I'm trying to understand why would ESPN be willing to pay $45 million versus just setting up ACC network.

I know that a lot of the revenue games might be tied up with Raycom, etc. but couldn't they use the non revenue sports with whatever revenue games might be available for a splash for the network.

If you've never watched either B1G or SEC Network let me tell you the majority of overall programming seems to be non revenue sports, talk shows. Classic Look Back, etc.

BTN is definitely more about the non-revs, some talk/news shows, classic games and basketball when its in-season. SEC Network is similar. That being said both have a substantial enough football inventory during football season to make it worth it. Basically, since the membership of those conferences either controlled their Tier 3 football games or were easily and cheaply able to buy out who did they could easily start up the network. The ACC's Tier 3 games are largely spoken for in long-term deals controlled by Raycom. ESPN would have to buy out the rights from Raycom, which is probably a fairly expensive proposition when combined with the capital investments necessary for the network. If the LHN wasn't such a failure, maybe ESPN would be in a position to say its worth it the SEC Network is working out.'

One other key difference here is that the 11 Big Ten schools at the time each made a part of the capital investment. Fox made about half of it, they each made about 1/22 of it and as a result member schools own 49% of the network's equity today. The SEC didn't do that to the best of my knowledge and the ACC isn't prepared to do that to the best of my knowledge. The Big Ten's conference buy-in period of 6 years is the longest in the business because of this as part of this period isn't just an entrance fee but also to pay for their equity share of the network.

I'm convinced that --- at least for the months of June and July --- BTN's aggregate costs are about $17.32.

They were showing the same damn 14 classic football games (1 classic game for each school) on a loop for 5 consecutive weeks last year! I get it, there no are no live sports during those months. But your inventory of historical football games goes well beyond 14 games!

All we hear on the outside is how much each school cleared which we can take as a proxy for net income (on a relative percentage basis). You'd have to work backward to figure the number out for expenses but the key unknown is what the margins are. I can theorize to show you what ik talking about.

Say each SEC school is earning 7 mil * 15 (including conference office) = 105 mil to the SEC. Since they get half of net income we can say total income is 210 mil. Now let's say for easy numbers gross revenue before expenses is 630 mil. That would imply for every dollar that comes in. 2/3rds would go toward expenses of one sort or another including depreciation, taxes, salaries, offices, staff, etc.
I don't know enough about the corporate structure or how capital intensive the business is. I'd imagine that for a cable company most of the expenses are 1 rights fees and 2 staff/talent. The structure is important because of when taxes are paid. IMO the B1G as part owners have an interest in spending money to expand as opposed to paying the MAN taxes. The SEC as a non owner doesn't have the financial pressure of before and after tax income to worry about.
Sorry about the long digression. Long story short, we can glean a lot from other conferences but the ACC's fixed expenses will have a lot to do with how they set up their business. Ultimately the top line Revenue is most important. And with the footprint of the conference it looks like it could be a profitable venture but as the fallen MWC network and Pac 12 have shown us... success is not guaranteed. 45 mil per year is a hefty check and simple logic says that if ESPN would lose less than that then it is a smart decision to start the network. I do thnk a network is coming for the ACC because ESPN's gravy is the SEC & ACC. IMO it is not in the interest of ESPN to have the most valuable properties leave the conference. If the B1G is pulling in 50 or 60 per year per school... even UVA & UNC might entertain a conversation with Delany.

(05-07-2016 01:21 PM)Strut Wrote:  I'm trying to understand why would ESPN be willing to pay $45 million versus just setting up ACC network.

I know that a lot of the revenue games might be tied up with Raycom, etc. but couldn't they use the non revenue sports with whatever revenue games might be available for a splash for the network.

If you've never watched either B1G or SEC Network let me tell you the majority of overall programming seems to be non revenue sports, talk shows. Classic Look Back, etc.

A majority of programming, to be sure, but a majority of audience would be for live games in FB and BBall, and after that would come live games in break-even or subsidy sports.

The rest of the programming is to avoid dead air.

If the Northern schools could convince the NCAA to allow the College World Series to take place in early July so that the baseball season could start two weeks later and the conference championships were in late June, June on the BTN would pretty much be "it's all about Big Ten baseball" month.

And driving the cable companies to offer a basic cable channel to the network in it's footprint is entirely on the FB and BBall. Since so much of the programming costs are fixed costs, getting cable companies to agree to pay the fee to carry the channel, and to put the channel on a place in the lineup where the network is well positioned to earn advertising revenue is a major part of the financial success of the network.