Big Ten Expansion Part Five

Today we look at expansion from the perspective of the Big Ten schools. I can tell you that there is frustration among the coaches and athletic directors. None will speak on the record, but let me share with you what I got last night from a Big Ten coach. “These meetings were a waste of my ******* time. They get us here, and of course, the entire nation is talking about Big Ten expansion and they don’t want to even talk about it. I mean they told us nothing. Get us here and ignore the elephant in the room. I guess it will be just like when they started the network (Big Ten) when they huddled the Presidents together and told us last.”

When I mentioned what I had been told by another coach to Mark in Chicago last night, he said, “…We will be the last to know.” The athletic people, the athletic directors and coaches were upset when the Big Ten Network started. They felt “Slighted” by Commissioner Delany keeping the athletic people out of the loop and only working via the Presidents.

One Big Ten school head coach mentioned to me today, “I would assume that he would keep us out again. Why should he ask us (athletic people) for input on an athletic issue?” Read into that quote and hear the sarcasm.

Many in “athletic” departments across the Big Ten feel like they are being kept out of the loop and do feel upset about it. I understand that the Commissioner recognizes that this is a very sensitive matter and it has to be handled with as much discretion as possible, I just think alienating your athletic people once again is not a wise choice.

Time Frame

The Commissioner has said that he expects this process to take 12-18 months. My source at the Big Ten throughout this series who spoke to Spartan Nation on the condition of anonymity fearing retribution from the Commissioner told me, “I would expect something to be done in June. If you add schools they have to tell their conferences what they are doing before the new fiscal year in July. When it happens is up in the air, but they would like to start actually playing the new schedules for the 2013 fall seasons.”

Revenue

ESPN is the most profitable television network in the history of TV because of subscription fees.  I briefly touched on this in previous columns, but I need to explain more. When a cable or satellite provider carries an ESPN or ESPN 2 etc. they (companies) pay them (ESPN) a certain fee for that. For example only, if they charge the satellite company a $2.12 per home fee and they have 987,000 homes the cable company pays them $2,092,440 per month. That is how ESPN was able to outbid and win Monday Night Football.

You may remember when the Big Ten Network launched there was a large disagreement as some providers wanted to offer it a la carte as an item separate of basic coverage that could be purchased. Cable companies loved that because it didn’t cost them anything out of pocket. The Big Ten said no and eventually won forcing them to carry it in their basic tier package.

In fact, many of the national broadcast networks like ABC, CBS, NBS and Fox are all considering leaving “over the air” traditional TV in order to get their hands on those carry or subscription fees. Right now they get nothing when a satellite or cable company distributes them. So many people have gone the satellite and cable route that local affiliates have to at times beg to make sure they are carried. If they went off of those cable and satellite providers their HUT (Households Using Television) levels would plummet.

The Big Ten Network has had an infusion of cash and success, because they held out at first, but now are getting those fees. In adding new schools via expansion the Big Ten is looking at who brings them more markets as I have discussed.

Advertising revenue is not what is driving the expansion or the network. Some have e-mailed and disagreed with me, but I can tell you in talking with people in the Big Ten and the various schools that is 100% accurate. As ratings improve their subscription fee goes up. At lunch today with MSU athletic director Mark Hollis, he made it very clear that advertising dollars are NOT what they are looking at. It is about subscriptions and new markets when he said, “We aren’t even counting on advertising revenue there,” referring to increased dollars from new schools. It is all in new markets and subscriptions.

Knowing that adding schools that bring new markets is critical, Hollis also said today, “If that (Big Ten) expands to a larger number that absolutely helps.” Hollis went on the add, “They have to be the right fit, you can’t expand just to expand.”

I have said multiple times throughout this series that I do not want to see Syracuse or Rutgers added. I mentioned in a previous article that sources at the Big Ten think there are other ways to get the eastern markets than adding them. Ideally that would be Notre Dame, but who knows if that would happen. Syracuse and Rutgers don’t get good ratings in those markets when they are on there.

If they aren’t proven winners (ratings grabbers), would eastern market cable and satellite companies pay the Big Ten subscription rates at the price dictated? Would it create a lengthy holdout similar to what happened when the Network launched? If so, I have spoken to multiple people that think adding them is just too risky.

If the expansion happened and schools didn’t get a rise in revenue right away, those schools would have their already strained budgets get even more stretched with longer trips to play new schools that didn’t produce the expected cash.

In part six of our series we will look at MSU and their current budget situation. We will take you inside the struggle that Mark Hollis is having and tell you bluntly who is at fault. How could expansion hurt MSU or help it?