nzmorange
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RE: ACC Network or bust?
(06-06-2015 05:52 AM)nole Wrote: (06-06-2015 02:45 AM)nzmorange Wrote: (06-05-2015 10:59 PM)Marge Schott Wrote: (06-05-2015 08:23 PM)Dasville Wrote: If I were the ACC and ESPN wanted to buy my Digital rights, I'd either charge them an arm and a leg or keep them.
And what are you going to do with all of that content that ESPN didn't even want to put on ESPN3?
Exactly. Everyone who preaches the virtues of networks tends to ignore the fact that there is a significant cost to acquiring the content, opportunity or otherwise. Sure, the SEC got a pay bump, but they also A) invested in the conference, and B) implicitly invested in the conference again by passing up a pay increase from the TAMU/MIZZOU add.
Similarly, the BTN makes a lot of money, but they also spent a TON of money to make that happen, AND they air valuable content. Some of those games would fetch a substantial price if they were sold to Fox/ESPN. Yes, they are still keeping the network going, but that *could* very well be because it only makes financial sense if A) there is significant political pressure to have a network and its cheaper to capitulate than to fight (i.e. possibly the SECN and probably the PACN), the market is terribly undervalued due to asymmetric information and other market inefficiencies (i.e. BTN at launch), or if the start-up costs turn into sunk costs (i.e. BTN today). Theoretically, one could string together some kind of reasoning for vertical integration based on specific investments or more efficient management, but I have yet to hear it.
I get that the ACC makes less than the SEC/B1G, but we also don't have the same types of schools in the conference. The conference's #1 athletic department (FSU) isn't even the most valuable athletic department in its own state (UF>FSU in value). After that, there is no match for the (pick 3 of the 4) Wisconsins, Ohio States, Michigans, and Penn States of the world. The same goes for the Alabamas, LSUs, Auburns, Tennessees, Georgias (UF is intentionally excluded because the Gators were referenced earlier). Our #2 football brand is *maybe* a top 20 all time team in terms of prestige, that *might* have a top 15 stadium in terms of size and has no other athletic programs of note. Sure, our middle is very solid and has great upside, but our low end is very low. Yes, we have great basketball brands, but that will only take a conference so far. Even then, we don't lead the nation in attendance.
Unless Wake goes on an absolute tear and wins the next 10 straight NC's there are only so many people who are going to care about WF athletics, and that number isn't especially high. The same goes for NCSU, and to a lesser extent, Miami, BC, Pitt, GT, and any other city team that I'm forgetting that has to compete with pro sports.
Those of us who are convinced that an ACCN will solve all of the conference's problems are living a pipe dream. We might get a network, but if we do, then I'm pretty sure that it will 100% be to save Swofford's job. If the entire paradigm blows up (one way or the other), it is much less risky to do what everyone else does. In other words, if the market takes off, you aren't left behind, and it it bottoms out, you don't look any dumber than anyone else. That said, if the network made good business sense, the conference would have pulled the trigger on it, and it would have been launched with the SECN, along with ESPN/Disney's renegotiation. Why is that the case? It's the case because it would have likely made the overall package less price elastic, thereby likely creating value for all, which can be split up by all (including the ACCN) based on that entity's contribution to the whole. However, that didn't happen. Instead, the conference hesitated, and has thus far taken the ESPN consolation payout of an extra $2 million (or whatever it is this year). Assuming that the ACC leadership isn't completely lost, they would have only take the extra $2 mm if 50% of the profits less opportunity costs associated with the initial investment was less than $2 million. Therefore, unless someone has better information that I do, that's the value of an ACCN for the conference; less $2 million/school + the opportunity cost of the initial investment (i.e. buying back the media rights).
Regardless, I think that the ACC will stay together for reasons that go beyond TV money. Namely, the ACC is EXTREMELY Carolina/Duke/Virginia friendly and has the capacity to be EXTREMELY friendly to FSU (whether FSU fans want to admit it or not). After that, I don't think that the SEC wants Clemson, and GT is tied to the Carolina schools + UVA + Clemson + FSU (as is VT), and BC, Pitt, UL, and SU are generally happy where they are. The money is good enough, the academics are great, the southern exposure is great for athletics, and most importantly, there aren't any other attractive options in the NE now that the BIG EAST is dead (there's the B1G and the AAC).
I guess that's my of saying "everyone is wrong." The sky isn't falling, and there also aren't any castles up there, either. We're in the middle, along with the Pac and the Big XII. It isn't perfect, but it could be a lot worse. Anyway, TV money is only part of the equation. The B1G absolutely blew everyone else's finances out of the water for a solid decade, and what did they get in return? Despite having 2 of the top 5 football brands (OSU and UM) and several elite/very good basketball brands (IU, MSU, UM, and OSU), they got 1 NC in football and 0 in basketball. The ACC, SEC, and arguably the Big XII (depending on when you start counting) all matched or beat that.
