Big Ten Media Rights / Conference Realignment

#27
I think you mean more ridiculous speculation:

"If this deal ends up going through, and if the other half of the deal is worth the same as this one..."
Right, assuming the other half is equal is a very bad assumption. Fox almost assuredly bought first pick of games.

My theory would be that Fox and ESPN were the only serious bidders, ESPN wasn't willing to go to Delany's price because of its cost cutting mandate, and Fox wasn't either because they don't have the platforms to exploit all that content. So therefore Delany is going to split the baby in half, sell Fox the piece they have the ability to market effectively, and cut ESPN a deal on the leftovers to keep that relationship going at a price they can swallow.

Just a guess, but that would make a lot of sense for all parties involved and would square with the information made available.
 
#28
I think you mean more ridiculous speculation:

"If this deal ends up going through, and if the other half of the deal is worth the same as this one..."
Yet they also assumed no increase in the BTN profits, which is unlikely. Even if the second deal is less than the first, the sum total is clearly far ahead of earlier projections.

Right, assuming the other half is equal is a very bad assumption. Fox almost assuredly bought first pick of games.
I'd say almost assuredly not. If you're going to split the bidding into 2 lots, putting all of the best games into the first round would be pretty dumb. And Jim Delany isn't dumb.
 
#30
Yet they also assumed no increase in the BTN profits, which is unlikely. Even if the second deal is less than the first, the sum total is clearly far ahead of earlier projections.



I'd say almost assuredly not. If you're going to split the bidding into 2 lots, putting all of the best games into the first round would be pretty dumb. And Jim Delany isn't dumb.
No idea if Fox gets premium half or not, but there is no way to spin this that it isn't going to be a lot more money. Also puts ESPN a bit on the spot, I'm sure ESPN doesn't want to whiff on entire B1G for next 6 years. If you are #1 & want to remain number 1 you need a piece of the pie. I think B1G needs/wants ESPN for maximum coverage as well, but with B1G Network, potential to sell off some more bits to other players or more to Fox I think ESPN is in a worst spot negotiating...the language also leaves some "up to sort of stuff" that may mean the premium games are still in play. So I will throw it out there that I bet Delaney is still shooting for every bit as much money or more from ESPN. Maybe ESPN can't go there or wasn't willing to...but this has to be a shot across the bow for ESPN. Just not betting against Delaney at this point.
 
#31
It's very smart if someone will give you an awesome number for that lot, which it sure looks like Fox did.
Possible, but unlikely.

No idea if Fox gets premium half or not, but there is no way to spin this that it isn't going to be a lot more money. Also puts ESPN a bit on the spot, I'm sure ESPN doesn't want to whiff on entire B1G for next 6 years. If you are #1 & want to remain number 1 you need a piece of the pie. I think B1G needs/wants ESPN for maximum coverage as well, but with B1G Network, potential to sell off some more bits to other players or more to Fox I think ESPN is in a worst spot negotiating...the language also leaves some "up to sort of stuff" that may mean the premium games are still in play. So I will throw it out there that I bet Delaney is still shooting for every bit as much money or more from ESPN. Maybe ESPN can't go there or wasn't willing to...but this has to be a shot across the bow for ESPN. Just not betting against Delaney at this point.
Agreed. And as I said before, ESPN desperately needs this kind of premium level live sports. They simply can't afford to be left out of this deal. Having to do only half probably helps them out as they couldn't afford to buy it all as they've done previously. And having to only do 6 years could help, too.
 
#32
This idea that an initial projection of $45 million per team per year which was later revised downward based on how the negotiating was going is suddenly going to turn into $60 million because of some underpants gnome theory about what a genius Jim Delany is is absolutely laughable.
 
#37
We're talking about two different bubbles here.

Whether college sports revenues can keep going up and up and up is a question I don't know the answer to. Regardless, the NCAA tournament is going to outlive us all, in whatever broadcast form it may take, because there is tremendous broad-based demand and interest for it to exist.

But that's not the bubble I'm talking about.

