Some B1G Financial Thoughts

[WestHartHusk]

Fox's purchase of the Yes Network has major conference realignment implications that UConn needs to: 1) recognize and; 2) exploit.

CT Households: 1,400,000
Hampden County Households: 200,000 (Representative: I think we get 1 non-CT county in B1G)
Yes carried in 10,600,000 non-CT households
Current Yes Network Subscriber Fee: $3/month
Current B1G Subscriber Fee: $.40 / month + 20% ad revenue (a low-end estimate)

CT has both a significant Yankee and UConn following meaning that pairing these networks together (plus Government action I will discuss below) creates a strong negotiating position with the networks in Connecticut. I think it can be reasonably assumed that the networks negotiated jointly will fetch +25% their current rate within the state, and I think that we hold our own in generating the pro forma 20% ad revenue (and there is an opportunity to be higher given that we have three teams with significant following and an opportunity to add soccer and hockey to that). Moreover, adding our content to Rutger's content may make a marginal impact in the value of the Big Ten Network in the non-CT metro-NY households which we will value at $.10/month. If we run these assumptions through we will see a strong financial case for UConn.

YES in CT w/ 25% price increase: $63,000,000 (+$12,600,000)
If we add only one 200,000 household non-CT county for YES & B1G $10,200,000 (+$10,200,000)
B1G on Basic Cable in CT w/ 25% increase: $8,400,000 (+$8,400,000)
B1G Advertising @ current rate: $1,700,000(+$1,700,000)
Minor Increase to non-CT rate: $12,700,000 ($12,700,000)

Total net increase: $45,600,000

To put that into terms, that is the equivalent of 9.6M new households paying the B1G Network's current fees due our unique position regarding YES, and Connecticut's strong Yankee/UConn followings.

But to further entice an invitation the state should be reaching out NOW to the B1G network. YES already does it's in-studio production in Stamford and have been there since its inception. Given the state's position as a national leader in sports entertainment production the state should be offering financial incentives (ala ESPN & NBC) to consolidate their operations HERE.

And finally, YES can gut SNY's last remaining non-Mets content and force a withdrawal in their non-NYC penetration.

So there is an opportunity right now but we need the coordinated action of our University, elected state officials, mayors, fans and students and we need to sell. HARD.

 

[Rumrunner]

This is where ct's politicians should be focused. Not threatening to blow up the system but to use greed to advance uconn's cause.

 

[RS9999X]

I agree we need to think out of the box. An aggressive media strategy. A CT sports channel developed with partners like WWE AND Fenway Group. Force it down the throats of cable. Take no prisoners

Sent from my Lumia 920 via Windows 8. Now bite me Apple Droids.

 

[Oxford Bob]

Fox's purchase of the Yes Network has major conference realignment implications that UConn needs to: 1) recognize and; 2) exploit.

CT Households: 1,400,000
Hampden County Households: 200,000 (Representative: I think we get 1 non-CT county in B1G)
Yes carried in 10,600,000 non-CT households
Current Yes Network Subscriber Fee: $3/month
Current B1G Subscriber Fee: $.40 / month + 20% ad revenue (a low-end estimate)

CT has both a significant Yankee and UConn following meaning that pairing these networks together (plus Government action I will discuss below) creates a strong negotiating position with the networks in Connecticut. I think it can be reasonably assumed that the networks negotiated jointly will fetch +25% their current rate within the state, and I think that we hold our own in generating the pro forma 20% ad revenue (and there is an opportunity to be higher given that we have three teams with significant following and an opportunity to add soccer and hockey to that). Moreover, adding our content to Rutger's content may make a marginal impact in the value of the Big Ten Network in the non-CT metro-NY households which we will value at $.10/month. If we run these assumptions through we will see a strong financial case for UConn.

