Interview with Delany

[itgoeslike]

UConn can start the ball rolling nationally on this by not spending on its basketball coach.

Coach Kevin Ollie is not an expense item, but rather an Appreciable Asset.

 

[IthacaMatt]

We need to stop arguing that the ACC is in some kind of difficulty, because it isn't. Not even close. It will continue to get bigger checks from ESPN in some form for a long time, and will be able to compete with the other majors for the next 10 years at least.

Edit: the only thing dumber than arguing that the ACC is in trouble is IthacaMatt arguing that the Big 10 is in trouble.

The ACC WAS in trouble when Maryland was poached. At that moment in time, people wondered if UVA and UNC would fall like dominoes. That was only a couple years ago.

But I've never said the Big 10 was in trouble. The Big 10 and the SEC make the most money. The Big 10 moved first with their network ahead of the other conferences. I don't think it's a huge success so far. Yes, the Big 10 continues to outpace the ACC, Big 12 and the Pac-Whatever, but it's only by a few million a year. All the P5 teams will be fine.

Where I differ is when Delany thinks they are going to double their per school revenue on the back of the Big Ten Network being carried on cable and being able to exact a $1 per subscriber (or whatever) carriage fee. I don't think the demand is there in New Jersey, Maryland or New York to carry it except on a premium tier. Delany thinks he is doubling his conference's revenues in 3 years, when they've only been going up by $2-3M per year for the last several years.

I think the long term dynamic is against people staying with expensive bundled TV services. Technology will force ala carte programming, and all the content owners are seeing they can cut out the middle man by selling their product directly to consumers via app / subscription. Delany is double counting. The more people pay for BTN as an app, the fewer will pay as cable subscribers. He's basing his projections on mass adoption via basic cable, but I don't see him getting the money he thinks he can (over the long term), unless he goes direct or goes premium tier.

 

[IthacaMatt]

Under the scenario you describe the Big Ten and/or BTN could actually thrive. Content owners/licensees stand to profit the most. In many respects this is why Netflix and other are investing in developing or acquiring content. The Big Ten stands to benefit the most because of its alumni base. National following aside, Michigan and Ohio State have a million living alumni between them. The conference as a whole probably has close to 10 million alumni. Throw in local populations and national fans and that number grows substantially. It's the small privates without a national following that will suffer most.

I think you're right about this. The Big 10 schools have massive alumni bases. Their school loyalty is very high. I think the direct-to-consumer model is the future, and the Big 10 is probably best positioned for that world.

 

[IthacaMatt]

I think they already launched it. . .

http://www.sbnation.com/2014/2/27/5453344/espn-conference-channels-watchespn

It's going to be more than this. There are a couple connected cable TV people on our board who have been talking about it. Part of the issue is phasing out Raycom's participation in syndicating and distributing games.

 

[FAIRTIDES]

I Would Also Think It Is Beneficial In The Current Lawsuits By Obannon AndOthers As Well As The Other Attacks The SchoolsAre Under.

If one side presents its books as evidence,won't the other side send its own auditors to confirm?

 

[dayooper]

It's going to be more than this. There are a couple connected cable TV people on our board who have been talking about it. Part of the issue is phasing out Raycom's participation in syndicating and distributing games.

OK, but where is the money coming from? ESPN already owns all of your content that isn't leased to Raycom. Sure there may be an ACCN. The question is how much will the ACC schools see from it. Why would they pay more for something when they already own the rights. The ACC might get more exposure, and that's a great thing, don't get me wrong. I just don't see that much more added value for something ESPN already owns.

 

[Seaa Blue]

Your theory is the schools want to show they are making less on sports? Why?

Related: How Athletic Departments (And The Media) Fudge The Cost Of Scholarships

As Brian Goff and Dennis Wilson very perceptively have written, athletic departments are trying to walk a rhetorical tightrope. They want to hide their profits to make it easier to keep them away from other would-be claimants. They also want to avoid looking so poor that other stakeholders within academia use sports' apparent poverty to strip them of power. Rhetoric that turns a price into a cost, and a transfer of profit into a loss of money, helps play a role in confusing things enough that the moment in the magic trick where the profit is moved from one pocket to the other gets obscured.

