That’s well and good for Texas, but it really hurts the rest of the schools. They are left to individually monetize their own Tier 3 rights. But they can’t come close to making the money schools in other power conferences are making from theirs.
The Big 12 schools are left to split just the revenues from their Tier 1 and Tier 2 TV deals, which amount to about $20 million per school per year.
Cable and Satellite Subs drive big Tier 3 revenue
Those Tier 3 games may not be attractive to national television networks, but they are vital to fans. So the conference networks work out deals with cable and satellite providers to carry the network with their programming. But at a price. A hefty one.
Many fans scratched their heads when the Big Ten was excited to add Rutgers to its membership. What the confused failed to realize is that with the addition, TV providers in the New York City metro area would now be required to carry the Big Ten network, often as part of basic packages.
And for every subscriber that’s added in the conference footprint, the Big Ten gets $1 — per month! So adding the New York Market means Big Ten schools’ checks get much, much bigger. And by a significantly greater amount than what they give up splitting the Tier 1 and 2 pie by an extra member. That doesn’t even take into account the wider advertising reach the network will now enjoy.
In all, it means the Big Ten Network is projected to earn over $100 million dollars this year, or $7.4 million per school on top of the more than $30 million expected from the other TV contracts.
And the SEC is rumored to be getting more per sub than the Big Ten. That kind of money is why conferences are looking to expand their footprint, not stand pat.
Big 12 has no incentive to expand
Without the ability to collectively monetize those Tier 3 rights through subscriber count like other conferences, the Big-12 distribution is limited to the $20 million per school it receives from its Tier 1 and 2 deals. Any additional school added to the conference means less money per school. Period.
The deal goes all the way through the 2024-2025 football seasons. And the contracts are such that they can’t be renegotiated without a major shift in the earning power of the product. Adding BYU doesn’t do that.
At this point, it would take outside forces acting upon the conference forcing them to expand. Maybe the other leagues get upset that the Big 12 teams in the football playoff are fresher and have an easier path to a championship. Maybe at some point Texas relents on Tier 3 rights.
But right now, there’s nothing the Big 12 or BYU can do to make a relationship work. The money just isn’t there.
Ryan Teeples, twitter.com/SportsGuyUtah, is a marketing and technology expert, full-time sports fan, owner of Ryan Teeples Consulting Inc. (RyanTeeples.com) and regular contributor to LoyalCougars.com.
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