Watch out ESPN, Here Comes the Big Ten Network?: Speculation on Expansion Pt. II
If you read part I, you understand that (from my perspective) the ultimate goal of the BTN is not just to make money, but to actually become a national cable station competing with the likes of ESPN. The Big Ten will target five teams for expansion, Texas, Texas A&M, Notre Dame, Rutgers, and one of Syracuse, Nebraska, and Kansas.
But even if all five teams accept, the BTN is only catering to states in the Northeast, Midwest, and Southwest. It's still missing populous areas, specifically the Southeast and West Coast.
The answer to fixing this problem lies with the rarely talked about player involved who actually stands to gain the most by Big Ten Expansion. Believe it or not, it's not the current members who will get 1/16th of the net revenue, nor is it the new invitees who will get a significant monetary increase, more academic opportunities, and increased national exposure.
The player in all this who will ensure that the Big Ten expands to 16 teams and stands to gain the most is Fox Sports, who doens't have to split their 49 percent share with anyone. They are without a doubt, pushing strongly toward expansion.
What that means is that even if each current member has to drop from $22 million to $20 million with 16 teams (which is highly unlikely), Fox Sports would still increase their revenue significantly from around $232.5 million to over $307 million annually. If each member jumps up to $26 million with the conference championship game, Fox Sports would make over $384 million, and that's with a conservative estimate on the monetary increase.
If the BTN continues to make even more money yet, it's not inconceivable that Fox Sports could start pulling in $500 million annually. That's certainly nothing to scoff at.
Right now, Fox Sports does a lot of regional games, but doesn't do as much with games that get national coverage, as those deals are already in place with ESPN and CBS primarily. This is about to change.
According to ESPN.com, the Pac 10 TV contract expires in the Spring of 2012. Here's where the BTN becomes a thorn in the side of ESPN. Expect Fox Sports, which is based on the West Coast, along with the BTN to purchase the TV rights to the Pac 10 football and basketball games.
How would they do this? ESPN's Outside the Lines lists the Pac 10's current TV deal as netting them around $78 million per year (less than a third of the Big Ten's current deal), so what would happen if Fox Sports and the BTN offers the Pac 10 $100 million for their TV rights?
Fox could broadcast any of the high profile Pac 10 games, like Notre Dame at USC, UCLA at USC, or possibly Oregon-Oregon State or Washington-Washington State, the next biggest game would be on FSN, and the next biggest yet would be relegated to the BTN.
All of a sudden, the Pac 10 could have night games on the BTN across the country. The Pac 10 will be happier with their increased TV revenue and greater national exposure, but this changes the game for the BTN and Fox Sports. By owning the TV rights to Pac 10 football and basketball games, they'll get on the cable packages and lock up the West Coast for BTN programming, and there will only be one section of the country not being impacted directly by the BTN.
With the expansion and the new contract with the Pac 10, the BTN will have to add at least a second channel, BTN2 or BTN West, or something like that, and with all the extra revenue, they can put the pressure on ESPN to either overpay or give up the rights to other major conferences like the ACC, and what's left of the Big 12 and Big East.
At this point, the BTN will be so big and represent such a large portion of the population, for it to not at least be offered in the South. There are just too many Texans, Michiganders, Californians etc. relocated in the South for it to continue to be overlooked, especially if they ever get a hold of the rights to the Big East or ACC. It might be a stretch to expect it to be put in their basic package, but it would have to at least make it on an extended package and thus, be offered to all four corners of the country.
Advertising dollars would go up, as would carriage fees, and the Big Ten member schools would start RAKING in the money. How much money would this make? $1 billion? $1.5 billion? It would basically cover the entire US. As it competes for new contracts, the BTN and Fox Sports could be the number one destination for college athletics.
If this proposal was brought before Texas A&M University and the University of Texas Austin and they bought into it, could/would the legislature try to hold them back? If the BTN makes it nationally, it's conceivable that each member school doubles the current rate now and starts pulling in upwards of $45 million/year.
To help understand how much money that is, according to the Orlando Sentinel, the Miami Hurricanes were 51st in 2007-08 in the amount of total revenue they brought in at $46,849,990. Just in their TV contracts, Big Ten teams could rival other BCS schools entire athletic revenue! That's the potential of having their own TV network.
Will this happen? Probably not. Could this happen? Well, a lot of things would have to work out perfectly, but it's definitely possible. The Big Ten will hold out as long as they can for Texas, Texas A&M, and Notre Dame, because they are too important. Those are the teams that would get the ball rolling, and those are the teams that are available and have the least incentive to join. This could be a very painful 12-18 months of rumors and speculation.
Look out ESPN, here comes the Big Ten Network!
*Side Note: The best source for Big Ten Expansion Analysis available is at: http://frankthetank.wordpress.com/page/3/
If you're interested in Big Ten Expansion, start with the post from December 27, 2009 and read through 'til you get to the most recent post. It's extremely high quality writing and well-researched information. Several of my ideas and much of my analysis surely came from here. Even if you think I'm crazy, it's still a good read.*
**I noticed a flaw in my logic and my figures. I made an unfair assumption that was terribly wrong so not all of the content in this article is accurate, although the logic is still there. I assumed that Fox was making 49% of what the Big Ten was making, which is not the case. Fox is not getting a cut (obviously) from ABC/ESPN or CBS, which accounts for $102 million/year. Fox is making an estimated $133.5 million per year from the BTN, and while it's going up steadily, it's still significantly less than I was figuring in the article. As far as everything else goes, I think everything I said still holds true. It does take some of their buying strength away when purchasing the TV rights to the Pac 10 (I had estimated them paying around $120 million annually with the BTN picking up around 50-60% of it, which would mean Fox would end up paying around $83.28 million per year, while the Big Ten would end up paying $36.72 million). It's very coceivable that with the scenario that I, and probably many other people have drawn/dreamed up would conservatively make Fox around $250 million per year, and liberally make them around $400 million annually.
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