The talk of Big Ten expansion and the expected ripple effect through major college football is inescapable this off season. The presumed dominance an expanded Big Ten apparently would claim has forced every university president and athletic director – from the heavyweights to the barely existent – to ponder what Big Ten expansion means to their program.
But the amazing and disturbing thing about this talk of a pending major shift in all of major college football is that it’s all about generating higher subscriber fees from a basic cable network.
The Big Ten Network (a joint venture with News Corp.) is now the primary driver of Big Ten revenue – and apparently a rousing success. The revenue model is a good one, and one that’s familiar to any second-tier cable TV executive – get into as many households as possible to generate carriage fees, charge the distributors as much as you can for carriage and keep your production costs low. The Big Ten Network (BTN) is Country Music Television (CMT) and its athletes are stars of their own reality TV shows.
News Corp. and the Big Ten want to expand so they can charge more money for the BTN. It’s as simple as that. This isn’t about expanding the Big Ten; it’s about expanding the Big Ten Network.
They don’t want to add The University of Missouri to their conference; they want to add Charter Cable of St. Louis to their network. Carriage rates, it seems, are much higher in markets where there is a Big Ten team.
That’s the game the Big Ten is playing. And when the future of college football supposedly comes down to whether a cable customer is worth 10 cents a month or 70 cents a month – well that’s a shame.
The Big Ten seems to have little interest in raising its competitiveness in college football. Commissioner Jim Delany is on record saying he doesn’t care about creating a championship game. The 11-team conference still plays a laughable eight-game conference schedule that puts a questionable “champion” on the shelf while the SEC, Big 12 and ACC gear up for championship games and the Pac-10 finishes out it season of each team playing one another.
I don’t care about the Big Ten. Let them add Rutgers to get into the New York market and get those high carriage rates. But I hope the other conferences take a look at the big picture and don’t go into land-grab mode once the BTN adds new high-carriage-rate markets.
Tony Barnhart loves to quote former SEC Commissioner Roy Kramer saying “Your No. 1 job is to look at least 10 years down the road to where your conference is going to be and where the competition is going to be.” And that’s absolutely right.
So … 10 years from now, how important will a basic cable footprint be to a conference?
These are the early days of the decline of traditional television. Distribution is (slowly) moving away from the 100-channel subscription television model. I didn’t buy ESPN’s GamePlan last season because I had free access to all the games I’d want to see on ESPN360.com. It’s no longer a crazy idea that you could go without cable or satellite service and still watch your favorite programs. Folks like Google are pretty interested in that idea now. As more content is served through the Internet right to your television, the demand for paid cable channels will go down.
Things will be far different in the “television” world 10 years from now. And the Big Ten is apparently committed to their basic cable network and dependent on carriage fees for 17 more years.
The SEC signed a blockbuster 15-year deal with ESPN two years ago – after considering creating its own conference-owned network. In announcing the $2.25 billion ESPN deal, which came on the heels of a new $825 million deal for games on CBS, SEC Commissioner Mike Slive talked about the SEC’s decision to go with ESPN instead of creating its own network.
“In considering these two options, our goals were as follows: To provide expanded national exposure for football, men’s and women’s basketball and our Olympic sports; to further increase the recognition of the Southeastern Conference nationally; to provide the opportunity for our institutions to promote their academic initiatives and achievements; to provide widespread distribution of SEC programming for our fans, both inside and outside of the SEC footprint; to recapture the copyright of our games; to retain digital rights for the benefit of our institutions and conference as we move into the age of new medias, and, finally, to provide financial stability for the Conference and for our institutions,” Silve said.
Through 2023, the SEC has a guaranteed $205 million per year revenue stream while having its product distributed by the undisputed powerhouse in sports media. ESPN and CBS made these commitments because of the strength of the SEC’s product. The only risk for the SEC is that 15 years from now their TV rights might be worth more than $205 million a year.
Through 2027, the Big Ten will be largely dependent on the dynamics of cable television for their revenue. Their partner (News Corp.) isn’t interested in the quality of the product, they’re focused on the network’s footprint. The conference may well come out ahead of the SEC financially at the end of its News Corp. deal, but the quality of their product will be in doubt after adding schools to grow the footprint. The conference is putting a lot at risk to play the cable TV game as it exists today.
So if the SEC stands pat with its 12-member conference and the Big Ten expands for the sake of carriage rates as expected, at the end of their current deals the SEC will be shopping a high-quality product that’s been the centerpiece of college sports on The Worldwide Leader for 15 years and the Big Ten will be shopping … awesome rivalries like Minnesota / Rutgers that have been enjoyed by everybody on basic cable who cares enough to subscribe to BTN and/or find it in the cable guide.
And note Slive’s mention of digital rights retention and the “age of new medias”. In their deals, the SEC has secured $205 million a year for television-type rights while apparently holding on to the digital rights that no doubt will become much more valuable over the next decade. BTN, no doubt, will also leverage digital rights, but again for a product not focused on quality.
I hope the SEC stays on the course it set with its 1992 expansion and focuses on the quality of their product over merely maximizing short-term revenue. Over the long haul, the value of having the nation’s strongest football conference will present more opportunities than finding more homes to squeeze 70 cents a month out of.
No matter what the Big Ten does, the SEC doesn’t need to expand. Circumstances might arise that make expansion a smart move for the SEC, but those circumstances would be something like Texas and Florida State looking for new homes, not luring North Carolina State into the conference to expand the footprint. That’s the Big Ten’s game – and one they have to play given the focus on CMT – I mean BTN. Reaching out to get into more cable markets might make them richer, but it won’t make them stronger.