Archive for the ‘NBA Basketball’ Category

As many of my regular readers know, I’m a huge fan of both the NBA and college basketball. While this blog has generally focused on college football over the past few years since that has been the driving force behind conference realignment, I’m still a hoops guy at heart. As a result, I’m constantly thinking about how to balance all of the interests of the NBA, colleges and individual players while maintaining a high quality on-the-court product at all levels of the game.

Dallas Mavericks owner Mark Cuban recently touched off another debate about “one-and-done” players in college basketball and whether they would be better off going straight to the NBA Developmental League:

“I think what will end up happening — and this is my opinion, not that of the league — is if the colleges don’t change from the one-and-done, we’ll go after the one,” Cuban said. “The NCAA rules are so hypocritical, there’s absolutely no reason for a kid to go [to college], because he’s not going to class [and] he’s actually not even able to take advantage of all the fun because the first semester he starts playing basketball. So if the goal is just to graduate to the NBA or be an NBA player, go to the D-League.”

Notwithstanding the fact that Cuban erroneously assigns blame to the NCAA for not allowing players to enter into the NBA Draft immediately out of high school (that’s completely an NBA collective bargaining rule), what’s interesting over the past couple of days is that I’ve seen a lot of both NBA and college basketball fans agree with this sentiment. To the extent that they are in separate camps, NBA fans generally just want to see the best players in the pros ASAP, while college fans hypothetically don’t want to spend time worrying about players that are only going to spend a year on campus.*

(* Granted, I believe most college basketball fans are being disingenuous about this issue. If a bunch of freshmen can lead your favorite team to the national title like Kentucky in 2012, you generally get comfortable with the one-and-done concept pretty quickly. Most college basketball fans complaining about the practice are grousing about teams or rivals other than their own.)

However, while I generally sympathize with Mark Cuban and the basketball fan masses on a lot of issues, this is one area where I believe a lot of people are having collective amnesia of what both the NBA and college basketball looked like in the early-2000s before the NBA age limit was put into place. Simply put, basketball at both the pro and college levels sucked back then. The NBA was drafting high schoolers such as Kwame Brown in the lottery based on raw athleticism that were thrown into the league prior to being ready, which created a sloppier and less polished on-the-court product. Meanwhile, the college ranks were depleted of a critical mass of top-level players in a way that ended up pushing down the quality of the play across-the-board. Even if the one-and-done year gets transferred to the D-League as Cuban proposes, this can have a disastrous effect on both the pros and college levels.

This issue is a tough one for me because I’m someone that normally believes that if you’re good enough to perform a job or task, you should be allowed to do so regardless of your age. Yet, basketball seems to be the one area the laissez faire approach has proven to not work because of the nature of the sport. The main problem is that virtually everyone involved in the NBA Draft process needs to be protected from themselves (as the system provides incentives for everyone to take actions that are detrimental to the quality of the game overall). If I had faith that the only high schoolers that NBA general managers would draft were like LeBron James that were ready immediately at age 18 and, at the same time, only high schoolers that were of a LeBron-quality entered the draft into the first place, then it would be easy to say that anyone should be able to go to the pros immediately. However, we have empirical proof from the early-2000s that this simply doesn’t happen. Basketball, unlike football and baseball, is a game where obtaining an individual star matters more than anything. In contrast, stars in football and baseball might be important, but depth generally trumps stardom.

As a result, NBA GMs were (and still are) significantly more mortified about missing out on the next Kobe Bryant or Kevin Garnett compared to their football and baseball counterparts (and it makes sense considering the type of superstar that you need in order to viably compete for the NBA championship) and they overvalued raw athleticism in high schoolers back in the early-2000s. Meanwhile, top high school players saw all of their AAU buddies getting massive paydays at age 18, so anyone with a prayer of getting into the draft jumped in (whether it was by their own volition or pressure from family members and/or street agents looking for a financial meal ticket). This created a vicious cycle where NBA GMs were taking unproven high school players based on raw athleticism with lottery picks that were previously used on seasoned college players (many of which were already household names by the time they entered the draft), such lottery picks were getting stuck on the bench with high bust rates as opposed to contributing right away, and college programs were left with the scraps. Blowing a top 5 pick in the NFL or Major League Baseball is not a good thing for a GM, but it’s at least recoverable or mitigated if the team has the right depth. In the NBA, though, blowing a top 5 pick can mean that your franchise is set back for a decade… and we saw a whole lot of NBA franchises blow their top 5 picks in the early-2000s.

