I know this is an SEC board but I find this very interesting myself.

http://www.detroitnews.com/story/sports/.../79869742/

it leaves them a lot of flexibility with respect to the number of networks that can broadcast their game, getting current market value for their games(upside and downside) and they would be guaranteed to reap the benefits immediately of any expansion they want.

(02-08-2016 03:19 PM)Win5002 Wrote:  I know this is an SEC board but I find this very interesting myself.

http://www.detroitnews.com/story/sports/.../79869742/

it leaves them a lot of flexibility with respect to the number of networks that can broadcast their game, getting current market value for their games(upside and downside) and they would be guaranteed to reap the benefits immediately of any expansion they want.

It solves a big problem for the networks. Instead of having to commit to spending $3 billion or whatever over the next 10 years, and putting that contract on their balance sheet, the B1G can bid out one season at a time, allowing ESPN and Fox to bid up the cost without future commitments. It also maximizes the number of bidders because NBC, CBS, TNT or any other outlet can bid for some or all games.

It also seems to address a thorn in the side issue with individual schools as well. One complaint I've heard is that the BTN has essentially shut out local TV contracts and schools like Iowa or Purdue, whose games aren't always carried on BTN, lost the exposure among fans that the local networks gave them by carrying their games. With the rumored new setup, it seems the local broadcast outlets could bid on a package of local B1G team games to telecast and the BTN might sell them games that the BTN doesn't want to reserve for itself.

It's a risky strategy. Bids will dry up during lean years when the B1G teams are down, but historically the trend is for prices to increase over time and, with the B1G's vast alumni base, it's unlikely the B1G would see significant revenue declines even in bad years. On the other hand, if the result is a constant series of competitive bids that maximize the potential number of bidders, the strategy could be even more lucrative than the $45 million per team numbers thrown around so far.

(02-09-2016 12:49 AM)CintiFan Wrote:  

(02-08-2016 03:19 PM)Win5002 Wrote:  I know this is an SEC board but I find this very interesting myself.

http://www.detroitnews.com/story/sports/.../79869742/

it leaves them a lot of flexibility with respect to the number of networks that can broadcast their game, getting current market value for their games(upside and downside) and they would be guaranteed to reap the benefits immediately of any expansion they want.

It solves a big problem for the networks. Instead of having to commit to spending $3 billion or whatever over the next 10 years, and putting that contract on their balance sheet, the B1G can bid out one season at a time, allowing ESPN and Fox to bid up the cost without future commitments. It also maximizes the number of bidders because NBC, CBS, TNT or any other outlet can bid for some or all games.

It also seems to address a thorn in the side issue with individual schools as well. One complaint I've heard is that the BTN has essentially shut out local TV contracts and schools like Iowa or Purdue, whose games aren't always carried on BTN, lost the exposure among fans that the local networks gave them by carrying their games. With the rumored new setup, it seems the local broadcast outlets could bid on a package of local B1G team games to telecast and the BTN might sell them games that the BTN doesn't want to reserve for itself.

It's a risky strategy. Bids will dry up during lean years when the B1G teams are down, but historically the trend is for prices to increase over time and, with the B1G's vast alumni base, it's unlikely the B1G would see significant revenue declines even in bad years. On the other hand, if the result is a constant series of competitive bids that maximize the potential number of bidders, the strategy could be even more lucrative than the $45 million per team numbers thrown around so far.

The fact that they would consider this means they doubt whether the $45 million tossed around is possible. A year ago I would have thought it was very doable. Given the present jitters over the global financial situation, and the coming emphasis on content, and the relatively limited number of brand vs brand matches in the Big 10 (5 major to solid brands) equals 11 games of content if they all play each other and they don't, and I'd say that the new goal with the right two additions will be $40 million. And those right two additions need to be football brands, and those with AAU credentials, or just solid academics with no AAU are few and far between.

IMO achieving that number can only be obtained by working with the SEC to dissolve the ACC and taking not two each but 4. Notre Dame would need to be involved and North Carolina would have to suffice as the second really solid brand. I say they would need to take 4 because those won't leave in pairs. So Notre Dame, North Carolina, Virginia (markets), and Duke to the Big 10 gets close to that $45 million figure.

Virginia Tech, N.C. State, Clemson & Florida State does it for the SEC.

I don't see how either conference gets there with just two unless they are Texas and Oklahoma and I don't see that pair moving without baggage that would sink the numbers the Big 10 and SEC are looking for.

I think one of the problems with this strategy is that the major networks would probably be less willing to work with the B1G unless they are guaranteed a massive number of games. I doubt they will work around their commitments to other leagues in order to give the best deal to the B1G on a game by game basis.

What you'd probably get are far more inferior start times, less exposure for the league from dedicated coverage, and lower ratings from casual fans not knowing where to find the product.

I mean, you'd probably maximize revenue out of a game like OSU/Michigan, but you're bound to lose on the other end with games like NW/Illinois or Maryland/Rutgers.

(02-09-2016 01:28 AM)JRsec Wrote:  

(02-09-2016 12:49 AM)CintiFan Wrote:  

(02-08-2016 03:19 PM)Win5002 Wrote:  I know this is an SEC board but I find this very interesting myself.

http://www.detroitnews.com/story/sports/.../79869742/

it leaves them a lot of flexibility with respect to the number of networks that can broadcast their game, getting current market value for their games(upside and downside) and they would be guaranteed to reap the benefits immediately of any expansion they want.

It solves a big problem for the networks. Instead of having to commit to spending $3 billion or whatever over the next 10 years, and putting that contract on their balance sheet, the B1G can bid out one season at a time, allowing ESPN and Fox to bid up the cost without future commitments. It also maximizes the number of bidders because NBC, CBS, TNT or any other outlet can bid for some or all games.

It also seems to address a thorn in the side issue with individual schools as well. One complaint I've heard is that the BTN has essentially shut out local TV contracts and schools like Iowa or Purdue, whose games aren't always carried on BTN, lost the exposure among fans that the local networks gave them by carrying their games. With the rumored new setup, it seems the local broadcast outlets could bid on a package of local B1G team games to telecast and the BTN might sell them games that the BTN doesn't want to reserve for itself.

It's a risky strategy. Bids will dry up during lean years when the B1G teams are down, but historically the trend is for prices to increase over time and, with the B1G's vast alumni base, it's unlikely the B1G would see significant revenue declines even in bad years. On the other hand, if the result is a constant series of competitive bids that maximize the potential number of bidders, the strategy could be even more lucrative than the $45 million per team numbers thrown around so far.

