Big Ten ---> Big What?
Sports fans can be a little crazy. We go to insane lengths not just to see games, but to think about them. I guess it says something about me that I sat and read this magnum opus about which university the Big Ten should invite into it's ranks nodding approvingly. Of course, it's a worthwhile point of discussion. Of course, its right and proper that you should work out a weighted point system. Of course this makes perfect sense.
The Big Ten Expansion Index
But there is one point of interest (actually three paragraphs of interest.)
Of course, it’s easy to see what’s in it for the Big Ten. However, the issue has always been about what’s in it for Notre Dame. While I personally believe that Notre Dame will continue with its current stance in favor of independence, the college sports financial landscape has drastically changed since the Fighting Irish rejected a Big Ten invite in the late-1990s. What the average sports fan doesn’t realize is that Notre Dame’s NBC contract, which is what the uninformed pundits point to as the major reason why the Irish wouldn’t join the conference, pales in comparison to what every single Big Ten and SEC school makes from their respective conference TV contracts. Notre Dame reportedly makes around $9 million per year from NBC, which was a level that made it the top TV revenue school back in 1999. In contrast, ESPN’s Outside the Lines reported last week that the Big Ten is currently making $242 million per year in TV revenue which is split equally among the 11 schools, meaning that everyone from Michigan to Northwestern is taking in $22 million per year. Think about that for a second: the vaunted Notre Dame was the #1 TV revenue maker in the entire country up until just a few years ago, yet it’s now only #3 in its own home state behind Purdue and Indiana (and less than half as much of each, at that).
How did this happen? It’s the fact that the TV landscape has tipped completely in favor of cable over the past decade. Cable channels have a dual revenue stream, where they make a certain amount of money for each subscriber it has every month plus advertising on top of that. In contrast, over-the-air networks can only rely on advertising. For instance, about $3 of your monthly cable bill goes to ESPN whether or not you watch it. ESPN is in over 100 million households, which means that it’s making $300 million per month and $3.6 billion per year in subscriber fee revenue… and that’s before the network sells a single ad… and that’s not counting its revenue from ESPN2, ESPNEWS, ESPNU and ESPN Classic. As a result, ESPN is the single most profitable entity in the entire Disney empire, which is why the network can afford to pay much more for high profile sports events such as Monday Night Football (note that ESPN is paying almost twice as much for MNF as NBC is for a better flex option slate of Sunday Night Football) and the BCS bowls than the traditional TV networks. When Comcast bought NBC Universal last month, the main prize was the stable of profitable cable channels such as CNBC, MSNBC and Bravo. In contrast, NBC itself is bleeding over several hundred million dollars per year in losses and is the main reason why General Electric wanted to sell the entertainment unit in the first place.
While the Big Ten has ensured that its top tier games continue to be shown on ABC for football and CBS for basketball, it has taken advantage of the sports landscape by securing massive cable revenue for its second tier games on ESPN and its own Big Ten Network. The SEC has done the same via its own wide-ranging media rights deal with ESPN. Notre Dame’s issue is that it’s almost impossible for it to take advantage of these financial changes by being outside of a conference unless it moves all or most of its games to cable (i.e. Versus, which is now a sister company to NBC in the new Comcast conglomerate), which defeats the main advantage of having an independent TV contract in the first place (nationwide over-the-air NBC coverage whether you have cable or just rabbit ears). As a result, independence has turned from Notre Dame’s greatest financial asset into possibly its greatest long-term financial liability.
Here is the link to the OTL report - Television Impact on College Sports
First, some fact checking. In 1991, the ND/NBC contract was about $7 million a year with revenue split between ND and the opponent. So, 3.5 million a year for ND. The deal has been renewed several times, and recently renewed to 2015. The Big Ten signed a deal with ABC/ESPN for $100 million a year for 10 years. Nearly 10 million per team...and then whatever the Big Ten Network is getting from the cable companies. I was able to confirm that OTL reports the Big Ten Network deal is $242 million annually. But the Big Ten Network is half owned by the Big Ten, with the other half owned by Fox Cable Networks (a part of News Corp.) So, really it's $121 million annually, which is still about $11 million per team, plus another $10 mil from the ABC/ESPN deal.
So, the point is made - unless Notre Dame is getting $20 mil a year from NBC for it's television network or starts its own basic cable network, the "We make so much money bit" isn't valid. Also, we aren't counting bowl money - this year PSU, Iowa, Northwestern, Ohio State all played in big bowls. That's alot of bowl money being split between 11 teams. The Big Ten is a BCS conference, and has prestige enough that Wisconsin, Northwestern, Ohio State, Penn State, Michigan, and Iowa are all regular bowl participants. The money truly keeps rolling in.
A larger point is, omg ESPN is making alot of money. In 2004, I see that ESPN signed a nine year deal with Cox Communications for $2.50 per subscriber. Cox had 6 million subscribers at the time. $18 million dollars per month goes to ESPN. Wikipedia shows that ESPN now is at $3.65 with the top 5 cable companies totalling 50 million subscribers. $3.65 x 50 million. x 12.
