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Arbitrage ...

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"the practice of taking advantage of a price difference between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices"

Let's face facts - as College Football fans - that there are Programs that are Value far beyond others. Start at the immense Stadium sizes of Michigan (at number1) to Penn State, Ohio State, Texas A&M, Tennessee, LSU, Texas. Add in Nebraska, Florida, Alabama, FSU, Clemson, Notre Dame, Wisconsin ... and I don't know what to do about UCLA/USC or Stanford (because frankly, they don't fill to 100,000 except on rare occasions). Eyeballs? Seats? In the Air & On the Ground. Terms we learned through this B12 conversation.

Of the 64 Power 5 mouths that are getting fed - anywhere from $23 million to (soon) over 40million ... is there a darn good reason why Rutgers, Northwestern, Vandy, BC, Wake, Virginia, Washington State get deserve to get near the starting Point of those current TV contracts. Seemingly locked in via GOR ... or moral suasion. We just heard that the ACC Network GOR takes that commitment out to 2035. I am looking at building ground leases that aren't that long.

Plus ... as we are learning ... the B12 really is not going to be the same post-2024.

Meanwhile you have this imperfect market whereby ESPN (predominantly) and then Fox are looking at the shifting cord cutting/streaming world ... and pondering their future. Yet, you have Amazon, BeIN, Netflix, Twitter, etc etc. Things we cannot even think about coming.

While we labeled the B12 WannaBee contingent as a network of unworthy. I think the reality is there is a National Network of Attractive Programs getting 1/12th of what Kansas State is due.

Conference smonference. There is a sunny opening: You can't continue to think that - UConn, Temple, Army, Navy, Cincinnati, East Carolina, USF, UCF, Memphis, Tulane, Houston, SMU, Tulsa, Colorado State, Air Force, BYU, Boise State, UNLV, San Diego State - is worth 1/12th what the lower legs of the P5 are getting and 1/20th what Rutgers is getting. I think that is why the AAC only signed for 7 years.

Conference Realignment? My debate of common sense:

1. I LOVE that my University is now presented repeatedly as a Top 20 Public. And a Top 60 National. However, I do not believe - when the real grind happens - that Academic prestige plays into what may happen. Clemson's capability to bring eyeballs or raise ticket prices > BC or Duke or Northwestern. At some point, the MARKET leverage that a Texas or a Notre Dame or a Michigan brings will force some strange changes to the Model.

2. You can't lock out a UCF ... or other newby fast growing market/University forever. When Houston is growing 12% over the last 5 years and WV doesn't grow at all, would immense market forces, does that make sense to have this structure in conferences?

3. They say it is strictly about FOOTBALL. With what we are looking at with Concussions & parent's concerns ... is that forever? What are you watching from mid January to Sept? And greater Female audience? And Soccer increasingly building internationally.

4. Fair Democracy. Someone brought up the collapse and total regeneration of what used to be the Pacific Coast Conference (into what became the Pac 8 then the Pac10 then the Pac12). Pushing out Idaho & Montana ... but also Oregon & Oregon State. Being from the Big East ... ahem ... WE can say that the scism of these Conferences aren't seen from our birdseye Fan perspective. Look at the B12. Universities are going to play fair together in a sandbox ... even as greater lucrative market forces come into play? Or then ... how will the next Baylor/Louisville massive scandal sex scam play at a ... Stanford or some other prestige place.

UConn is in bigtime football. Our immediate challenge - even though those amongst us know that the 2016 schedule is probably as challenging as 2005 - is how to fill Rentschler. As Calhoun said so well, we are used to Brand X at UConn (Syracuse, Pitt, Georgetown) and our Fanbase hasn't done well with the next tier AAC. Thinking of rolling back to Big East basketball ... is like thinking you need to answer your home phone.
 

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The makeup of the P5 is as simple as this: Those are the conferences that traditional New Year's Day bowl games want to have associated with their games, to which automatic births have historically been awarded. Unless and until a full-blown playoff model comes in, say 8 teams, to supplant the big bowls and render them obsolete to the point of irrelevance, there will be no upward mobility in college football. It's not about Wake Forest, it's about the ACC having the ability to send FSU or Clemson to the Orange Bowl most years.
 

SubbaBub

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The solution would be by act of Congress leveraging the tax exempt status of the university to form an English style Football Authority for college football and other sports.

