(04-10-2017 09:42 PM)Hokie Mark Wrote: (04-10-2017 08:54 PM)JRsec Wrote: (04-10-2017 08:41 PM)Wedge Wrote: (04-10-2017 08:12 PM)JRsec Wrote: So you don't have a single advantage that the SEC had within its own market. The simple truth is the ACC was constructed with the market model in mind and now the marketplace is shifting ever faster to a content driven model.
The fact that the ACC doesn't have as much football value as the SEC is obvious, but IMO their real story is that the ACC has done an excellent job transitioning from the 1970s conference, which was very compact and all about basketball, into the conference they have today.
I don't disagree. But that success story gets lost in the milieu that is everything contractual. Mark's point was that no conference deserved to be paid way more than another. My point is that the market controls those forces. Many in the ACC have had wildly high estimates of value for the upcoming ACCN. My point is that the factors which would support those estimates simply are not there, especially in a marketplace that is transitioning again into a content driven market place which may likely be disconnected from the market model upon which that ACC growth was based.
Initially they did better than everyone else with their growth. Now the landscape looks quite different. We'll see.
I never said that anything about what conferences "deserved to be paid" at all, and I totally disagree about market forces. There were no market forces pushing ESPN to pay twice the market rate for the SEC or the Big XII - they only needed to pay enough to get the contract. This is NOT a free market, and it should NOT be contrasted with socialism. There are forces at work which have absolutely nothing to do with the free market - a point which JR has made himself many times in the past.
For the record, I don't expect the ACC to get paid more than the SEC soon, if ever. However, I do think that if there's a big enough difference between the price of hot dogs and hamburgers, a market correction is bound to occur. The same goes for huge differences in the price of college football on TV - the viewership numbers are simply not different enough to sustain a huge price difference long-term.
Mark there may be a sports bubble that is unequally inflated, but, at some point the hypothetical or the ideal has to give way to the actual. Are these schools actually more valuable to the provider? As in all things the market sets the price. Gold goes up in a crisis and down in the absence of crises, but there are other factors that drive that price as well among which is inflation. In sports that inflation is signified through advertising rates. Is the SEC overpaid? Maybe, maybe not. It could be that the ACC is underpaid. Or it could be that a composition of factors has them valued correctly. We will never know completely. Therefore in the end regardless of theories and in light of incomplete information on all factors it simply it what it is. If the Big 10 and SEC suffer devaluations then regardless of the reasoning they will have been overvalued. If the ACC remains a far distant 4th or 5th in income it will have to be assumed that the going rate is their relative value.
It simply is a business. Market forces do apply. No doubt the Big 12 had an inflated value in order to keep properties that ESPN was interested in acquiring off of the market by providing a level of income that would diminish the desire to move and a GOR for insurance that they wouldn't. Add the LHN to Texas and it becomes very obvious that ESPN was doing all in their power to hold that product in stasis and under some form of obligation to ESPN. Certainly the markets of the Big 12 could not hold a candle to those of the ACC, but the Big 12 has extremely strong penetration of the markets they do have. So not all of their revenue is inflated. They are in 3rd position in earnings and in attendance and in 2nd place in saturation. The 3rd tier deals there were designed to prevent Texas and Kansas (ESPN) from leaving and to keep Oklahoma (FOX) from leaving. Nobody save N.D. has any kind of special allocation in the ACC and then N.D.'s came prior to association with the conference so was not an inducement.
Part of what is being paid to the SEC and Big 10 accounts for product placement (or brand on brand) competition. The SEC has much more of this than most. But I have no doubts that the SECN getting the over the top efforts of ESPN to have full carriage from day 1 was our biggest perk. But we only got that effort because through no fault of our own a deal we had prepared to receive and candidates we had taken in lieu of others compromised our position when a certain deal fell through. Mea Culpa revenue is hard to quantify, especially when the effort resulted in legitimate results.
So yes there are other factors which play into this, not the least of which was Swofford's sweetheart deal for his son which delayed the ability of the ACC to capitalize on the the whole network concept.
So from where I stand your natural inhibitor of revenue is venue size and consequently attendance x gate. Your self inflicted revenue inhibitor was the 3rd tier rights debacle, and our inflationary contributor was the extra effort put into distribution in part due to an alleged business deal gone awry.
The Big 10 for the next 6 years is overpaid by FOX in hopes of landing more product for FOX, namely Oklahoma, Texas, and future hopes for some ACC prizes.
But Mark, the vast percentage of everyone's valuation is accurate to market forces. With the exception of Texas nobody got more than a 10% inflated valuation and most less than that. I would guess that Texas may have gotten an inflated value closer to 15% with part of the LHN's money being an adjustment to what their actual value should have been over and above their association with the Big 12 and part of it being the inflated part to hold them longer.
But if 90% of something is accurately valued then nobody's overvaluation and nobody's undervaluation is truly destructive or aberrant.
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OT: ESPN, ESPN talent and layoffs