The fact that they would consider this means they doubt whether the $45 million tossed around is possible. A year ago I would have thought it was very doable. Given the present jitters over the global financial situation, and the coming emphasis on content, and the relatively limited number of brand vs brand matches in the Big 10 (5 major to solid brands) equals 11 games of content if they all play each other and they don't, and I'd say that the new goal with the right two additions will be $40 million. And those right two additions need to be football brands, and those with AAU credentials, or just solid academics with no AAU are few and far between.

IMO achieving that number can only be obtained by working with the SEC to dissolve the ACC and taking not two each but 4. Notre Dame would need to be involved and North Carolina would have to suffice as the second really solid brand. I say they would need to take 4 because those won't leave in pairs. So Notre Dame, North Carolina, Virginia (markets), and Duke to the Big 10 gets close to that $45 million figure.

Virginia Tech, N.C. State, Clemson & Florida State does it for the SEC.

I don't see how either conference gets there with just two unless they are Texas and Oklahoma and I don't see that pair moving without baggage that would sink the numbers the Big 10 and SEC are looking for.

I don't see any impetus that would drive ND into the Big Ten (of all places) against its will.

Take 8 ACC schools? I doubt that will happen but, if so, just backfill. That gives ND more leverage in negotiations with the new ACC.

I do think something has to happen with either the Big XII or the ACC. Without a conference network and more name brand schools, they will fall farther and farther behind the SEC and B1G in revenues, which will certainly tempt the high quality schools into considering a move. I agree that both the B1G and SEC would prefer to carve up the ACC, getting each of them into NC and VA and giving each the opportunity to pick up additional schools they may covet. The B1g XII still seems the most unstable and the more likely to get picked apart.

I mentioned the two advantages I saw to the B1G approach already: (i) solving the network problem of putting a large contract on their books while also maximizing the number of bidders to carry games and (ii) enabling the B1G to sell more games to local networks to get exposure for teams whose games don't always make it on BTN.

There's one more advantage. Network contracts so far always seem to be front loaded in the sense that by the time the 10 or 15 year deal ends, the payout to the conference is low in comparison to its true value as evidenced by newly re-negotiated contracts. The new B1G approach seems to assure that the B1G gets full value even in the last year of the contract by not pricing the last year until it happens.

I understand the criticism that crappy games may not garner high bids, but ESPN and Fox Sports both need a massive amount of content to fill their airtime. They pay extraordinary amounts to televise bowl games between two teams no one cares about, so I think they would pay a fair price for a lower priority B1G game.

The downside of course is the B1G doesn't have a guaranteed stream of payments and that makes long range planning harder to do if the individual schools can't be assured of network payouts. I'm not sure that's really a problem though, as long as the B1G can somewhat accurately project revenues. If the rumor is true, it creates a more market and demand driven pricing structure that might make even more money than the B1G projected.

(02-10-2016 11:40 PM)CintiFan Wrote:  I do think something has to happen with either the Big XII or the ACC. Without a conference network and more name brand schools, they will fall farther and farther behind the SEC and B1G in revenues, which will certainly tempt the high quality schools into considering a move. I agree that both the B1G and SEC would prefer to carve up the ACC, getting each of them into NC and VA and giving each the opportunity to pick up additional schools they may covet. The B1g XII still seems the most unstable and the more likely to get picked apart.

I mentioned the two advantages I saw to the B1G approach already: (i) solving the network problem of putting a large contract on their books while also maximizing the number of bidders to carry games and (ii) enabling the B1G to sell more games to local networks to get exposure for teams whose games don't always make it on BTN.

There's one more advantage. Network contracts so far always seem to be front loaded in the sense that by the time the 10 or 15 year deal ends, the payout to the conference is low in comparison to its true value as evidenced by newly re-negotiated contracts. The new B1G approach seems to assure that the B1G gets full value even in the last year of the contract by not pricing the last year until it happens.

I understand the criticism that crappy games may not garner high bids, but ESPN and Fox Sports both need a massive amount of content to fill their airtime. They pay extraordinary amounts to televise bowl games between two teams no one cares about, so I think they would pay a fair price for a lower priority B1G game.

The downside of course is the B1G doesn't have a guaranteed stream of payments and that makes long range planning harder to do if the individual schools can't be assured of network payouts. I'm not sure that's really a problem though, as long as the B1G can somewhat accurately project revenues. If the rumor is true, it creates a more market and demand driven pricing structure that might make even more money than the B1G projected.

In a static global economy I would tend to agree with your assessment. However the global economy is anything but static, and unproven models are merely best guesses. So we'll see.

(02-10-2016 11:40 PM)CintiFan Wrote:  I mentioned the two advantages I saw to the B1G approach already: (i) solving the network problem of putting a large contract on their books while also maximizing the number of bidders to carry games and (ii) enabling the B1G to sell more games to local networks to get exposure for teams whose games don't always make it on BTN.

There's one more advantage. Network contracts so far always seem to be front loaded in the sense that by the time the 10 or 15 year deal ends, the payout to the conference is low in comparison to its true value as evidenced by newly re-negotiated contracts. The new B1G approach seems to assure that the B1G gets full value even in the last year of the contract by not pricing the last year until it happens.

I understand the criticism that crappy games may not garner high bids, but ESPN and Fox Sports both need a massive amount of content to fill their airtime. They pay extraordinary amounts to televise bowl games between two teams no one cares about, so I think they would pay a fair price for a lower priority B1G game.

The downside of course is the B1G doesn't have a guaranteed stream of payments and that makes long range planning harder to do if the individual schools can't be assured of network payouts. I'm not sure that's really a problem though, as long as the B1G can somewhat accurately project revenues. If the rumor is true, it creates a more market and demand driven pricing structure that might make even more money than the B1G projected.

The advantages though, as you said, are for the networks which means less money for the league.

i) If the networks aren't interested in putting one large contract on their books then I doubt they would commit to numerous small contracts over time that actually cost more money. The B1G loses some of its leverage if it sells piecemeal rather than as one take it or leave it property.

ii) Also, if more games end up on local regional networks then, yes, more local fans can watch their team and that's great for them, but the real money will be in national broadcasts. Games on local TV simply won't have the generating potential to be worth more than games on the current BTN because the audiences will be significantly smaller.