Multiple 20 team divisions based in on the field achievement with financial contractual benefits based on which division you are in. The FA would control all media rights.

If a school didn't want to play then they couldn't accept financial support for their programs without fouling their tax status.
 
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You lost me at Virginia. They're a highly desirable P5 member, such that multiple conferences would fight over them if they could. AAU member with over 7B endowment. #24 on US News & World Report. 12th most populated state, and the clear #1 team in the state.
 
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For whatever reason ... this work computer won't let me edit the grammar/syntax. Sorry.

Here's the deal:

Stop freaking moaning. This doesn't have to be CASE STUDY 101 in a top 15 Business school ... it just should occur to all of us that "things will change". And, all the moving pieces, illustrated in the B12 fiasco, tells you that things the Loudest cry about (1. ESPN; 2. Power 5 GOR; 3. Tier 3 Revenue) are vastly/dramatically looking at a dynamic business model. You simply cannot leave 20 Programs with some value making $2m per year and then pay the lowliest in the Cartel $23m. You just opened the door to the next thing.

And Virginia? Why? Are they drawing 100,000 to the Lawn? What is their buzz? Mendenhall is a GREAT head of the Program; so, I believe he can really raise them up. Right now ... what I saw ... they have a 5 year question mark as does BC, Duke, Wake, Cuse. The Academic stature makes them valuable as long as the B1G is predatory. However ... the underlying revenue distribution channel (ESPN) has questions.
 
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The makeup of the P5 is as simple as this: Those are the conferences that traditional New Year's Day bowl games want to have associated with their games, to which automatic births have historically been awarded. Unless and until a full-blown playoff model comes in, say 8 teams, to supplant the big bowls and render them obsolete to the point of irrelevance, there will be no upward mobility in college football. It's not about Wake Forest, it's about the ACC having the ability to send FSU or Clemson to the Orange Bowl most years.

I believe that can change - fairly instantly.

What if JERRY JONES or ARTHUR BLANK want to make their gorgeous new stadium more valued for one game a year than Pasadena or Glendale. Bingo. Sponsors + New TV/Streaming package = Mo' Money.

Would Alabama or Texas or Notre Dame (good God ... they are shameless) go to a New Bowl venue instead of the Traditional for an incremental $10m? OK ... you say the Conference has handcuffs on that. We already know that Texas and/or Notre Dame can do what they want in their current conference structure in shot time.
 
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I have no idea what he said, but I'd love to know how he decides which words deserve the caps lock treatment.

It's a complex process. It would require a separate longer thread.
 
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Clearly he's upset about the outcome of the shot put finals in the 1984 summer olympics
 
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HuskyHawk

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Well my finance degree from UConn and understanding of arbitrage generally still doesn't allow me to follow whatever the heck Pudge is saying here. However, my years as a lawyer have given me practice in understanding clients who explain simple things in absurdly complex ways. So, my attempted summary:
  1. UConn is doing well, you know, as a university
  2. The old guard can't lock out the new guard indefinitely (despite the fact that they have done so thus far)
  3. Football may not last! (but we'll be dead by then)
  4. No idea.
 
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Well my finance degree from UConn and understanding of arbitrage generally still doesn't allow me to follow whatever the heck Pudge is saying here. However, my years as a lawyer have given me practice in understanding clients who explain simple things in absurdly complex ways. So, my attempted summary:
  1. UConn is doing well, you know, as a university
  2. The old guard can't lock out the new guard indefinitely (despite the fact that they have done so thus far)
  3. Football may not last! (but we'll be dead by then)
  4. No idea.

Too many people locked into what the economics are IF we are in a conference. If conference's are the only way to do a contract.

You have at least a handful of new points of distribution coming. Bad news for ESPN (cap lock) and FOX. That means that we aren't going to be watching simply anything they put on at the prime Saturday hours. Unless Michigan or Notre Dame or Alabama or Texas are the prime game (or the like), the viewing and the revenue is spread through many models. Contracts that ESPN just got into with the ACC and B1G - that go out to 2035 (in the one case) - are stupid. You just agreed to the $25m number for ACC slugs like BC or Syracuse or Wake and $40m for Rutgers and Minnesota.

Today, UConn, Houston, Boise, UCF, USF, Cincinnati are at less than $3m.

