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  1. #1
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    I'm Not Getting The Economics Behind 16 Team Leagues

    As I understand the main sources of revenue for a conference are TV package, bowl games and NCAA basketball tournament.

    The Big10 for instance is splitting those funds 11 ways. By going to a 16 team league they would have to split 16 ways meaning each category would have to increase 45% just to break even. Some of the plans I see would only increase the net TV area by 20% or so, how do they get 45% higher TV package from 20% bigger viewing area.

    I can see where the B10 could get increased revenue from 12 teams by adding a football playoff game, but going to 16?

    To look at it another way. Say there were four 12 team conferences that were going to re-align into three 16 team conferences. Haven't they just gone from 4 football championship games and 4 basketball conference tournaments down to 3.

    Those 48 teams now have "X" bowl games and "X" NCAA basketball qualifiers. How is this increased by going from 4 conferences to 3. If those numbers don't increase where is the extra money coming from.



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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    I think if you have 4 mega conferences you go a notch above others and you can skip out of the NCAA and make more money for your school.


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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    Quote Originally Posted by CyCy View Post
    As I understand the main sources of revenue for a conference are TV package, bowl games and NCAA basketball tournament.

    The Big10 for instance is splitting those funds 11 ways. By going to a 16 team league they would have to split 16 ways meaning each category would have to increase 45% just to break even. Some of the plans I see would only increase the net TV area by 20% or so, how do they get 45% higher TV package from 20% bigger viewing area.
    There is another significant source of income, according to analysis of Big Ten expansion from a blog written by a couple of purported "experts". This was discussed in one of the other numerous threads. That additional source of income is advertising money, and supposedly, the ad money makes everything work out financially. There were no sources cited to verify the financial figures and other inside information thrown around in that blog.

    I'm with you though...unless a school on the order of UT (and how many of those are there???) is part of the Big Ten expansion to 16 teams, I am skeptical that such a move will pan out financially for them.


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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    Here is what I'd like to see - right now there are 65 BCS Conference football teams. Once one school goes to a 16 team conference everybody will want to go that big. Just go with 4 or 5 hugenormous conferences of 16 teams. Somebody figure this out. If there is only 4 I'd hate to see ISU be the only one left out.




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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    Remember a few weeks ago when the NCAA tournament was a "done deal" expanding to 96 teams?

    Yep...that happened.

    This too is being overhyped and ridiculously exaggerated. A handful of teams are going to get shuffled. It will not be mass hysteria as being hyped by the media, bloggers, etc. It doesn't make sense on any level.



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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    What motivation do cable carriers in New York, New Jersey, Delaware, Maryland, Virginia, and Missouri currently have to carry the Big 10 Network if no one in those states cheer for any team currently in the Big 10? Now, if the Big 10 adds Rutgers, Syracuse, Pittsburgh, Maryland, Virginia, and Missouri to the conference, suddenly those carriers have all the incentive in the world to carry the Big 10 Network. More TV sets, more customers forced to pay the $1/mo (or whatever the real cost is) for the channel, and more advertising dollars.


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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    The Big 10 reportedly currently gets .70 per tv set as a subscriber fee per month from each tv in its 8 state region. .10 per tv outside of it. The conference feels not only by adding Missouri, New Jersey & New York markets do you add tv sets but maybe the value per subscription goes up especially if they could ever convince Notre Dame to join.

    This being said advertising makes more money for the network reportedly a 60/40 split, but the advertising is not maximized because they do not have enough live events. By going to 14 or 16 eventually it gives them more events to sell advertising, further maximizing their profits.

    So the inrease in subscription fees and advertising revenue exceeds the part of the existing TV deals they have to split up. Also, by the time they are done they feel their product will be worth even more for negotiations in all these areas.



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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    I would rather talk about cancer than Big 10 expansion. That's how depressing it is for me as an Iowa State fan. However, one thing I never here mentioned are travel costs. Obviously, not a huge concern for the revenue positive sports of Football and Men's BB; however, what about all of the other sports? It's a big deal when you have to fly and can't bus. I am hoping geography helps Iowa State. Have a Great Day & Go Cyclones!



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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    I think the travel issue is a minor one. The Pac Ten is about as spread out as most of the hypothetical new Big Ten conferences are and they somehow manage. Using an extreme example (Texas to the BT), the distance from Tuscon to Seattle is comparable to the distance from Austin to State College. The Mountain West is similarly spread out and the WAC extends to Hawaii and somehow they manage the costs as Mid Majors.



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    This is correct...

    Quote Originally Posted by Win5002 View Post
    The Big 10 reportedly currently gets .70 per tv set as a subscriber fee per month from each tv in its 8 state region. .10 per tv outside of it. The conference feels not only by adding Missouri, New Jersey & New York markets do you add tv sets but maybe the value per subscription goes up especially if they could ever convince Notre Dame to join.

    This being said advertising makes more money for the network reportedly a 60/40 split, but the advertising is not maximized because they do not have enough live events. By going to 14 or 16 eventually it gives them more events to sell advertising, further maximizing their profits.