You are right that these contracts are front loaded in a sense, but the answer to that is to sell rights in smaller increments...something like 4-6 years at a time. That's basically what pro leagues do. Selling individual games on a season by season basis puts all the leverage back in the hands of the networks. They will love paying a little more money for OSU/Michigan or Penn State/Nebraska because they know the games will garner huge ratings, but they'll love it because they won't have to commit to buying less watched games at an equal price. Sure, they need content and they'll buy the lesser games, but they won't pay top dollar for them. I don't see any motivation for them to do so. The networks will like the deal because they can increase their profit margin which means they'll be paying out less for the same amount of content.

There will be some nice bidding wars over the big games, I don't doubt that at all. The other games will be relegated though because the networks will have a greater motivation to feature the partners they are more entrenched with.

(02-11-2016 02:52 AM)AllTideUp Wrote:  You are right that these contracts are front loaded in a sense, but the answer to that is to sell rights in smaller increments...something like 4-6 years at a time. That's basically what pro leagues do. Selling individual games on a season by season basis puts all the leverage back in the hands of the networks. They will love paying a little more money for OSU/Michigan or Penn State/Nebraska because they know the games will garner huge ratings, but they'll love it because they won't have to commit to buying less watched games at an equal price. Sure, they need content and they'll buy the lesser games, but they won't pay top dollar for them. I don't see any motivation for them to do so. The networks will like the deal because they can increase their profit margin which means they'll be paying out less for the same amount of content.

There will be some nice bidding wars over the big games, I don't doubt that at all. The other games will be relegated though because the networks will have a greater motivation to feature the partners they are more entrenched with.

If a per game bidding war were to take place, I could see the B1G losing lots of Tier 1 and 2 money unless they move to a promotion/relegation division set up. Move all the "winning" football schools into one division to create all the matchups the networks would want and pay for. The B1G Ten CCG would still be between the winners of both divisions and technically allow the weaker division access to the CFP. But what would happen would be the two weakest schools from the promotion division would fall down to the relegation division for the next season and vise versa.

(02-11-2016 02:52 AM)AllTideUp Wrote:  

(02-10-2016 11:40 PM)CintiFan Wrote:  I mentioned the two advantages I saw to the B1G approach already: (i) solving the network problem of putting a large contract on their books while also maximizing the number of bidders to carry games and (ii) enabling the B1G to sell more games to local networks to get exposure for teams whose games don't always make it on BTN.

There's one more advantage. Network contracts so far always seem to be front loaded in the sense that by the time the 10 or 15 year deal ends, the payout to the conference is low in comparison to its true value as evidenced by newly re-negotiated contracts. The new B1G approach seems to assure that the B1G gets full value even in the last year of the contract by not pricing the last year until it happens.

I understand the criticism that crappy games may not garner high bids, but ESPN and Fox Sports both need a massive amount of content to fill their airtime. They pay extraordinary amounts to televise bowl games between two teams no one cares about, so I think they would pay a fair price for a lower priority B1G game.

The downside of course is the B1G doesn't have a guaranteed stream of payments and that makes long range planning harder to do if the individual schools can't be assured of network payouts. I'm not sure that's really a problem though, as long as the B1G can somewhat accurately project revenues. If the rumor is true, it creates a more market and demand driven pricing structure that might make even more money than the B1G projected.

The advantages though, as you said, are for the networks which means less money for the league.

i) If the networks aren't interested in putting one large contract on their books then I doubt they would commit to numerous small contracts over time that actually cost more money. The B1G loses some of its leverage if it sells piecemeal rather than as one take it or leave it property.

ii) Also, if more games end up on local regional networks then, yes, more local fans can watch their team and that's great for them, but the real money will be in national broadcasts. Games on local TV simply won't have the generating potential to be worth more than games on the current BTN because the audiences will be significantly smaller.

You are right that these contracts are front loaded in a sense, but the answer to that is to sell rights in smaller increments...something like 4-6 years at a time. That's basically what pro leagues do. Selling individual games on a season by season basis puts all the leverage back in the hands of the networks. They will love paying a little more money for OSU/Michigan or Penn State/Nebraska because they know the games will garner huge ratings, but they'll love it because they won't have to commit to buying less watched games at an equal price. Sure, they need content and they'll buy the lesser games, but they won't pay top dollar for them. I don't see any motivation for them to do so. The networks will like the deal because they can increase their profit margin which means they'll be paying out less for the same amount of content.

There will be some nice bidding wars over the big games, I don't doubt that at all. The other games will be relegated though because the networks will have a greater motivation to feature the partners they are more entrenched with.

We don't know how the BTN will divide up the games, and I'm sure they are savvy enough to figure out how to maximize the attractiveness of packages to get the best bids and most bidders. It may well be that there are multiple season packages, single season packages or combinations. The point, though, is that the dynamic pricing model gives the B1G more flexibility to design packages of games that are the most attractive to bidders, and have multiple bidders involved - and that drives pricing up, not down. Lots of bidders competing in an auction results in overall higher prices.

The BTN already has a baseline revenue with cable subscription dollars, and being able to sell the lower tier games to local networks gives it additional revenue that would otherwise be lost if the games were not on BTN. Combine the additional revenue with the additional exposure in local markets and that's a win-win for both the BTN and the individual teams.

(02-11-2016 05:47 PM)murrdcu Wrote:  

(02-11-2016 02:52 AM)AllTideUp Wrote:  You are right that these contracts are front loaded in a sense, but the answer to that is to sell rights in smaller increments...something like 4-6 years at a time. That's basically what pro leagues do. Selling individual games on a season by season basis puts all the leverage back in the hands of the networks. They will love paying a little more money for OSU/Michigan or Penn State/Nebraska because they know the games will garner huge ratings, but they'll love it because they won't have to commit to buying less watched games at an equal price. Sure, they need content and they'll buy the lesser games, but they won't pay top dollar for them. I don't see any motivation for them to do so. The networks will like the deal because they can increase their profit margin which means they'll be paying out less for the same amount of content.

There will be some nice bidding wars over the big games, I don't doubt that at all. The other games will be relegated though because the networks will have a greater motivation to feature the partners they are more entrenched with.