YES in CT w/ 25% price increase: $63,000,000 (+$12,600,000)
If we add only one 200,000 household non-CT county for YES & B1G $10,200,000 (+$10,200,000)
B1G on Basic Cable in CT w/ 25% increase: $8,400,000 (+$8,400,000)
B1G Advertising @ current rate: $1,700,000(+$1,700,000)
Minor Increase to non-CT rate: $12,700,000 ($12,700,000)

Total net increase: $45,600,000

To put that into terms, that is the equivalent of 9.6M new households paying the B1G Network's current fees due our unique position regarding YES, and Connecticut's strong Yankee/UConn followings.

But to further entice an invitation the state should be reaching out NOW to the B1G network. YES already does it's in-studio production in Stamford and have been there since its inception. Given the state's position as a national leader in sports entertainment production the state should be offering financial incentives (ala ESPN & NBC) to consolidate their operations HERE.

And finally, YES can gut SNY's last remaining non-Mets content and force a withdrawal in their non-NYC penetration.

So there is an opportunity right now but we need the coordinated action of our University, elected state officials, mayors, fans and students and we need to sell. HARD.

I like what your saying, but why wouldn't the B1G try to work out the same package with NESN and take BC instead of us. They would control all of NE, NYC and NJ.

 

[WestHartHusk]

Because the B1G is partly owned by Fox Sports who owns 49% of YES (increasing to 80% in the upcoming years). Fox Sports would have to buy an ownership stake is NESN for what I have proposed to work, and the fact that BC isn't 'must have' programming like UConn is in CT limit the leverage effect of combining the assets.

 

[OkaForPrez]

Here is what I'd like to know from folks closer to the media market implications of both this thread and the "How Swofford" thread. I'm willing to believe that only markets matter to the B1G given the Rutgers acquisition, so if we hypothesize that at least one more northeastern program is required to anchor the B1G in the North East megamarket, how do we compare to BC and Cuse given the YES variable, the assumption that viewership doesn't matter as much as general cable sets, etc?

 

[Rumrunner]

The BTN business model derives most of its revenues from forcing distribution companies to (cable) to carry the BTN. The footprint states, that is states in which the BTN has a local school, allow the BTN to charge an everage of $.80 per subscriber. A state like michigan, eg, is an easier sell to the cable company.

I keep going back to the intervuew from a couple of months ago of Mark Silverman, the pres of the BTN. He stated that the BTN was doing well with respect to getting these higher fees everywhere in the BTN footprint states except for eastern pennsylvania.

I think that that pushback has guided the Big 10's expansion plans. They don't want a team that WON'T be a footprint state. MD will cover MD. Rutgers will get central and southern new jersey. The BTN I think concedes that the nyc market will more closely resemble eastern pa (philly) than western pa. So the goal ther is to, if the op's idea is sound, bootstrap the btn on the yes network.

conn would definitely be a footprint state, something like 700k households. The Op isuggesting that NYC using the bTN alone won't be a footprint state, but as an add-on to yes network. There are a lot of people in sw ct that would want yankees PLUS to sweeten the pot, uconn bb and fb.
Syracuse is not a footprint school.
it barely would cover cent ny. It would do for nyc what uconn would do, but ct crushes the syracuse dma.

for boston, first that's nesn. yankees/red sox. BC isn't a footprint school that is going to cause eastern mass cable subs to pony up for them. If anything, it would be 100x more difficult than eastern pa. Pro team focus, small catholic school. that isn't the BTN model, not even close.

 

[mavblues]

Besides, I think BTN is already on in Boston.

OP: could you add your post to the B1G thread? Excellent thoughts.

 

[RegisteredUconn]

Here is what I'd like to know from folks closer to the media market implications of both this thread and the "How Swofford" thread. I'm willing to believe that only markets matter to the B1G given the Rutgers acquisition, so if we hypothesize that at least one more northeastern program is required to anchor the B1G in the North East megamarket, how do we compare to BC and Cuse given the YES variable, the assumption that viewership doesn't matter as much as general cable sets, etc?

In my mind the question to be answered would be what recommends either Cuse or BC to the B1G. Both are relatively small, private institutions and, as such, have very limited ability to grow. People not associated with a college just don't relate to a private institution the way they do to the school that has the same name as the place they live. Each state's flagship school carries a built in advantage simply by virtue of having relatability. I have no doubt that Rutgers' troubles over the years can be blamed, in part, because a lot of people don't know they are the state university of New Jersey.

