Potential television windfall driving Big Ten's latest expansion efforts
The University of Maryland's Board of Directors
According to a television executive familiar with the Northeast corridor, the move could ultimately be worth as much as $200 million annually for the Big Ten in cable subscription fees. This is a Pollyannaish figure that's unlikely to ever materialize, but it shows the scope of the potential value. The interesting part, considering the current cable climate, is that the move also comes with considerable risk.
There are an estimated 15 million available households in the New York, Philadelphia, Baltimore and Washington D.C. markets. If the Big Ten Network got on basic cable in all those places, which is an enormous long shot, the per-household figure by the time Rutgers and Maryland joined the league would project in the neighborhood of $1.25 per month. That would equate to about $200 million per year.
The risk comes because none of that money is guaranteed. Considering the struggles the Pac-12 has had with DirecTV and the distribution issues surrounding the Longhorn Network, it's clear cable subscribers automatically handing over distribution is far from a given. (The Lakers have struggled to obtain distribution in Los Angeles this season, yet another sign of a new era in cable TV.)
"It's a long fight," the television executive, who has no connection to the move, said of the Big Ten cashing in on Maryland and Rutgers. "That's the potential. There's a lot of negotiating to happen before that."
While getting all 15 million homes is unlikely, this could potentially be a $100 million annual television windfall for the Big Ten. (That figure doesn't include the additional money that will come from the added markets and games when the Big Ten negotiates its next television contract in 2017.) It's estimated that the Big Ten's annual payout could increase to between $30-35 million per year, nearly double the ACC's $17 million payout.
There's optimism about the possibility for significant cable pickup in the Maryland and Washington areas, where the Terps have a strong presence. The same can't be said for Rutgers, which has little recent history of local relevancy in football or basketball.
"Rutgers is the wild card here," said the executive. "Rutgers in New Jersey and New York City isn't Ohio State in Ohio. Is it possible that the interest in Rutgers in the corridor is so marginal that no one is willing to carry it in that corridor? Is it possible that Rutgers doesn't resonate enough to justify 1.25 across any of the subscribers?"
One potential piece of leverage the Big Ten will have is FOX and News Corp's
But with big potential comes big risk. This move will not come without some drama.
"Hey, it could be big money," said the executive. "But it's a lot of risk. Rutgers isn't the Yankees. It will be interesting to tell."