Shrewd Big Ten Remains Gold Standard in College Sports

By Kyle Rowland on May 1, 2014 at 8:30a
25 Comments

In 2004, the Big Ten Conference began exploring the idea of creating its own network. A decade after those talks and seven years after the Big Ten Network launched amid impending doom, according to a bevy of detractors, it stands as a model of success in the ever-growing conference network race.

It reaches an estimated 100 million households in the United States and Canada and has agreements with more than 300 cable-service providers.

“The exposure for the student-athletes and institutions has been fantastic, better than we all envisioned,” Ohio State director of athletics Gene Smith told Eleven Warriors. “Football and basketball are drivers, but the opportunity for Olympic sport coverage continues to be significant and growing.”

BTN also prints money.   

The Lafayette Journal and Courier reported Saturday through an open records request that conference members (excluding Maryland and Rutgers) are projected to receive $44.5 million in 2017-18 through the conference’s distribution plan. The league’s TV contract represents 70-75 percent of that number with NCAA distributions, bowl games and the conference’s football championship game and the men's basketball tournament filling out the rest.

Maryland and Rutgers will not receive full shares until the 2020-21 academic year after the conclusion of a six-year financial integration plan, according to the conference. In 2017-18, the Big Ten projects $33 million alone from TV revenue for the 12 schools. That’s when the current 10-year, $1 billion deal expires.

It was signed the year BTN launched, which set the conference down a green road. It only took the fledgling network five years to become profitable, and last year it provided member schools close to $8 million out of their $25.7 million payday. This year’s payout is expected in the neighborhood of $27 million. 

Since the BTN’s inception, it’s provided nearly $50 million to Ohio State and the original nine, plus Penn State. Revenues from the network have surged past 60 percent since its first year on air. In 2006, the year before it was formed, schools received $14 million. 

The money has left athletic departments with a financial windfall, contributing to the renovation and building of new facilities and retaining coaches. 

There’s a push for more primetime games in the new TV contract. Ohio State and Michigan have played in more night games the past five years than any other five-year period in program history. Their national brands attract eyeballs, flashing dollar signs in the direction of advertisers and TV executives.

“Primetime games have always been important, and their importance continues to grow as matchups become more intriguing and televisions partners become more creative with viewership windows,” Smith said. 

The Big Ten’s nine-game conference schedule takes effect in 2016, creating more games between conference foes and upping value. Conferences also will reap rewards from the new College Football Playoff. The Big Ten expects to hand out nearly $5 million to its members next season from bowl payouts, with the number rising to $7.1 million the following year.

Big Ten deputy commissioner Brad Traviolia told the Journal and Courier that the conference’s financial projections have been very accurate and they don’t expect any discrepancies in the future.

“Going forward, how we do in the next round of television negotiations will determine where those numbers go,” he said.

The Big Ten’s business savvy has led to $315 million in revenue for fiscal 2012, according to USA Today. That’s $42 million more than the Southeastern Conference, which reported $314.5 million in revenues the very next year, but $317.9 million in total expenses. The SEC’s 12 members (excluding Missouri and Texas A&M) received $21 million from the conference. TV revenue was just over $200 million, up more than $40 million from the previous year. Industry experts expect each school to haul in $30 million once the SEC Network is launched.

Eyeing BTN’s success, Mike Slive and the SEC created its own network, which is owned and operated by ESPN. The SEC Network is not taking a soft approach to TV. Brent Musberger, Tim Tebow, Joe Tessitore and Jesse Palmer will all work for the network, giving it immediate legitimacy.

But the success rate will be measured in dollars and cents.

25 Comments

Comments

TossTrap's picture

Good lord I can't begin to imagine the hype ESPN will exude for their SEC games.   

 

First and goal at the five and Arch is getting the ball.

+1 HS
Colerain 2004 G.O.A.T.'s picture

They will surely make a Tennessee Vs Vandy game seem like a big deal compared to a psu vs tOSU. It will be sickening.

