Just how much $$$ are we talking about?

by ProveIt on Apr 19, 2011 11:12 AM CDT

I saw a couple of posts about shared revenue and decided to post some research we did at another site. This was originally researched before Nebraska joined the Big Ten, but with the CCG removed should be relatively accurate.

Big Ten expansion is driven by revenue. Here is the best current and projected revenue breakdown I can find. I am using 2016 as the future projection date - this is when the existing broadcast contracts for football and basketball run out and new contracts take effect. (The BTN contract runs much longer.)

6% to 8% per year growth is common throughout this discussion. This is derived from the amount NCAAF broadcast contracts have been increasing. This can be tracked to the growing NCAAF audience (about 3% to 4% a year) and average inflation (about 3% to 4% a year). This audience growth is on the low side based on recent articles I could google.

These estimates do not include gains from expansion. In the case of Nebraska their gains will not significantly impact shared revenue until 2016 – their financial gains falls outside shared revenue.

BTN Licensing Fee currently $5.45 Million
$60 Million yearly is paid by the BTN to the Big Ten before splitting network profits and is not to be confused with the subscription fees collected from cable carriers. Delany and the Illini AD noted the Big Ten has been in negotiations with the broadcasters during expansion. Unlike situations with ESPN where they already own rights to teams in other conferences, adding teams to the Big Ten represents a new audience to Fox. I do not know how this is structured - it may be fixed over the duration of the contract, or it may go up each year. I am going with the more conservative former estimate:
Projected $5.45 Million (low estimate)

BTN Shared Revenue currently $6.5 Million
Estimates I could find projected this to increase $2-4 Million from 2010 to 2013 (4 years). I am going to be conservative and estimate growth of $1-2 Million for 2014 to 2016 (3 years) since applying an inflation rate would not be accurate as it does not capture the license fee or network operating costs.
Projected $9.5-12.5 Million (accurate to low)

FB and BB Broadcast Contracts currently $8.43 Million
The 10 year NCAAF contract is for $1 Billion total ($9.09 Million a year average) and the BB contract $20 Million total (a paltry $.18 Million average).
The 10 year average is about $9.27 Million a year.
Contracts have been increasing an average of 6% to 8% a year. I use the more readily available average over the lifetime of the contract, and the current contract length of 10 years.
Projected $16.6-19.93 Million (accurate for average, high for 2016)

Shared BCS and Bowl Revenue currently $1.98 Million
I am going to use the 6% to 8% a year increase over 7 years.
Projected $2.97 to $3.39 Million (accurate)

Basketball Tourney currently $350K/team
I don't know the revenue growth of NCAABB. so I am going very low here.
Projected $400K (low)

Update Conference Championship Game $2.08 Million
The Big Ten is maximizing CCG revenue by marketing it seperate from the broadcast contract.
5 year broadcast deal for an escalating amount from $20 to $25 Million. This includes sponsorship and advertising rights.
Indianapolis is reported to have paid $5 Million to host the game. I believe this includes ticket sales. I will lowball the estimate and make this amount constant.
Projected $2.5 Million (low estimate)

Total Current Shared Revenue $22.8 Million per team per year (excludes CCG)
Total 2016 Projections $37.4 to $44.2 Million per team per year (including CCG)
This is a low to accurate estimate before expansion, definitely low after expansion.

Some References
Big Ten (Network) bonanza
Big Ten Conference on Television
Big Ten’s title game rights to hit market
I could not locate all of the references – they are buried behind literally millions of google links now.

This FanPost created by a registered user of Corn Nation.

Tweet Comment 12 comments | 0 recs |

Do you like this story?

Comments

Welcome to the Country Club Boys! :o)

"They say in Happy Valley that if God wasn’t a Penn State fan, why is the sky blue and white?" Fortt said. "Who am I to argue with God?"

by amandakt on Apr 19, 2011 10:35 PM CDT reply actions

hell

maybe they should start giving players a stipend.

Go Big Red Nebraska!
Our Cobs Are Bigger Than Yours!
Corn Nation!
Twitter!
cornnation@gmail.com

by Jon Johnston on Apr 20, 2011 8:15 AM CDT reply actions

I don't think Nebraska's gonna see that right away

I think they’re easing into the revenue split in the B1G (read: not getting a full share right away). What the percentage is, I don’t know. Gotta be more than the 9 million the Big XII was giving you, though.

A little off topic, bu didn’t the B1G leave money (maybe alot of money) on the table by not renegotiating the network TV deals, or did they renegotiate (i don’t recall seeing anything)? I’d think the addition of Nebraska would be a material change that would allow for this.

by rogerja on Apr 20, 2011 11:25 AM CDT reply actions

I was wondering about that too

Their ABC/ESPN contract doesn’t expire until 2016. You’d think they’d want to renegotiate and cash in on Nebraska’s death march the next couple of years.

Still chuckling over how the Big 10 has a sizable revenue advantage over the Big 12 even after the Big 12 renegotiated and is locked in for the next 13 years with Fox. Not sure how much longer they’re locked in with ABC, but regardless, 5-10 years down the road, the only Big 12 school that will be on par with Nebraska is Texas, with their Bevo Network. Further, I’m pretty sure I remember Delany saying that Nebraska would at a minimum be made whole for their transition and that they’d get at least as much money as they would have in the Big 12 during their induction phase.

"My hardest job is to convince the people of Nebraska that 10-1 is not a losing season." - Tom Osborne

by jdhusker on Apr 20, 2011 3:24 PM CDT up reply actions

Big 12 ABC/ESPN deal is through 2016

Currently paying them 60-65 Mil.

by Wolvie on Apr 20, 2011 4:21 PM CDT up reply actions

You are absolutely right...

didn’t the B1G leave money (maybe alot of money) on the table by not renegotiating the network TV deals

There are some comments indicating Delany was able to work ahead of time with the BTN (though with profit sharing, the only issue would be 1/2 of the licensing fee).

