Report: OU & Texas reach out to join SEC

[J Mast]

I posted this info on a premium board but thought I’d share here:

Bezos announced these Amazon Prime numbers in April:

Amazon Prime subscribers (worldwide): 200 million

Amazon Prime video viewers (worldwide): 175 million

Consumer Intelligence Research Partners 2021 estimates:

Amazon Prime subscribers (US): 147 million

If you assume that the worldwide percentage of viewers vs subscribers holds true (or better) for the US, that’s a lot of actual (not just potential) eyeballs. Even if college football only pulls a small percentage of those viewers we’re still talking about significant ratings/exposure for ISU.

I think people are grossly underestimating the reach of Prime Video. It is the #2 streaming service (based on viewers) behind Netflix (200 million).

For perspective:

ESPN tv subscribers (2020): 80.1 million
ESPN+ subscribers (2021): 13.8 million

ESPN generates $7.34 billion from pay tv subscribers and $2.08 billion from ad revenue. ESPN+ adds another $760 million (2021 estimate).

Compare that to Amazon Prime subscription revenue: $25.21 billion (only 6.5% of Amazon’s total 2020 revenue!).

I get that not having ISU on an OTA or cable channel will be difficult for some but streaming is the way of the future. And if the Big 12 is lucky enough to be visited by the Amazon fairy, we all should be supremely thankful.

 

[DarkStar]

And whenever you go back and re-watch a game, you get fresh ads delivered to you for Amazon to sell.

Don't forget the reminders of things sitting in your shopping cart or the last 20 things you looked at on Amazon or lastest deals on restaurant food they can deliver to you in the next couple hours...

All if it just a couple clicks away...

 

[Number Monkey]

Yes, ISU stacks up well vs Pac 12 schools but does ISU bring enough value to increase the payouts for each school? That's what matters. If each Pac school is getting $25 million/year right now, ISU would need to bring in at least $25 million in value annually just to keep their payouts the same. Ideally they'd want their payouts to increase no? In reality ISU would need to add at least $38 million/year so each team, including ISU would get a net $1 million more. How many schools out there can do that?

There are only a handful of teams, likely less than ten, that are like the tide in that they rise all boats. There are none of those left on the market. Everyone else is valued on competitiveness and compelling match ups. The more of those you can put together, the higher the value you'll draw for everyone.

Conferences share the wealth, so while Iowa State will clearly add value to the Pac 12; not only will they provide match ups in the central time zone, they'd be the third most watched school in the Pac 12 last year (on a per game average). The real question is will the Pac 12 has enough to drive Iowa State's biggest numbers? Granted, Oregon/ISU did well last year, but ISU didn't have very strong games against Kansas and Baylor, at less than 1m viewers. The bad news is that the Pac 12 had 7 teams draw less than the Big 12's #7 TCU, who averaged just shy of 1.1m. That's a problem.

It sounds strange, but value isn't static. It changes. Iowa State is likely worth less in the Pac 12 and more in the Big Ten, simply due to the match ups. Even in non-playoff talk years, their audiences against Nebraska/Iowa/Minnesota/Wisconsin will likely all be more than the highest ISU/Pac12 game.

My guess, assuming they can maintain this success, is that ISU with an 8 win season will have per game averages of about 1.5-2m in the Pac 12, and around 2.5-3.2m in the Big Ten West. If it gets north of 8 the numbers will improve and sustained success will grow the base audience year over year.

 

[Number Monkey]

And if the Big 12 is lucky enough to be visited by the Amazon fairy, we all should be supremely thankful.

I actually would prefer if there was a solid streaming option for top games so I could finally kill my cable connection.

 

[twojman]

Iowa State is likely worth less in the Pac 12 and more in the Big Ten, simply due to the match ups. @Number Monkey

I don't understand how this was said with a straight face. ISU might bring a few hundred thousand more viewers to a game but they would bring ZERO new subscribers to the cable system. While the cable subscribers are going to reduce over time they are still a HUGE part of the B1G revenue stream and will be for quite some time. ISU would have to bring a minimum value of $54 million to the B1G just for them to break even and not have a lower payout for everyone. $69 million would be enough for everyone to get a $1 million pay raise. Does that even seem logical to you? No? Because it isn't.

