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Two Numbers To Consider: $32.4 Million, and $1.3 Billion

Back in my corporate days, we used to invite key members of the sales force to product development meetings and ask for their feedback on what they thought we needed to add to our product line.

Dozens of ideas about product other competitors had would be offered. I was the “no fun” guy at times who would ask specifically why we needed to have a version of that product, wanting to know was it their best-seller? How many floors in your territory was it on? How much volume do you think we’d do with such a group? Whose product would we knock off retail floors to make room for this new addition?

In many cases the answer was they didn’t know. They just liked how the product looked and wanted something like that in our lineup. I would then say it’d be a shame for us to go through all the expense of developing a new group, only to find out that while visually appealing, it didn’t really sell well for the competition, and thus probably wouldn’t be making any money for us either. So get me more data or the answer was no.

Then they’d call me names 😊

My point in saying this is because after reading a bunch of stories and opinions about who the Atlantic Coast should consider adding, now that Texas and Oklahoma have launched the opening salvo in another round of conference wars, is that most fans and pundits sound just like those product development meetings. They suggest and want every shiny bauble that might be out there, with little to no regard to the bottom line.

The magic number I’ve seen that should be the basis of any suggestion is this one: $32.4 million. That’s the revenue split each team got in the most recent sharing of the pot of gold the league passed out from television and revenue sharing agreements. It doesn’t mean each team brought in that much – I’m sure Clemson brought in a lot more, and teams like Boston College brought in a lot less – but that was the average.

A team you bring in that may be fun to watch in a sport or two but does not bring in at least another $32.4 million can’t be a serious consideration. That’s the litmus test: can a new school meet or exceed that number in revenue or not. They don’t have to be good at anything, by the way. Rutgers got into the Big Ten not because of their ability to fill stadiums; they just had a gazillion cable subscribers in their foot print the Big Ten couldn’t wait to charge an extra few bucks per subscriber to enrich the league’s coffers.

This is the knock on West Virginia, who it seems like a lot of people would like to see added to the ACC mix. I personally like to watch them in football and basketball, but this isn’t a popularity contest. It’s a $32.4 million contest. With a low population state that wouldn’t add huge numbers of subscribers to the ACC Network (who I'm hearing Comcast is finally going to pick up in late September), their addition might make for a situation where each ACC team one day doesn’t get $32.4 million at the end of a year; instead, each team might get $31.2 million.

That’s not what you’d call progress.

Jay Bilas suggested the ACC try to merge with the SEC, which I find kind of interesting. If you use the $32.4 million test, it would probably be a great deal for the ACC, but a bad deal for the SEC, since the SEC’s average payout is significantly higher (estimated by some at $58 million). If I’m the ACC, I’d jump all over that offer before common sense entered the chat room and caused the SEC to rethink such a plan.

But then I read this story in USA Today extrapolating revenues if and when Texas and Oklahoma join the SEC. It made me think that for the SEC, the magic number may be $1.3 billion or higher.

The USA Today story estimates that with the addition of Texas and Oklahoma, SEC revenues in the 2024-2025 season would be about $1.3 billion. The story also estimates the NCAA’s revenues would be about that much by that year as well, with $990 million of it coming from the NCAA basketball tournament.

So let’s play “what if?” What if the end goal is to either kill or break away from the NCAA? How’s the easiest way to do it? My thought would be to go steal the NCAA’s goose that lays a golden egg in March every year, and the organization would just implode when it can’t pay for much of its useless overhead.

Step one would be for the SEC to merge with the ACC. They’d then have revenues of $2 billion or more, and with close to twice the revenues of the NCAA, would be in the driver’s seat. I mean, what power would the NCAA have? They’re going to put an SEC team on probation? Fine, no SEC schools will participate in your basketball tournament and your $990 million deal is now worth $190 million.

It would be like the character in the Captain Phillips movie: Look at me. I’m the captain now.

Step 2 would be to get the Big Ten and “Pac-however many teams they end up with eventually” to merge, as they have a history going back to the Rose Bowl agreement that initially started 75 years ago. If they merge, major college sport has just two super conferences, and you have the collegiate version of the NFC and the AFC. You can then break away and have your own football championship and….basketball tournament.

The NCAA is then dead. The college landscape is the haves and the have nots. and these two conferences get all the money. Heck, they could form one giant television network and be so powerful they could even tell ESPN what to do.

To me, that’s the end game. Money and power. Total control.

Folks have suggested this for a long time, as I’m not the first person to write about it. But the game and economics of sports – football and basketball specifically - have changed dramatically in the last couple of years, so I no longer dismiss it as click-driven journalism. You have to take it seriously these days.

So, college sports fans, tighten those seat belts and return your trays to the upright position.

This time it really could happen.

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Comments 2

Doug Johnson on Saturday, 31 July 2021 22:17
The Washington Metro Market.

I would think that the Washington metro TV market would be the biggest prize that the SEC would be eyeing. How can the SEC not be thinking about snatching a VT or UVA or Maryland from their respective conferences?

I would think that the Washington metro TV market would be the biggest prize that the SEC would be eyeing. How can the SEC not be thinking about snatching a VT or UVA or Maryland from their respective conferences?
Dave Scarangella on Saturday, 31 July 2021 22:33
Can't really do that with the Grant Of Rights signed away in the ACC

ACC leadership had everyone sign away their grant of rights for their television rights for the next 15 years, so if the SEC wanted one team, they'd either have to merge and take the entire conference, or destablilize the conference so a school can say the league they signed such an agreement with is no longer viable.

ACC leadership had everyone sign away their grant of rights for their television rights for the next 15 years, so if the SEC wanted one team, they'd either have to merge and take the entire conference, or destablilize the conference so a school can say the league they signed such an agreement with is no longer viable.
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