I speak the truth but I guess that's a foreign language to yall.~~Lil Wayne

+2 HS
d1145fresh's picture

ESPN can hype up the SEC as much as it wants but it really won't matter much for their TV deal. The  SEC/ESPN network is its own channel and the only thing that matters is the amount of people who will be watching it in the market. Right now the SEC does not have a very strong population in their area. This is what makes the B1G network so valuable because it reaches a ton of people which equals a lot more you can charge for add revenue.

doudt's picture

I'm trying to think about how many states the BTN spans over in the Midwest (including Rutgers and Maryland) compared to the SEC - southern states (Texas, Kentucky, Florida, and etc).  The area that the B1G covers seem to be equal to the SEC, give or take.  You're right about the BTN having a strong customer fanbase, but the SEC fanbase may blow up for the SEC network over time.  I'd say give it time, it may catch up the BTN and project a strong revenue over the couple of years.  The SEC fans are crazy, but the B1G fans are crazier, we own up to it!

d1145fresh's picture

I guess its not so much that total area as much as it is larger cities. The B1G now covers seven of the top 15 media markets and that doesn't include any of Ohio (the 7th largest state). The SEC has some large markets in Texas through A&M but UT carries those markets more than A&M. Florida helps but their markets are split with the ACC as is Georgia.

+1 HS
sbentz4's picture

I think Texas is the big differentiator.  If SEC network hits all of those major markets it would at least be comparable to BTN's reach.

bucksk1n's picture

Both the B1G and the SEC network are shown outside their geographic footprint.  The B1G gets from about $.80 - $1 per subscriber in states with one of their teams and $.15 - $.20 outside their area which is what drives the revenue.  ESPN has said they plan to charge $1.30 in the SEC footprint and $.25 outside their territory for the SEC Network.  

One thing you are discounting is SEC population.  They had almost 90% of total B1G households before conference realignment.  Adding the two largest Big 12 States (Texas and Missouri) gives them almost 35 million households in their 11 state geography compared to the 32 million in the 11 state B1G footprint.  FWIW, Texas and Florida alone have almost 17 million households which is why adding Texas A&M was such a huge windfall.

So far ESPN has gotten DISH, Uverse and Google Fiber signed up but I'd be shocked if they don't get agreements with most major cables companies as they have leverage with ABC and ESPN channels that the B1G never had (though admittedly that didn't help the Longhorn Network).  The bottom line is the SEC Network will make more than the Big Ten Network assuming they hold firm on their rates and I don't see any cable company in those areas (outside of Texas) telling their subscribers they won't carry the network.  All they need is 70% of BTN's market penetration to make more.

The good news for BTN is if the $1.30/$.25 rate sticks then that will be the starting point for their next renegotiations though that's not good news for my cable bill.  It's probably also why the Big Ten is projecting huge increases in a few years.

d1145fresh's picture

I'm not 100% sure on  your numbers but the SEC adding Texas and Missouri helps but is no where near the add of NYC and Washington DC. Especially if in the next round of negotiations the B1G network is tied to YES like many believe it will be.

Another major issue for the SEC network is that football is only played for 5 months. Outside of the two times Florida and Kentucky play in hoops there is not much else to watch when it comes to SEC sports. I really think the SEC Network is not going to be as successful as many believe it will be. Then again many people were saying that about the BIG network when it launched.

 

CincyOSU's picture

Outside of the two times Florida and Kentucky play in hoops there is not much else to watch when it comes to SEC sports.

Baseball is VERY popular in the SEC, and the south in general.

 

 

-1 HS
bucksk1n's picture

I included Washington DC in my numbers.  NYC would definitely give the Big Ten a huge bump and I'm hoping the BTN sales department can get it done.  It would mean another 5 million households and put them ahead of the SEC in terms of potential revenue.

