TV Math Doesn't Necessarily Add Up For Conferences
CNBC Sports Business Reporter
Lost in the talk of the formation of college football mega conferences led by the Pac-10 and the Big 10 is that bigger isn’t necessarily more profitable.
Yes, there are certain teams that will make sense for both conferences, but let’s not forget that we’re dividing money here.
The Big Ten divided about $220 million in television revenue last year. By giving a full share to one new team, each team would be giving up $1.7 million each. That means that the new team not only has to be worth what another team in the league is worth, but it has to add value.
If the Big Ten wants to give a full share to a new team, and they want to make the same amount of money, they have to hope that that team alone can generate $20 million by itself.
How many teams can do that? Notre Dame. Maybe Nebraska. Rutgers, if you think that gets you the New York and Philly market. I personally don’t think it does.
The Pac-10 is in the same boat. What would Texas Tech add that Texas couldn’t? Is Oklahoma State worth as much as Oklahoma?
Conference championship or not, adding teams doesn’t automatically increase revenue to a point where every team is worth having. That’s the type of math that the conference commissioners have to consider.
TV revenues might double if a Pac-10 network succeeds, but if there are 16 teams involved, no one is doubling their money. Right now, TV revenue for the Pac-10 is around $100 million a year. Let’s say a new network deal after the 2011-12 season and a new network of their own adds up to $200 million in TV revenue a year.
Assuming equal splits of all 16 teams, original Pac-10 teams would only be making $2.5 million more than what they have now. And don’t forget the UCLA softball, and all its other non-generating sports, might have to travel to Texas now.
“It doesn’t make sense to add teams that don’t have incremental revenue opportunities,” said former CBS Sports president Neal Pilson, now a TV consultant.
With this partly in mind, Pilson doesn’t think the Big 10 or the Pac-10 will add more than one or two teams.
Plus, Pilson adds, “if any conference expands to more than 12, I think they are going to run into a hailstorm of criticism and condemnation that will surely earn them a trip to Washington D.C. and to some possible lawsuits.”
The only way I think 16 really works financially is if the Pac-10 gives different values to each school based on tradition and based on projected audience growth.
For instance, and just for argument’s sake, Texas gets a full share, Colorado gets a 75 percent share, Texas Tech gets a 70 percent share and so on. Or, maybe — if a new network emerges — they retroactively figure out shares based on who signs up and what team they are a fan of.
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