This sleight of hand confuses the media, who then (unknowingly) magnify and perpetuate the deception. Articles that use the label "scholarship cost" for what the schools call "athletic student aid" on their financial reporting documents are confusing price and cost, and those that don't net out direct institutional expense are reporting a fake price at that. Schools and athletic departments have no real incentive to correct the record, and so the public is left with the perception that somehow these wildly profitable enterprises are just scraping by—all the easier to claim poverty when the workforce comes around looking for a more competitive cut.

 

[IthacaMatt]

OK, but where is the money coming from? ESPN already owns all of your content that isn't leased to Raycom. Sure there may be an ACCN. The question is how much will the ACC schools see from it. Why would they pay more for something when they already own the rights. The ACC might get more exposure, and that's a great thing, don't get me wrong. I just don't see that much more added value for something ESPN already owns.

I think the expected bump will be a couple million a year at the beginning. But some colleges will do better, especially the Florida based schools, from an ACC perspective. It's the "third tier" rights that we're talking about. If you ever have watched BTN, it should be that, but with a bigger dose of baseball, softball, lacrosse, spring football practice (Fla State, Clemson, Miami). It's not something I would pay for, personally, but there is a market out there.

 

[upstater]

Coach Kevin Ollie is not an expense item, but rather an Appreciable Asset.

I think you're onto something. Schools should treat their stars like the world soccer leagues do. You want'em? Hand over $20 mill!

 

[upstater]

Related: How Athletic Departments (And The Media) Fudge The Cost Of Scholarships

This is such absolute horsepucky. Take the total number of athletes on scholarship, divide by total GIA, and you will not be anywhere CLOSE to $50k. Not even half of that.

The theory here is they are hiding money from O'Bannon etc., but the truth is they are hiding losses from parents.

Beyond that, I'm not getting into it.

 

[upstater]

Actually that difference was for 2011-12, two years ago. The ACC got a $2M per school bump from the ND addition, plus they have their own network in the works.

They didn't get that bump yet. ACC is at $17m in the last year (ended 2013).

 

[itgoeslike]

I think you're onto something. Schools should treat their stars like the world soccer leagues do. You want'em? Hand over $20 mill!

I'd rather CKO appreciate in Storrs, although when the exit fee money dries up we may need to take a look at your proposal. I'll send it over to Nelson. He's always looking for innovative ways to boost revenue. . .

 

[noeynox]

If one side presents its books as evidence,won't the other side send its own auditors to confirm?

I don't know but I would imagine they would. If for nothing else to clear up some of the ambiguity in what schools claim as revenue and expenses. There doesn't seem to be any uniformity in that process.

I feel like certain schools/conferences have clearly shot themselves in the foot with these cases that athletes and former athletes are bringing forward. On the one hand you have Jim Delany saying "We (the P5) schools bring in the most revenue, so we should have the loudest voice" he has since changed the tone of that rhetoric to wanting autonomy to offer more benefits to student athletes that lesser schools may be can't offer because they don't generate the revenue. So in essence, he is sorta saying "we'd love to offer student athletes more, but current NCAA rules prohibit us from doing so because Maine, and Md Baltimore County say we can't."

I think whoever the lawyers were that came up with the idea of suing the P5 conferences individually apart from the rest of the NCAA were brilliant. I really think that will really make them think twice about separating from the NCAA and forming their own league btw, they can't turn around and say that is the NCAA's problem and were no longer in the NCAA , though I don't even know if they could do that if they wanted to.

To me "amateur model" and paying Nick Saban 7 million a year don't jive. Recently I heard Francessa say the Duke's coach K is the highest paid team sport coach in America at 9 million??? Why doesn't the WVU rifle coach make that kind of money despite his success? And no I don't have a clue as to that guy's name.

 

[upstater]

I don't know but I would imagine they would. If for nothing else to clear up some of the ambiguity in what schools claim as revenue and expenses. There doesn't seem to be any uniformity in that process.

I feel like certain schools/conferences have clearly shot themselves in the foot with these cases that athletes and former athletes are bringing forward. On the one hand you have Jim Delany saying "We (the P5) schools bring in the most revenue, so we should have the loudest voice" he has since changed the tone of that rhetoric to wanting autonomy to offer more benefits to student athletes that lesser schools may be can't offer because they don't generate the revenue. So in essence, he is sorta saying "we'd love to offer student athletes more, but current NCAA rules prohibit us from doing so because Maine, and Md Baltimore County say we can't."

I think whoever the lawyers were that came up with the idea of suing the P5 conferences individually apart from the rest of the NCAA were brilliant. I really think that will really make them think twice about separating from the NCAA and forming their own league btw, they can't turn around and say that is the NCAA's problem and were no longer in the NCAA , though I don't even know if they could do that if they wanted to.

