First off, I would like to welcome Maryland and Rutgers to the conference. We will definitely have to make friendly wagers pitting your seafood against our steaks. I'm looking forward to it. Also, I'm not against the Big Ten expanding. I'm just very cautious about it. So with that being said, let's talk about the latest expansion in our great conference.
I'm just going to say it. It's all about money and survival. If you think conference expansion is anything else, you are fooling yourself. So where does the money that keeps athletic departments running come from? It comes from television rights, advertising revenue and us. We buy tickets to games. We spend money on jerseys and hats. We give the concession stands five bucks for a bottle of water. We fork over $100 a month for cable to watch games and because we can't even view the "National Championship" game over the air anymore. We also watch BTN and the same Buffalo Wild Wings commercials over and over again.
Cable. That appears to be where everything is headed and what has fueled all this expansion. Cable companies pay a lot of money for the right to air sporting events. That amount is dependent on two things: viewer interest in the contests, and amount of likely viewers. The quality of the match up is the most important factor that can directly affect the viewer interest and amount of likely viewers.
I care when my team plays on T.V. I want to watch them. However, I don't care about other teams. Both of these are typical for the "average fan". The average fan does not care when two bad teams play each other. On the flip side, the average fan cares a little more than normal when their team is playing a marquee school. The average fan may be more interested in a marquee match up, even if it doesn't involve their school. Also, if their team sucks, the average fan will be less likely to watch them play. Do you think Nebraska Volleyball would have as good of a following if they weren't so dam good? In order to maximize the conferences rights agreement that will start in 2017, people in the newer markets must be interested in watching Big Ten athletics. More specifically, they have to be interested in football. In order for this to happen, the people in Baltimore, D.C. and New York/New Jersey have to be excited. The nationally recognized schools (Michigan, Ohio State, Penn State, Nebraska) must play Maryland and Rutgers (and anyone else they bring along for schools 15 and 16). Ideally, Maryland and Rutgers need to be good so that the interest in the games will also be maximized. If they suck, no one will be interested in watching them play.
The other aspect of cable for us is the BTN. This is the huge wild card in our revenue stream. It has so much potential, but it can also be our biggest let down. Games that don't get picked up by the rights agreements contracted through cable companies are played on the BTN. In order to watch the BTN, you have to subscribe to a cable package.
I don't have cable. I had it in college (when it was free). I had it in my first apartment (when it was free). Since then, I haven't found a reason to shell out the $100 a month (or whatever it is now a days) for 300 channels that I will never watch. I'm a man. When I go to the hardware store to by a replacement drill bit, I buy the size I need and spend $.50. I don't spend $25 on a complete set of bits to get the one I want.
That's what cable is. Excess. You are forced to buy a "package" deal in order to get the one bit you want. You like to watch ESPN, well, you also have to get MTV or the Bravo channel. It's a good strategy in the market place. You see it at restaurants all the time. They want to sell you an appetizer, an entree and then desert. Most of us can't even eat the entire entree, let alone the appetizer and desert. On top of that, they serve you so much food so that they can jack the prices up. Ask yourself this, why don't restaurants give you the option for half the food at half the price? Answer: they wont make any money. Any excuse to give you more than you want is an excuse to raise the price you pay, even if you don't need it or want it.
The majority of cable channels would not exist if they weren't included as part of a package that consumers were forced to buy. When the cable salesman calls me about once every month to try and get me to sign up for cable, my response is always, "Sure. I'd love cable. Send me a list of all the channels you have and I will check off the channels that I want and only pay for them." Their response is always, "Well, legally we can't do that." So what their are saying is that legally, we have to support all these crappy channels that no one cares about. It also tells me that (if their BS line is true) we have laws in place to protect bad and unneeded businesses. I'll stop short of getting to political, though.
Where am I going with all of this? Well, I see the future and cable's future is like the penny. It's not needed anymore but for whatever reason, we keep it around. Up until the mid-naughts, it cost around $.007 to make a penny. If you do the math, the U.S. government made $.003 per penny. Though that may not sound like much, if you make five billion of them per year, it adds up. Now, it costs $.0179 per penny. That's almost double what it's worth.
"But Aaron, cable is not like the penny. I need to watch my television shows and Nebraska football."