If a per game bidding war were to take place, I could see the B1G losing lots of Tier 1 and 2 money unless they move to a promotion/relegation division set up. Move all the "winning" football schools into one division to create all the matchups the networks would want and pay for. The B1G Ten CCG would still be between the winners of both divisions and technically allow the weaker division access to the CFP. But what would happen would be the two weakest schools from the promotion division would fall down to the relegation division for the next season and vise versa.

Marquis matchups will certainly get higher prices in an auction but the question is whether overall the B1G gets more or less than continuing to sell 10 years of games at a time as they have done in the past.

The B1G and other conferences all carve up their media deals to some extent, with ESPN, Fox, and NBC all owning some rights here and there. They obviously do that because it's more profitable than selling all the games to a single buyer. The dynamic pricing model the B1G seems to be considering just takes that concept one step further.

Instead of bidding out 10 years of games in packages, the B1G may bid out only one year at a time or maybe 3 years at a time. That opens up the bidding to other potential players like TNT, for example, or another cable network that can't afford $billion dollar bids for 10 years of football but can certainly bid effectively against ESPN for a smaller package of games. More bidders mean higher prices and that's what the B1G seems to be shooting for.

(02-11-2016 10:14 PM)CintiFan Wrote:  

(02-11-2016 05:47 PM)murrdcu Wrote:  

(02-11-2016 02:52 AM)AllTideUp Wrote:  You are right that these contracts are front loaded in a sense, but the answer to that is to sell rights in smaller increments...something like 4-6 years at a time. That's basically what pro leagues do. Selling individual games on a season by season basis puts all the leverage back in the hands of the networks. They will love paying a little more money for OSU/Michigan or Penn State/Nebraska because they know the games will garner huge ratings, but they'll love it because they won't have to commit to buying less watched games at an equal price. Sure, they need content and they'll buy the lesser games, but they won't pay top dollar for them. I don't see any motivation for them to do so. The networks will like the deal because they can increase their profit margin which means they'll be paying out less for the same amount of content.

There will be some nice bidding wars over the big games, I don't doubt that at all. The other games will be relegated though because the networks will have a greater motivation to feature the partners they are more entrenched with.

If a per game bidding war were to take place, I could see the B1G losing lots of Tier 1 and 2 money unless they move to a promotion/relegation division set up. Move all the "winning" football schools into one division to create all the matchups the networks would want and pay for. The B1G Ten CCG would still be between the winners of both divisions and technically allow the weaker division access to the CFP. But what would happen would be the two weakest schools from the promotion division would fall down to the relegation division for the next season and vise versa.

Marquis matchups will certainly get higher prices in an auction but the question is whether overall the B1G gets more or less than continuing to sell 10 years of games at a time as they have done in the past.

The B1G and other conferences all carve up their media deals to some extent, with ESPN, Fox, and NBC all owning some rights here and there. They obviously do that because it's more profitable than selling all the games to a single buyer. The dynamic pricing model the B1G seems to be considering just takes that concept one step further.

Instead of bidding out 10 years of games in packages, the B1G may bid out only one year at a time or maybe 3 years at a time. That opens up the bidding to other potential players like TNT, for example, or another cable network that can't afford $billion dollar bids for 10 years of football but can certainly bid effectively against ESPN for a smaller package of games. More bidders mean higher prices and that's what the B1G seems to be shooting for.

More bidders could drive up prices, or they might all face the realities of a deflationary trend economically and simply refuse to bid up anything. We'll see.

(02-11-2016 10:02 PM)CintiFan Wrote:  

(02-11-2016 02:52 AM)AllTideUp Wrote:  

(02-10-2016 11:40 PM)CintiFan Wrote:  I mentioned the two advantages I saw to the B1G approach already: (i) solving the network problem of putting a large contract on their books while also maximizing the number of bidders to carry games and (ii) enabling the B1G to sell more games to local networks to get exposure for teams whose games don't always make it on BTN.

There's one more advantage. Network contracts so far always seem to be front loaded in the sense that by the time the 10 or 15 year deal ends, the payout to the conference is low in comparison to its true value as evidenced by newly re-negotiated contracts. The new B1G approach seems to assure that the B1G gets full value even in the last year of the contract by not pricing the last year until it happens.

I understand the criticism that crappy games may not garner high bids, but ESPN and Fox Sports both need a massive amount of content to fill their airtime. They pay extraordinary amounts to televise bowl games between two teams no one cares about, so I think they would pay a fair price for a lower priority B1G game.

The downside of course is the B1G doesn't have a guaranteed stream of payments and that makes long range planning harder to do if the individual schools can't be assured of network payouts. I'm not sure that's really a problem though, as long as the B1G can somewhat accurately project revenues. If the rumor is true, it creates a more market and demand driven pricing structure that might make even more money than the B1G projected.

The advantages though, as you said, are for the networks which means less money for the league.

i) If the networks aren't interested in putting one large contract on their books then I doubt they would commit to numerous small contracts over time that actually cost more money. The B1G loses some of its leverage if it sells piecemeal rather than as one take it or leave it property.

ii) Also, if more games end up on local regional networks then, yes, more local fans can watch their team and that's great for them, but the real money will be in national broadcasts. Games on local TV simply won't have the generating potential to be worth more than games on the current BTN because the audiences will be significantly smaller.

You are right that these contracts are front loaded in a sense, but the answer to that is to sell rights in smaller increments...something like 4-6 years at a time. That's basically what pro leagues do. Selling individual games on a season by season basis puts all the leverage back in the hands of the networks. They will love paying a little more money for OSU/Michigan or Penn State/Nebraska because they know the games will garner huge ratings, but they'll love it because they won't have to commit to buying less watched games at an equal price. Sure, they need content and they'll buy the lesser games, but they won't pay top dollar for them. I don't see any motivation for them to do so. The networks will like the deal because they can increase their profit margin which means they'll be paying out less for the same amount of content.

There will be some nice bidding wars over the big games, I don't doubt that at all. The other games will be relegated though because the networks will have a greater motivation to feature the partners they are more entrenched with.

We don't know how the BTN will divide up the games, and I'm sure they are savvy enough to figure out how to maximize the attractiveness of packages to get the best bids and most bidders. It may well be that there are multiple season packages, single season packages or combinations. The point, though, is that the dynamic pricing model gives the B1G more flexibility to design packages of games that are the most attractive to bidders, and have multiple bidders involved - and that drives pricing up, not down. Lots of bidders competing in an auction results in overall higher prices.