The current one-and-done system, while imperfect, at least provides a checkpoint for all parties involved: NBA GMs can watch players compete against people other than 5′ 11″ power forwards in high school (like I was back in the day) in pressure situations, while the players themselves get a reality check of where their skills really stand. Unfortunately, shifting the one-and-done year to the D-League in the manner that Cuban suggests would likely bring up the same problems as the old open NBA Draft without an age limit. NBA franchises would go back to drafting raw prospects (now for the D-League) as opposed to obtaining the best players that are ready for the NBA immediately, while top high school players will get delusions of grandeur and/or chase after the easy paycheck.

Note that Mark Cuban isn’t really proposing anything new: 18-year olds already have the option of giving up their NCAA eligibility and spending a year in the D-League (such as P.J. Hairston, who left UNC in the middle of the season this year and is now playing with the Texas Legends) or Europe (a la Brandon Jennings). So, why aren’t top players choosing that option en masse? Part of it is that the special branding in college sports matters quite a bit, as outlined by Dave Warner of “What You Pay for Sports” (who happens to be an outspoken critic of the cable subscriber fees that people pay for sports networks). As Warner stated about why minor leagues in basketball and football haven’t been successful financially:

Minor league basketball has had a bit more traction — the Continental Basketball Association survived for decades as an NBA minor league before finally folding in 2009 — but it doesn’t come close to outdrawing big-time college basketball. Go to any NBA D-League game, and you’ll be lucky to find a few thousand fans in the stands. More importantly, you won’t find the top high school prospects at those games. Jabari Parker gets more attention playing for Duke than he would playing for, say, the Fort Wayne Mad Ants.

This is where we begin to understand the status quo. What we have here is an issue of branding. Minor league football and basketball have no traction in America, because fans have declared their loyalty to the brands of college football and basketball teams. College football, in particular, has a century’s worth of rich history in America. College students attach themselves to their schools’ teams, remain attached through adulthood, and spread those attachments to children and other family members. You can’t sell the Omaha Nighthawks to an army of die-hard Cornhuskers fans. They’ve spent decades engrossed in the University of Nebraska’s football team and all of its traditions. Supporting a group of guys trying to play their way into the NFL is not enough. These people demand Nebraska football.

The point about Jabari Parker getting more attention playing for Duke than the Fort Wayne Mad Ants is particularly exacerbated in the NBA context even compared to the NFL because it relates back to the star system that’s inherent in pro basketball specifically. While Jabari Parker might get more specific basketball-focused training, avoids having to go to class, and even would earn a paycheck in the D-League, the exposure that he gets with nationally-televised games of Duke and constant SportsCenter highlights aids his own personal brand off-the-court and the long-term financial effects of that could vastly outweigh a year’s worth of earnings in the D-League. In turn, the NBA itself benefits from this as it gets to leverage the pre-made stardom of players like Jabari by the time they enter the draft, which creates further interest in the league. That aspect was completely lacking in the early-2000s (with the exception of LeBron, who legitimately was a household name by the time he graduated from high school) and we’d go back to that malaise if top players enter the D-League and Europe instead of going to college. The NBA has a golden goose here that it ought to be extremely wary of messing with again.

To that end, the best approach going forward is the simple one that new NBA Commissioner Adam Silver has already suggested: raise the NBA age limit to 20. That effectively means that top high school players would need to play 2 years of college basketball prior to entering the draft. While that might delay the LeBron-types from entering into the league even further than now, the early-2000s should have shown everyone that the LeBron-types are so rare that the NBA needs to care more about its year-to-year product as a whole. That requires another year of vetting in college in order to separate the proverbial wheat from the chaff along with building the anticipation of stars like Jabari Parker even further. At the same time, college basketball programs get the benefit of having top players for at least 2 years, which is a good balance between having such players on campus for a long enough time that programs feel confident in investing time and money into them while being short enough to prevent holding back the true superstars from going to the next level for too long.*

