November 21, 2012 Leave a comment
I realize my sports-related posts are among the least popular, but given what’s going on with my two favorite conferences, ACC and Big 10, the present situation is near and dear to my heart. And, I really like the points Chait brings up:
The core of the financial logic of expanding the Big Ten, and other league expansions, as Derek Thompson has explained, is cable television. The Big Ten has its own network and can charge cable operators to carry it. The more people who live in the Big Ten’s footprint, the more households will be paying their cable operators an extra dollar a month or so to carry the Big Ten network. Hence the logic of adding Rutgers and Maryland. While the athletic traditions of both schools are, respectively, mediocre and terrible, they geographically encompass large, populous regions whose cable television subscribers will, for the most part involuntarily, be paying the Big Ten conference a chunk of their cable television bills.
In other words, as a profit-making mechanism, this is essentially a scam. It relies on an opaque pricing mechanism (bundled cable television) forcing people to pay for a product they don’t want. Right now, it’s a highly lucrative scam. But bundled cable television pricing is not going to last forever, and possibly not very long at all. There is already a revolution in video content under way that is going to render the cable television bundle model obsolete. When that revolution has finished, the Big Ten will realize it pulled apart its entire identity to grab a profit stream that has disappeared.
Now, to be sure, it will all be worthwhile if the Big Ten’s new members have fully acculturated themselves. It is possible that, in a decade or two, pulling apart century-old rivalries between Midwest institutions to replace them with matchups like Maryland-Minnesota and Rutgers-Iowa will seem like a brilliant piece of insight. Proud alumni will walk around New Brunswick and College Park wondering how they had ever got on without the Big Ten. Cultural artifacts like Paul Bunyan’s Axe and the Ten Year War will be part of their shared campus heritage.
But it seems highly unlikely.
And, my favorite part:
Like the Big 12, the ACC learned that taking a bunch of fan bases that reside in the same general region and declaring that they should start caring passionately about beating each other is not enough to make it happen. And if you can’t gin up fan interest in a manufactured rivalry between real football powers like Virginia Tech and Miami or Nebraska and Texas, what possible hope is there for Maryland, Rutgers, and … anybody? Is there any possible outcome here for the Big Ten other than brand dilution?
The superconference experiments failed because you can’t manufacture tradition, and tradition is the only thing college football has to offer. Without tradition, college football is just an NFL minor league. Big Ten football mainly consists on a week-to-week basis of games like Michigan versus Minnesota and Illinois versus Wisconsin. Those games have meaning to the fans in ways outsiders can’t grasp. The series have gone on for a century. They often have funny old trophies. Every game is lodged into a long historical narrative of cherished (or cursed) memory. Replacing those games with some other equally good (or, as the case may be, not good) program is like snuffing out your family dog and replacing it with some slightly better-trained breed. It is not the same thing. And that deep well of sentiment, not the conferences’ ability to exploit a series of local cable cartels, is its ultimate source of value. [emphasis mine]
Yep. And sure, modern air travel means the crazy distances don’t have quite as dramatic an impact on the student athlete, but it’s still something. College Park to Charlottesville or Durham sure beats College Park to Minneapolis. And, of course, the players always will fly. What about parents, dedicated fans, etc. They’re just screwed. But, of course, this isn’t about the fans, alumni, student athletes, etc., even one little bit.
Now, as for the economics of all this, there’s one little part– as explained by Derek Thompson— that I don’t quite get:
Cable channel make money in two ways: (1) advertising and (2) the small cut of your monthly cable bill. For most BTN subscribers, that small cut is $1 per household. That’s one dollar, each month, from your checking account to the Big Ten, through the TV.
Stop right there. Stop thinking like a college fan who wants to preserve the 1980s-era conferences, and start thinking like a television executive. I just told you that every pay-TV household with BTN is worth one dollar a month. The obvious question is: How do I get more of those folks? Answer: You expand into more television markets where people haven’t had any reason to care about the Big Ten, yet. Each time the Big Ten adds a school in a new city, the Big Ten Network adds a market. So, more schools, more schools!
The University of Maryland, which just announced it would join the Big Ten in two years, sits in a local market around Washington, D.C., with more than 3 million households paying for television. Let’s say Maryland joins the Big Ten, and BTN negotiates with those local cable providers to get the same deal it’s made in the Midwest. [emphasis mine]That’s a cool $36 million for the conference “before the first ad gets sold,” Andy Staples writes.
Here’s what I don’t get. Why in the world would DC area cable providers be willing to pay BTN anything near what Midwest cable providers do?! If they do they are absolutely asinine and totally screwing their customers (hmmm, cannot imagine a cable company doing that). Is there any question whatsoever that the value of the BTN to the average cable subscriber is astronomically higher in Ohio, Michigan, Indiana, etc., than in the DC suburbs? If that’s the case– and it obviously is why shouldn’t the BTN receive way less revenue in its new markets where there is very little traditional Big 10 fandom? What am I missing here?