The BTN already has a baseline revenue with cable subscription dollars, and being able to sell the lower tier games to local networks gives it additional revenue that would otherwise be lost if the games were not on BTN. Combine the additional revenue with the additional exposure in local markets and that's a win-win for both the BTN and the individual teams.

The people running the Big Ten are savvy, no doubt. I tend to agree with JR though in that the reason they are taking this risk is because the projections for a new contract are not as stout as previously believed.

Dynamic pricing could help in some areas, but as always the final value depends on demand rather than the method of bidding. Demand will be less for games like RU/Maryland or Indiana/Purdue no matter what the bidding model is. That means that even in a bidding war, the participants will start with a lower price than those games are currently going for as a part of the whole. It's a problem if you're starting in a hole and hoping to get back up to current pricing levels.

Don't forget that the reason the networks won't want to pay an exorbitant price for the entire B1G contract is because everyone is cutting costs. That dynamic will be in place no matter the bidding method. That's mostly why I find it highly unlikely that the B1G will get a better deal with piecemeal bidding. It is entirely possible though that this method will give the B1G the best deal it can get. That's a different matter though than getting a deal equal with the projections.

I have to disagree though on your thoughts on the BTN. Yes, they have a baseline currently, but we have to think about why that is. Quality games, a large number of them, and the ad rates that accompany them are what supplies the current BTN revenue pot. When you start monkeying with the product then you don't necessarily have the same guarantee that that baseline remains consistent.

Will customers drop the network if the games they really want to see are on other channels? Will customers drop the network if the league attempts to raise the sub fee while simultaneously reducing the quality of content? Will advertisers pay the same amount if there aren't as many games or aren't as many quality games? These are all things to be considered when calculating the baseline.

Additionally, I didn't know that there were B1G games not being currently broadcast on the BTN platform or on other networks. You're absolutely right that that leaves room to increase revenue. I will say again though that if the BTN sub-licenses games that would otherwise be good enough to get on air then they are taking a risk by reducing the quality of the current content.

(02-12-2016 02:18 PM)AllTideUp Wrote:  

(02-11-2016 10:02 PM)CintiFan Wrote:  

(02-11-2016 02:52 AM)AllTideUp Wrote:  

(02-10-2016 11:40 PM)CintiFan Wrote:  I mentioned the two advantages I saw to the B1G approach already: (i) solving the network problem of putting a large contract on their books while also maximizing the number of bidders to carry games and (ii) enabling the B1G to sell more games to local networks to get exposure for teams whose games don't always make it on BTN.

There's one more advantage. Network contracts so far always seem to be front loaded in the sense that by the time the 10 or 15 year deal ends, the payout to the conference is low in comparison to its true value as evidenced by newly re-negotiated contracts. The new B1G approach seems to assure that the B1G gets full value even in the last year of the contract by not pricing the last year until it happens.

I understand the criticism that crappy games may not garner high bids, but ESPN and Fox Sports both need a massive amount of content to fill their airtime. They pay extraordinary amounts to televise bowl games between two teams no one cares about, so I think they would pay a fair price for a lower priority B1G game.

The downside of course is the B1G doesn't have a guaranteed stream of payments and that makes long range planning harder to do if the individual schools can't be assured of network payouts. I'm not sure that's really a problem though, as long as the B1G can somewhat accurately project revenues. If the rumor is true, it creates a more market and demand driven pricing structure that might make even more money than the B1G projected.

The advantages though, as you said, are for the networks which means less money for the league.

i) If the networks aren't interested in putting one large contract on their books then I doubt they would commit to numerous small contracts over time that actually cost more money. The B1G loses some of its leverage if it sells piecemeal rather than as one take it or leave it property.

ii) Also, if more games end up on local regional networks then, yes, more local fans can watch their team and that's great for them, but the real money will be in national broadcasts. Games on local TV simply won't have the generating potential to be worth more than games on the current BTN because the audiences will be significantly smaller.

You are right that these contracts are front loaded in a sense, but the answer to that is to sell rights in smaller increments...something like 4-6 years at a time. That's basically what pro leagues do. Selling individual games on a season by season basis puts all the leverage back in the hands of the networks. They will love paying a little more money for OSU/Michigan or Penn State/Nebraska because they know the games will garner huge ratings, but they'll love it because they won't have to commit to buying less watched games at an equal price. Sure, they need content and they'll buy the lesser games, but they won't pay top dollar for them. I don't see any motivation for them to do so. The networks will like the deal because they can increase their profit margin which means they'll be paying out less for the same amount of content.

There will be some nice bidding wars over the big games, I don't doubt that at all. The other games will be relegated though because the networks will have a greater motivation to feature the partners they are more entrenched with.

We don't know how the BTN will divide up the games, and I'm sure they are savvy enough to figure out how to maximize the attractiveness of packages to get the best bids and most bidders. It may well be that there are multiple season packages, single season packages or combinations. The point, though, is that the dynamic pricing model gives the B1G more flexibility to design packages of games that are the most attractive to bidders, and have multiple bidders involved - and that drives pricing up, not down. Lots of bidders competing in an auction results in overall higher prices.

The BTN already has a baseline revenue with cable subscription dollars, and being able to sell the lower tier games to local networks gives it additional revenue that would otherwise be lost if the games were not on BTN. Combine the additional revenue with the additional exposure in local markets and that's a win-win for both the BTN and the individual teams.

The people running the Big Ten are savvy, no doubt. I tend to agree with JR though in that the reason they are taking this risk is because the projections for a new contract are not as stout as previously believed.

Dynamic pricing could help in some areas, but as always the final value depends on demand rather than the method of bidding. Demand will be less for games like RU/Maryland or Indiana/Purdue no matter what the bidding model is. That means that even in a bidding war, the participants will start with a lower price than those games are currently going for as a part of the whole. It's a problem if you're starting in a hole and hoping to get back up to current pricing levels.

Don't forget that the reason the networks won't want to pay an exorbitant price for the entire B1G contract is because everyone is cutting costs. That dynamic will be in place no matter the bidding method. That's mostly why I find it highly unlikely that the B1G will get a better deal with piecemeal bidding. It is entirely possible though that this method will give the B1G the best deal it can get. That's a different matter though than getting a deal equal with the projections.

I have to disagree though on your thoughts on the BTN. Yes, they have a baseline currently, but we have to think about why that is. Quality games, a large number of them, and the ad rates that accompany them are what supplies the current BTN revenue pot. When you start monkeying with the product then you don't necessarily have the same guarantee that that baseline remains consistent.

