Pitt: Among Biggest Winners in Phase I?

Submitted by psychomatt on June 19th, 2010 at 1:22 AM

Conventional wisdom is that the primary driver of B10 expansion is BTN. BTN makes money both through cable subscriber fees and advertising. When considering the economics of expansion, most experts and casual observers have tended to gravitate to the candidates that bring entirely new media markets. This is probably because it is much easier to calculate the incremental cable subscriber fees that come with adding more TV Households than it is to estimate increased BTN advertising revenue via more games and higher ad rates. Similarly, the impact of expansion on non-BTN TV revenue through more lucrative TV deals with the likes of ABC/ESPN is often overlooked or underappreciated. As we have seen recently with the B12/P16 soap opera, the money generated from third party TV contracts can be as large or larger than what the B10 earns from BTN.

Marquee Games & Advertising

The fact that the B10 chose Nebraska for its 12th team is very telling. Effectively, the B10 chose a storied football program with a national name and appeal (i.e. a team whose games against UofM, OSU, PSU, Wisky are likely to be picked up by ABC/ESPN and have premium ratings) over schools with far superior local media markets (i.e. MO, RU, MD).

Nebraska's local media markets are, in fact, particularly poor. The Lincoln-Hastings DMA is ranked #105 with 0.3 million TV Households. In comparison, NY is #1 with 7.6 million, Chicago is #3 with 3.5 million, St. Louis is #21 with 1.2 million and Kansas City is #32 with 0.9 million. Additionally, Nebraska won out over MO in a pretty much head to head competition, despite the fact that MO potentially brought both St. Louis and Kansas City.

For months, Pitt has been consistently dismissed or its chances seriously downgraded because it would not bring any new markets. I admit I have been among this group of naysayers. But if the Nebraska selection says anything, it says that focusing too narrowly on a candidate's local media markets can quickly lead you to the wrong answer. A school's ability to consistently generate marquee games with above average ratings actually may be more valuable. Marquee games and ratings translate into better B10 TV contracts and higher advertsing dollars for BTN.

B10's Remaining Candidates

Of all the teams remaining on the B10's potential wish list, ND is clearly #1.* This is because of the cachet of the name, the geographical/cultural fit and the national appeal and TV ratings. Notice, again, ND brings no new local media markets. The question is who is #2?

When JoePa began bringing up B10 expansion again 18 or so months ago, he was actually talking about the need for the B10 to expand east. He also specifically mentioned three names -- Syracuse, RU and Pitt:

http://bleacherreport.com/articles/227520-paterno-wants-rutgers-in-the-…

Add MD to the short-list and even MO, since both have been thrown around heavily as being in the mix. Nebraska was a phenomenal pick up, but it was opportunistic. The B10 has no compelling need to expand further into the Plains states. The East, on the other hand, has some of the largest media markets in the country along with fertile recruiting areas.

New Life for Pitt

Of the remaining short-list candidates (other than ND and TX), Pitt generates substantially higher average TV ratings than the others, only slightly less than Nebraska:

http://media.pennlive.com/davidjones/photo/bigten-1gif-cafc3a6ce509bd0a…

In this sense, Pitt looks a heck of a lot more like ND and Nebraska than do MO, Syracuse, RU or MD.

Pitt has always satisfied the academic requirements of the B10, has a financially secure athletic department and fits geographically and culturally (much better than either RU or MD). FWIW, it also brings a pretty good basketball team. Except for the ability to bring new local media markets, Pitt appears to be the best name on the board (yes, after ND and TX). In contrast, the other names on the board seem to be just the reverse, particularly RU and MO. The only thing they bring are new local media markets and, if Nebraska's selection over MO is a guide, that does not appear to be enough.

I am not saying the B10 is going to invite Pitt anytime soon (or ever) or that the B10 even will expand at all beyond 12. I am merely saying that Pitt looks alot more probable than it did two weeks ago. I can even see a scenario where the B10 invites Pitt as #13 in the next 12-24 months and tries to use that (along with the possibilty that Syracuse or RU could be next) to leverage ND into the #14 slot. I am not excited about megaconferences, but if we are going to end up there eventually I would prefer it be with ND and Pitt rather than MO and RU.

