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The Pac-12?s financial future: Comparing TV revenue to the SEC and Big Ten

So if you’re scoring at home, we have these projections for TV-related revenue for 2017-18, on a per-school basis:
SEC: $35.6 million
Big Ten: $33 million
Pac-12: $22.95 million
That’s a monumental gap, folks.

This could have been in the DirecTV thread since that's a major component of the gap looking forward. But the bigger issue is the Pac-12 footprint and the fact that despite these large cities, the folks living in them simply don't watch football at the same rates as they do in other places. It's a metric that kills Tier 1 media money.

The Pac-12 really needs to get into the Central Time Zone and the state of Texas if this is ever going to change. That delivers an additional time slot and also delivers a ton of passionate football fans. Adding the states of Utah and Colorado with the expansion to 12 helped (money from conference championship game, more programming volume, and the Mountain Time Zone), but the real value comes into play if UT and CO are the bridge to TX/OK/KS.
 
That's because many of the Pac 12 cities are very much transplant cities and the schools are comprised of a lot of OOS students. Tough to beat the tradition, "stay home" mentality, and general passion for football in SEC country.
 
Buffnik said:
So if you’re scoring at home, we have these projections for TV-related revenue for 2017-18, on a per-school basis:
SEC: $35.6 million
Big Ten: $33 million
Pac-12: $22.95 million
That’s a monumental gap, folks.

This could have been in the DirecTV thread since that's a major component of the gap looking forward. But the bigger issue is the Pac-12 footprint and the fact that despite these large cities, the folks living in them simply don't watch football at the same rates as they do in other places. It's a metric that kills Tier 1 media money.

The Pac-12 really needs to get into the Central Time Zone and the state of Texas if this is ever going to change. That delivers an additional time slot and also delivers a ton of passionate football fans. Adding the states of Utah and Colorado with the expansion to 12 helped (money from conference championship game, more programming volume, and the Mountain Time Zone), but the real value comes into play if UT and CO are the bridge to TX/OK/KS.
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Yeah. I was thinking the exact same thing. Sadly, I think the Pac needs to expand to 16 and adding 4 from the Big XII. Texas, OU, OSU and, umm, I got nothing. How about TCU for the Dallas/Ft. Worth metroplex?
 
16 team conferences with 4 pods of 4 teams. Winner of each pod advances to the playoffs within that conference. Winner of that conferences playoffs advance to the national College Football Playoffs. Winner of that rules the world.
 
Wilner math makes my head hurt. But there are some interesting tidbits in there when he just quotes facts. Like $1 million per school from P12 Net. Well, we all know the network brought in more than $12 million in revenue. The relevant question is what are the costs and how do they break down - how much are yearly and how much are startup costs? If there is a point in the near future where startup costs become paid off completely, revenue will jump. If those are somehow amortized over the 12 years of the contract, then wow the P12 Net is not doing all that well.

So on to the DTV issue - remember they only hold 20% of market share. Then consider the greater LA market (almost 1/3 of the P12 footprint) - right now I don't think they offer the dodgers network. I doubt most sports fans will ditch cable for DTV to get the p12 Net and not the dodgers. So why would DTV pay a lot for P12? Plus sports bars need cable to show dodgers games.... and p12 is on cable already.

If profits are really only $1 million per school, the P12 just might not be able to budge on their asking price. Remember that other first comers have the right to renegotiate down if the Pac gives DTV a break. So if the Pac12 lowers to ask .64/sub in market to DTV, the others will get that rate. Nominally 64 cents/sub would be the break even point. Give DTV a rate below that, and the network as a whole LOSES money. To be honest, that MIGHT be worth it (essentially getting extended coverage for $$) if schools were getting $7-8 million per year each - but not at this level.

To be honest, with all teh cord cutting, I'd much rather have guaranteed money coming from cable companies (or a telco like ATT). Households will still need them for internet, so they won't go under. They can offer bundled deals. If the DTV/ATT merger does not go through, DTV faces a huge threat from cord cutters. So does Dish, which is why they are doing sling TV. Cable/Telcos are still necessary because cord cutters need internet. Plus, the ATT/DTV merger only helps bundling in areas where ATT is telco franchise - CA, Texas, and some other scattered areas in the SE I believe.

