(01-13-2020 05:31 PM)JRsec Wrote: (01-13-2020 03:47 PM)AllTideUp Wrote: I've always subscribed to the philosophy that "the whole is greater than the sum of the parts."
What I mean by that is there are several SEC schools that would take a dive in their overall values if you move them out of the conference and into another. The greatest asset of the SEC is the collective strength. It is by far the deepest conference when it comes to power players in college athletics. Even some of our weaker schools are above average nationally.
For example, Texas A&M is now noticeably more valuable since they moved to the SEC and it's only been about 8 years since the official transition occurred. You put a school in the modern SEC and their numbers go up. The averages then go up.
To me, that means there should be a little more wiggle room in what would ultimately be profitable in the eyes of TV networks. I would agree with the general principle of that potential being very exclusive. It's not going to be very many schools no matter how you slice it. For example, Missouri's value hasn't really increased although some of that is due to campus politics.
With regard to the list, Louisville strikes me a little funny. I'm not saying the SEC shouldn't take them should the opportunity present itself, but their market is already covered. That and their basketball program would be the true value add, but they don't have the cache of a Kansas or Duke. They also seem to run into scandal more consistently than others.
Texas and Oklahoma are no-brainers. I think Kansas would be a good addition because of their ability to elevate SEC basketball to a broader national audience. And I don't see the SEC turning down Florida State.
I would extend the list a bit, but not much.
Virginia Tech: VT still feels like a growth property. They fought their way out of the Big East, but the ACC isn't really a place where a growing program can shine. Their recruiting grounds are limited by a large selection of similar programs being nearby and they're not going to pull prospects from SEC schools. Nonetheless, it wasn't that long ago that Frank Beamer had them in the national spotlight and even a national title game. They're treading water right now, but they are the more popular program in the state of VA...a growing state with a major metro at its North end. They're the only real football school there and Blacksburg isn't far from SEC territory at all. They also conduct a great deal of research and would probably help our academic cred.
Clemson: I don't think the SEC would turn them down. They've certainly elevated their stature in recent years. Considering the meager funding the ACC provides, it's pretty darn impressive what they've been able to accomplish.
North Carolina: Academic scandal aside, they are still a strong property and the flagship school of a pretty large state chock full of college sports fans. Throw in the bandwagon fans around the country and you've got a very solid addition.
Duke: There's a qualifier on this one. I think they would be a good addition, but only if paired with UNC. Other than that, they don't have the reach. Their basketball tradition is about as rich as it gets and ESPN loves the Dukies about as much as life itself, but it's still a small private at the end of the day. Their football program is traditionally miserable although David Cutcliffe has shown a decent coach can make them respectable
Piggybacking on my earlier notion of the "whole," I think very much the same of the ACC. The problem is they have the inverse effect because so many of the ACC programs are weak. It drags down some otherwise solid products. That league doesn't have anyone that compares to Texas or Oklahoma, but I think there's a few that would work under the right circumstances.
I'm not certain I'd have Louisville on my list, but I would put these other 4 on there.
There's no room for feelings in a business decision.
I listed the schools that the numbers indicated. No more, no less.
I see that Duke, and North Carolina and Clemson are good looking schools. But by the numbers they don't make the cut. Now if there is a separation from the NCAA and basketball values go up, we'll see.
Also note that I didn't say we should take Louisville. They were there because their numbers put them there. It was a surprise but it is what it is.
And go back to the caveats I listed at the beginning and apply them when the parameters change. But as things stand now these are the numbers.
Furthermore you forget that the market model is all but dead for everything but T3 which only NET's us between 6 to 10 million depending upon subscribers.
The simple truth right now is that if we added Virginia Tech and North Carolina that's 19 million people divided by 3 to get an approximation of households, times 35% which may be the number of households that actually subscribe that's 2.2 million X 1.25 for an in footprint subscription which is 33 million divided 16 ways which equals 2.06 million minus the difference in their current media deficit of 14 million x 2 which equals 28 million dollars. Minus their shares in difference from the present share and the future share they add 2.06 million to. So they bring the SEC between the 2 of them 1 million a year. But they take bowl and tournament slots away from existing members. And of the two North Carolina at least adds content value to hoops, but not as much as Kansas if the WSJ valuations are to be trusted.
