

Take a look at UCF. I believe the entire state of Florida is already a home market area for the ACC, so the ACCN will not gain any revenue. UCF is currently in the AAC, whose media is also run by ESPN. Does ESPN gain anything? Will ESPN pay any more if they do not gain anything? They probably would move the media money for the 6 home games that UCF plays, but that will be far, far below the $32 million average in the conference currently. Will ESPN sign up for an extra $50 million per year because maybe in 10 years UCF, Miami, and FSU will have a "State of Florida" championship rivalry? No. If that is developed, then somebody will pay for it, but they aren't going to pay for a maybe, someday, might happen scenario.

I do not disagree with you that in the future things will be different, but do you want to negotiate in 10 years, or do you want to get more revenue now? I am posting numbers (rough, not exact) from media analyst's estimates. I am describing how sports media actually currently makes money, not a idealistic way of how I think sports media should work.

So, from what you say, ratings might matter for how much an ad costs during a prime time matchup of two top ranked teams but advertising dollars are the smallest piece of the pie and have no bearing on TV contracts and their overall worth.

 

[RonJohn]

So, from what you say, ratings might matter for how much an ad costs during a prime time matchup of two top ranked teams but advertising dollars are the smallest piece of the pie and have no bearing on TV contracts and their overall worth.

Zero bearing is probably too harsh. But ad revenue is only 15-20% or ESPN's revenue. The big prime-time matchups are probably 10-20% of the ad revenue. If that is the case, adding 30% to the prime-time audience could add about 1% to the overall revenue (1.3*.2*.2 - 1*.2*.2). So if ESPN believes that the marquee matchups from your conference will add 30% to the audience, it is only worth low single digit percentages to the contract's worth.

 

[MidtownJacket]

So, if I understand you correctly, it doesn't matter if the channel offers a scintillating college football matchup with millions of viewers, or an infomercial selling cap snafflers. It's all the same because you're on the same TV package. Uh huh. I think it's obvious that ratings matter.

Good on you for not disparaging the mighty spurtle. Which only advertises on the fanciest of fancy matchups.

Eyes on glass is all that streaming content providers care about. They dynamically watch what programs people are watching and make decisions (show to show on some cases) on what to tweak to make their shows more appealing. The granularity they have to see what people do, how and where is amazing. I have consulted with a couple major providers of digital content think Netflix/Comcast/NBCU in this space and you’d be shocked at the level of detail they’re tracking and making Decisions at.

 

[Coloradojacket]

Good on you for not disparaging the mighty spurtle. Which only advertises on the fanciest of fancy matchups.

Eyes on glass is all that streaming content providers care about. They dynamically watch what programs people are watching and make decisions (show to show on some cases) on what to tweak to make their shows more appealing. The granularity they have to see what people do, how and where is amazing. I have consulted with a couple major providers of digital content think Netflix/Comcast/NBCU in this space and you’d be shocked at the level of detail they’re tracking and making Decisions at.

You would be shocked or maybe not about how much data is gathered about what you watch and do. I was at Dish 9 years and worked on the viewer measurement project. A great example, last year I got into watching that show Yellow Stone. After one night of watching it on Peacock, through Comcast.....Adds for Yellow Stone merchandise shows up in my Facebook feed.

 

[bobongo]

No, the number of people that subscribe is what matters. For example, if you pay for Youtube and buy the package that has the ACC Network it doesn't matter if you watch or not

It matters how many people are watching the ACC Network as pertains to how much Youtube will pay the ACC Network to include it in their package. If viewership doesn't matter, then why would it make any difference whether the ACC brought in Notre Dame or Tulsa? Notre Dame is more valuable because more people watch them. That's why they have a contract with NBC and not Tulsa. Duh.

 

[bobongo]

]

Eyes on glass is all that streaming content providers care about.

Exactly. Ratings, viewership of particular content.

 

[forensicbuzz]

no sir and they can get pretty big, they give the Eastern Diamondback a run for their money, but a beautiful snake none the less

No such thing as a beautiful snake. I'm fine with them as long as they're on the other side of where ever I am. No thank you.

 

[GTNavyNuke]

No such thing as a beautiful snake. I'm fine with them as long as they're on the other side of where ever I am. No thank you.

Snakes eat rats. Go snakes.

 

[Technut1990]

No such thing as a beautiful snake. I'm fine with them as long as they're on the other side of where ever I am. No thank you.

last off subject post here but I’m with GTNavyNuke, can’t stand rodents !

 

[yjack]

An interesting article . . .

While the masses clamored over Playoff ‘expansion,’ the real college football brokers continued the inevitable march toward ‘contraction’

A move toward fewer 'power' conferences seems to be the wave of the future in college football.

www.saturdaydownsouth.com

 

[GT14]

An interesting article . . .