The only bone the P12 can really throw DTV is giving them out of market households for free. Hell I'd do that for all providers that pay in market rates provided that they actually make it available on the basic tier.
 
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we will never get texas. Need to go hard after the oklahoma schools. Hell Kansas would be a quality addition. Doormat football, elite basketball.
 
Begin negotiations with Houston, SMU, and start to wine and dine the Oklahoma schools. Texas, TCU, Baylor, Texas Tech will fight over the opportunity to jump out of the B12 at that point (knowing it will be the equivalent of the old Big East - a 'power' conference lacking the oomph to get a team in the title picture).

Texas wouldn't have the ability to manipulate a P16 they way they did the B12. Wouldn't mind seeing the P16 end up with a Texas pod of four teams: UT, TCU, Houston, and Texas Tech. Let the BigTen have OU and OSU (renewing the NU/OU rivalry). The SEC can grab Baylor and another team to get to 16. OR Baylor can burn in Hades, either option is acceptable.
 
FLounder said:
we will never get texas. Need to go hard after the oklahoma schools. Hell Kansas would be a quality addition. Doormat football, elite basketball.
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Should I take this bold statement with as much validity as your bold statements about our next DC?
 
"And if the Pac12Nets aren’t on DTV in two years, for whatever reason, then the league could be $12 – $15 million behind its peers."

This guy is waaaay off. Doesn't he know that DTV is a dying medium? I think we should let the author know that the future is ordering a la carte channels off your smart watch, while your wife streams cooking shows on the latest iPAd - which lets your kids get all 3 Nickelodeon channels on AppleTV-Roku-Amazon Prime. Dude has no leg to stand on.
 
More on wilner math.

What if startup costs for the P12N were 100 million, spread out over 2-3 years? Then the P12N payout would jump when that's paid off.... by $3-4 million per year even w/o DTV. Add DTV and it's up to $27 million.

I'm also not sure how the ESPN payout for 1st/2nd tier rights to the SEC will increase (especially on a per team basis) given that ESPN had to shift content they already owned to the SECN to have enough programming to get it picked up. SEC was not in a position of power to get the original 15 year CBS/ESPN contract starting in 2009 renegotiated. The SEC NEEDED the espn football content for the SECN more than ESPN needed the SECN.

CBS certainly got the best of the 15 year SEC deal - they get the best game every week, and during the 'look in' after Mizzou/A&M, they did not have to pay more, they only had to give up their exclusivity window.

If one assumes the $15.6m for SECN is correct (seems high), why would ESPN pay more for 1st/2nd tier than the 15 mil quoted, given that they gave up a ton of content to the SECN. Take off a few million from that $35 million and the SEC is not light years ahead of the P12. About what one would expect given the relative interest levels.
 
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I can't imagine Texas leaving for a situation in which they aren't the 800 pound gorilla. Not saying Texas wouldn't help the ratings and our share of the revenue, but Texas would never agree to an even split. Plus the Longhorn Network would make things even iffy-er.
 
Mr. Babar said:
Begin negotiations with Houston, SMU, and start to wine and dine the Oklahoma schools. Texas, TCU, Baylor, Texas Tech will fight over the opportunity to jump out of the B12 at that point (knowing it will be the equivalent of the old Big East - a 'power' conference lacking the oomph to get a team in the title picture).

Texas wouldn't have the ability to manipulate a P16 they way they did the B12. Wouldn't mind seeing the P16 end up with a Texas pod of four teams: UT, TCU, Houston, and Texas Tech. Let the BigTen have OU and OSU (renewing the NU/OU rivalry). The SEC can grab Baylor and another team to get to 16. OR Baylor can burn in Hades, either option is acceptable.
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there's a strong perception amoungs those that follow conference re-alignement that an unwritten rule exists: "no AAU membership, no B1G invite" (note that Nebraska was still in when they got their invite).
 