You can find TV households at the following link which is where i got my info.

http://www.tvb.org/media/file/Cable_UEs_by_State.pdf

One thing you need to keep in mind is ESPN is going to insist that cable customers get the SEC Network with basic tier just like BTN. That might not be true everywhere but this will definitely be the case in the south as ESPN will insist the channel be on the basic tier and will try to use their market power to put it on everywhere.  That means it won't matter if you don't watch basketball or college baseball.  If you get cable you won't have a choice as you will get SEC network along with USA, ESPN, and AMC.

Of course I could be wrong as they haven't gotten an agreement with Charter, Time Warner, Comcast, or DirectTV yet but I'm pretty confident all of these companies will come to an agreement like BTNs as they all have customers in the south. 

Killer nuts's picture

He looks like a villain from a movie but Jim Delany has advanced the Big Ten Conference and brand remarkably during his tenure

+2 HS
703Buckeye's picture

He may be a villain but he's our villain!

"Attack the Strong, Trample the Weak, Hurdle the Dead!"
-Former OSU S&C Coach Lichter

+1 HS
Furious George 27's picture

The Brand is out there but he whiffed on not pushing for the playoffs to be played at higher seeded locations and I am not a fan of sharing the wealth when teams  sit back and collect the same money for doing very little to improve.

Yeah, well…that’s just like, your opinion, man.

+2 HS
Ethos's picture

The wealth share is the only reason we were able to add Nebraska, Rutgers, and Maryland.  The last two being for more money, of which we share.

"What do you need water for, Sunshine?!" - Coach Coombs, if you don't love this man, you have no soul.

BuckeyeStrong2's picture

Not a bad idea. Instead of 44 million, maybe hand out a 'base' of 20-30 million, and divide the rest up between the schools that make the football and men's hoops championship games. 

Go1Bucks's picture

Speaking of shares, how much will Maryland and Rutgers make over the integration period?  I would like to think they do get a good size chunk in order to help them step up the competition while integrating into the B1G.  All the teams in the B1G need to compete in order to help the brand.

Go Bucks!

Jack Fu's picture

"Gold standard"? In revenues, maybe. And I don't give a shit about revenues if it doesn't translate into success on the field/court. The conference has produced a grand total of three combined championships in basketball and football in the last 25 years. Over the same time period, the SEC has won six titles in basketball alone. What the hell good are piles of money to the fans? It's not leading to athletic success, and the schools sure as shit aren't using it to make the fan experience better. I'm supposed to applaud Jim Delany because he's doing a great job lining the pockets of coaching staffs and university administrators? Pass.

-1 HS
BME_Buckeye's picture

I beg to differ and think you should recalibrate your thermometer in terms of athletic success. If you measure success in terms of just basketball and football accomplishment, it's a narrowminded view of the conference teams success compared to looking at non revenue sports. The point being, the extra money made to such lucrative deals are helping other schools in ways you may not see and schools have had success nationally in all sports, not just the main two.

Look closely, because the closer you think you are, the less you will actually see.

 

+2 HS
Jack Fu's picture

Watching our conference get its ass kicked every bowl season isn't made more palatable by the fact that OSU's men's tennis team is really good.

BME_Buckeye's picture

Double post

Look closely, because the closer you think you are, the less you will actually see.

 

hit_the_couch's picture

Sure it reaches 100 million households, but how many people actually watch the BTN? I watch  only when Buckeye (football) games are on it. The few other times i've watched, the anchors are horrible, and there's a bunch of repeat shows. Maybe they could work on programming. 

I don't know, maybe people who are into more than one college sport appreciate it. At least it reaches households and providers carry it unlike the stupid LHN.

And then I told her...i'm no weatherman, but tonight's forecast is calling for several inches!

BroJim's picture

The Network makes a lot of money, cool. Why dont they hire better play by play?

I season my simple food with hunger

Menexenus's picture

Yeah, I wish they'd throw enough cash at Brent Musberger to make him jump ship.

Real fans stay for Carmen.

BuckeyeStrong2's picture

But Katherine Webb!!

Deadly Nuts's picture

and Beth Mowins, she's an allstar!

LEBRON