To me "amateur model" and paying Nick Saban 7 million a year don't jive. Recently I heard Francessa say the Duke's coach K is the highest paid team sport coach in America at 9 million??? Why doesn't the WVU rifle coach make that kind of money despite his success? And no I don't have a clue as to that guy's name.

I doubt the O'Bannon people would EVER send in auditors. They would shoot themselves in the foot if they did that.

 

[SAMCRO]

How much does Penn State spend sending its students across 2 time zones for conference games? .

Considering SU and BC have 2 conference games further from their campuses than PSU's furthest trip in the B1G, and a third about the same distance as PSU's furthest, one could pose the same question to SU and BC. Factor in most of PSU's travel is going to be closer than SU and BC's shortest away trips and PSU's travel seems manageable comparatively speaking.

 

[IthacaMatt]

Considering SU and BC have 2 conference games further from their campuses than PSU's furthest trip in the B1G, and a third about the same distance as PSU's furthest, one could pose the same question to SU and BC. Factor in most of PSU's travel is going to be closer than SU and BC's shortest away trips and PSU's travel seems manageable comparatively speaking.

Flying up and down the east coast is much easier that flying east and west and crossing time zones. Travel is much easier, and cheaper.

 

[SAMCRO]

Flying up and down the east coast is much easier that flying east and west and crossing time zones. Travel is much easier, and cheaper.

So a charter flight traveling 2800 miles round trip or 2400 miles round trip costs less than one traveling 2000 miles round trip? Got it.

 

[NotreDameJoe]

I doubt the O'Bannon people would EVER send in auditors. They would shoot themselves in the foot if they did that.

I think they would love to do that because the university mice would flee from the spotlight and settle.

What Sea Blue linked shows how easy it is for ADs to misrepresent their bottom line. They could have any number of motives, such as justifying a change of conferences.

 

[upstater]

I think they would love to do that because the university mice would flee from the spotlight and settle.

What Sea Blue linked shows how easy it is for ADs to misrepresent their bottom line. They could have any number of motives, such as justifying a change of conferences.

I already blew apart SeaBlue's article. It's easy to do. Simple calculation. Take the total GIA, divide by the number of student athletes on scholarship, and you are absolutely nowhere near the $50k a year that the article claims. Do the calculation yourself. You're not going to get $50k per. Not to mention that the total GIA of say $10m a school is still under direct support plus student fees plus interest on facilities.

 

[NotreDameJoe]

I already blew apart SeaBlue's article. It's easy to do. Simple calculation. Take the total GIA, divide by the number of student athletes on scholarship, and you are absolutely nowhere near the $50k a year that the article claims. Do the calculation yourself. You're not going to get $50k per. Not to mention that the total GIA of say $10m a school is still under direct support plus student fees plus interest on facilities.

That's the point. The U gets to bill it's left pocket (Athletics) for tuition total X dollars. This is in spite of the fact that it costs nowhere near $X to educate that athlete. They can transfer X dollars out of the athletic dept to the general fund, but they are moving money from their left pocket to the right one.

Here's a retro hypothetical example. Music label mails a free sample CD to a promoter. The label accounts it as promoter had bought it for $15 in some strip mall even though the CD's marginal cost was around 35 cents. The label can says they lost money on it, but really matters is what kept the mass of teenagers marching in to buy the $15 album.

 

[upstater]

That's the point. The U gets to bill it's left pocket (Athletics) for tuition total X dollars. This is in spite of the fact that it costs nowhere near $X to educate that athlete. They can transfer X dollars out of the athletic dept to the general fund, but they are moving money from their left pocket to the right one.

Here's a retro hypothetical example. Music label mails a free sample CD to a promoter. The label accounts it as promoter had bought it for $15 in some strip mall even though the CD's marginal cost was around 35 cents. The label can says they lost money on it, but really matters is what kept the mass of teenagers marching in to buy the $15 album.

Can you do math?

Take GIA, divide by total scholarships, and you'll see what the average per student is. That destroys the whole logic of the article you like. The article argues that GIA is over and above the cost per student to the university (i.e. true cost AFTER accounting for any scholarships). Just do the math and you will see how wrong the authors are. Every university has a true cost per student (which isn't tuition/room&board). That's what the authors argued. I agree with that. However, the authors then argued that ADs pay the top rate. If you divide GIA by total scholarships, you will quickly find that ADs do NOT pay the top rate.