* Note: TX's recent flawless execution of the Texas "two-step" has put both the P10 and B10 on notice that TX would be among the most disruptive and high-risk additions to either conference. The P10 needs a team like TX much more than the B10, so maybe that door is still ajar; but I believe the B10 is done with any serious consideration of TX. At a minimum, it makes ND look like the much safer choice and ND doesn't come with several additional mouths to feed.

Comments

psychomatt

June 19th, 2010 at 1:51 AM ^

The P10 would benefit substantially if they could get more of their games into Eastern/Central time zones. That has always been the P10's problem. They have great media markets on the West Coast, but they lose most of the rest of the country as a result.

TX is high-maintenance and high-risk, but the P10 might decide it is willing to take that risk at some point if they continue to fall behind in TV revenues and if the ultimate implosion of the B12 leaves TX looking for a home. I highly doubt the B10 will.

anonbastardo

June 19th, 2010 at 5:05 AM ^

Are you speaking of the television exposure?  Why is being on the West Coast detremental to exposure--given the 3 hour time change seems like the Pac-10 should do just fine since most east coast games are finished once PAC-10 games start.  As a big ten fan and west coast resident I find it tricky to catch even UofM games due to the early hour.

psychomatt

June 19th, 2010 at 8:13 AM ^

Generally, the late afternoon games and early evening games on Saturday are considered "prime time" for college football. For that reason, the early games (e.g. 12 noon) often generate lower ratings than the games that follow them (e.g. 3:30 pm, 7 pm).

Games that run in "prime time" on the West Coast start and end three hours too late to fall in "prime time" on the East Coast. For example, a Pac 10 game that starts at 7 pm in Los Angeles actually starts at 10 pm in New York. That is too late for many people, either because they have been watching football since noon and are tired or because they have evening plans (dinner, movies, bar). Even for someone who is a football fanatic, a game that begins at 10 pm is not "prime time". A football fanatic will "stretch" to watch the late game (or get up very early to watch the early games, in the case of West Coast viewers), but it is not the most convenient time for that game to be scheduled. "Prime time' is called that for a reason; it is the time period that is most attractive to the largest number of likely viewers.

Understand that this "out of sync" problem is compounded by the fact that the reason the 7 pm game in Los Angeles is scheduled for 7 pm West Coast time, is because the West Coast has the largest fan base and likely number of viewers for that game. For example, people on the West Coast are more likely to stay up late on Saturday to watch Arizona v. Washington than people on the East Coast. If it was Notre Dame v. Miami, the East Coast viewership would be higher, but the Notre Dame v. Miami game will be scheduled instead at 7 pm East Coast time because those are East Coast teams and it makes far more sense to schedule that game in East Coast "prime time".

Don

June 19th, 2010 at 7:49 AM ^

For those who haven't read it already, there was an interesting post on Frank the Tank's blog by some TV advertising guy who contradicted the prevailing notion that cable carriage rates were the primary determinant of BTN revenue, instead saying that revenue was derived 60/40 in favor of advertising over carriage rates. As matt says, from that standpoint PItt brings quite a bit to the table. Personally I would love the addition of Missouri and Pitt if the conference is going to 14. I know ND would be a better addition than either one, but I just don't think the Domers are ever going to join.

Tim

June 19th, 2010 at 8:03 AM ^

Except for the ability to bring new local media markets, Pitt appears to be the best name on the board

"Aside from this most important thing, Pitt is OK!"

revenue was derived 60/40 in favor of advertising over carriage rates.