Will customers drop the network if the games they really want to see are on other channels? Will customers drop the network if the league attempts to raise the sub fee while simultaneously reducing the quality of content? Will advertisers pay the same amount if there aren't as many games or aren't as many quality games? These are all things to be considered when calculating the baseline.

Additionally, I didn't know that there were B1G games not being currently broadcast on the BTN platform or on other networks. You're absolutely right that that leaves room to increase revenue. I will say again though that if the BTN sub-licenses games that would otherwise be good enough to get on air then they are taking a risk by reducing the quality of the current content.

Cost cutting for the networks, and really for any company, is all about cutting recurring, baked in costs to provide for a leaner operating model so that the company can continue to spend money driving revenue up on their most profitable businesses. For ESPN and Fox, that means cutting high cost programming that advertisers won't pay for (e.g. some of the talking heads shows). They will also be more careful about the huge, lengthy contracts the networks signed with the NBA, for example, but that doesn't mean they won't pay up for the kind of live sporting events that bring in revenue. And cost cutting won't impact how much they pay for the rights in their current budget period. If the networks think they can sell enough ads to make a decent profit, they will bid through the roof for programming. That's why the dynamic pricing model the B1G seems moving towards is a great strategy.

I do think that even if the B1G kept the old model, it would still get a premium price for media deals. The B1G is coming off a national championship for Ohio State, solid teams in Wisconsin, Iowa and Michigan State, and signs that Penn State and Michigan will be moving back to their former top positions. With Harbaugh and Meyer, the B1G has two high profile coaches who will keep the conference in the national championship hunt most years. The B1G now has exposure in the NY/NJ and DC media markets, and a huge nationwide fanbase of B1G alumni. All of that points to a monster contract, or series of contracts depending on how the networks and the B1G want to carve up the rights.

(02-13-2016 02:00 AM)CintiFan Wrote:  Cost cutting for the networks, and really for any company, is all about cutting recurring, baked in costs to provide for a leaner operating model so that the company can continue to spend money driving revenue up on their most profitable businesses. For ESPN and Fox, that means cutting high cost programming that advertisers won't pay for (e.g. some of the talking heads shows). They will also be more careful about the huge, lengthy contracts the networks signed with the NBA, for example, but that doesn't mean they won't pay up for the kind of live sporting events that bring in revenue. And cost cutting won't impact how much they pay for the rights in their current budget period. If the networks think they can sell enough ads to make a decent profit, they will bid through the roof for programming. That's why the dynamic pricing model the B1G seems moving towards is a great strategy.

I do think that even if the B1G kept the old model, it would still get a premium price for media deals. The B1G is coming off a national championship for Ohio State, solid teams in Wisconsin, Iowa and Michigan State, and signs that Penn State and Michigan will be moving back to their former top positions. With Harbaugh and Meyer, the B1G has two high profile coaches who will keep the conference in the national championship hunt most years. The B1G now has exposure in the NY/NJ and DC media markets, and a huge nationwide fanbase of B1G alumni. All of that points to a monster contract, or series of contracts depending on how the networks and the B1G want to carve up the rights.

I do agree that cutting talking heads and other unnecessary expenses will be the first thing ESPN and other networks go for in order to save money. Nonetheless, they've already done quite a bit of that. While they've found themselves spending too much money on analysts, that won't cover the reported $250M that Disney wants off the books.

The NBA deal was an egregious overreach, but it's in the past now. Nothing they can do about that now other than to learn their lesson. With that said, future contracts won't get the same inflation. That will be true no matter who they are paying...NBA, NFL, MLB, NHL, MLS, or college conferences. It just so happens that the B1G may be the first to suffer the squeeze, but it won't be the last. The SEC, ACC, Big 12, and PAC will all feel it as well going forward.

I'm not saying at all that the B1G won't get an increase over their current pay outs. I do think their dynamic pricing plan is a risk and probably an indication that negotiations weren't going as well as anticipated. Their dynamic pricing plan may actually help give them a bump, but I think the days of windfalls are over. Cord cutting, while we haven't felt the full effect of that yet, is clearly going to increase in the future. I've got a friend of mine who loves sports maybe more than I do talking about cutting his satellite to save money. He's not alone. The market is changing and it's only a matter of time before streaming becomes the predominant method of delivery. It may take another decade or so for the full effect to be felt, but any good businessman negotiates a contract with expectations in mind, not totally relying on past performance. If not then he risks losing money in the future. It's the way of the world in a rapidly changing economy.

Point being, with the market changing and budget cuts being mandated, the motivation to grant a windfall increase just isn't there. Yes, networks will always pay for live content because that's where the money is, but they'll never pay more than they have to. The networks have no motivation to bid against themselves which is exactly what they would be doing if they intended to cut the budget while also anticipating a changing delivery model. The leagues expect pay raises every time a contract is negotiated. A windfall now demands another windfall later and if you know the money isn't going to be there in the future then you're really just screwing yourself out of cash.

With that said, the B1G and the SEC will be fine. I'm not a prophet of doom or anything, but everything our leagues have going for them is mitigated by market conditions.

One last note to make a broader point. I completely disagree that Rutgers was a more valuable addition than Oklahoma. Yes, the market is huge and there was a resident alumni base from a variety of schools, but content is king. That means the better the content the better the ratings and that's where the money ultimately comes from. In the future, streaming will demand that leagues get paid for actual viewers and not so much for the markets it penetrates. OU will always be more valuable than Rutgers for obvious reasons. That is why, if leagues expect to get raises or maintain current payout levels, then they need to make sure the quality of content is top notch.

(02-13-2016 09:40 PM)AllTideUp Wrote:  

(02-13-2016 02:00 AM)CintiFan Wrote:  Cost cutting for the networks, and really for any company, is all about cutting recurring, baked in costs to provide for a leaner operating model so that the company can continue to spend money driving revenue up on their most profitable businesses. For ESPN and Fox, that means cutting high cost programming that advertisers won't pay for (e.g. some of the talking heads shows). They will also be more careful about the huge, lengthy contracts the networks signed with the NBA, for example, but that doesn't mean they won't pay up for the kind of live sporting events that bring in revenue. And cost cutting won't impact how much they pay for the rights in their current budget period. If the networks think they can sell enough ads to make a decent profit, they will bid through the roof for programming. That's why the dynamic pricing model the B1G seems moving towards is a great strategy.