One of the new venues (Amazon, Netflix, Hulu, Twitter, HBO Plus, BeIN) can produce quality watched programming - at least as good as the ESPN Wake versus Virginia game - for a number 50% less than the B12 or the ACC and 70% less than Rutgers versus Illinois. Quality Production values today are quite simple and none of the announcers are anything but a commodity. Houston versus UCF or Boise versus BYU or Cincy versus East Carolina will be a better game. That's Arbitrage.

Once this breaks away, with 2025 coming, Oklahoma & Texas and Pac 12 powers will find their way into separate Premium space out of ESPN and that will break down the CFB watching on the upper end. Disintermediation.
 

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Too many people locked into what the economics are IF we are in a conference. If conference's are the only way to do a contract.

You have at least a handful of new points of distribution coming. Bad news for ESPN (cap lock) and FOX. That means that we aren't going to be watching simply anything they put on at the prime Saturday hours. Unless Michigan or Notre Dame or Alabama or Texas are the prime game (or the like), the viewing and the revenue is spread through many models. Contracts that ESPN just got into with the ACC and B1G - that go out to 2035 (in the one case) - are stupid. You just agreed to the $25m number for ACC slugs like BC or Syracuse or Wake and $40m for Rutgers and Minnesota.

Today, UConn, Houston, Boise, UCF, USF, Cincinnati are at less than $3m.

One of the new venues (Amazon, Netflix, Hulu, Twitter, HBO Plus, BeIN) can produce quality watched programming - at least as good as the ESPN Wake versus Virginia game - for a number 50% less than the B12 or the ACC and 70% less than Rutgers versus Illinois. Quality Production values today are quite simple and none of the announcers are anything but a commodity. Houston versus UCF or Boise versus BYU or Cincy versus East Carolina will be a better game. That's Arbitrage.

Once this breaks away, with 2025 coming, Oklahoma & Texas and Pac 12 powers will find their way into separate Premium space out of ESPN and that will break down the CFB watching on the upper end. Disintermediation.
The college football viewing audience is driven by name brands, not what hypothetical matchup would produce a better game. We will see what happens if the AAC is intact and puts its product back on the open market again in the future. Can the AAC schools increase in value because of MARKETS?
 
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Once this breaks away, with 2025 coming, Oklahoma & Texas and Pac 12 powers will find their way into separate Premium space out of ESPN and that will break down the CFB watching on the upper end. Disintermediation.
So wait until 2025 because then Uconn will show them all value. And the costs will go down for all production over time as it streams over multiple channels. OK and TX will go to a new venue and make ESPN sorry they paid up for the SEC, B1G and ACC since the big teams there will follow as soon as they can. Is that what you are saying? Or will the new venues bring about an end to conferences as we know them today? Or UCONN can capitalize on the new venues with an idnependent contract with a new venue since the AAC contract is so short?

I am also not sure when any game involving ECU will be better than a game with TX and OK from a total eyeball perspective which will still govern how much any venue, new or old, will pay for the chance to air a premium team/conference.

I have a rule with my guys. If you use a word 3+ syllables long when there is a simpler way to say something, you owe me a dollar. From the posts in this thread, you would owe me at least $100.
 
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HuskyHawk

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The college football viewing audience is driven by name brands, not what hypothetical matchup would produce a better game. We will see what happens if the AAC is intact and puts its product back on the open market again in the future. Can the AAC schools increase in value because of MARKETS?

Winner winner chicken dinner.

Houston vs Cincinnati never tops Ohio State vs Michigan, even if OSU and Michigan stink and the other two are very good.
 
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The college football viewing audience is driven by name brands, not what hypothetical matchup would produce a better game. We will see what happens if the AAC is intact and puts its product back on the open market again in the future. Can the AAC schools increase in value because of MARKETS?

MARKETS?

Lawrence, Kansas + Ames, Iowa + Manhattan, Kansas + Waco, TX

versus

Orlando, FL + Tampa, FL + Philadelphia, PA + Hartford/Fairfield (NY/NE) (or San Diego, New Orleans, Denver, SLC, Dallas, Houston)

What is driving this space, since the B12 expansion discussion is in the open, is that multiple new production distribution points will open up within a few years. Not by 2025. You aren't going to watch ESPN from 11am to 11pm all day on your TV game after game; you are going to search for the Team that you want. Yes, the Big Brands (Michigan, Notre Dame, Texas, FSU, Alabama) are going to drive the schedule. But, why be paying that much (already contractual) to a Virginia versus NC State or the like.