And what, exactly, do you think allows them to charge more for advertising (hint: number of households the ad will hit). In fact, expanding into new markets has a much GREATER effect on advertising than carriage rates.

psychomatt

June 19th, 2010 at 8:39 AM ^

Let me say it another way. It is important to have maximum TV Households, because potential viewers can only see a game if it is offered where they live. But it is also important to have highly attractive match-ups, because it does not do advertisers any good if all of those TV's are turned off or tuned to other channels. You need both the footprint (distribution) and attractive match-ups (quality product) to maximimize revenue. My point is that the B10's selection of Nebraska over MO suggests that the "attractiveness" of the match-ups is far more important than some of us originally understood. If this is correct, Pitt is the next best football name on the list (with a record of significanly higher TV ratings) and the fact that it brings no new local media markets might not be enough to tip the scales in favor of a RU, or Syracuse or MO.

MGoShoe

June 19th, 2010 at 8:41 AM ^

...in my estimation.  The Big Ten is pursuing an expansion strategy to make the BTN a national network vice a regional network.  Then those higher carriage rates apply not to a given added market like Saint Louis and Kansas City (Mizzou) or greater NYC plus (Rutgers or Syracuse), but to the entire country.

Nebraska was a key piece in that puzzle, but the missing piece is still Notre Dame.  The complementary piece to ND is almost beside the point.

psychomatt

June 19th, 2010 at 8:55 AM ^

The complimentary piece to ND is very important, because that team will likely play an average of seven to eight home games each year. The home games are the ones that accrue to the B10's benefit under its ABC/ESPN TV contracts or are available to be picked up by BTN.

MO v. PSU might be interesting, but it is not nearly as interesting as Pitt v. PSU. And this is right accross the board such that the ratings of games with Pitt as one of the teams are likely to be consistently higher than if those games had RU, MO, Syracuse or MD. I believe this is a large part of the logic behind the decision to select Nebraska. Not that Nebraska automatically gets BTN on basic/expanded basic cable in a whole bunch of new markets (although it will help), but that even in the markets in which BTN already exists the ratings for Nebraska games will be inherently higher than for MO games.

MGoShoe

June 19th, 2010 at 9:02 AM ^

...beside the point" comment was a bit of hyperbole.  Of course the complement to ND matters, I just don't think it matters that much.  IME, any of these schools work: Pitt, Syracuse, Rutgers.  Pitt brings a proud football tradtion, recent success, very good basketball and recent good ratings.  Syracuse brings proud football and basketball traditions (plus lacrosse!).  Rutgers brings no tradition of success except for women's basketball.  They also bring the very large Big Ten alumni base in the tri-state area to bear.

I'm ok with any of them.

Tim

June 19th, 2010 at 9:08 AM ^

Disagreeing. I think everyone will agree that Nebraska is far greater than Pitt from a competitive and prestige standpoint. Adding the Huskers doesn't suddenly mean that slightly better TV ratings between two other schools will mean that school will be selected over another. Nebraska exists on a different plane in that respect than any school outside of Notre Dame and some of the pipe dreams (i.e. Texas).

Pitt is a little more competitive than, say, Rutgers or Syracuse (long-term much more than Rutgers, and short-term much more than Syracuse), but they don't bring such huge cachet, a la Nebraska, that they justify not adding media markets.

When you look at other options, such as the two I've mentioned above, they not only aren't huge downgrades from a competitive standpoint (keeping in mind that the financial windfall from joining the Big Ten would be a huge boost to their facilities and competitiveness overall, in theory), but they do bring the media market that BTN wants. When taken in tandem with the fact that a number of NYC-based alums are already camoring for the network, a Syracuse or (more likely) Rutgers could provide a tipping point.

ZooWolverine

June 19th, 2010 at 9:26 AM ^

I think this is a really good point: getting more viewers for the BTN is a big goal, but it was out-weighed by a program with a ton of history and national prominence.  Getting many more outstanding games may have trumped adding a large media market this time, but it's hard to read much into that because Nebraska is such an outstanding program.  It's possible that Pitt may have a chance despite not bringing a media market with them but they fall well short of Nebraska in terms of excitement and prestige.

It, in fact, may have hurt Pitt if the Big Ten is really looking to add a media market--they've taken one team without a big market due to extraordinary circumstances, so they may be even less likely to add a second.