The rapidly expanding TV money coming into the Big Ten comes primarily, not entirely, but primarily out of the wallets of people who have no interest in watching or paying for Big Ten sports. Every single household in America with cable TV pays over $7 a month every single month directly to ESPN. Every single household in the Big Ten footprint pays $1 per month directly to the Big Ten Network. Those subscriber fees represent almost two thirds of ESPN's revenue, with ad sales making up the rest. The ratio of subscriber fees to ad revenue is even steeper at BTN.

This has always been a shell game. Rather than selling their product to people who are interested in it at a price they were willing to pay, refuse to sell your product to anyone unless it is sold to EVERYONE at an equal price regardless of whether they use it or not. Big Ten fans will put overwhelming pressure on cable providers to cave, whereas cable providers incentive to keep prices low for their overall subscriber base is vague and out-of-sight. The angry letters and calls will win every time, and cable prices are always going up anyway, what's the difference in a couple more bucks?

(Just to tie this all together so everyone's clear: actual viewership for Big Ten games is a tiny, tiny fraction of the total cable subscriber base. Like single digit percentages. BTN and ESPN collect their toll from every single one every month regardless.)

Jim Delany was a visionary for seeing that this would work. He was daring and bold to try and sucker DC and NYC into this deal and he somehow pulled it off. But this is a con, and every con must end. In a world of ever increasing non-cable options, increasing pressure on cable operators to de-bundle, and widening income inequality, cable subscriptions are going down and will continue to go down. This isn't a future hypothetical, this IS HAPPENING NOW. That will trickle away revenue from BTN in the short term, but will also continue to put pressure on the companies that purchase sports content at these outrageous premiums and make up the cost via bloated carriage fees. Fox charges $0.99 per subscriber for Fox Sports 1. The idea is that with the Big Ten, they can charge more. Don't be shocked if the major cable providers balk at this demand. That isn't Jim Delany's problem now, he can count his money on this six-year deal, but those chickens are eventually coming home to roost.

Maybe when sports are sold in an NFL Sunday Ticket-type model with the costs borne solely by individual sports fan subscribers, the Big Ten can make even more money. It has millions of people who want to watch, after all. The English Premier League rakes it in hand over fist with that system. But the way the Big Ten makes its money TODAY is a bubble that is in the process of bursting. It is dependent almost entirely on people who have no interest in or desire to pay for Big Ten sports. It cannot and will not last.
 
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#38
This idea that an initial projection of $45 million per team per year which was later revised downward based on how the negotiating was going is suddenly going to turn into $60 million because of some underpants gnome theory about what a genius Jim Delany is is absolutely laughable.
You seem to follow this more closely than I, so where do you think Illinois split will be?

I'm assuming the $45 came from same source as this but goes back to 2014.
http://www.cbssports.com/collegefootball/eye-on-college-football/24540002/big-ten-schools-projected-to-get-45-million-with-new-tv-deal

Also found this, where basis came from OSU numbers, which is where I expect the 60 million comes from & the 35 million prediction is indeed double the FOX number, but note this all assumes zero gain everywhere else, so knock the 1st tier in 1/2 & it looks like 40 million is the floor. Add into that Maryland/Rutgers still won't be getting fulll share, growth in BTN number, minus a bit because contract is likely backloaded. Personally I don't expect it to be 57 million/team, but I bet not many are thinking the 45 is too high at this point.
http://awfulannouncing.com/2016/big-ten-schools-will-see-media-revenues-skyrocket-thanks-new-tv-deal.html

Year 2015 2018
First-tier rights (full members) ~$9 million ~$35 million
Other rights and BTN ~$12.5 million ~$12.5 million (or more)
College Football Playoff $4.7 million $4.7 million
NCAA distribution $4.4 million $4.4 million
Big Ten Tournament
and Championship Game $740,000 $740,000
Total $32,407,363 ~$57 million
 
#40
Frank the Tank weighs in, he's a pretty good read on this stuff.

Highlighting his thoughts:

I have seen a lot of scuttlebutt online that this indicates that the Big Ten might be leaving ESPN entirely, but personally don’t believe that for a second.

...

