(05-20-2020 08:34 AM)BePcr07 Wrote: A question I have is what does it mean to have a school add to the value of the conference (SEC or other). I can look at the numbers provided and see that a school is above or below the conference median. That being said, how can we know for if a school would bring in that same amount if in the SEC? Would Virginia Tech bring more to the bottom line as an SEC school rather than an ACC school? Would Texas bring as much to the bottom line in the SEC without the LHN? Do those potential numbers matter?
Well the best answer I can give you is this. Whenever a conference and a prospect get hot for one another it is usually the Network, or now an outside firm to avoid tortuous interference suits, that does an in depth evaluation of how much revenue that the school and conference could anticipate by the move.
A lot of the that information that is used is available to us by annual reports which I list here annually. Generally speaking a school which is below a conferences average for attendance (a sign of alumni support and donation since most schools require donations for tickets) and Gross Total Revenue (a more accurate picture of donations and not really about media money) give you a good idea if the applying school adds to the bottom line. The WSJ numbers give you an idea of what the school is worth to its surrounding area in terms of business generated which is also a strong indication of support and interest..
When the average SEC school generates over 700,000,000 in ancillary business and Virginia Tech generates less than 250 million in ancillary business and the Va Tech averages 10 thousand less in attendance and their Gross Total Revenue isn't top 25 then they aren't going to add to the bottom line.
In 2010 cable subscription pay models were based on the potential number of subscribers within a state and the schools were paid accordingly. Virginia a state of 9 million was appealing and N.C. State or UNC in a state of 11 million was as well.
Innovation in technology via streaming, and smart TV's from which information about viewing habits is actually quantifiable permit a more accurate picture of who watches. Because of that a state like Alabama of 5 million plus might actually have 4 million who watch college football and a state like Virginia with 9 million might only have 3 million who watch college football and of those even less that watch Virginia Tech. Therefore in this new era the actual number of viewers is what attracts advertising's higher rates, not population.
This is why the Big 10 and SEC have now outpaced the ACC and PAC where actual viewing numbers are paltry.
It is also why so much interest is shown in the Big 12 for expansion targets. The Big 12 actually has roughly the same % of homes viewing as the Big 10, it's just that they have much fewer homes. But with Texas and Oklahoma you have two schools who draw strong national numbers due to a spread of alumni but more importantly brand identification with the sport of college football. That's something that Virginia Tech, N.C. State, North Carolina and Louisville don't have, and Georgia Tech hasn't had in the modern TV era. Florida State has it, but their numbers in all other areas are just on par with the SEC therefore it safe to assume they would be about break even in the SEC.
Clemson is strong recently, but historically their numbers probably don't put them on par, but they are growing a national brand so might be worth the risk. Remember against week in and week out competition in the SEC they might not be as viable. It only takes 2 losses a year to diminish where they are now.
When you consider all of this there are 3 schools that add to the SEC's bottom line and the Big 10's bottom line:
1. Texas
2. Notre Dame
3. Oklahoma
All three are top 12 revenue producers (UT #1, OU #7, ND #12), all three average more than 74,000 in attendance, Texas right at 100k, OU at 85k, and ND at around 75K, and all three draw extremely well nationally. There is no area of measurement where these programs fail to add.
I strongly suspect they would already be in the SEC or Big 10 where they would exponentially increase their revenue and that of the conference were it not for wanting to remain relevant competitively. With the added money I believe they would, but face it the likelihood that OU, UT or ND would suffer more 2 loss seasons in the SEC or Big 10 is fairly high. I think they fear a loss of national prominence with such moves.
The thing is however that is where the money is going to be at a time when enhanced revenue streams are going to be tough to find. The eventual need to increase revenue will bring about these moves. When they do there is no mutual interest between N.D. and the SEC, so the fight will be over Texas and Oklahoma and it will be between the Big 10 and SEC. The Big 10 has the academic advantage and that's the angle they sell, and the SEC has the geographic, recruiting, and competition advantage and that is the angle we sell.
Time, technology, and opportunity to catch up have passed the PAC and the ACC by. If they get into the Big 10 or SEC it will be at network expense in an effort to protect a product (likely basketball) reach for a niche time of the year (think Winter/Spring).
Edit: I missed your question on the LHN. I would assume that the SEC would benefit subscription wise from rolling the ESPN shared LHN into the ESPN shared SECN. T3 is so little of the total revenue and the SEC's big new contract figures are based on actual viewers for T1 and T2 content that I doubt the LHN would be a significant negative factor for either the SEC or Texas. It would be a benefit for ESPN which I'm sure would share the buyout of the LHN with the SEC where it would be handled by a 1 million reduction per school in annual payouts which will be going up massively by 2024 (sooner if ESPN buys out the CBS contract) and that way the LHN which expires in 2031 could be bought out over 4 years time without anyone missing the reduced money which would more than be made up for long term by UT's inclusion.