I will just say this, first and foremost to even mention SMU, and TCU is outrageous. The PAC has never wanted anything to do with BYU because they are a religious institution. Do you really think they are going to buy into Southern Methodist, or Texas Christian ? Second Texas isn't going anywhere without OU, and the Sooners are not going anywhere without the Longhorns, WRITE IT DOWN. To take it a step further the Okie State Government isn't letting OU go anywhere without Okie Lite. That brings you to Texas Tech being included. That will set in motion the Baylor contingent blocking the whole damn thing in the state legislature because they think they are important and again as a religious institution they will be all dressed up and no one to blow.
 
EddieCrowder said:
I will just say this, first and foremost to even mention SMU, and TCU is outrageous. The PAC has never wanted anything to do with BYU because they are a religious institution. Do you really think they are going to buy into Southern Methodist, or Texas Christian ? Second Texas isn't going anywhere without OU, and the Sooners are not going anywhere without the Longhorns, WRITE IT DOWN. To take it a step further the Okie State Government isn't letting OU go anywhere without Okie Lite. That brings you to Texas Tech being included. That will set in motion the Baylor contingent blocking the whole damn thing in the state legislature because they think they are important and again as a religious institution they will be all dressed up and no one to blow.
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I don't think it was the religious affiliation. Rather, it was that BYU has had significant issues regarding academic freedom and is not respected as a research institution. TCU isn't exactly Tier 1, but it wouldn't have the same baggage as BYU.
 
EddieCrowder said:
I will just say this, first and foremost to even mention SMU, and TCU is outrageous. The PAC has never wanted anything to do with BYU because they are a religious institution. Do you really think they are going to buy into Southern Methodist, or Texas Christian ? Second Texas isn't going anywhere without OU, and the Sooners are not going anywhere without the Longhorns, WRITE IT DOWN. To take it a step further the Okie State Government isn't letting OU go anywhere without Okie Lite. That brings you to Texas Tech being included. That will set in motion the Baylor contingent blocking the whole damn thing in the state legislature because they think they are important and again as a religious institution they will be all dressed up and no one to blow.
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UT will do what is right by UT. They have a relationship of convenience with OU - that would end the moment UT found something else more convenient.
 
Buffnik said:
I don't think it was the religious affiliation. Rather, it was that BYU has had significant issues regarding academic freedom and is not respected as a research institution. TCU isn't exactly Tier 1, but it wouldn't have the same baggage as BYU.
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Nik I have heard that, I have also heard that just being affiliated is not something that especially Stanford and Cal would be agreeable to. It could be completely false. I do know it seemed as though the PAC moved very quickly it invite CU when Baylor started making the same noise that bought them a place in the Big XII
 
The gap is big. It's not big enough for me to even think about the possibility of entertaining the idea of maybe trying to get Texas in the P12.

Improve the brand. The money will follow. Texas isn't necessary.
 
EddieCrowder said:
Nik I have heard that, I have also heard that just being affiliated is not something that especially Stanford and Cal would be agreeable to. It could be completely false. I do know it seemed as though the PAC moved very quickly it invite CU when Baylor started making the same noise that bought them a place in the Big XII
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Baylor may very well be a Kenneth Starr issue, too. He's President and Chancellor at Baylor. Before that he was Dean of the law school at Pepperdine and was heavily involved with the BYU/LDS money on the Prop-8 gay marriage legislation in California... at odds with some heavy hitters in the law schools (and on faculty + some huge boosters) at Stanford, Cal, USC and UCLA. There was no way in hell that Kenneth Starr was going to get a seat at the Pac-12 table when the Presidents & Chancellors debated and voted on conference issues. I don't know if Baylor is auto-blackballed, but it was a complete non-starter with Starr at the helm.
 
Highlander said:
UT will do what is right by UT. They have a relationship of convenience with OU - that would end the moment UT found something else more convenient.
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To a certain degree obviously UT will, that said what is best for UT is directly related to OU it has been that way for 100+ years. Unlike the majority of schools that need to recruit in other places both of them only need the state of Texas. Would they like exposure out west, Yes. But when you get right down to it there is nothing in it for them. The easier solution for them both is to add a school like BYU and keep ruling their private little kingdom. UT already makes more money then schools in the PAC so why would they take a pay cut ?
 