    So the inrease in subscription fees and advertising revenue exceeds the part of the existing TV deals they have to split up. Also, by the time they are done they feel their product will be worth even more for negotiations in all these areas.
    and this is why it seems likely the Big 10 will go to 14 or 16 as opposed to 12. They would get a bump in revenue both from the subscriber base in the new Big 10 footprints (for example Missouri, New Jersey and portions of New York) plus the opportunity to sell more live events to advertisers.

    Big 10 was pilloried by many for having the cojones to go out and start its own network. That decision has now positioned the conference very strongly.



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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    Quote Originally Posted by PGreen ISU '92 View Post
    I would rather talk about cancer than Big 10 expansion. That's how depressing it is for me as an Iowa State fan. However, one thing I never here mentioned are travel costs. Obviously, not a huge concern for the revenue positive sports of Football and Men's BB; however, what about all of the other sports? It's a big deal when you have to fly and can't bus. I am hoping geography helps Iowa State. Have a Great Day & Go Cyclones!
    Nebraska would be the farthest west team and if the Big Ten added Syracuse and/or Rutgers it would only be about 300 more miles for Nebraska to get to these places as compared to Nebraska getting to College Station, Waco or Austin Texas, I'm sure ISU or Nebraska aren't busing it to Texas schools for the other sports.



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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    Quote Originally Posted by hawkeyescott View Post
    Nebraska would be the farthest west team and if the Big Ten added Syracuse and/or Rutgers it would only be about 300 more miles for Nebraska to get to these places as compared to Nebraska getting to College Station, Waco or Austin Texas, I'm sure ISU or Nebraska aren't busing it to Texas schools for the other sports.
    Sure, but in terms of Nebraska - they can get to ISU, KU, KSU, Mizzou, perhaps even CU, OU and OSU... before they get to the next Big 10 school past Iowa City (and maybe Minneapolis).

    It's not just the farthest of the far getting further (). Most of what's in between gets alot farther. That's a long trip for the buses from Lincoln to Madison, Evanston, Champaign-Urbana. Then figure Mich, Indiana, Ohio


    Last edited by DaddyMac; 05-05-2010 at 09:20 AM.

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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    Quote Originally Posted by DaddyMac View Post
    Sure, but in terms of Nebraska - they can get to ISU, KU, KSU, Mizzou, perhaps even CU, OU and OSU... before they get to the next Big 10 school past Iowa City (and maybe Minneapolis).

    It's not just the farthest of the far getting further (). Most of what's in between gets alot farther. That's a long trip for the buses from Lincoln to Madison, Evanston, Champaign-Urbana. Then figure Mich, Indiana, Ohio
    The Big 10 Network is only having this success currently because they don't have any competition. When the SEC goes exclusive (cutting ESPN out) for their own network then the value of the Big 10 network will follow the same trend as Worldcom stock. The SEC Network would be picked up by every satellite provider and virtually every major cable provider in the country. The Big 10 will lose the only bargaining chip they had with those providers and will be forced off of the regular programming packages they currently are on. They will become an add-on network through extended packages like a sports pack rather then forcing customers who have no desire to have that channel to pay for it. Their ad revenue will drop considerably and they will have 5 more mouths to feed while the SEC could still potentially only have 12 which would give them a huge financial advantage. The Big 10's greed is going to put them in a world of hurt eventually.



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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    Quote Originally Posted by Cyclonestate78 View Post
    The Big 10 Network is only having this success currently because they don't have any competition. When the SEC goes exclusive (cutting ESPN out) for their own network then the value of the Big 10 network will follow the same trend as Worldcom stock. The SEC Network would be picked up by every satellite provider and virtually every major cable provider in the country. The Big 10 will lose the only bargaining chip they had with those providers and will be forced off of the regular programming packages they currently are on. They will become an add-on network through extended packages like a sports pack rather then forcing customers who have no desire to have that channel to pay for it. Their ad revenue will drop considerably and they will have 5 more mouths to feed while the SEC could still potentially only have 12 which would give them a huge financial advantage. The Big 10's greed is going to put them in a world of hurt eventually.
    Check the population of the SEC territory with the population of the Big 10 territory. (or # of tv sets in each).

    The Big 10 network isn't going anywhere and will only get more profitable as they expand into larger markets.

    Other conferences will get their own tv networks eventually but they're not going to have much of an impact on the BTN just as the BTN isn't going to have much of an impact on them.



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    Re: I'm Not Getting The Economics Behind 16 Team Leagues

    Quote Originally Posted by DaddyMac View Post
    Sure, but in terms of Nebraska - they can get to ISU, KU, KSU, Mizzou, perhaps even CU, OU and OSU... before they get to the next Big 10 school past Iowa City (and maybe Minneapolis).

    It's not just the farthest of the far getting further (). Most of what's in between gets alot farther. That's a long trip for the buses from Lincoln to Madison, Evanston, Champaign-Urbana. Then figure Mich, Indiana, Ohio
    This is true, but the additional revenue they would gain by joining the Big Ten will offset any travel issuses they may have anyway, that is why travel is probably the least of their concerns because their travel cost will rise but they will still be making more money for their athletic programs even with increased travel cost.



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