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<blockquote data-quote="Second and Chalmers" data-source="post: 1211298" data-attributes="member: 527609"><p>We're talking about two different bubbles here.</p><p></p><p>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.</p><p></p><p>But that's not the bubble I'm talking about.</p><p></p><p>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 <a href="http://www.whatyoupayforsports.com/numbers/" target="_blank">over $7 a month</a> every single month directly to ESPN. Every single household in the Big Ten footprint pays <a href="http://www.whatyoupayforsports.com/numbers/" target="_blank">$1 per month</a> directly to the Big Ten Network. <a href="http://www.businessinsider.com/espn-revenue-subscriber-fees-2015-11" target="_blank">Those subscriber fees represent almost two thirds of ESPN's revenue</a>, with ad sales making up the rest. <a href="http://www.stltoday.com/sports/college/illini/big-ten-network-had-record-revenue-in/article_e05a998c-a390-11e1-99b2-001a4bcf6878.html" target="_blank">The ratio of subscriber fees to ad revenue is even steeper at BTN</a>.</p><p></p><p>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?</p><p></p><p>(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.)</p><p></p><p>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.</p><p></p><p>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.</p></blockquote><p></p>
[QUOTE="Second and Chalmers, post: 1211298, member: 527609"] 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 [URL="http://www.whatyoupayforsports.com/numbers/"]over $7 a month[/URL] every single month directly to ESPN. Every single household in the Big Ten footprint pays [URL="http://www.whatyoupayforsports.com/numbers/"]$1 per month[/URL] directly to the Big Ten Network. [URL="http://www.businessinsider.com/espn-revenue-subscriber-fees-2015-11"]Those subscriber fees represent almost two thirds of ESPN's revenue[/URL], with ad sales making up the rest. [URL="http://www.stltoday.com/sports/college/illini/big-ten-network-had-record-revenue-in/article_e05a998c-a390-11e1-99b2-001a4bcf6878.html"]The ratio of subscriber fees to ad revenue is even steeper at BTN[/URL]. 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. [/QUOTE]
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