You folks need to think with your head, not your heart. ISU would add the least value to the B1G. ISU would add more value to any other league. BUT you have to look at the current payouts by league and ask if ISU would bring at least that amount to the league. If ISU passes that threshold take the number of teams in that league and add a million for each team plus another million for ISU, so an additional $13 million for PAC-12.. Would ISU increase payouts for everyone by $1 million if added? Basically ISU needs to add $46 million in annual value to Pac-12 to make financial sense.

School Payouts

• Big Ten: $54.3 million.
• SEC: $45.5 million.
• Big 12: $37 to $40.5 million.
• Pac-12: $33.6 million.
• ACC: $30.9 to $37 million.

 

[FeedBreece]

I hate to say it, but take out OU and Texas and our recruiting in this conference is very similar to the AAC’s top programs. (some have been even better over the last few years)

Was looking at the roster makeup of these schools yesterday on 247 where you can see what Star level these guys were coming out. Some of these UCF’s, Cincy’s and Houston’s have been able to land several 4 star players over the years. Surprisingly OK State only has about four on their roster right now.

There’s not much of a difference recruiting wise between the remaining 8 and those guys. Now your East Carolina’s and Tulane’s are a different story, but even they probably still do better than Kansas.

I’m really not sure how a move like this would effect our recruiting directly since we’re not stacking up 5 star players anyways. It’s not like all of these high 3 star level/low 4 guys will all decide to be backups in the SEC now. It’s still all about opportunity.

 

[twojman]

So @Cyclones1969 what did I say that was dumb. Just because you don't like it doesn't mean I am wrong. Just show me with data where I'm wrong and I'll admit it. Thank you.

 

[brett108]

Iowa State is likely worth less in the Pac 12 and more in the Big Ten, simply due to the match ups. @Number Monkey

I don't understand how this was said with a straight face. ISU might bring a few hundred thousand more viewers to a game but they would bring ZERO new subscribers to the cable system. While the cable subscribers are going to reduce over time they are still a HUGE part of the B1G revenue stream and will be for quite some time. ISU would have to bring a minimum value of $54 million to the B1G just for them to break even and not have a lower payout for everyone. $69 million would be enough for everyone to get a $1 million pay raise. Does that even seem logical to you? No? Because it isn't.

You folks need to think with your head, not your heart. ISU would add the least value to the B1G. ISU would add more value to any other league. BUT you have to look at the current payouts by league and ask if ISU would bring at least that amount to the league. If ISU passes that threshold take the number of teams in that league and add a million for each team plus another million for ISU, so an additional $13 million for PAC-12.. Would ISU increase payouts for everyone by $1 million if added? Basically ISU needs to add $46 million in annual value to Pac-12 to make financial sense.

School Payouts

• Big Ten: $54.3 million.
• SEC: $45.5 million.
• Big 12: $37 to $40.5 million.
• Pac-12: $33.6 million.
• ACC: $30.9 to $37 million.

No one is adding a cable subscription to watch sports at this point. You are bringing up a dinosaur argument. Any conference that thinks like this is failing.

 

[Statefan10]

Iowa State is likely worth less in the Pac 12 and more in the Big Ten, simply due to the match ups. @Number Monkey

I don't understand how this was said with a straight face. ISU might bring a few hundred thousand more viewers to a game but they would bring ZERO new subscribers to the cable system. While the cable subscribers are going to reduce over time they are still a HUGE part of the B1G revenue stream and will be for quite some time. ISU would have to bring a minimum value of $54 million to the B1G just for them to break even and not have a lower payout for everyone. $69 million would be enough for everyone to get a $1 million pay raise. Does that even seem logical to you? No? Because it isn't.