I do think that even if the B1G kept the old model, it would still get a premium price for media deals. The B1G is coming off a national championship for Ohio State, solid teams in Wisconsin, Iowa and Michigan State, and signs that Penn State and Michigan will be moving back to their former top positions. With Harbaugh and Meyer, the B1G has two high profile coaches who will keep the conference in the national championship hunt most years. The B1G now has exposure in the NY/NJ and DC media markets, and a huge nationwide fanbase of B1G alumni. All of that points to a monster contract, or series of contracts depending on how the networks and the B1G want to carve up the rights.

I do agree that cutting talking heads and other unnecessary expenses will be the first thing ESPN and other networks go for in order to save money. Nonetheless, they've already done quite a bit of that. While they've found themselves spending too much money on analysts, that won't cover the reported $250M that Disney wants off the books.

The NBA deal was an egregious overreach, but it's in the past now. Nothing they can do about that now other than to learn their lesson. With that said, future contracts won't get the same inflation. That will be true no matter who they are paying...NBA, NFL, MLB, NHL, MLS, or college conferences. It just so happens that the B1G may be the first to suffer the squeeze, but it won't be the last. The SEC, ACC, Big 12, and PAC will all feel it as well going forward.

I'm not saying at all that the B1G won't get an increase over their current pay outs. I do think their dynamic pricing plan is a risk and probably an indication that negotiations weren't going as well as anticipated. Their dynamic pricing plan may actually help give them a bump, but I think the days of windfalls are over. Cord cutting, while we haven't felt the full effect of that yet, is clearly going to increase in the future. I've got a friend of mine who loves sports maybe more than I do talking about cutting his satellite to save money. He's not alone. The market is changing and it's only a matter of time before streaming becomes the predominant method of delivery. It may take another decade or so for the full effect to be felt, but any good businessman negotiates a contract with expectations in mind, not totally relying on past performance. If not then he risks losing money in the future. It's the way of the world in a rapidly changing economy.

Point being, with the market changing and budget cuts being mandated, the motivation to grant a windfall increase just isn't there. Yes, networks will always pay for live content because that's where the money is, but they'll never pay more than they have to. The networks have no motivation to bid against themselves which is exactly what they would be doing if they intended to cut the budget while also anticipating a changing delivery model. The leagues expect pay raises every time a contract is negotiated. A windfall now demands another windfall later and if you know the money isn't going to be there in the future then you're really just screwing yourself out of cash.

With that said, the B1G and the SEC will be fine. I'm not a prophet of doom or anything, but everything our leagues have going for them is mitigated by market conditions.

One last note to make a broader point. I completely disagree that Rutgers was a more valuable addition than Oklahoma. Yes, the market is huge and there was a resident alumni base from a variety of schools, but content is king. That means the better the content the better the ratings and that's where the money ultimately comes from. In the future, streaming will demand that leagues get paid for actual viewers and not so much for the markets it penetrates. OU will always be more valuable than Rutgers for obvious reasons. That is why, if leagues expect to get raises or maintain current payout levels, then they need to make sure the quality of content is top notch.

It seems this thread's about used up, so I won't debate you much on the points you made. The amount ABC/ESPN and Fox are willing to bid on college football games depends entirely on how much they think advertisers will pay. Longer contracts force the networks to predict the amount advertisers will spend 5-10 years from now and those estimates are always wrong. Predicting what advertisers will pay six months from now is not as hard. That's why I think the networks will really like the B1G proposal, if what we hear is true. From the B1G's perspective, it would be better to lock in a long term contract if the B1G believed its value would diminish in future years but it would be better to go with shorter term contracts if the value of the B1G, or of college football in general, increases over time. Historically the values have increased.

The OU/Rutgers scenario is an interesting one to me because it contrasts the value of a blue-blood program in a state with a small population vs. a not so popular flagship school in a top media market. The B1G has a large alumni base in the NY/NJ area, so the move to Rutgers was as much about energizing that alumni base as it was about getting into the NY/NJ media market. If Rutgers can become competitive and begin to garner more local fan support, the move will be a grand slam home run for the B1G. By the way, I think adding Oklahoma would also be an outstanding move by the B1G too and I hope it happens.

(02-14-2016 02:45 AM)CintiFan Wrote:  It seems this thread's about used up, so I won't debate you much on the points you made. The amount ABC/ESPN and Fox are willing to bid on college football games depends entirely on how much they think advertisers will pay. Longer contracts force the networks to predict the amount advertisers will spend 5-10 years from now and those estimates are always wrong. Predicting what advertisers will pay six months from now is not as hard. That's why I think the networks will really like the B1G proposal, if what we hear is true. From the B1G's perspective, it would be better to lock in a long term contract if the B1G believed its value would diminish in future years but it would be better to go with shorter term contracts if the value of the B1G, or of college football in general, increases over time. Historically the values have increased.

The OU/Rutgers scenario is an interesting one to me because it contrasts the value of a blue-blood program in a state with a small population vs. a not so popular flagship school in a top media market. The B1G has a large alumni base in the NY/NJ area, so the move to Rutgers was as much about energizing that alumni base as it was about getting into the NY/NJ media market. If Rutgers can become competitive and begin to garner more local fan support, the move will be a grand slam home run for the B1G. By the way, I think adding Oklahoma would also be an outstanding move by the B1G too and I hope it happens.

Yes, we obviously disagree on a few things so no need to belabor the point.

I would add though that college presidents tend to prefer security to taking chances on maximizing their revenues through less traditional means. This is why they take 10 plus year deals from the networks and essentially leave money on the table rather than doing shorter term deals that are more common with pro leagues. College presidents don't really think like businessmen. It's one of the reasons it took so long to get a playoff and it's one of the reasons the bowl system is so upside down in favor of the bowl committees.

Point being, it would be awfully odd for these leaders of the league to abandon more traditional funding strategies for a completely different and untried approach. I think the dynamic pricing strategy, if guaranteed to be more profitable, would have already been common among pro leagues. Those people are literally businessmen in every way. They are always on the cutting edge while college presidents are balancing a number of priorities and generally lack expertise in the private sector. Now obviously league commissioners are there to advise the presidents on how to proceed, but this would pretty much be the first time a league office would have convinced the presidents to sacrifice security for the chance at a few more dollars.