In addition to the relatability problem, neither BC nor Cuse have the deep pockets that a state funded institution does. They struggle (relative to a public flagship school) to maintain their physical plant and that includes athletic facilities. Deterioting conditioning rooms/equipment and practice don't impress recruits or prospective coaches. Does BC's men's basketball team even go to holiday tournaments any more? Know where there football team traveled (outside of conference games)? Nowhere. Does that sound like a recruiter's dream? BC's athletic future looks ugly. Cuse looks a little better but if you were the B1G would you want to place a huge bet on them? UConn, on the other hand, has been on one of the steepest upward trajectories over the last 2 decades. That shows promise. That shows committment. That sounds like the better bet.

 

[Dann]

should i do a merge job?

 

[businesslawyer]

should i do a merge job?

We're not interested in your love life.

 

[ctchamps]

The BTN business model derives most of its revenues from forcing distribution companies to (cable) to carry the BTN. The footprint states, that is states in which the BTN has a local school, allow the BTN to charge an everage of $.80 per subscriber. A state like michigan, eg, is an easier sell to the cable company.

I keep going back to the intervuew from a couple of months ago of Mark Silverman, the pres of the BTN. He stated that the BTN was doing well with respect to getting these higher fees everywhere in the BTN footprint states except for eastern pennsylvania.

I think that that pushback has guided the Big 10's expansion plans. They don't want a team that WON'T be a footprint state. MD will cover MD. Rutgers will get central and southern new jersey. The BTN I think concedes that the nyc market will more closely resemble eastern pa (philly) than western pa. So the goal ther is to, if the op's idea is sound, bootstrap the btn on the yes network.

conn would definitely be a footprint state, something like 700k households. The Op isuggesting that NYC using the bTN alone won't be a footprint state, but as an add-on to yes network. There are a lot of people in sw ct that would want yankees PLUS to sweeten the pot, uconn bb and fb.
Syracuse is not a footprint school.
it barely would cover cent ny. It would do for nyc what uconn would do, but ct crushes the syracuse dma.

for boston, first that's nesn. yankees/red sox. BC isn't a footprint school that is going to cause eastern mass cable subs to pony up for them. If anything, it would be 100x more difficult than eastern pa. Pro team focus, small catholic school. that isn't the BTN model, not even close.

I'm really impressed with what you guys bring to these forums. Do you have a comparison of what VA or UNC would bring compared to UConn?

 

[ctchamps]

should i do a merge job?

No this thread actually gives meat to the other threads potatoes!

 

[businesslawyer]

I'm really impressed with what you guys bring to these forums. Do you have a comparison of what VA or UNC would bring compared to UConn?

I've spent a lot of time in Virginia. I don't know that adding UVA forces all the cable companies to put BTN on basic. Adding North Carolina, you absolutely get on basic in every cable sysatem in the state for hoops. Just like in Ct. Except their state has more people.

 

[ConnHuskBask]

I wish the guy from a few months back 'FromTheInside' was here to shed some light on this situation.

It certainly seems that if the B1G wants to leverage YES that the three most logical choices are NJ - Rutgers, NY - Syracuse and CT - UConn. The Yankees alone carry a ton of clout and adding the three local major universities to that seems like a huge revenue generator.

The one thing that I can be certain of is that Delany, B1G and Fox have probably run these numbers hundreds of times and definitely have an answer and a plan going forward.

 

[Dann]

I wish the guy from a few months back 'FromTheInside' was here to shed some light on this situation.

It certainly seems that if the B1G wants to leverage YES that the three most logical choices are NJ - Rutgers, NY - Syracuse and CT - UConn. The Yankees alone carry a ton of clout and adding the three local major universities to that seems like a huge revenue generator.