I'll also reiterate what's been said in several threads previously--Nebraska may not be huge, but essentially every single television in the state will be turned on to Nebraska football when they're playing.  I think you're also going to see huge devotion and appreciation of the BTN--until this point, many Nebraska games were on pay-per-view.

psychomatt

June 19th, 2010 at 9:52 AM ^

Every TV set in Lincoln might be tuned into all of their games, but they have 1/7th the number of TV households as St. Louis and Kansas City. Thus, the B10's decision to select Nebraska over MO cannot be explained by Nebraska TV sets or, in fact, indigenous Husker fans (Nebraska has 1.8 million residents while MO has 6 million). This can only be explained in terms of the interest level of national college football fans who have respect for Nebraska and will tune in to watch Nebraska in marquee games (not Nebraska v. Indiana, but Nebraska v. UofM, OSU, PSU, Wisky, OK??).

ZooWolverine

June 19th, 2010 at 12:54 PM ^

Fair enough, but my main point is that the fact that Nebraska being added only proves that a new media market wasn't a key factor for that expansion, not that it won't be a key factor for the future.  I think it's possible that you're right--the Big Ten doesn't care as much about that as we've been led to believe--but I think it's also very possible that this was a big exception that makes it even less likely that there will be an exception in the future.

wildbackdunesman

June 19th, 2010 at 10:24 AM ^

I am surprised that Pitt had a 3.31 TV rating in their 7 nationally televised games.  I wonder if playing a few Thursday and Friday night games as well as the last regular season game against undeated Cincinnati on Dec. 5th helped with that rating number though.  For whatever reason I just don't see ABC and ESPN as interested in Pitt vs OSU or Pitt vs Michigan...  Maybe Pitt vs Penn State.  I could be wrong.

blueloosh

June 19th, 2010 at 9:52 AM ^

As we have seen recently with the B12/P16 soap opera, the money generated from third party TV contracts can be as large or larger than what the B10 earns from BTN.

What specifically are you referring to?  I recall one doubious quote for a possible new Big 12 TV deal.  I never saw any quotes for the Pac 10.

psychomatt

June 19th, 2010 at 10:39 AM ^

I probably overstated or even misstated this slightly. In 2009, the B10 generated an estimated $6-7 million per team from BTN along with an estimated $8-9 million from third party TV contracts. Whether the pickup of Nebraska will enable the B10 to renegotiate their third party contracts is unclear, but it might be possible. In any event, Nebraska logically will help when the the contracts come up for renewal. Moreover, Fox has been reportedly bidding against ESPN and driving pricing significantly higher (they supposedly did so with the recent ACC contracts and were mentioned as the network expected to be working on the new B12 deal and on the P10's proposed BTN style network).

A few of the third party TV contracts that have been renewed in recent years at significantly higher rates include:

(1) When ND renewed its broadcast deal with NBC a couple of years ago, it reportedly increased from $9 million to $15 million per year.

(2) The ACC's deal with ESPN was recently renewed and more than doubled from $75 million to $155 million per year.

(3) The SEC's $3 billion in deals from ESPN and CBS has been well-publicized and was a substantial increase over their previous deals (sorry I do not have time to go find the exact numbers).

Ballparking off these data points, it is not unreasonable to think that the B10's ABC/ESPN deals could as much as double when they come up for renewal, particularly now that the conference has added Nebraska. If so, the B10's third party TV revenues should continue to meet or exceed what the B10 generates from BTN for the foreseeable future.

KidA2112

June 19th, 2010 at 10:13 AM ^

I like Pitt for selfish reasons, it's like 35 min from my hometown and I wouldn't mind moving back sometime.

Pitt gets totally overshadowed by the steelers and although Pitt has a good basketball team, since Mario, it's been a hockey city notice how I didn't say hockeytown.

BTN would be pretty big in Pitt though, they are hardcore sports fans. Problem is Pitt is secondary to the pro teams.

Tim

June 19th, 2010 at 8:45 PM ^

Yet another problem with Pitt (and I know I'm coming off as anti-Pitt here - but that's only because I am). In what other Big Ten city (or even state in most instances) is the college secondary to pro sports in the area?