You folks need to think with your head, not your heart. ISU would add the least value to the B1G. ISU would add more value to any other league. BUT you have to look at the current payouts by league and ask if ISU would bring at least that amount to the league. If ISU passes that threshold take the number of teams in that league and add a million for each team plus another million for ISU, so an additional $13 million for PAC-12.. Would ISU increase payouts for everyone by $1 million if added? Basically ISU needs to add $46 million in annual value to Pac-12 to make financial sense.

School Payouts

• Big Ten: $54.3 million.
• SEC: $45.5 million.
• Big 12: $37 to $40.5 million.
• Pac-12: $33.6 million.
• ACC: $30.9 to $37 million.

I believe you're putting too much stock into cable subscribers.

 

[twojman]

I believe you're putting too much stock into cable subscribers.

But that is a huge source of revenue right now and will continue that way for years. Not everyone thinks like current 30 year olds.
Can ISU increase payouts for schools by the amounts I said they need to?

 

[twojman]

No one is adding a cable subscription to watch sports at this point. You are bringing up a dinosaur argument. Any conference that thinks like this is failing.

I get that which is why I said that in my post those numbers will go down over time.

 

[Number Monkey]

Iowa State is likely worth less in the Pac 12 and more in the Big Ten, simply due to the match ups. @Number Monkey

I don't understand how this was said with a straight face. ISU might bring a few hundred thousand more viewers to a game but they would bring ZERO new subscribers to the cable system. While the cable subscribers are going to reduce over time they are still a HUGE part of the B1G revenue stream and will be for quite some time. ISU would have to bring a minimum value of $54 million to the B1G just for them to break even and not have a lower payout for everyone. $69 million would be enough for everyone to get a $1 million pay raise. Does that even seem logical to you? No? Because it isn't.

You folks need to think with your head, not your heart. ISU would add the least value to the B1G. ISU would add more value to any other league. BUT you have to look at the current payouts by league and ask if ISU would bring at least that amount to the league. If ISU passes that threshold take the number of teams in that league and add a million for each. Would ISU increase payouts for everyone by $1 million if added?

School Payouts

• Big Ten: $54.3 million.
• SEC: $45.5 million.
• Big 12: $37 to $40.5 million.
• Pac-12: $33.6 million.
• ACC: $30.9 to $37 million.

It has to do with viewership, not carriage. You and I are talking different things here. The opportunity for a higher viewing audience exists in the Big Ten West, because that is where most of the teams closest to ISU reside. ISU/Iowa or ISU/Nebraska will likely draw far more interest in people tuning in than ISU/Washington State, or ISU/Cal.

Cable subscribers are a very large part of BTN's revenue stream, that is true. But BTN already has 73m subscribers, which rivals ESPN. No school is going to add to that, because it is already everywhere. That work is done.

And the $54m you quote, isn't for BTN, its for what BTN actually provides you. Two major changes occurred with the Big Ten to get that big jump in revenue. First, with BTN national, they can dump all of their worst games on the channel (outside a few tasty teasers from time to time). These games are the games worth next to nothing. The ones you see in the Big 12 numbers on FS1 drawing 250k people. The Big Ten simply doesn't have to take them to market. They're paid for through the generosity of non-sports viewers nationwide.

The second change was they went to 9 conference games, which gave them more inventory to sell. Out of conference games are worth a small fraction of what conference games are worth, unless they are made for TV events. So you increase your football inventory, giving you over 70 games to sell, then you package them so only the best games are being bid on.

The SEC is doing this and the Big 12 can't do this because it doesn't have enough inventory.

At the end of the day, BTN is going to be BTN though. The only way for the Big Ten to make any more money is find ways to increase the interest in their games. This increases the value of their main contracts and their negotiations for more carriage. (and regional sports networks are getting hammered on carriage now)

Now, I'm not saying Iowa State is Texas or something laughable like that. They're not. Or even that the Big Ten will add any Big 12 schools. My point is Iowa State will draw bigger audiences in the Big Ten West than the Pac 12, because of the regional nature of college sports. This year's Iowa/Iowa State game may be the largest for both schools this year and may reside within the top of the Big Ten West's games. Familiarity and hate breed interest in sports.