The one thing that I can be certain of is that Delany, B1G and Fox have probably run these numbers hundreds of times and definitely have an answer and a plan going forward.

i bet he will come back at some point

 

[businesslawyer]

I wish the guy from a few months back 'FromTheInside' was here to shed some light on this situation.

It certainly seems that if the B1G wants to leverage YES that the three most logical choices are NJ - Rutgers, NY - Syracuse and CT - UConn. The Yankees alone carry a ton of clout and adding the three local major universities to that seems like a huge revenue generator.

The one thing that I can be certain of is that Delany, B1G and Fox have probably run these numbers hundreds of times and definitely have an answer and a plan going forward.

One advantage of UConn over Syracuse in this regard: While SNY carries UConn, RU and Syracuse events, in CT they were having trouble getting market coverage for their Mets feeds and solved that problem by entering into their deals with UConn. Now, because of that, everyone in CT gets the Mets.

In addition to what Fox could make with the BTN in CT, it could make money for YES by taking away UConn's relationship with SNY for the Tier 3 events and then watching much of CT lose the Mets games from their cable boxes.

Of course, that is all illegal "tying" under the Sherman Act, but since we live in a world where non-profit state institutions are breaking laws daily relating to college sports, it would at least be refreshing to see someone do it for money they get to keep at the end of the day.

 

[WestCoastHusky]

Great analysis so far. This is kind of data that will get us into the B1G vs. CUSE/BCU/GTECH etc. If we can break it down to actual $$$ showing why UCONN is the better bet for BTN financially, then we got a realistic chance. Bottom line is B1G analysts will be using these data to make the recommendation to Delaney and gang.

Props to WestHawk and RumRunner for providing the analysis.

 

[ConnHuskBask]

One advantage of UConn over Syracuse in this regard: While SNY carries UConn, RU and Syracuse events, in CT they were having trouble getting market coverage for their Mets feeds and solved that problem by entering into their deals with UConn. Now, because of that, everyone in CT gets the Mets.

In addition to what Fox could make with the BTN in CT, it could make money for YES by taking away UConn's relationship with SNY for the Tier 3 events and then watching much of CT lose the Mets games from their cable boxes.

Of course, that is all illegal "tying" under the Sherman Act, but since we live in a world where non-profit state institutions are breaking laws daily relating to college sports, it would at least be refreshing to see someone do it for money they get to keep at the end of the day.

So, in this scenario does UConn cede it's Tier 3 rights to B1G Network or is it possible to have a similar deal with YES as we currently have with SNY? A lot of moving parts here, but some of it makes sense.

BL - In case I missed it, what are your thoughts on UConn's chances to B1G? I think everyone here values your opinion highly and I'm not sure if I've seen you put it out there one way or another.

 

[businesslawyer]

So, in this scenario does UConn cede it's Tier 3 rights to B1G Network or is it possible to have a similar deal with YES as we currently have with SNY? A lot of moving parts here, but some of it makes sense.

BL - In case I missed it, what are your thoughts on UConn's chances to B1G? I think everyone here values your opinion highly and I'm not sure if I've seen you put it out there one way or another.

Even two months ago, I would have said it was utterly ridiculous. I am not longer saying that. I can see us being in the discussion as the Ten expands further.

That having been said, I don't think it's likely that we go to the Ten. I just think they will be able to find what, to them, are more valuable targets.

But at this point who knows.

 

[SubbaBub]

I think any increase in subscription fees for a merged network would have to leverage the YES brand moreso than the BTN. A "BTN on YES" would certainly allow Fox to get more $ from CT cable subscribers (at least equal to the current BTN footprint fee) and transfer that fee in within the existing BT footprint.

The real score looks to be from those areas where YES is a valuable asset to a cable system outside the BT footprint. Systems that might not want the BTN might be leveraged into paying at least the non-footprint premium in order to keep YES on their systems. I'd be interested in those numbers.

 

[WestHartHusk]

First, to update the numbers based on Rum's input that BTN typically gets subscription fees of $.80/month our contribution to BTN would increase by $5.75M.