That's one of the reasons I tend to believe this is a response to negotiations not going as anticipated rather than a bold new strategy. I could be wrong of course, but I think that's more likely. My guess would be that the dynamic pricing strategy may be more of a stop gap. Perhaps the league hopes to ride out uncertainty in the marketplace in the short term and endeavors to obtain a better long term deal in a few years when the networks have figured out the effects of streaming and their budget constraints.

(02-15-2016 03:17 AM)AllTideUp Wrote:  

(02-14-2016 02:45 AM)CintiFan Wrote:  It seems this thread's about used up, so I won't debate you much on the points you made. The amount ABC/ESPN and Fox are willing to bid on college football games depends entirely on how much they think advertisers will pay. Longer contracts force the networks to predict the amount advertisers will spend 5-10 years from now and those estimates are always wrong. Predicting what advertisers will pay six months from now is not as hard. That's why I think the networks will really like the B1G proposal, if what we hear is true. From the B1G's perspective, it would be better to lock in a long term contract if the B1G believed its value would diminish in future years but it would be better to go with shorter term contracts if the value of the B1G, or of college football in general, increases over time. Historically the values have increased.

The OU/Rutgers scenario is an interesting one to me because it contrasts the value of a blue-blood program in a state with a small population vs. a not so popular flagship school in a top media market. The B1G has a large alumni base in the NY/NJ area, so the move to Rutgers was as much about energizing that alumni base as it was about getting into the NY/NJ media market. If Rutgers can become competitive and begin to garner more local fan support, the move will be a grand slam home run for the B1G. By the way, I think adding Oklahoma would also be an outstanding move by the B1G too and I hope it happens.

Yes, we obviously disagree on a few things so no need to belabor the point.

I would add though that college presidents tend to prefer security to taking chances on maximizing their revenues through less traditional means. This is why they take 10 plus year deals from the networks and essentially leave money on the table rather than doing shorter term deals that are more common with pro leagues. College presidents don't really think like businessmen. It's one of the reasons it took so long to get a playoff and it's one of the reasons the bowl system is so upside down in favor of the bowl committees.

Point being, it would be awfully odd for these leaders of the league to abandon more traditional funding strategies for a completely different and untried approach. I think the dynamic pricing strategy, if guaranteed to be more profitable, would have already been common among pro leagues. Those people are literally businessmen in every way. They are always on the cutting edge while college presidents are balancing a number of priorities and generally lack expertise in the private sector. Now obviously league commissioners are there to advise the presidents on how to proceed, but this would pretty much be the first time a league office would have convinced the presidents to sacrifice security for the chance at a few more dollars.

That's one of the reasons I tend to believe this is a response to negotiations not going as anticipated rather than a bold new strategy. I could be wrong of course, but I think that's more likely. My guess would be that the dynamic pricing strategy may be more of a stop gap. Perhaps the league hopes to ride out uncertainty in the marketplace in the short term and endeavors to obtain a better long term deal in a few years when the networks have figured out the effects of streaming and their budget constraints.

The last time the B1G tried a big bold strategy they created the Big Ten Network. You may be right. Maybe the Presidents want the security of a longer term contract. But if they can be sold on the potential benefits of a different strategy, they will go that direction.

(02-15-2016 11:56 PM)CintiFan Wrote:  

(02-15-2016 03:17 AM)AllTideUp Wrote:  

(02-14-2016 02:45 AM)CintiFan Wrote:  It seems this thread's about used up, so I won't debate you much on the points you made. The amount ABC/ESPN and Fox are willing to bid on college football games depends entirely on how much they think advertisers will pay. Longer contracts force the networks to predict the amount advertisers will spend 5-10 years from now and those estimates are always wrong. Predicting what advertisers will pay six months from now is not as hard. That's why I think the networks will really like the B1G proposal, if what we hear is true. From the B1G's perspective, it would be better to lock in a long term contract if the B1G believed its value would diminish in future years but it would be better to go with shorter term contracts if the value of the B1G, or of college football in general, increases over time. Historically the values have increased.

The OU/Rutgers scenario is an interesting one to me because it contrasts the value of a blue-blood program in a state with a small population vs. a not so popular flagship school in a top media market. The B1G has a large alumni base in the NY/NJ area, so the move to Rutgers was as much about energizing that alumni base as it was about getting into the NY/NJ media market. If Rutgers can become competitive and begin to garner more local fan support, the move will be a grand slam home run for the B1G. By the way, I think adding Oklahoma would also be an outstanding move by the B1G too and I hope it happens.

Yes, we obviously disagree on a few things so no need to belabor the point.

I would add though that college presidents tend to prefer security to taking chances on maximizing their revenues through less traditional means. This is why they take 10 plus year deals from the networks and essentially leave money on the table rather than doing shorter term deals that are more common with pro leagues. College presidents don't really think like businessmen. It's one of the reasons it took so long to get a playoff and it's one of the reasons the bowl system is so upside down in favor of the bowl committees.

Point being, it would be awfully odd for these leaders of the league to abandon more traditional funding strategies for a completely different and untried approach. I think the dynamic pricing strategy, if guaranteed to be more profitable, would have already been common among pro leagues. Those people are literally businessmen in every way. They are always on the cutting edge while college presidents are balancing a number of priorities and generally lack expertise in the private sector. Now obviously league commissioners are there to advise the presidents on how to proceed, but this would pretty much be the first time a league office would have convinced the presidents to sacrifice security for the chance at a few more dollars.

That's one of the reasons I tend to believe this is a response to negotiations not going as anticipated rather than a bold new strategy. I could be wrong of course, but I think that's more likely. My guess would be that the dynamic pricing strategy may be more of a stop gap. Perhaps the league hopes to ride out uncertainty in the marketplace in the short term and endeavors to obtain a better long term deal in a few years when the networks have figured out the effects of streaming and their budget constraints.

The last time the B1G tried a big bold strategy they created the Big Ten Network. You may be right. Maybe the Presidents want the security of a longer term contract. But if they can be sold on the potential benefits of a different strategy, they will go that direction.

You are correct and at the time, that was a risk. With that said, the Big Ten wasn't the first sports league to try it. The NFL Network was already up and running. There may have been a couple of other entities out there as well although I'm not sure about that.

It would be odd for the B1G to go from standard long term contracts with security as a top priority to the antithesis of security in one fell swoop. We'll find out one way or the other soon enough.