So ATU Virginia Tech by themselves doesn't bring enough. North Carolina by themselves is close to a wash and Kansas actually adds more content value though UNC is from a much larger state. Add Duke to that mix with North Carolina and you don't even get the benefit of the subscriptions from Virginia. And all of these are predicated on the SEC only making what it did last year, 43.7 million. Take that to the most conservative estimate for 2024 which is 63 million and they lose us money big time.
The numbers really only prove what we've already known Texas and Oklahoma at the minimum projected rate of the new contract by any account are the only schools which add value at those levels.
Louisville bows out at an increase from 43.7 to anything above 63.
I could have listed Notre Dame for us but didn't see the point.
Our options are Texas and Oklahoma period. If we didn't land them then schools like Kansas might come into play. You at that point could make an argument for perhaps a North Carolina with one of Texas or Oklahoma, but the numbers still might not be there at 63 million.
It's not a feeling, it's an analysis of the situation.
I understand why you post those numbers, and they are certainly relevant, but I can't get behind using them as a hard and fast criteria.
The reason for that is simple...the Wall Street Journal doesn't pay the SEC for their TV contract. That money comes from Disney/ESPN. It's their investment and they're on the hook for ensuring a profit. I have a hard time believing anyone at Disney or ESPN is pulling up the numbers generated by a third party, however thorough or accurate they may be, and basing their decisions purely on those totals.
I'm not saying the numbers are bad. I'm saying no one at ESPN is going to put their job on the line by completely relying on this information. They'll have their own internal criteria and their own internal research. I'm sure they will attempt to corroborate with other entities to ensure they aren't wildly off in whatever they come up with. Nonetheless, how ESPN makes their money is not based purely on the same methodology that the WSJ would use to arrive at those numbers.
If they make more money by going Plan B as opposed to Plan A then they choose Plan B. There's a long term cost/benefit analysis. There's politics involved as far as what administrators might be interested in or refuse to do. You've got the advent of streaming technology that alters viewing habits and how companies can monetize their content. In certain situations, it would depend on what the competition is willing to pay.
I'm saying there's a lot more relativity here. If there wasn't then TV contracts would never go up because, and I may be wrong, the typical TV payout has increased at a far faster rate than the overall revenue of the average school. The money making ability of a given program can fluctuate based on success rate, internal politics, the local economy, or the introduction of other institutions into the same league. There's a variety of factors.
All of these factors would alter the value a given program might have if sold as a private entity. Even that could be somewhat hard to quantify because they're not private entities that could ever be sold. Their true market value could never be tested. Especially when you consider the reliance on donations, the numbers themselves aren't so hard and fast.
Take Missouri for example, were they really a value add financially according to these metrics? No, but the parties involved nonetheless found a reason that it worked. Would it have been more profitable for ESPN to move Florida State and Clemson in and stop the SEC at 16? Probably, but they found reasons not to do it.
When it comes to a school in a new market then it's not that the market model is dead, it's that it has changed or perhaps simply reverted to the original state. Relying on conference network subscriptions from large states is a bad idea, I totally agree with that. Nonetheless, if you can find larger audiences that will watch your product by accessing new territory then that's potentially very beneficial.
We expanded into TX not necessarily because Texas A&M was guaranteed to bring huge profits to the SEC Network for decades to came...we expanded because A&M has a crap ton of fans in a large and growing market. In other words, we wanted to give people in TX a reason to watch SEC competition. Setting aside the obvious difference between a market the size of TX and VA, the principle still remains. Can an addition make your 1st and 2nd tier contracts more valuable by introducing your product to people you otherwise aren't reaching? Can we increase demand for the supply...that's the primary question.
Of course, it's entirely possible Virginia Tech or others couldn't do that, but that's how ESPN and company make money.
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A Sober Look at the Potential Realignment of 2024
