In thinking about the recent success of the Big 10 Network, generating already almost a quarter of a billion dollars in revenue in only its third year, I got to thinking about the future of television and what this means for college football. In particular, what it means for one private Catholic university.
It seems like every day the world of television technology continues to change, and no one single industry is likely to be affected more than the sports industry. As I write this, many are watching Tiger Woods playing his second best game on the internet, free of charge. The cell phone that I have had for more than a year now allows me to watch some live sporting events (e.g. the NCAA men’s basketball tournament) anywhere I can carry my phone. And a buddy of mine swears that he can show me how to download any Buckeyes game free of charge on my PS3, to include many games that are not readily available elsewhere (if anyone from the FCC is reading this article, I have not tried this. I swear). While the rest of us are watching games on 3-D computer monitors anywhere in the world, will legions of confused Domers still be gathered around their rabbit ear powered 13 inch black and whites watching games against Army? Don’t bet on it.
The first important shift in the history of sports television was the proliferation of ESPN, the “worldwide leader in making sports related money.” They were the first to figure out how to increase their revenue by charging subscriber fees for every single household that uses a cable or satellite provider, earning $3 from every subscriber, regardless of whether the customer ever tunes into their network. They then, of course, charge their advertisers for commercials aired during their programming, meaning that such cable outlets are capitalizing on two sources of revenue rather than one.
It didn’t take long for others to figure out this TV Network thing. In 1999, the New York Yankees decided to merge their operations with the New Jersey Nets by forming a corporation called YankeeNets. The purpose was consolidation of resources by forming a network with exclusive rights to certain games. If you want to watch the Yankees or Nets (not that anyone wants to watch the latter), you tune into our network (or any other that we sell our rights to in another market for additional revenue), or you do not watch the game. Just today, Forbes Magazine came out and valued the worth of the New York Yankees at 1.6 billion dollars, almost three quarters of a billion dollars more than any other baseball franchise. Being the first MLB organization to establish a network has dramatically increased their operating profits as well as the value of their organization. The Big 10 further transformed the concept by creating its Network; it was the first time a collection of affiliated teams consolidated resources within the network blue print. Few experts anticipated the Network being this successful, both in terms of the amount of revenue generated and how quickly the Conference was able to do it.
But the future of sports television is about to evolve again, this time involving the most profitable of all human inventions, the internet. And I believe that Jim Delaney and his merry band of rich men have their finger on the pulse (and by pulse I mean wallet), and it’s this anticipated market evolution that is the real reason they are pushing for conference expansion by trying to woo one of college football’s most lucrative entities. Now if Irish fans could just turn off reruns of Leave it To Beaver and pay attention, they just might get out of Jack Swarbrick’s way long enough to keep their program relevant.
Internet TV is the future for sports broadcasting. How is Notre Dame going to compete if they are bogged down in a contract with NBC?
Here is the future of college football. Take a look at the demo on this website, which is the first day of the U.S. Open. The first thing that you notice is that you can watch five matches at once. No annoying cable company dictating what you can watch and when (I recently travelled to a sports bar to watch my favorite NCAA basketball team play because they supposedly had a direct feed that would show that game in it’s entirety; CBS still switched to other games that they thought I’d rather see. I ended up going home and watching the game on CBS.com). And there is one simple source for the feed, the website. No trying to figure out who is carrying what game in what market, trying to figure out if your game will be blacked out or if the alternate game will be shown in your market (believe it or not ABC, I don’t want to see Oregon State v. Washington State just because I live in Arizona). No annoying broadcast network refusing to preempt the Today Show, instead showing the sporting event on tape delay (ahem NBC, I’m talking to you. It was more than a little annoying watching the Olympics hours after the medals were actually earned, and hours after my phone told me all about it, just because that’s when housewives wanted to watch figure skating). You simply click on the website, log in, and watch whatever you want to watch, whenever you want to watch it. And the best part of all of this, you can jump on any computer or even many cell phones and watch these games. You don’t want to watch games on your computer, no problem. Free technology already exists so that you can beam the internet signal to your 78 inch Sony 3-D Behemoth that will likely be in your living room within the year. This is the future of sports television.
My question is, if this is the future, how in the world is free public television, and those foolish enough to hitch their star to that wagon, going to survive?
I believe that the Big 10 is eying expansion in large part because they realize that the TV network gravy train isn’t going to last forever. It’s my belief that the Big Ten will follow the same model MLB uses for their Extra Innings; charge both a subscriber’s fee and charge the advertisers for the banner ads and the commercials run during time outs. Imagine the power of a sixteen team conference, with internet subscribers from about a dozen or so primary markets logging into the Big 10 network’s website watching eight different games at once. The key here is amount of traffic the site could generate for advertisers by attacting both those fans interested in sixteen different teams and the casual sports fan that would simply have an interest in monitoring a number of games at the same time. The NFL is so convinced that such a market exists that next season several NFL teams will rent out television sets to fans that attend games so they can follow other sporting events. You combine this market with the ease of logging onto a computer or getting games on your cell phone, and it’s easy to see why this will be the next generation of sports broadcasting.
With all of this technology, are we really to believe that Notre Dame will stay with NBC and continue to show their games on free TV? And with declining ratings for Irish games, will NBC even want to bring Notre Dame back on a similiar deal?
I think that Notre Dame is going to have two realistic choices going forward; join a conference or launch their own television network. Starting one’s own network is fraught with difficulty; it costs millions of dollars to start a network , requires extensive negotiations with outlet providers to be included in their packages, and it could take years before initial profits are realized (think of the problems the Big 10 Network had getting included in the various cable deals to even bring their product to Midwest households, and they were pitching a product that had specific appeal to an easily identifiable marketplace). Even if such a network was successful, the reality of the matter is that Notre Dame’s independent status will make it very difficult to capitalize on such a network.
First of all, it’s not clear to me how Notre Dame would even begin to negotiate “exclusive marketing” deals with their opponents, who already have their own marketing affiliations in place (U.S.C. could never allow N.D. to show this game exclusively on ND’s Network no matter how much they were offered because of contracts the Pac 10 already has in place). This is a unique problem for the Fighting Irish because all of their games are non-conference, meaning they have no affiliations with any of the teams involved. And second, what exactly would they show on this network on Saturdays; three hours of football and twenty-hours reminiscing about glory days gone by? Simply put, a network for one team just isn’t as lucrative when all they really can offer their viewers is one football game each week, the reason I never believed that the Texas Longhorns would opt to create their own TV network.
The answer is simple. The Fighting Irish need to join a conference that already has a network and an established revenue stream in place. With the profitable Big 10 Network already in place, Notre Dame walks into a deal that already guarantees them significantly more TV revenue then they can ever hope to command from NBC or any other public television network, and they would be poised to take advantage of the TV internet market when the Big 10 Network further evolves.
All that’s left is for Notre Dame to wake up and smell the money before it’s too late.
Categories: College Football