By the same token, let’s not pretend that the Big Ten wants to get away from ESPN. I have seen some Big Ten fans profess a desire to leave ESPN entirely, but that would be as short-sighted for the conference as it would be short-sighted for ESPN to let the Big Ten go completely.

...

In looking at the imminent Fox deal with the Big Ten, this seems to be set up to put a weekly football game on both Big Fox and FS1. This will end up being quite a boon for Fox’s college football game inventory quality. From a personal standpoint, I just hope that it improves that actual college football game production quality, which I have found lacking compared to ABC/ESPN and CBS.

...

The reported 6-year timeframe of the Fox deal is unusual compared to the much longer-term deals that the other power conferences have signed. In fact, the Big Ten will end up back at the negotiating table before any of the other power conferences once again. On the one hand, this presents some risk to the Big Ten since they are not locking in today’s high rights fees into the late-2020s or even 2030s. On the other hand, every time that the Big Ten has bet on itself, it has ended up succeeding, whether it was with the formation of the BTN or taking its rights to the open market in a period of uncertainty for sports programming values with decreasing cable subscriptions.

Like a Fox
 
#41
Ooh, from a link within a link there, how this affects the ACC/Big Ten Challenge is a very good question. It would be a shame to see that tradition pass away.

Also, the thought of having Gus Johnson and Bill Raftery on the call for Illini games is a big plus here. They deserve better than the random St. Johns-Creighton type games they've been stuck doing at FS1.
 
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#42
A very good possibility for the 6-year time frame is that would bring the Big Ten back to the negotiating table for their broadcast rights around the same time that the Grant of Rights Agreement for the Big 12 ends.

That means that if the Big 10 is going to add any schools from the Big 12, such as Oklahoma, Kansas, or Texas (long-shot), that gives them the perfect window to do that and factor it into their new broadcast rights deal(s).
 
#43
Ooh, from a link within a link there, how this affects the ACC/Big Ten Challenge is a very good question. It would be a shame to see that tradition pass away.
Eh, it'll still be on ESPN. I'm not sure the tradition is all that great with all the conference expansion, anyway. Plus you hardly hear about it on ESPN since the ACC stopped "dominating" it. :)
 
#44
Probably not too far off from where their initial projections were.

The money isn't likely to be shocking in either direction. The six-year term is a bit of an eye-opener though.
So 45 million first year of new deal, or roughly 23 million in first tier TV rights.

To me it looks like 45 million is pretty much in the bag already with the Fox numbers, without any B1G network growth. If ESPN comes up with 1/2 of current 1st tier rights today (9 mil/2, +37 mil/2) then you are roughly at the 45 million. (I suspect these numbers lose a bit 1st year because the Fox contract is likely back loaded), but other numbers likely go up as well.

Which that much in the bank, I'm guessing Delany is thinking North of 50 mil is now possible & if ESPN is unwilling to come up with that kind of money, then the 2nd half of content gets split up between other players or held in ransom in the BTN until ESPN plays.

Just speculation, but with the "up to" in front of the Fox numbers I'm guessing the Fox number quoted is indeed for a premium 1/2, but B1G left themselves some room to make the 2nd half at least as attractive as the Fox portion, in which case Fox number goes down, but ESPN number will need to be in range of revised Fox number.
 
#45
Just speculation, but with the "up to" in front of the Fox numbers I'm guessing the Fox number quoted is indeed for a premium 1/2, but B1G left themselves some room to make the 2nd half at least as attractive as the Fox portion, in which case Fox number goes down, but ESPN number will need to be in range of revised Fox number.
That would definitely make sense.
 
#46
Frank the Tank weighs in, he's a pretty good read on this stuff.

Highlighting his thoughts:
He is a very good read on this & FWIW I think he has this one right.

B1G needs to maintain a balance between Fox & ESPN, they want both involved. With BTN partnered with Fox, I think B1G has most leverage with ESPN. The Fox Tier 1 deal is a shot across ESPN's bow, but it is intended to get them to play the game by B1G rules.

What is the speculation on the 6 yr deal? Sure it is different/significant, but why? I'm wondering if this is a play to open up ESPN: Will ESPN pay more without the long term risk? Do they see the the situation at ESPN changing in this time frame? Do you want to send a message to ESPN, but not lock them out for too long? Is it as someone else speculated to time next conference expansion. Maybe all of this.
 
