Archives For Conference Cable Deals

Moot Realignment

Tyler Raborn —  Friday, February 22, 2013 — 4 Comments

When the phrase “conference realignment” is uttered, most college sports fans can’t help but roll their eyes.

…or throw up.

Yet conference realignment is prevalent in today’s college sports’ landscape.

But why?

As Pete Thamel pointed out in his Sports Illustrated article, conference realignment, such as Maryland joining the Big Ten, has been fueled by revenues from cable deals:

Maryland will join the Big Ten conference in 2014 after a vote by its Board of Regents on Monday to end a 59-year relationship with the ACC. The impetus of the move, primarily, is to help save an athletic department struggling financially and to set up a huge potential payday for the Big Ten through increased cable revenue.

Even the mighty SEC has fallen victim to this greedy desire, as Chris Smith pointed out in his article:

The conference has two deals to renegotiate: a $825 million first-tier rights contract with CBS, and a $2.25 billion second-tier deal with ESPN. Both are 15-year contracts that were signed in 2008 and run through the 2023-24 season. The SEC gets the chance to renegotiate both deals thanks to the recent additions of Missouri and Texas A&M.

The SEC’s first-tier rights deal pays an average $55 million annually, and that payout should move up to a minimum $64 million to equally compensate the two new members.

But has it all been worth it?

Maybe. We don’t know yet. But we can speculate.

Apple fever has been sweeping the United States for the last few years. People who once vowed they’d never give up their Blackberry, including myself, are now on their 2nd iPhone. PC users have become Mac diehards. And some families have given up their cable boxes for the selective programming offered by Apple TV.

That same selective programming, through applications such as Netflix and Hulu Plus, are available on Xbox and Playstation as well.

So where is this all headed?

We don’t know.

There’s a lot of money moving around in Washington from companies to lobbyists that we don’t know about.

But we’re speculating.

If a company could offer totally selective programming, wouldn’t everyone opt to do it?

Instead of paying $63.99 for 300 channels, 293 of which you don’t watch, wouldn’t you rather pay $35 for the channels you do watch? Or more so, $15 simply for the specific shows and events you watch?

Obviously cable companies are doing everything they can to block a transition to selective programming. Yet it seems to be consumer-friendly. Maybe next year, maybe in 50 years, it could happen.

There is a disproportionality in what people watch and how much money those programs make off of their specific event. Yet it seems the programming that is getting the “short end of the stick” could eventually break out of their cable deals and into the free market of “pay-per-program” television.

Imagine turning on your Xbox and being able to select any show, movie, or live sporting event you please for a cost.

This model would also inspire more talented independent people to create shows and movies, if they were given a user-friendly platform. Simply look at what Xbox’s platform has done for small game developers. Or what YouTube has done for creative film students.

The economics behind a shift to this model contain an outrageous amount of variables, which could be credited with the slow and hesitant move to what seems to be an obvious choice for consumers. Yet this article’s purpose isn’t to analyze the percentage chance of this move happening or how quickly it could come. Rather, this article seeks to pose a question to conferences that are realigning:

What if the cable deals that motivated all of the geographically irrational conference realignment fall apart?

You’re all thinking “slim chance.”

I know.

But—what if?

The conferences could begin marching to a different drummer. Cable deals could no longer be the motivating factor, but rather, maximizing viewership of individual events.

When Auburn rolls into Tuscaloosa to play Alabama in the Iron Bowl, and 12 million viewers tune in, Alabama and Auburn could exclusively profit off of that event. Playing rivals could become even more attractive for schools.

Further, big non-conference games could become much more attractive to schools. If Michigan could profit more from a television event that featured them playing Oklahoma, more so than Appalachian State (ha), then they could be more likely to schedule big games.

This could also lead realigned conferences to… realign. Again.

Schools could lose more money from being part of conferences not geographically-friendly. The burden of travel cost on schools could no longer be outweighed by the “profit-sharing” cable deals of certain conferences.

Thus, schools could be inclined to join more geographically-friendly conferences. We could end up with more logically aligned conferences where teams are financially encouraged to play more successful non-conference opponents.

Yes, I know that several schools would be left high and dry without profit-sharing. So maybe some conferences still implore profit-sharing. I don’t know, nor care to study, the exact dollars and cents behind it. But I will say that I am a proponent of free market ideology—so, there’s that.

Either way, the destruction of cable deals could lead to much more fan-friendly conference re-realignment. It could also lead to schools playing more prominent non-conference games.

But…

These possibilites are all “could be” scenarios, rather than “will be.” Too many key pieces, including politicians, cable executives, contract laws, and a plethora of other obstacles, stand in the way of this conference utopia.

So in conclusion… we have no conclusion. Merely a glimmer of hope that one day, this will all make sense.

————

By: Tyler Raborn

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