What the Big Ten needs in the next decade is to increase the amount of people watching their content, not the amount of people subsidizing their content.

 

[Gonzo]

Iowa State is likely worth less in the Pac 12 and more in the Big Ten, simply due to the match ups. @Number Monkey

I don't understand how this was said with a straight face. ISU might bring a few hundred thousand more viewers to a game but they would bring ZERO new subscribers to the cable system. While the cable subscribers are going to reduce over time they are still a HUGE part of the B1G revenue stream and will be for quite some time. ISU would have to bring a minimum value of $54 million to the B1G just for them to break even and not have a lower payout for everyone. $69 million would be enough for everyone to get a $1 million pay raise. Does that even seem logical to you? No? Because it isn't.

You folks need to think with your head, not your heart. ISU would add the least value to the B1G. ISU would add more value to any other league. BUT you have to look at the current payouts by league and ask if ISU would bring at least that amount to the league. If ISU passes that threshold take the number of teams in that league and add a million for each team plus another million for ISU, so an additional $13 million for PAC-12.. Would ISU increase payouts for everyone by $1 million if added? Basically ISU needs to add $46 million in annual value to Pac-12 to make financial sense.

School Payouts

• Big Ten: $54.3 million.
• SEC: $45.5 million.
• Big 12: $37 to $40.5 million.
• Pac-12: $33.6 million.
• ACC: $30.9 to $37 million.

ISU would get a reduced share for the first number of years in the B1G so I don't think they'd have to bring the full $54 million value, but I agree with your overall points here.

 

[Cyclones1969]

So @Cyclones1969 what did I say that was dumb. Just because you don't like it doesn't mean I am wrong. Just show me with data where I'm wrong and I'll admit it. Thank you.

No it’s that you totally ignored what was written in order to give the standard big 10 is too good for us ********.

@Number Monkey was right. We would be more valuable to the big 10, because of regional rivalries, than we would be the pac 10 with no common geography or citizenry. That didn’t mean we will get an invitation to the big 10, but you didn’t want to take the time to understand that.

 

[Cyclones1969]

It has to do with viewership, not carriage. You and I are talking different things here. The opportunity for a higher viewing audience exists in the Big Ten West, because that is where most of the teams closest to ISU reside. ISU/Iowa or ISU/Nebraska will likely draw far more interest in people tuning in than ISU/Washington State, or ISU/Cal.

Cable subscribers are a very large part of BTN's revenue stream, that is true. But BTN already has 73m subscribers, which rivals ESPN. No school is going to add to that, because it is already everywhere. That work is done.

And the $54m you quote, isn't for BTN, its for what BTN actually provides you. Two major changes occurred with the Big Ten to get that big jump in revenue. First, with BTN national, they can dump all of their worst games on the channel (outside a few tasty teasers from time to time). These games are the games worth next to nothing. The ones you see in the Big 12 numbers on FS1 drawing 250k people. The Big Ten simply doesn't have to take them to market. They're paid for through the generosity of non-sports viewers nationwide.

The second change was they went to 9 conference games, which gave them more inventory to sell. Out of conference games are worth a small fraction of what conference games are worth, unless they are made for TV events. So you increase your football inventory, giving you over 70 games to sell, then you package them so only the best games are being bid on.

The SEC is doing this and the Big 12 can't do this because it doesn't have enough inventory.

At the end of the day, BTN is going to be BTN though. The only way for the Big Ten to make any more money is find ways to increase the interest in their games. This increases the value of their main contracts and their negotiations for more carriage. (and regional sports networks are getting hammered on carriage now)

Now, I'm not saying Iowa State is Texas or something laughable like that. They're not. Or even that the Big Ten will add any Big 12 schools. My point is Iowa State will draw bigger audiences in the Big Ten West than the Pac 12, because of the regional nature of college sports. This year's Iowa/Iowa State game may be the largest for both schools this year and may reside within the top of the Big Ten West's games. Familiarity and hate breed interest in sports.