The only one I can think of off the top of my head is Northwestern in the Chicago area, and the 'Cats seem to get an exemption at times because they're an original member and prop up the conference's academics for the Michigan States and Iowas of the world.

Don

June 19th, 2010 at 10:55 AM ^

The article in FTT's blog is here:

http://frankthetank.wordpress.com/2010/04/19/the-value-of-expansion-can…

In it, there is a linkable chart that compares schools such as Neb, MO, SYR, RU, and Pitt in a variety of factors, including TV ratings for 2009. Surprisingly, Pitt's ratings were second only to Nebraska's and significantly ahead of MO and the other Big East schools. I would argue that TV ratings would allow them to charge more for advertising.

I'm not arguing that NU isn't by far the best addition to the conference aside from ND; Delaney et al hit a home run there. And if the choice came down to either Pitt or ND, obviously you choose the latter. However, if it's between SYR or RU or Pitt, maybe the issue isn't as clear cut as some say it is. From a historic perspective, Pitt's football program is easily the equal, or better, of SYR or MO and far surpasses RU. From the academic standpoint, Pitt is by far the best institution, even including ND, for addition to the B10.

wildbackdunesman

June 19th, 2010 at 12:49 PM ^

I would like to see what Pitt's TV numbers are for different years.  Their high TV numbers only count the 7 nationally televised games, which were:

-a Bowl game right after Christmas -- only game on

-2 Friday games where they are the only game on

-a game against undefeated Cincinnati that had a chance to make the BCS CG on Dec 5th, only game on worth watching at the time

-Notre Dame (huge fan base), Navy (big fan base) and West Virginia rivalry

 

I am not convinved that Pitt always brings in those kind of numbers year in and year out like they did with their 7 nationally televised games this year.  I could be wrong, but I think there is some inflation due to those circumstances.

Tim

June 19th, 2010 at 8:48 PM ^

Again, while ratings are important (and don't get me wrong - they are) it doesn't matter if you put Pitt games on the Big Ten Network and nobody new can get the network. Either people have it, or they don't (and to a lesser extent, either they're already watching it or they're not).

A network in the specific position that the BTN is in, and that's strictly regional, can't really increase its ratings without expanding said region. Nebraska gets an exception for being an enormously prestigious national program over time. Another program that doesn't expand the footprint should be eligible for a similar exemption (i.e. Notre Dame). Anything else doesn't do the network any good.

MGoShoe

June 19th, 2010 at 8:54 PM ^

...you keep ignoring the likelihood that another expansion won't happen unless it includes ND.  If it includes ND, the other team doesn't really matter, because the Big Ten can then make the argument that the BTN should be treated as a national network and carried as a part of the basic package. 

It seems to me that the identity of the one or three teams that defect and cause the Big East to dissolve are essentially immaterial as long as they force ND's hand.

My take is that expansion is not about expanding the regional footprint, it's about making it nationwide.

Tim

June 19th, 2010 at 10:35 PM ^

I'm not ignoring the possibility, in fact I may be taking it into account more than anyone else might be.

If Notre Dame is brought onboard, the national cachet factor is accounted for. At that point, a market grab (i.e. New York) is definitely in the offing. Somebody who provides a tipping point for New York (unless Texas happens, which, well, won't happen) is an important factor, as ND already adds a huge base in the City, along with the alumni from the likes of UM, PSU, NU, etc.

As far as bringing ND onboard, I agree that any Big East school will help bring that about. If ou have to take a Big East school, the Big Ten will prefer to bring along one that has additional value (i.e. New York).

MGoShoe

June 19th, 2010 at 11:02 PM ^

...essentially in agreement.  I'm kind of tired of the insistent "nobody cares about Rutgers in New York.  They're 15th behind the Giants, Jets, ..., St John's basketball, Furman swimming, Columbia Debate, New School not applicable." 

Here's one thing that they have over any other school in the BTN with respect to getting the Tri-state Area cable providers to put the BTN on their standard package and pay the in footprint carriage rate: No other school makes this even remotely possible - not even Syracuse.  They may be a third tier draw, but they're still the only local FBS team that qualifies (UConn fails on the academic requirement).