Because of the accelerated time line, he didn’t get to renegotiate the broadcast contract with ABC/ESPN. It is unfortunate because ABC/ESPN will be big benefactors.

Oh well, 2016 isn’t far away.

I think they’re easing into the revenue split in the B1G

Could be the case with a portion of the shared revenue (ABC/ESPN) but with the CCG adding more than 1 team’s shared revenue, I would be surprised if the difference was large.

by ProveIt on Apr 20, 2011 8:35 PM CDT up reply actions

usually you get phased in at 50% over the first year or two

but the B1G may have exempted Nebraska from this or given them a shorter phase in period or a higher percentage take during that period. I find it hard to believe that the B1G would try to stiff Nebraska.

No one is getting Rubio's rights unless they pry them from our cold dead fingers.

by TheEvilProfessor on Apr 24, 2011 10:51 AM CDT up reply actions

Big Ten expansion is driven by revenue.

Yes, to a point. The expansion is driven by revenue, but Nebraska wasn’t chosen for its revenue. The Big 10 could have gone into the bigger and more profitable markets to its east but I think was Nebaska was chosen to improve the football image of the Big 10. The Big 10 has been taking it on the chin lately (we haven’t been much better), Nebraska has a national pedigree that most teams dont, but we’re still a small state with a small TV market. To the east of Big 10 country is $$$, Boston College, Virginia, Virginia Tech, Cinncinnati, Conneticut, Syracuse, Maryland, Pittsburgh, Rutgers, West Virginia and a bunch of others. Good football and basketball schools on that list too. Expansion for more money, Nebraska for better football.

It is what it is and we are who we are. Deal with it.
Sober (again) since January 10th, 2011.
My only draft predictions: We will NOT take an OT in rounds 1-4

by nateforchiefs on Apr 20, 2011 10:19 PM CDT reply actions

Well said.

I'm your huckleberry.

by Brizzle T on Apr 21, 2011 1:45 AM CDT up reply actions

just an FYI

To the east of Big 10 country is $$$, Boston College, Virginia, Virginia Tech, Cinncinnati, Conneticut, Syracuse, Maryland, Pittsburgh, Rutgers, West Virginia and a bunch of others

The B1G Network is already in the markets in WV, Pittsburgh (PSU), Cinncinnati (tOSU)—this is why those schools were never in consideration (also WVU doesn’t meet academic requirements). I also believe they are in a majority of VA/MD markets because of the large alumni base in those states. It’s only smaller owned companies that haven’t reached an agreement with the networks yet, primarily. Major providers, like TWC, have the network in either a base package if they are in B1G area or in an additional sports package that can be bought.

I believe Nebraska was chosen for several reasons; the B1GN goes west (and I trust your alumni base will be calling like crazy to get the network), Nebraska’s traditional power in sports, fits academically into the fold. I for one was happy with the choice. But believe me, money is the main motivator and you guys fit that.

"They say in Happy Valley that if God wasn’t a Penn State fan, why is the sky blue and white?" Fortt said. "Who am I to argue with God?"

by amandakt on Apr 21, 2011 10:35 AM CDT up reply actions

This is what caught us off guard with Nebraska

I think was Nebaska was chosen to improve the football image of the Big 10.

Delany’s opinion of performance when the Big Ten goes thru a down time was and still is it is an issue for individual programs to address, not the conference.

Nebraska has a national pedigree that most teams dont, but we’re still a small state with a small TV market.

This is what caught us by surprise with the Nebraska addition. I am still kicking myself for starting down the thought path but being diverted when I asked myself “Why is Notre Dame a good candidate?”
It isn’t BTN revenue the Big Ten only collects about 1/7 to 1/8 the subscription fee for teams outside the Big Ten states.
It isn’t their TV audience despite some marquee teams on NDs schedule, they recently had a short TV contract extension for around $15 Million a year (I think) – comparable to or less than the broadcast rights of the average B10, SEC, PAC, ACC, or B12 and less than their top drawing teams.

The B10 administrators continually noted Nebraska’s brand attraction (the hardest route to an invite). With Nebraska, the Big Ten now believes they have 4 of the top 10 brands in college football.
Nebraska’s addition to shared revenue isn’t from accessible information such as new BTN subscriptions (small state populous) or BTN ratings (their better games will be aired by ABC/ESPN).
They didn’t get a leg up over other candidates because of the CCG or increased inventory of BTN games any new team would have accomplished this.

Like Notre Dame, most of Nebraska’s value comes from increase interest among the existing fan bases leading to the B10 administrators use of the term “Brand.” For example…
Having Nebraska on the schedule increases ticket demand for 1 game, which can increase ticket demand for other games, which can increase ticket demand for season tickets, which can increase booster contributions to be eligible to get season tickets.
Nebraska attracts fan base attention to ABC/ESPN broadcasted games increasing their ratings and the value of the contract at the next renewal.
The BTN gets an advertising boost as Nebraska vs. a scrub will draw more viewers than an average team vs. a scrub.

The difficult part is that even if we had access to relevant information, we wouldn’t know how to project the impact of a brand on revenue.

by ProveIt on Apr 22, 2011 4:39 PM CDT up reply actions

The B1G preferred Nebraska because

of the national appeal. Should the league ever expand further and nab Notre Dame plus another good school the BTN will have national appeal and can negotiate itself onto all of the basic cable packages and make a ton of money for all involved.

No one is getting Rubio's rights unless they pry them from our cold dead fingers.

by TheEvilProfessor on Apr 24, 2011 10:54 AM CDT up reply actions