That's fine. You can still do that, but why do you have to go through the cable company? What's the future? The future is your T.V. hooked up to the internet. It's turning your television on and it going to your "home page". From your home page you can subscribe to any channel you want and pay a small fee for that channel. You can then access any channel you have subscribed to from your home page. Don't like paying $100 a month for cable to get your BTN, ESPN, History Channel, Food Channel and 300 channels you don't want? Well, now you can subscribe to the 20 channels you do like and pay $20 a month (or whatever the individual channel charges) and get the products that YOU want.
It may take awhile for this to happen. More laws might be passed to protect the cable companies, but once this becomes available, I think a majority of people would prefer to spend less (in some cases a lot less) picking the channels they want instead of spending a lot more to get stuff they will never use.
What does that mean? It means that cable companies will become obsolete. Yea, cable/Internet companies will still be around because they will probably jack up their prices for your internet bandwidth usage.There might be a company that manages channel subscriptions for these cable stations (maybe the cable company), but why wouldn't ESPN just manage all of that themselves? Cut out the middle man.
No one wants the crappy cable stations. They cost us extra money and we have to flip through them in order to get to the channels that we really want to see. It's a huge reason why I don't have cable. When we get to the point where people will be able to chose which channels they want, the only people that will want to watch the PAC-12 Network or BTN or the SEC Network will be the people who care about those networks. Right now, people are being forced to subscribe to these stations. If you take a cable package, you have to pay for ALL the channels in the package. You may only have to pay $.10 per crap channel and it may not seem like much, but tack on 300 channels you'll never watch and the extra nickel that the cable company charges so they can make some money, it adds up. In the B1G footprint, the BTN can charge over $1.00 a month. And while that isn't too bad for us ($12 a year when we were paying $49.95 for a pay-per-view against The University of Tim-Buck-Two), if you don't like Big Ten sports (i.e. the people in New York City, Baltimore and D.C.), why bother with it?
Another strategy that happens a lot with cable packages is deal making between cable companies.
"I have this really awesome channel that lets you watch paint dry. Will you pick it up COX?" - Aaron
"Um. No. That's a waste of time and money." - COX
"Well, if you don't include the paint-drying channel in our package, you can't air our station." - ESPN
ESPN is good at this. They take a cut of the profits of crap channels that are included in their package. For instance, to get my paint-drying channel on cable, I make a deal with ESPN that gives them $.02 per subscriber. I then charge $.05 and pocket $.03 per subscriber. Easy money for ESPN. Their product is in demand and the cable companies will go along with it. To make up that money, the cable company will now charge you $.10 for my paint-drying channel. Go me.
The B1G is banking on forcing people in the New York/New Jersey/Baltimore/Washington D.C. markets to have to pony up for another channel that they may or may not want. That's all nice and good for us right now, but what happens when people in those areas get to dump the package deals and get to choose the channels they want? Will they decide to subscribe to BTN? Will Rutgers and Maryland still be as valuable then? Maybe. That is the true long term risk that the B1G takes with expansion, in my opinion. A la carte cable. And it's the long term risk all conferences will take when banking on an independent cable station to add to their coffers. How long will cable companies be able to continue to force people to pay for channels they don't want?
Maybe I'm overreacting. When people get to choose, maybe instead of paying $100 to the cable company for 300 channels, we'll end up paying $100 to the 20 channels that we want. Instead of ESPN getting our $5 a month as part of the 300 channel package, they will get $30 a month from me for the single subscription. If that's the case, the world-wide leader will easily be able to fork up even more money for the rights to the games which, in turn, will go into the pockets of the B1G schools.
Another big concern with expansion is our product. It is a good product. People have been down on our conference this year, but it's just one year. Two of our best schools are on probation and one was undefeated. Better days on the field are ahead of us. Continued expansion along the East Coast will likely see some B1G schools rarely compete against schools that they have played against for 100 years. Ohio State is a prime target to anchor an eastern division. They may not see Illinois, Northwestern, Iowa, Minnesota, Michigan State, etc much in the future. Maybe they don't care. This would make things easy on renaming the divisions. We could just call the "western" division the Big Ten and the "eastern" division the Big East.
Stand by. Next article to come: Politics and Conference Expansion