#47
Just speculation, but with the "up to" in front of the Fox numbers I'm guessing the Fox number quoted is indeed for a premium 1/2, but B1G left themselves some room to make the 2nd half at least as attractive as the Fox portion, in which case Fox number goes down, but ESPN number will need to be in range of revised Fox number.
Agree, I don't think the exact determination of which games is set yet. We know Fox has the Big Ten football title game. I imagine CBS will want to try and keep the Sat/Sun B1G BTT games, too. Rest is probably negotiable to a great extent.

What is the speculation on the 6 yr deal? Sure it is different/significant, but why? I'm wondering if this is a play to open up ESPN: Will ESPN pay more without the long term risk? Do they see the the situation at ESPN changing in this time frame? Do you want to send a message to ESPN, but not lock them out for too long? Is it as someone else speculated to time next conference expansion. Maybe all of this.
Funny you should ask that, here's some speculation about what it could lead to...

While the vast majority of the attention from the report by John Ourand of SportsBusiness Daily on the looming deal between the Big Ten and FOX went to the gargantuan money involved, a much smaller number in the story might be even more important: six, as in the number of years in the contract.

Signing on for such a short duration not only grants the conference flexibility to re-evaluate its options in a rapidly changing industry. It also all but assures more realignment among the power conferences in the not-too-distant future.

The forthcoming B1G deal will run out right around the same time as the current ACC, Big 12 and Pac-12 agreements. That means the grant-of-rights pacts currently holding those conferences together will be sunsetting, too.

If they so desire – and nothing in their history suggests that they wouldn’t – the B1G schools could again start the process of vetting potential expansion candidates. The league should have no problem poaching at least a couple schools from the ACC and/or the Big 12. (To quote Jim Cutler, “It’s a lot of money!”)

Next round of conference realignment?
 
#48
What is the speculation on the 6 yr deal? Sure it is different/significant, but why? I'm wondering if this is a play to open up ESPN: Will ESPN pay more without the long term risk?
Anyone would pay more without the long-term risk.

10 years ago, the Big Ten would have had to accept less money to be able to jump back into the market in 6 years, now, they accept a 6-year commitment in order to get more money. Everyone knows the current decline in cable subscriptions is terminal, it's just a question of how long this model can continue.

Having been a believer in the cable bubble for years and years, I'm probably biased in thinking the end is going to come really rapidly. A 6-year deal might not be a bad bet for Fox at all, especially considering their incentive to gain brand parity with ESPN for whatever sports delivery model comes next. But regardless, this thing only ends one way and it ends reasonably soon, and the fact that seemingly every major sports cable TV contract out there has an end date somewhere in the mid-2020's probably gives you an indication of what the industry itself is predicting in terms of timing.
 
#49
Anyone would pay more without the long-term risk.
No, because it is not nearly as simple as that, there is also a risk that prices will continue to go up & you will have to pay more or lose the content later. So there are risks/rewards to both choices. It is about how ESPN/B1G perceive these risks that matters.

If everyone was sure the impending bust was going to hurt the content value, then prices would start going down, that hasn't really happened yet for a Power 5 conference. Maybe this shorter term is a sign of increased concern by at least one party or maybe not, still a lot of assumptions to make that call with any certainty, but one possible explanation is that ESPN is more adverse to the long term risk than the B1G.
 
#50
If everyone was sure the impending bust was going to hurt the content value, then prices would start going down, that hasn't really happened yet for a Power 5 conference.
You don't have to worry about the value of an asset in 2030 if you're only buying it until 2023.

The cable industry believes their subscriber losses are going to stay at just a trickle for several years yet, with increased fees making up for it. They're probably right. But the end is coming, and while the future is still uncertain and could look a number of different ways, it is virtually certain that it will not be a model in which old grannies pay $12 a month for niche sports programming they don't watch or even realize they're paying for. That is the part of the model that's dying, and the beneficiaries of that particular swindle are overwhelmingly sports entities whose cultural cache greatly outweigh their actual viewership.