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CBS: Big 12 could earn an additional $1 billion by expanding...
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adcorbett Offline
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Post: #101
RE: CBS: Big 12 could earn an additional $1 billion by expanding...
(06-02-2016 02:43 PM)Goldenbuc Wrote:  Big12 Network with current members
39.1M potential "footprint" subscribers
$44.9M potential with "footprint" subscriber fees

Big12 Network with current members & FL and OH
70.9M potential "footprint" subscribers
$81.5M potential with "footprint" subscriber fees

Big12 Network with ONLY FL and OH
31.8M potential "footprint" subscribers
$36.6M potential with "footprint" subscriber fees


We need to clear up a few things here. First, your numbers are WAY off. You are using population in place of households. Households are the potential subscribers, not individual people. There are only 106 million households in the US as of the last census (perhaps a million or two more now), and you have 40% of them in the Big 12 states. That is not true. . The household information for the current Big 12 footprint is as follows:

Texas 7.5 million
Oklahoma 1.5 million
Kansas 1 million
Iowa 1.2 million
West Virginia 750k

There are a bit under 12 million households in the Big 12 footprint, with only 4.5 million of those outside of Texas. The standard calculation used has been $1.00 per subscriber within the footprint (not always attainable BTW, as even LHN gets less than half of that), which would be potential subscriber revenue of $144 million per year, before the owning entity takes at least half (if not more depending on the set up), leaving $72 million in carriage fees max, before expenses (and additional revenue) before splitting, or no more than $7.2 million per team. As you can see, Texas, Oklahoma, and Kansas already make more than this.

So any additions would be considered based off those numbers. Now in regards to the calculations you used above, if some combination of Cincinnati, USF, and UCF were to be added to the Big 12. I think a far better true representation for potential subscribers would be their metropolitan area, not the entire state. PR and reality should not be confused with each other.

That said, the numbers would still be impressive on a per school basis in comparison to what they have - Cincinnati/Dayton 1.6 million*, Orlando 1.6 million, Tampa 2 million, and a host of surrounding households - which in each case would expand the Big 12 household footprint by at least 10% with each one, and would represent a minimum of a 33% increase in non-Texas households. If the same dynamics work, and we will add in UConn (1.3 million) just so I have an even 14 teams, you now have closer to 19 million households in the footprint, plus a better chance of getting more out of market subscribers (likely in the $0.10-$.20 per month range, but it could add another 30 million subscribers), you now have potential subscriber revenue in the neighborhood of $228 million per year, or $114 million for the conference.

Now that is only $8.14 million per team, only about a million per team more, but that also gives them a much larger base to subtract expenses from - the expenses are likely to be mostly fixed no matter the number of teams, so the more gross revenue earned, the less the expenses per team (this is also true with payments to the conference office). This is often forgotten when comparing set ups per conference. The more teams you have, the less the fixed costs are per school. This is also important because those extra gross dollars, and the expenses they help cover, are likely difference between having a network, and not having one.

Now to be sure there are drawbacks, such as less games vs. the marquee opponents. But looking at dollars from a pure "per team" basis often misses a lot of financial data.




*Cincinnati would probably lose some numbers as part of their metro area extends into Kentucky, and carriage fees in "home markets" don't tend to cross state lines, even with Rutgers in NYC and MD in DC, so that might come into play
06-03-2016 09:56 AM
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Post: #102
RE: CBS: Big 12 could earn an additional $1 billion by expanding...
FYI, to clear up any confusion about that extra billion dollars with 4 adds, this is an excerpt from Dennis Dodd's latest article on the Big 12:

That pro rata money -- approximately $25 million for each new school -- goes to the league coffers, not the individual schools. With four new teams, that's $100 million per year the Big 12 could distribute any way it wants.

Maybe the four new schools -- let's say it's BYU, UConn, Central Florida and Houston -- get only $10 million each the first year. That leaves $60 million for the remaining 10 members.

Not a bad haul.


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06-03-2016 11:53 AM
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Post: #103
RE: CBS: Big 12 could earn an additional $1 billion by expanding...
(06-03-2016 09:56 AM)adcorbett Wrote:  
(06-02-2016 02:43 PM)Goldenbuc Wrote:  Big12 Network with current members
39.1M potential "footprint" subscribers
$44.9M potential with "footprint" subscriber fees

Big12 Network with current members & FL and OH
70.9M potential "footprint" subscribers
$81.5M potential with "footprint" subscriber fees

Big12 Network with ONLY FL and OH
31.8M potential "footprint" subscribers
$36.6M potential with "footprint" subscriber fees


We need to clear up a few things here. First, your numbers are WAY off. You are using population in place of households. Households are the potential subscribers, not individual people. There are only 106 million households in the US as of the last census (perhaps a million or two more now), and you have 40% of them in the Big 12 states. That is not true. . The household information for the current Big 12 footprint is as follows:

Texas 7.5 million
Oklahoma 1.5 million
Kansas 1 million
Iowa 1.2 million
West Virginia 750k

There are a bit under 12 million households in the Big 12 footprint, with only 4.5 million of those outside of Texas. The standard calculation used has been $1.00 per subscriber within the footprint (not always attainable BTW, as even LHN gets less than half of that), which would be potential subscriber revenue of $144 million per year, before the owning entity takes at least half (if not more depending on the set up), leaving $72 million in carriage fees max, before expenses (and additional revenue) before splitting, or no more than $7.2 million per team. As you can see, Texas, Oklahoma, and Kansas already make more than this.