While the masses clamored over Playoff ‘expansion,’ the real college football brokers continued the inevitable march toward ‘contraction’

A move toward fewer 'power' conferences seems to be the wave of the future in college football.

www.saturdaydownsouth.com

"While you’ll continue to hear that the ACC is fine because of the grant of rights lock up, each year that passes means the exit fees get lower and lower. If other conferences are offering more and more revenue while the exit fees decrease each year, eventually there’s a breaking point."

Big Ten: $54.3 million
SEC: $45.5 million
Big 12: $37 to $40.5 million
Pac-12: $33.6 million
ACC: $30.9 to $37 million

I think the author is spot on. If you assume the ACC payout is on the high end at $37M and the exit fee is $52M (assuming my Googling is correct), I hope GT is on the phone with the Big Ten trying to undo a decade old mistake. It would take 3 years to pay for the exit fee with the increased distribution, 4 if you'd like to amortize it and factor in higher travel expenses. Internet people talk about the GOR like it's some Uber expensive thing, but the opportunity cost of NOT paying the exit fee seems to be far larger.

 

[ugacdawg]

Big Ten: $54.3 million
SEC: $45.5 million
Big 12: $37 to $40.5 million
Pac-12: $33.6 million
ACC: $30.9 to $37 million

The SEC had already negotiated with ESPN that starting in 2024 it would have paid almost $70 million per without OU and UT. Most assume that will be renegotiated to the $85-95 million range now since half that Big12 revenue value just arrived.

Will be interesting to see where the Big10 lands on their new contract and what the ACC then does. My understanding is the exit fee isn’t the problem in the ACC, it’s the crazy GOR. According to these guys, it would cost hundreds of millions for Clemson to leave. https://rubbingtherock.com/2021/07/27/clemson-football-wont-leave-acc/

 

[Northeast Stinger]

An interesting article . . .

While the masses clamored over Playoff ‘expansion,’ the real college football brokers continued the inevitable march toward ‘contraction’

A move toward fewer 'power' conferences seems to be the wave of the future in college football.

www.saturdaydownsouth.com

Yes, that was interesting. I do have a slight difference of opinion with the author though. If only the SEC and the B1G are relevant in ten years, and all the other conferences are meaningless, I think it will be bad for college football and I can see a lot people finding other things to do rather than watch bad football with low viewer ratings.

 

[gameface]

I think the whole point of the article was that ND should go to the BIG10. also, I do not get the reasoning behind sayting the buyout for Clemson gets smaller the closer you get to the end of the GOR. Isn't a figure like 3 x operating expenses part of the buyout? and that should go up.

 

[yjack]

An interesting article . . .

While the masses clamored over Playoff ‘expansion,’ the real college football brokers continued the inevitable march toward ‘contraction’

A move toward fewer 'power' conferences seems to be the wave of the future in college football.

www.saturdaydownsouth.com

A major take away is the reminder that conferences are individual entities. Don't expect them to work together for the common good.

 

[WreckinGT]

An interesting article . . .

While the masses clamored over Playoff ‘expansion,’ the real college football brokers continued the inevitable march toward ‘contraction’

A move toward fewer 'power' conferences seems to be the wave of the future in college football.

www.saturdaydownsouth.com

Yep. A really good article about where this is headed. I disagree on the last section though. This line in particular:

The true joy of college football is watching your team compete against other teams, both bitter rivals and others. That doesn’t change.

How exactly is that not changing? For the many who support teams that don't end up in the SEC or Big 10 it will change drastically. They will be playing most of their games against now irrelevant teams. Some of them will have their rivalry games ripped away immediately. Some others will eventually see their rivalry games end. For instance, if the ACC implodes and we don't find a landing spot in the Big 10 or SEC then how much longer are we expecting COFH to continue? These changes will absolutely ruin college football for millions of fans.

While the article does do a good job of laying out where we are heading, it gave pretty mediocre lip service to the eventual fallout of going down that road.

 

[Northeast Stinger]

Yep. A really good article about where this is headed. I disagree on the last section though. This line in particular:

How exactly is that not changing? For the many who support teams that don't end up in the SEC or Big 10 it will change drastically. They will be playing most of their games against now irrelevant teams. Some of them will have their rivalry games ripped away immediately. Some others will eventually see their rivalry games end. For instance, if the ACC implodes and we don't find a landing spot in the Big 10 or SEC then how much longer are we expecting COFH to continue? These changes will absolutely ruin college football for millions of fans.

While the article does do a good job of laying out where we are heading, it gave pretty mediocre lip service to the eventual fallout of going down that road.

Agree completely and that was my criticism of the article too. Don’t tell me college football is going to be completely turned upside down but it will still be the same.

I also think COFH will not be long for the world if the rest of his predictions are correct.