For fun we can look at our contribution head-to-head with UVA & UNC. I believe that UVA would be required programming in VA, however I am not sure they would get the full-rate given BTN doesn't get it in E-PA so we can look at them both ways, and UNC certaintly gets full rate in NC.

Connecticut: 1.4M x $.80 x 12 = 13.5M
UNC: 3.6M x $.80 x 12 = $34.6M
UVA: 3.0M x $.80 x 12 = $28.8M
x $.40 x 12 = $14.4M

While this is a stark gap (less so if you don't think UVA can fully carry VA) CT, via YES and our proximity to NYC, can close it. A few scenarios illustrate how:

1. SNY gets pushed off CT cable systems ($2.37 / mo) and YES can get half that back by leveraging the joint product: +$19.8M.
2. For each incremental $.10 of value UConn adds BTN in metro-NYC: +$12.7M
3. For every 100,000 homes that add YES/BTN (RI/MA): +$4.5M

Will each of those things happen? Probably not. But the gap is $21M between us and UNC from a subscription fee standpoint and there are a lot of avenues to close it. I know the BTN is looking at these numbers (or something similar) but it is incumbent for OUR leadership to present the data in the light most favorable. Let's all hope that is what they are doing.

 

[John Greene]

In my mind the question to be answered would be what recommends either Cuse or BC to the B1G. Both are relatively small, private institutions and, as such, have very limited ability to grow. People not associated with a college just don't relate to a private institution the way they do to the school that has the same name as the place they live. Each state's flagship school carries a built in advantage simply by virtue of having relatability. I have no doubt that Rutgers' troubles over the years can be blamed, in part, because a lot of people don't know they are the state university of New Jersey.

In addition to the relatability problem, neither BC nor Cuse have the deep pockets that a state funded institution does. They struggle (relative to a public flagship school) to maintain their physical plant and that includes athletic facilities. Deterioting conditioning rooms/equipment and practice don't impress recruits or prospective coaches. Does BC's men's basketball team even go to holiday tournaments any more? Know where there football team traveled (outside of conference games)? Nowhere. Does that sound like a recruiter's dream? BC's athletic future looks ugly. Cuse looks a little better but if you were the B1G would you want to place a huge bet on them? UConn, on the other hand, has been on one of the steepest upward trajectories over the last 2 decades. That shows promise. That shows committment. That sounds like the better bet.

Your second paragraph blows the cred of your first, at least as far as BC is concerned. You must never have set foot on the campus because if that physical plant is in need of repair I hate to hear what you would say about Storrs. Even with the new construction happening.

 

[Rumrunner]

To carry it further, Dish network and directv pay about $.40 per subscriber. NJ's southern half is covered by the philly dma, so in hindsight silverman's concern about eastern philly are being addressed.

with respect to syracuse, the syracuse DMA is ranked #84 and has 377,000 households.

Syracuse also was just about booted from the AAU before voluntarily leaving on its own. I really can't see syracuse being in the discussion.

One thing to consider is that the timing of the big 10's move might have been quicker than presidents expectations. was uconn gunning for an aau invite in 5 years? was the whole "relative calm" self-proclaimed by notre dame after its move to the acc thought by those in power to stretch out thru the first attempts at the playoffs?

 

[RegisteredUconn]

Your second paragraph blows the cred of your first, at least as far as BC is concerned. You must never have set foot on the campus because if that physical plant is in need of repair I hate to hear what you would say about Storrs. Even with the new construction happening.

I didn't say the place was in need of repair. I said they struggle to keep up because their pockets aren't as deep. Sooner or later, that struggle will likely take a toll. As evidence, I offered a rather weak travel budget BC seems to have adopted. Kids like to travel, experience new things, experience others won't. Recuits won't rate that a positive or even a neutral. People try to hang onto the status quo for as long as possible but once they have to downgrade, the snowball begins to roll.

The question was how does BC and Cuse compare to UConn athletically. BC seems to have fallen on bad times recently. That, of course, is nothing new. I just submit that their path back to relevance is tougher that would be ours because we have greater resources to provide a better experience.