 

[NotreDameJoe]

Can you do math?

Take GIA, divide by total scholarships, and you'll see what the average per student is. That destroys the whole logic of the article you like. The article argues that GIA is over and above the cost per student to the university (i.e. true cost AFTER accounting for any scholarships). Just do the math and you will see how wrong the authors are. Every university has a true cost per student (which isn't tuition/room&board). That's what the authors argued. I agree with that. However, the authors then argued that ADs pay the top rate. If you divide GIA by total scholarships, you will quickly find that ADs do NOT pay the top rate.

First the article is calculating the GIA per student, there's no division needed. Second, the 'true cost' per student is what the school says it is, largely a function of how much they want to spend.

Yeah there are reality checks where they have to spend money to keep the lights on in the athlete's classroom but the price tag is nowhere near that.

 

[dayooper]

I think the expected bump will be a couple million a year at the beginning. But some colleges will do better, especially the Florida based schools, from an ACC perspective. It's the "third tier" rights that we're talking about. If you ever have watched BTN, it should be that, but with a bigger dose of baseball, softball, lacrosse, spring football practice (Fla State, Clemson, Miami). It's not something I would pay for, personally, but there is a market out there.

So you are saying that ESPN will pay at least $28 million for the non revenue sports that they already own? I was under the impression that ESPN owned almost all of the media rights (excepting coaches shows, radio broadcasting and the like). If they didn't, what would stop UNC from monetizing their "Tier3" games and starting their own network? This is what The Big12 did when The LHN put an end to The Big12 Network. If I remember correctly, ESPN bought The ACC's with the last contract so they could put the big non revenue games on ESPNU.

Let's say that they held back those games, how would ESPN make money on an ACCN if they gave each school at least $2 million more and take content away from ESPNU? Fox is itching to get their hands on as much content as they can and already owns the Big East. ESPN has to decide if they want to play with The Big 10 (I personally think the media will be split between Fox and ESPN) or lose that content as well. They are already losing money (or breaking even) on The LHN so they wouldn't lose them to Fox and either the Pac or The Big10. The ACCN may happen, but it will be bundled with The SECN and The ACC schools won't see as much as you would like. The exposure is priceless, but the money won't be as much, if at all.

Another thing - If you are thinking the Florida schools will get more than the others (or FSU/UNC), than The ACC is dead conference walking. Nothing splits apart a conference faster than a conference automatically giving more resources to certain schools and not others. The Big12 tried it and it almost fell apart. Now, I know you will say that Michigan makes more than Northwestern, and they do. Michigan charges way to high prices on a stadium that holds 115,000 fans and make much more on their non Big10 media (radio broadcasting, coaches show, merchandising licensing, ect). Not from the Big10 media payouts, though. Yes, Nebraska, Rutgers, and Maryland get less of a payout, but they are buying their way in and will receive equal payouts eventually.

 

[upstater]

First the article is calculating the GIA per student, there's no division needed. Second, the 'true cost' per student is what the school says it is, largely a function of how much they want to spend.

Yeah there are reality checks where they have to spend money to keep the lights on in the athlete's classroom but the price tag is nowhere near that.

Durgh!!! The GIA per student is the total GIA divided by number of student athletes on scholarships. It is for this reason I told you to do the calculation. They say it's 50k per. Randomly I picked 4 schools: LSU, Florida St., UConn and Cincy. I looked at their GIAs, which averaged $8.7m. Divide that by number of student athletes. UConn happens to be at $10.3m, but no matter how hard you try, you're not going to get $50k GIA per out of $10.3m GIA at UConn. Just try the math, see if you can do it.

Look here for more info: http://ope.ed.gov/athletics/InstDet...4743d352f31332f3230313420323a32323a303020504d

As for true costs, there are endowments and taxpayers that subsidize those costs. For a % of athletes in research intensive programs, there are research grants as well that subsidize costs. You'd be surprised to see how low the GIA are. These things aren't a mystery. They are reported.

 

[FAIRTIDES]

I doubt the O'Bannon people would EVER send in auditors. They would shoot themselves in the foot if they did that.

Is there a short-form description as to why you feel this way?

If an organization/company uses a number (revenue/cash flow/expense) to counter an argument, the other organization (Union?) has to have the opportunity to vet the number(s).