Damn. For comparison, cartoon network does 8 cents per subscriber, MSNBC? $0.15. TNT? 0.89.
Cable channels are making money and cable companies are shelling it out....which of course means customers of cable should continue to expect $100 cable bills.
The Big Ten Expansion Index
But there is one point of interest (actually three paragraphs of interest.)
Of course, it’s easy to see what’s in it for the Big Ten. However, the issue has always been about what’s in it for Notre Dame. While I personally believe that Notre Dame will continue with its current stance in favor of independence, the college sports financial landscape has drastically changed since the Fighting Irish rejected a Big Ten invite in the late-1990s. What the average sports fan doesn’t realize is that Notre Dame’s NBC contract, which is what the uninformed pundits point to as the major reason why the Irish wouldn’t join the conference, pales in comparison to what every single Big Ten and SEC school makes from their respective conference TV contracts. Notre Dame reportedly makes around $9 million per year from NBC, which was a level that made it the top TV revenue school back in 1999. In contrast, ESPN’s Outside the Lines reported last week that the Big Ten is currently making $242 million per year in TV revenue which is split equally among the 11 schools, meaning that everyone from Michigan to Northwestern is taking in $22 million per year. Think about that for a second: the vaunted Notre Dame was the #1 TV revenue maker in the entire country up until just a few years ago, yet it’s now only #3 in its own home state behind Purdue and Indiana (and less than half as much of each, at that).
How did this happen? It’s the fact that the TV landscape has tipped completely in favor of cable over the past decade. Cable channels have a dual revenue stream, where they make a certain amount of money for each subscriber it has every month plus advertising on top of that. In contrast, over-the-air networks can only rely on advertising. For instance, about $3 of your monthly cable bill goes to ESPN whether or not you watch it. ESPN is in over 100 million households, which means that it’s making $300 million per month and $3.6 billion per year in subscriber fee revenue… and that’s before the network sells a single ad… and that’s not counting its revenue from ESPN2, ESPNEWS, ESPNU and ESPN Classic. As a result, ESPN is the single most profitable entity in the entire Disney empire, which is why the network can afford to pay much more for high profile sports events such as Monday Night Football (note that ESPN is paying almost twice as much for MNF as NBC is for a better flex option slate of Sunday Night Football) and the BCS bowls than the traditional TV networks. When Comcast bought NBC Universal last month, the main prize was the stable of profitable cable channels such as CNBC, MSNBC and Bravo. In contrast, NBC itself is bleeding over several hundred million dollars per year in losses and is the main reason why General Electric wanted to sell the entertainment unit in the first place.
While the Big Ten has ensured that its top tier games continue to be shown on ABC for football and CBS for basketball, it has taken advantage of the sports landscape by securing massive cable revenue for its second tier games on ESPN and its own Big Ten Network. The SEC has done the same via its own wide-ranging media rights deal with ESPN. Notre Dame’s issue is that it’s almost impossible for it to take advantage of these financial changes by being outside of a conference unless it moves all or most of its games to cable (i.e. Versus, which is now a sister company to NBC in the new Comcast conglomerate), which defeats the main advantage of having an independent TV contract in the first place (nationwide over-the-air NBC coverage whether you have cable or just rabbit ears). As a result, independence has turned from Notre Dame’s greatest financial asset into possibly its greatest long-term financial liability.
Here is the link to the OTL report - Television Impact on College Sports
First, some fact checking. In 1991, the ND/NBC contract was about $7 million a year with revenue split between ND and the opponent. So, 3.5 million a year for ND. The deal has been renewed several times, and recently renewed to 2015. The Big Ten signed a deal with ABC/ESPN for $100 million a year for 10 years. Nearly 10 million per team...and then whatever the Big Ten Network is getting from the cable companies. I was able to confirm that OTL reports the Big Ten Network deal is $242 million annually. But the Big Ten Network is half owned by the Big Ten, with the other half owned by Fox Cable Networks (a part of News Corp.) So, really it's $121 million annually, which is still about $11 million per team, plus another $10 mil from the ABC/ESPN deal.
So, the point is made - unless Notre Dame is getting $20 mil a year from NBC for it's television network or starts its own basic cable network, the "We make so much money bit" isn't valid. Also, we aren't counting bowl money - this year PSU, Iowa, Northwestern, Ohio State all played in big bowls. That's alot of bowl money being split between 11 teams. The Big Ten is a BCS conference, and has prestige enough that Wisconsin, Northwestern, Ohio State, Penn State, Michigan, and Iowa are all regular bowl participants. The money truly keeps rolling in.
A larger point is, omg ESPN is making alot of money. In 2004, I see that ESPN signed a nine year deal with Cox Communications for $2.50 per subscriber. Cox had 6 million subscribers at the time. $18 million dollars per month goes to ESPN. Wikipedia shows that ESPN now is at $3.65 with the top 5 cable companies totalling 50 million subscribers. $3.65 x 50 million. x 12.
Damn. For comparison, cartoon network does 8 cents per subscriber, MSNBC? $0.15. TNT? 0.89.
Cable channels are making money and cable companies are shelling it out....which of course means customers of cable should continue to expect $100 cable bills.