(04-18-2011 06:16 PM)Purple n Gold Wrote: If the BE stays at 10 in the expansion for now it will expand to 12 in the near future again
Doubftul. You will see why below.
(04-18-2011 06:30 PM)animus Wrote: But if I was negotiating from the Football side of things, I'd at least test the waters and see what happens. If we can get 125-130M a year as a new All Sports League, I'd go for it and hope that a 10th team could lift that # to 135-140.
This would be a bad idea. I posted this in the member's board, but think it is worth reposting for a larger audience:
I had some time to try and break it down specifically for a split scenario. Based on the current offer on the table of $130 mil a year using the same ratios as before of 67% of value being for basketball games, and 33% for football games which breaks down to $9,912,893 per FB team, and remember, this number may still be negotiated up without adding any teams under the current format. For reference the current contract is for BE football to get $13 million of the $45 milllion in total TV contracts with ESPN and CBS, which is actually about 29% for football 71% for basketball, but I digress. If the league were to split today and manage to somehow get the same amount of money per game as they do now (and that would not happen with basketball)*, the prorated new offer would be for $84.1 million a year, or $9,346,396 per team. So already, splitting has cost each football team $566,458 per year. A tenth team will increase both your football and basketball inventories per team, so assuming you still manage the same payout per game, adding a tenth team to the all sports conference would net you a contract of $105.1 million a year, or $10.5 million per team. To compare, the same addition in the current hybrid would get you $145.9 mil a year, and also $10.5 mil per school, only with a much higher chance of actually achieving the same payout. However, we know that ten football teams are manageable in the current set up, so this scenario is not worth discussing. I just wanted to point out that splitting, in and of itself, does not increase the value of the contract for the football teams. Well, unless you think the payout per basketball game will increase without the NYC, DC, Philly, Chicago, or Milwaukee markets, or without Nova, GT, ND, or Marquette.
In order for a split to break even, it must show that going to 12 teams or beyond, in all sports will still get you $10.5 million per school in TV money. That means after you add team number 10 (for the sake of simplicity, I am going to say that UCF is team number 10, Houston is 11, and ECU is 12**)
your next two choices combined, need to increase the overall TV contract by $22 million. If, you can maintain the same pay per game, you will get $21 million, so this is possible, but this is a big gamble to make.* Unlike the expansion to ten in football, which increases your football inventory 0.5 games per team, and adds value in and of itself, going to a 12 team conference does not increase this number unless you go to ten conference games, something very unlikely. The only inventory bonus is a conference championship game.
Now all of that above was just to break even. And that was a lot of work. But using the logic many use on here that an all-sports league would pay MORE money per team, in order for the split to
increase each team's take home TV revenue by at least $1 million per year (and a 10% increase is probably too low goal for the headaches involved), adding Houston and ECU, and the subsequent CCG would need to generate $34 million between them. If you need a $2 million per year increase, that number vaults up to $46 million. Keep in mind we pretty much all agree that a BE CCG is not going to be worth more than the ACC championship game, which is valued at $5 million top. So we are already $8 million behind the 8 ball assuming you maintain the same payout per game in football and basketball, and net $5 mil from a CCG. On top of that, you need to maintain this payout per game, plus create an additional $8 million in value from the names of ECU and Houston (more below), despite losing the status of
the best basketball conference, and what stature and value that brings. This is also despite losing anchor in your four largest markets (NYC, DC, Phi, & Chi), including two where a Big East program was the primary team. And most importantly, something that I even overlooked that Frank mentioned, you have now created a major competitor in your home turf of the Northeast and in several of your home markets, with the very teams you just kicked to the curb. And this is no minor detail. A conference with Nova, GT, ND, SJU, XU, Butler, DP, etc will take away not only from available time slots in BB, but it will take away from money offered to you for those spots as well.
With all of this, how on Earth are ECU and Houston going to generate $34 million, which is what they need to bring to the table just to see a 10% increase in TV rights fees per team? And personally I think a 20% increase is the minimum need to justify the hassle, which means you need to create $46 million in new revenue. Oh, and before you answer that, chew on this for a moment: after you account for the invenotry and CCG game increase, I said that ECU and Houston had to generate $8 mil on their own to get to $34 million a year. Well if you are able to create value for your third and fourth expansion choices (ECU/Hou), then surely you have created the same increase with the team you have deemed more valuable, your second choice (UCF). I point this out because all of my assumptions so far have assumed that team ten has added no value from the name of the program. But if we are going to say that your third and fourth choices can add $8 mil on their name alone, or $4 mil a piece, then I have to assume that my second choice (after TCU) can add at least $6 million on its own, possibly $8 million. So, in addition to ECU/Hou needing to generate $10.5 mil to break even, plus an extra $1-2 mil per team, or $34 -$46 million, to justify the split, but they need to make up the additional $7.2 - $9.6 million it will take to make up the $600k- $800k per school increase UCF brought to the ten team conference, plus cover their portion. So all things considered, in reality to justify this split, ECU and Houston combined really need to bring in close to $44 -$56 million between them, or 3-4 times what their currnet conference makes in total.
Your honor, I will now rest my case.
- * A cursory review of the landscape tells you that a split conference no longer demands top dollar for basketball games. It is not simply the programs that make BE basketball so special: if it were Big Ten and Big XII basketball would be worth a lot more money than they are. This is what is often lost. The combination of extra large inventory, the markets the programs cover, and the large number of competitive teams is what makes Big East Basketball so valuable. Essentially, it is greater than the sum of its parts. Too many get caught up and think that an extra Louisville vs. Syracuse game is worth more than a DePaul vs. Rutgers game, but that is not what does it. The 16 team conference where everybody plays each other is as big or bigger draw than any one team. The Big East is so rugged that in previous years, contending teams, who were top ten, got so beat up, they went to the NIT. This set up is worth a lot of money. It cannot be duplicated in a 12 team conference.
** These teams were not choosen in any order for any partular reason, other than it made it easier to follow then listing the teams as "team ten," "team eleven," etc. I also wanted to be able to stress that whomever you personally think is the most valuable expansion candidate for team ten, the do not equate in the split scenario, because they can be added in the current format. It is the next two candidates that have to make up all of the extra money.