So any additions would be considered based off those numbers. Now in regards to the calculations you used above, if some combination of Cincinnati, USF, and UCF were to be added to the Big 12. I think a far better true representation for potential subscribers would be their metropolitan area, not the entire state. PR and reality should not be confused with each other.

That said, the numbers would still be impressive on a per school basis in comparison to what they have - Cincinnati/Dayton 1.6 million*, Orlando 1.6 million, Tampa 2 million, and a host of surrounding households - which in each case would expand the Big 12 household footprint by at least 10% with each one, and would represent a minimum of a 33% increase in non-Texas households. If the same dynamics work, and we will add in UConn (1.3 million) just so I have an even 14 teams, you now have closer to 19 million households in the footprint, plus a better chance of getting more out of market subscribers (likely in the $0.10-$.20 per month range, but it could add another 30 million subscribers), you now have potential subscriber revenue in the neighborhood of $228 million per year, or $114 million for the conference.

Now that is only $8.14 million per team, only about a million per team more, but that also gives them a much larger base to subtract expenses from - the expenses are likely to be mostly fixed no matter the number of teams, so the more gross revenue earned, the less the expenses per team (this is also true with payments to the conference office). This is often forgotten when comparing set ups per conference. The more teams you have, the less the fixed costs are per school. This is also important because those extra gross dollars, and the expenses they help cover, are likely difference between having a network, and not having one.

Now to be sure there are drawbacks, such as less games vs. the marquee opponents. But looking at dollars from a pure "per team" basis often misses a lot of financial data.




*Cincinnati would probably lose some numbers as part of their metro area extends into Kentucky, and carriage fees in "home markets" don't tend to cross state lines, even with Rutgers in NYC and MD in DC, so that might come into play

If they expand west there's San Diego with its 1,055,030 uncontested households...
06-03-2016 12:10 PM
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YNot Offline
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Post: #104
RE: CBS: Big 12 could earn an additional $1 billion by expanding...
(06-03-2016 09:56 AM)adcorbett Wrote:  Now that is only $8.14 million per team, only about a million per team more, but that also gives them a much larger base to subtract expenses from - the expenses are likely to be mostly fixed no matter the number of teams, so the more gross revenue earned, the less the expenses per team (this is also true with payments to the conference office). This is often forgotten when comparing set ups per conference. The more teams you have, the less the fixed costs are per school. This is also important because those extra gross dollars, and the expenses they help cover, are likely difference between having a network, and not having one.

Now to be sure there are drawbacks, such as less games vs. the marquee opponents. But looking at dollars from a pure "per team" basis often misses a lot of financial data.

Two things:

1) The numbers show that FOX and ESPN are more important to Big 12 revenue than a conference network. Who delivers value to FOX and ESPN to justify $20+M per year in an extension of the TV deal? That's not based on in-market carriage fees, that's based on brand value. Who will casual football fans in Atlanta, Dallas, Chicago, and Los Angeles want to watch?

2) BYU and Texas have existing infrastructure and staff that could substantially lessen the start-up costs and expense burden - perhaps avoid the need for a broadcast partner for the conference network. BYU's current infrastructure is ahead of the cable model, with leading on demand and online capabilities. I believe BYU has an extra unused television license that it could assign to the Big 12.
06-03-2016 12:12 PM
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adcorbett Offline
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Post: #105
RE: CBS: Big 12 could earn an additional $1 billion by expanding...
(06-03-2016 12:12 PM)YNot Wrote:  Two things:

1) The numbers show that FOX and ESPN are more important to Big 12 revenue than a conference network. Who delivers value to FOX and ESPN to justify $20+M per year in an extension of the TV deal? That's not based on in-market carriage fees, that's based on brand value. Who will casual football fans in Atlanta, Dallas, Chicago, and Los Angeles want to watch?

That is well and good. I was responding the person who was talking about the additions in terms of value to a conference network. Nothing more. Nothing less. This part, for that particular discussion, is not relevant. It is relevant overall. Also, Texas is not ending the LHN, so their existing infrastructure is also not relevant, again to this particular part of the discussion.
06-03-2016 01:09 PM
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