It has the capacity....what it lacks is the desire.
We all agree, the money has been good enough.....mark it down....next years revenue gaps are going to shock folks and a few schools will seriously wonder if the money is good enough anymore. The future for the ACC is RIGHT around the corner....horrible business moves can't be hidden much longer. I watched ESPN (not the SEC network) last night stick with a 18-2 SEC baseball game last night over a competitive ACC game. The ACC is being marginalized right now by it's own TV network....as the revenue gap goes to $10 million plus. This conference is going to be plucked apart.
I agree there was only so much Swofford could of done...the ACC was likely to be #3 in revenue at best......BUT if he achieved the ceiling the ACC had......the ACC would of likely survived. Instead the ACC stuck with Swofford, Raycom, his son's paycheck, and a refusal to accept basetball isn't #1. It will cost the ACC....and folks feel it....the ACC Network and it's inability to go anywhere is only the canary in the mineshaft.
The money comment is in reference to SU, BC, Pitt, and UL. We've been 10+ mm behind the B1G since '07 (until we joined the ACC). The money isn't ideal, but virtually any UL fan can tell you that conference payouts are only one part of the equation.
And yeah, Swofford screwed up with the sweet-heart ESPN/Raycom deal, and he screwed up big time with the Orange Bowl. The ESPN deal was 100% nepotism, and we're paying for it. The OB was old fashioned incompetence, and we're paying for that as well. That said, the sky isn't falling. There are bright points in our current situation, and I can see growth opportunities moving forward.
It will be interesting to see how Texas shakes out. I don't think that their minimum payments from the LHN are inflation-adjusted. That means there will come a day where their profits from the network will primarily/heavily float with the network's success. When that day comes, scheduling flexibility in football, membership in a conference with strong Olympic sports, and increased TV inventory will be at a premium. Those factors, along with the ACC's academic reputation, east coast exposure, and excellence in pretty much everything but football will make a ND-type deal with Texas extremely attractive. As such, Texas and the ACC will be in a position where UTex either takes the deal and both parties benefit, or UTex uses the credible threat of jumping to the ACC as leverage in the Big XII (the more likely outcome), and Texas benefits and the B1G XII takes a major hit (indirectly benefiting the ACC vis-a-vis the Big XII).
It will also be interesting to see if there is any urgency in the ACC brass to improve football. It wasn't that long ago that the Pac was arguably the weakest (and poorest) P6 conference (or at least 2nd poorest). However, the Pac went nuts hiring good coaches and suddenly, one can credibly argue that the Pac is the best football conference. The ACC could very easily do what the Pac did (and then some) if the situation were ever dire enough. Admittedly, I'm not sure how dire the situation would have to be to get action (which I believe is the topic of many of your posts, nole), but the potential is there and history has shown that said potential will be used (see Baylor, TCU, OSU, and all the other schools in the Big XII that might not have a seat at the table if the conference were to falter).
Going back to my first post, structurally speaking, we cannot compete with the B1G/SEC's finances and win. Referencing this post, we can, however, beat the PAC and the Big XII on an extremely consistent basis (financially), we can improve our situation through careful management (i.e. no more stupid blunders and nepotism), and we can win on the field on a consistent basis against anyone, even SEC/B1G teams. The sky isn't falling, but there aren't any castles in it either. Like most things in life, we're stuck in the middle.
**Also, I would argue that the ACC is MUCH better for FSU than most fans initially give it credit for, and FSU's options, SEC included, aren't as great as they initially seem. Much of what makes FSU special is the school's ability to win almost all the time. FSU wouldn't be able to do that if it faced a SEC schedule. I get that FSU is elite on the field. You are. But, so is Alabama, Auburn, UF, LSU, and UGA, TAMU, Arkansas, USC, and Tennessee all have the potential to consistently be very good, and schools like Mizzou, MSU, and 'Ole Miss have the potential to have some very good years once in a while. The same existence of major downsides goes for joining the B1G. Sure, the money is good, but one can argue that the B1G was out performed in the last decade by the ACC ... during a "lost decade." Combine that with the challenge of convincing Florida kids that they want to play in Minnesota during November in outdoor stadiums so that they can impress a bunch of Midwestern farmers by hanging 50 on the Gophers, and I think that the virtues of the B1G look a little less bright.**
(This post was last modified: 06-06-2015 10:26 AM by nzmorange.)
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