I believe that the primetime Brand game will still play big. But, the issue is 80% of the rest of the schedule. And ... I don't believe you can ever market that Missiissippi State versus Vandy or Rutgers versus Indiana is better than Houston versus Cincinnati. Let alone the whole damn rest of the ACC or SEC network. New points of distribution makes ALL the 20 University football programs in major cities far more viable.
 
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You lost me at Virginia. They're a highly desirable P5 member, such that multiple conferences would fight over them if they could. AAU member with over 7B endowment. #24 on US News & World Report. 12th most populated state, and the clear #1 team in the state.

Killer recruiting ground too.
 
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Killer recruiting ground too.

Trust in Mendenhall.

If they have a Addazio or a Mike London or you have whomever at NC State, you have a solid school guaranteed $25m+. You can get a BYU (with consistently better football) or a SMU/Houston (in growing markets) for far less on a Game price or on a 5-8 year contract. For all the nonP5, that is less than $3m per annum.

Yes, there are about 12 schools that drive the viewing public. But you have 52 others getting big checks that don't.
 
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Trust in Mendenhall.

If they have a Addazio or a Mike London or you have whomever at NC State, you have a solid school guaranteed $25m+. You can get a BYU (with consistently better football) or a SMU/Houston (in growing markets) for far less on a Game price or on a 5-8 year contract. For all the nonP5, that is less than $3m per annum.

Yes, there are about 12 schools that drive the viewing public. But you have 52 others getting big checks that don't.

So your point in all of this is that name brand schools (i.e. Bama, Ohio St, USC, Texas, etc.) are what drives TV contracts??

So the new $2.6 billion extension the B1G signed was not driven by Purdue & Northwestern? Where is the earth shattering revelation in this?
 
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To me it boils down to two things:

1. The G5 is the proverbial bargain bin. There's nothing in there that the G5 must have. But a clever school might try gimmick and trick them into thinking they are totally worth it. UConn is trying to convince them that it's best of what's left. The problem is the best of what's left may not be very convincing.

2. UConn may have to play dirty and not fight fair. Forget lawsuits. Think brown envelopes, think sketchy recruiting practices that still result in high profile bowl victories. Have some donors pitch in and donate to the campaigns of prominent Texas politicians.
 
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So your point in all of this is that name brand schools (i.e. Bama, Ohio St, USC, Texas, etc.) are what drives TV contracts??

So the new $2.6 billion extension the B1G signed was not driven by Purdue & Northwestern? Where is the earth shattering revelation in this?

Simple.

With new distribution platforms, the ENTIRE level beyond the top 12-15 is in play. The games are indistinguishable if they don't have a top Brand in them. Therefore, the $23-45m per University contracts are overstated from this day forward. And the AAC ... zoocougar ... is due a higher per University pay. Not $23m; but certainly in the teens. And Never ... don't give away the Tier 3 on WBB & MBB like the last go-around. We have the Brand in those sports to get paid. The B12 may do nothing because of all this swirling around and politics. They ought to "Grab the Cash". Why? This feels like the final years of the Big East as well: they aren't going to be able to keep the top few (UT & OU) after 2024.

Cord cutting may be and streaming through devices may be as industry changing as talkies coming to movies or cable coming to TV. You just don't know yet. You can get wonderful production values easily in this era beyond ESPN.

I think you answered the key question: Purdue & Northwestern didn't drive that extension; Houston & SMU can play/be valued at that level. The contracts for the latter must rise because the distribution channels are going to be greater.
 
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To me it boils down to two things:

1. The G5 is the proverbial bargain bin. There's nothing in there that the G5 must have. But a clever school might try gimmick and trick them into thinking they are totally worth it. UConn is trying to convince them that it's best of what's left. The problem is the best of what's left may not be very convincing.

2. UConn may have to play dirty and not fight fair. Forget lawsuits. Think brown envelopes, think sketchy recruiting practices that still result in high profile bowl victories. Have some donors pitch in and donate to the campaigns of prominent Texas politicians.

Why "thinking"?

If Amazon or BeIN or Twitter wants to stream you, you suddenly have several new platforms wanting to distribute your content. We know this is coming.
 
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