I detected no small amount of irony when the Big Ten announced their partnership with Fox to televise the first conference championship games on Fox via a press release.
Most people in the online PR industry think that the press release is already dead, but we could be seeing enough cracks in the armor to suggest that college conferences may go the way of the press release and the Dodo bird too.
College conferences are effectively middle-men who use their collective negotiating power to increase distribution (and resulting revenue) for its members. But with the Web continuing to change the dynamics of distribution, those middle men are becoming more vulnerable by the minute.
It wasn’t too long ago that the power conferences negotiated deals with television networks and only Notre Dame could negotiate a network deal on its own. For any university that wasn’t Notre Dame and wasn’t in a power conference, good luck getting your football team on television other than via local television. And as for out of town alumni? If your university was outside of the power conferences, you were out of luck. Check the box score in the newspaper the next day.
But then came cable with regional sports networks, which changed the game from local to regional. Then came competition from satellite providers and the channel wars brought the regional networks to a national audience. And now between pay per view and national access to all the regional networks, anyone in the country can now see almost any televised college football game, which is almost all of them, without much effort.
As for the few remaining games that do not make it onto even the regional network schedules, you can find them on the Web for free. And fans do. Currently, the feeds are being effectively pirated on sites like Justin.tv and Channelsurfing.net. The quality isn’t great, but it’s passable. Keep in mind that we’re talking about sports fans, who not too long ago considered listening on the radio a perfectly acceptable and even desirable solution. If a fan wants to see their game, average quality streaming is a more than sufficient alternative to nothing.
In the past 15 years, we’ve gone from being able to see about 10 college football games each week to being able to see more or less all of them. But the conferences and television executives, who still run college football by the way, don’t seem to know this.
The most lucrative conference deal is the 15-year, $2.25B deal between the SEC and ESPN. Upon signing the deal, ESPN’s executive vice president for programming acquisition and strategy John Wildhack said:
“At the core of our agreement is the fact that every SEC-controlled football game will be available to SEC fans throughout the conference territory, and indeed the country, via an ESPN platform or through our partners.”
Really? So without ESPN SEC fans wouldn’t be able to see their teams play? Is there no other way to monetize college football broadcasts other than via syndicated television? Do you think any of these executives thought through the impact of Google TV and Apple TV?
Keep in mind that YouTube did not exist as recently as 6 years ago, so it’s a good bet that high quality online video streaming will be available well before the SEC gets their rights back from ESPN. Forgive me if I don’t trust that these old-school television executives have a thorough understanding of where digital media will be in 5 or 10 years. The answers to some of the questions about licensing and rights are far from answered, but signing away rights for that long seems penny-wise and pound-foolish.
In announcing TCU’s addition to the Big East conference, TCU athletic director Chris Del Conte said:
“I did notice that 15 years ago, people expanded conference based on geography. Now they are totally based on TV households and how many you bring to the table.”
For TCU, this is about short term revenue and immediate access to the BCS games, not television exposure. I watched 3 TCU games this season and surely could have seen more. For the Big East, they are sadly mistaken if they think that access to a television market is going to give them more leverage than having good football teams. Big East member USF, from the big television market in Tampa Bay, doesn’t draw as many viewers as Boise State which comes from a tiny television market.
Distribution and the size of television markets are no longer a significant differentiator, production quality and football program quality are. High definition is a major differentiator, and the nationally syndicated players do a great job, but that’s quickly become standard on regional broadcasts. 3D is just arriving and it will be a differentiator, but we don’t yet know if the production costs will be prohibitive beyond the networks. But will 3D be the best networks and conferences can offer?
The reality is that conferences, the bowl system and the Bowl Championship Series (BCS) are all artifacts of an era that does not exist any more. Even the second tier bowls are poorly attended and unprofitable (for universities) and as we are now finding out how much money is being left on the table due to continuing the illegal sham that is the BCS, it seems likely that the BCS is on the way out too. Conferences are a little more deeply ingrained, but their thin value-add is becoming more apparent by the day. Second tier conferences are unable to provide enough financial resources to make them viable for the likes of TCU, Boise State and BYU.
The recent news that BYU has decided to leave the Mountain West Conference to become independent is a major crack in the armor. BYU does have a major built-in advantage in their own HD television production facility and channel with existing distribution through many major cable and satellite providers, but they bucked conventional wisdom and decided that they didn’t need to accept the status quo of second tier conference affiliation.
Instead of scheduling MWC opponents and splitting revenues with MWC opponents, BYU realized they could schedule whomever they want and keep all the revenues. Because the BYU TV channel has the same distribution as most regional sports network, the same potential audience will be able to watch the games either way, so all that matters is how many people want to watch BYU football games. If BYU is able to create a compelling schedule and put forth a quality program then I’d bet the gamble pays off handsomely. No doubt athletic directors around the country are watching closely.
The Big Ten’s creation of their own conference television network has been very successful so far, but at what point do some individual universities start going the route of BYU and producing networks of their own? At the end of the day, staying in conference requires a school like Texas ($138M in 2009 athletic department revenue) to tie its fortunes to the likes of conference-mate Iowa State ($45M).
To better understand the issue, take if from one of the few guys who is both a pioneer of the Web and a professional sports team owner, Ted Leonsis. In this interview with John Ourand at Sports Business Journal, Leonsis spells it out clearly. He acknowledges that his teams’ (the NHL’s Washington Capitals and the NBA’s Washington Wizards) TV rights are owned by Comcast SportsNet Mid-Atlantic for “many, many more years”, but also said the following:
“I’m a media executive and I also understand the Internet and broadband and cable. So I’m unabashed in saying at some point, I’m going to be in the network-content-delivery business. I’m just going to….All content generators end up saying at some point, Why do we need an intermediary. What value is the intermediary adding for that big arbitrage number?”
According to Forbes, the Capitals did $83M in revenues in 2009 and the Wizards did $110M. So if Leonsis is completely convinced that a sports business of that combined size should be producing its own content at some point, that suggests that more than a few universities should be looking closely at this.
Even without the built in ability to produce high quality HD (or 3D) content, many universities are already working with Neulion for multi-platform content delivery. How viable something like Neulion becomes as an alternative to broadcast is still to be determined, but it shows that options are becoming available.
And if the power players leave the conferences, all bets are off. It’s a good bet that there is more uncertainty about what lies ahead for college athletics than ever before. Rather than stockpiling members, conferences should be making sure that they are adding enough value to remain relevant.