Buffnik said:
Baylor may very well be a Kenneth Starr issue, too. He's President and Chancellor at Baylor. Before that he was Dean of the law school at Pepperdine and was heavily involved with the BYU/LDS money on the Prop-8 gay marriage legislation in California... at odds with some heavy hitters in the law schools (and on faculty + some huge boosters) at Stanford, Cal, USC and UCLA. There was no way in hell that Kenneth Starr was going to get a seat at the Pac-12 table when the Presidents & Chancellors debated and voted on conference issues. I don't know if Baylor is auto-blackballed, but it was a complete non-starter with Starr at the helm.
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Makes perfect sense when put in those terms
 
EddieCrowder said:
To a certain degree obviously UT will, that said what is best for UT is directly related to OU it has been that way for 100+ years. Unlike the majority of schools that need to recruit in other places both of them only need the state of Texas. Would they like exposure out west, Yes. But when you get right down to it there is nothing in it for them. The easier solution for them both is to add a school like BYU and keep ruling their private little kingdom. UT already makes more money then schools in the PAC so why would they take a pay cut ?
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Texas cares about money and prestige.

If the Big 12 is making it a lot less money, that's going to cause them to look around. If they got a piece of the Pac-12 purchasing LHN from ESPN to make it the Texas PACN Regional, that would talk loudly.

On prestige, that's both athletic and academic. UT does not like the academic rep of many of its conference mates right now. If it also sees its athletic rep hurt by being an also-ran in a conference that doesn't even have its own network, it would look around. Tier 1 research institutions, including the top public universities in the nation and a lot of Top 100s overall... along with the "Conference of Champions" thing... would have a lot of appeal.

Biggest issue with the Pac-12 attracting UT is that they don't like to share. It may be impossible for them to accept a conference configuration where they aren't at least "first among equals". They'd want a Pac-16 where USC ran the western half, UT ran the eastern half, and those 2 programs played a football game every season.
 
Buffnik said:
Texas cares about money and prestige.

If the Big 12 is making it a lot less money, that's going to cause them to look around. If they got a piece of the Pac-12 purchasing LHN from ESPN to make it the Texas PACN Regional, that would talk loudly.

On prestige, that's both athletic and academic. UT does not like the academic rep of many of its conference mates right now. If it also sees its athletic rep hurt by being an also-ran in a conference that doesn't even have its own network, it would look around. Tier 1 research institutions, including the top public universities in the nation and a lot of Top 100s overall... along with the "Conference of Champions" thing... would have a lot of appeal.

Biggest issue with the Pac-12 attracting UT is that they don't like to share. It may be impossible for them to accept a conference configuration where they aren't at least "first among equals". They'd want a Pac-16 where USC ran the western half, UT ran the eastern half, and those 2 programs played a football game every season.
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There are just too many good schools in the Pac-12 for them to do that it seems. Add in the fact that Oklahoma could finally think for themselves I just don't see how they could act like that. If USC acts normal and shares then Texas would have to follow their lead.
 
From a financial standpoint the two prime pick-ups are Texas and Oklahoma but I understand Sacky's resistance to Texas. At the same time the PAC12 presidents aren't as easy to push around.

UT and OU are the only ones that fit financially and somewhat culturally. If the money is right Texas might decide to jump ship on a limited B12. At that point the financial value of the B12 goes down substantially and OU could be very tempted to go along. There would be huge political resistance to leaving OSU behind but if it means that OU ends up in another version of the MWC then it might happen.

The BYU issue is multi-layered. One issue is clearly the religion and the practice of the beliefs. Cal, Stanford, and some of the other schools would be highly resistant to BYU not only for their limitations (or percieved limitations) on academic freedom but also for their very public practices of not accepting gay/lesbian behavior, of restricting sexual relations to a marriage, and other lifestyle restrictions on both students and staff. They are also very clear about not participating in athletic or other events scheduled for Sundays which would impact TV schedules and tournament scheduling. Add to this the school not having a strong identity as a research school and you have a bad fit.
 
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