What the Big Ten needs in the next decade is to increase the amount of people watching their content, not the amount of people subsidizing their content.

Thank you for explaining this to them. A lot of fans seem to walk around with the terminal we’re just Iowa state mentality

 

[Cloneon]

Sorry there is zero chance 70 percent of the country/households have Amazon Prime

In defense of cylclsoneu I think it's safe to say 1 membership per household. Add to that the provided numbers equals 76%; easily offsetting any errors on that premise. So, until you provide counter evidence, I think his still stands.

 

[Cloneon]

He's got the formula for the playoff downpat. He'll be able to tell you with who is where before the committee makes their announcement.

The reason he talks about TCU being a surprise? Coach Patterson has a +coaching effect. He regularly beats teams with better recruits. TCU also recruits ok. Combine those two things and that should get you wins. He looks at the talent on the rosters.
They put out their win totals for teams in like March or May and do pretty darn well...all based on analytics.

Yes, ISU stacks up well vs Pac 12 schools but does ISU bring enough value to increase the payouts for each school? That's what matters. If each Pac school is getting $25 million/year right now, ISU would need to bring in at least $25 million in value annually just to keep their payouts the same. Ideally they'd want their payouts to increase no? In reality ISU would need to add at least $38 million/year so each team, including ISU would get a net $1 million more. How many schools out there can do that?

With the much improved ISU program, the 'competition' alone would increase viewership significantly. Not to mention, the already high viewership as provided by several poster's data. That said, I believe ESPN is a prime example of having overbid a contract with LHN. I, personally, feel they've done the same with the SEC contract; forcing to play the hand they've done. Accordingly, I see future adjustments and shifting of fiscal obligation over the next few years.

 

[cytor]

Look, the only way tv networks and streaming services are going to bump up the payouts... is simple: You need good competition (matchups, rivalries, etc,) to attract eyeballs.

How is this done? By keeping College football interesting. This means no super conferences of 20, 24, 48 teams etc. It's really difficult having rivalries with teams you only play once every 4-8 years.

Super conferences are going to kill the interest of the casual observers (lower ratings) Not to mention how this will destroy March Madness which is already the best sporting event of the year.

OuT are extremely selfish and destructive for chasing the $. I will personally enjoy knowing Texas will be even worse in their new home and OU can certainly slow down on building trophy cases... but yes their checkbooks will be thicker.

 

[Cloneon]

And whenever you go back and re-watch a game, you get fresh ads delivered to you for Amazon to sell.

And, most important, ads that are customized for your purchasing habits. That, without a doubt, is the most important financial number in everything being discussed. That 'focused' advertising saves merchants millions of dollars in advertising, increases purchasing probability significantly, and reduces the need for useless advertising.

 

[CascadeClone]

@Number Monkey was right. We would be more valuable to the big 10, because of regional rivalries, than we would be the pac 10 with no common geography or citizenry. That didn’t mean we will get an invitation to the big 10, but you didn’t want to take the time to understand that.

I won't argue the point of there being more viewership for regional ISU games vs games against AzSt or Stanford. I agree with it.

BUT... in terms of value, there IS value to the Pac12 in having more inventory in the central time zone. So in terms of value to a conference, ISU and the other Irate8 might bring more value for the Pac12 (more early time slots to hit east coast viewers, better exposure thru the day, etc) than they would to the B1G (since more of their revenue model depends on cable TV where ISU adds nil). It seems conflicting, but though there would be more interest and viewers for ISU in the B1G, there might be more incremental revenue for the Pac12.

Of course, the actuals would all depend on your assumptions and model for estimating revenue. Which there are so many known unknowns, not to mention unknown unknowns like changeover to streaming etc.