Tim

June 19th, 2010 at 11:12 PM ^

Agree with your premise on Rutgers - only a "tipping point" school may be needed, considering the number of B10 alums in NYC (especially if Notre Dame were to come on board).

However, I think you underrate Syracuse in the situation. College football isn't big in New York - but college hoops is, and Syracuse is THE team in NYC, for the most part. While most BTN considerations have been football-only, basketball can play a role if you bring along a basketball school.

Sven_Da_M

June 19th, 2010 at 12:27 PM ^

... and major faulty premise: BTN as driver.  No, the driver is the trend to super-conferences and the need for at least 12 teams to get revenue from a conference championship.

BTN is a strategic weapon, not a driver of the strategy. 

People treat expansion like it's an exercise in TV markets.  You want the fewest teams of at least 12, 14 or 16 that allow you to stay in the top 3 conferences.  Fewer better teams equals more revenue per school. And the Big Ten, unlike most others, has equal shares.  And smart students and great faculty to boot.

Pitt was just a conversation piece, a stalking horse, a balance East for the Missouri talk.  All the while Delaney wanted Nebraska.  Maybe take a Hail-Mary shot at Texas, with a bit of Notre Dame talk thrown in.  But he likely knew that Texas wants control and a premium deal, and both are non-starters.  Notre Dame wants to turn the clock back to the 1940s.  

But Pitt or Rutgers or Syracuse or Missouri right now? Because of some cable-market mumbo-jumbo?  Nebraska is so much better of a fit, so much better of a draw nationally it's not even close.  

Doug

June 19th, 2010 at 1:51 PM ^

Nebraska's state populuation is misleading, because not only are they the only game in town but also the only game in town in the Dakotas and Montana, basically doubling their population.  And it's not like those states have night clubs in every town. Ever been to Billings, Fargo, Rapid City or the other thriving metros of those states? Those fans would watch Nebraska play the Sisters of the Poor.

Missouri was left out because part of the state of Missouri is already covered by the BTN because of a large presence of Illinois fans in the cities. And at this point, the Big Ten won't take Missouri because the BT wants to keep the BIg-12 Lite alive as a buffer against the SEC getting an inroad into Texas.

I think the BT's next move should be to take Syracuse and Rutgers to stake a claim on the NY and NJ markets, and to spread the word that they're interested in Maryland, which has two great new markets in DC and Baltimore, as well as excellent academics and research, and pretty good all-around athletics (27 sports). Syracuse's basketball team will help draw the NYC market and also help with getting Maryland, an excellent basketball school that is hesitant to trade the good BBall of the ACC in for that of the BT.

Then I think the BT sits back and hopes that the ACC gets nervous and takes UConn and/or Louisville, or the SEC takes West Virginia. If the Big East loses two teams, it's probably done. If it loses three, it has to fold as a football conference because, by NCAA rules, it won't have six teams left who've been together for five years. Then, Notre Dame might be forced into joining the BT. If they don't join, then the BT can make a play for Maryland and either Virginia or Pitt to round this off at 16. If Notre Dame, in later years, wants to join, the BT can add them and Missouri. By then, the SEC will probably have already filled out.

Sven_Da_M

June 19th, 2010 at 3:52 PM ^

... so a good basketball program is irrelevant.

Also, this urban legend that 'Cuse and Rutgers are popular in NJ/NY is just that.  It's pro football.  Jets or G-Men.  Just ask a fan in that area. Rutgers had one good year in the last 50.  'Cuse's last best game was the win against UM with Donovan McNabb.

See above, it's NOT about the Network.  Strong football school horse goes before BTN cart.  

Tim

June 19th, 2010 at 8:54 PM ^

I think you're wrong.

BTN is not the be-all and end-all of priorities for expansion. Money is a HUGE (the?) part of expansion, and TV is a HUGE (the?) part of that money. The Big Ten Network is a very large part of the TV money, and is a very important factor.

I wish you were right, as it's really depressing to see college athletics bared as simply a money0making machine, but them's the ropes.