(* I’ve seen a number of people suggest that the NBA approach the draft in the same manner as MLB, which is that high school players can either choose the enter the draft immediately or go to college for at least 3 years. While it’s not a bad suggestion, I disagree with it as applied to basketball because of the nature of the sport that I’ve noted above. All that would happen is the same thing that occurred in the early-2000s, where every high school player convinced that he’ll get drafted will enter the draft and NBA GMs will be de facto forced to pick them out of fear. That would lead the exact same on-the-court quality problems that we saw in that era. Plus, the MLB draft goes for 50 rounds and GMs are generally rewarded for building depth as opposed to getting a single superstar. In contrast, the NBA draft is the reverse where there are only 2 rounds, GMs are rewarded for finding a single superstar instead of building depth, and the practical reality is that only 15 or so players in any given NBA Draft ever becomes a regular rotation player (much less a superstar or even a starter). The simple numbers show that the opportunity cost of foregoing college eligibility is several magnitudes greater for basketball player compared to a baseball player. As much as I hate paternalistic rules, this is exactly why people in the basketball world need to be protected from their own worst instincts.)

So, that’s why I support raising the NBA age limit to 20-years old. It’s long enough for the NBA to get a solid evaluation of players and colleges to obtain the benefit of having top players on campus, yet short enough for the legitimately elite players to get into in the NBA relatively early. The next step is to get both the NBA and NCAA on the same page on this matter, which is probably the most difficult piece of all in this entire discussion.

(Image from Sports Illustrated)

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As promised, we continue to empty out the mailbag (click here for Part I):

Frank,
One of your theories is that if the Big 12 dies, Texas would try for a partial member deal like Notre Dame in the ACC instead of becoming an equal member of another conference. I had agreed with that theory up until Texas A&M exploded onto the national scene at the end of last year and has remained there ever since. Texas is going to make its money anywhere but playing 2nd fiddle to its state rival has to be a blow to the powers that be at UT. I don’t think playing a half ACC schedule mixed with a couple of 2nd tier Texas schools is going to offer enough pub to compete with A&M and the SEC especially with the coming difficultly of scheduling with conferences going to 9 games. Does Texas A&M success, and more importantly attention, change your thoughts on the future of UT? – PSUhockey

Very interesting question. I think that A&M’s success can definitely impact the long-term prospects of Texas, but that it’s a separate issue from the particular conference that UT is in (or if it’s an independent, not in). A lot of sports fans may be looking at the Big 12 through the prism of its relatively good on-the-field football success over the past few years, while the ACC has had arguably its weakest stretch over the exact same period. However, I’d argue that Florida State, Miami, Virginia Tech and Clemson at the very least are more valuable football opponents than any Big 12 school outside of Oklahoma. Personally, I’d put UNC, NC State and Georgia Tech ahead of anyone non-OU Big 12 school purely for football, as well. So, if Texas keeps the Red River Rivalry as an independent, plays 1 or 2 of its fellow in-state Texas schools not named Texas A&M, has a similar 5-game partial ACC schedule like ND and then fills out the rest of its schedule in a manner that’s similar to now, I think that’s very attractive compared to the normal Big 12 schedule for the long-term. We’re not even getting to basketball and baseball, where the ACC is extremely powerful.

So, A&M could certainly put a serious dent in UT’s power (and if it’s not A&M specifically, it could be simply the increased presence of the SEC in the state of Texas), but that doesn’t necessarily correlate in Texas preferring the Big 12 over partial membership in the ACC. If anything, Texas might end up with acting in a way similar to how BYU responded to Utah’s invite to the Pac-12, where independence became mechanism to show how it was “special” compared to its in-state rival.

To me, Big East expansion to 12 schools is inevitable and ought to have happened already. The fact that Xavier AD Greg Christopher mentioned St. Louis, Dayton, Richmond and VCU as the prime candidates isn’t any surprise. SLU seems to be a lock – it’s a perfect institutional fit in a large market (by college sports standards) with a competent on-the-court basketball team. As I’ve stated previously, it’s really a matter of who comes along with SLU. I don’t see the Big East being interested in creating a nationwide conference with schools like Gonzaga and BYU – that’s an interesting fantasy for those purely focused on the basketball product, but it’s a non-starter for all of the other sports. So, Dayton, Richmond and VCU are really the well-worn “other” candidates, with the Big East’s consternation on each of them being that they have major flaws from the conference’s perspective (Dayton is in a smaller Midwestern market, Richmond has a small alumni base, and VCU would be the lone public school in a league of private institutions). It’s also difficult to see many other schools outside of that group that could have both a Butler-like ascent and the institutional and market profiles that the Big East is looking for. The only ones that come to mind are Davidson (which has a small size like Richmond but has had more recent on-the-court success and is located in a college hoops hotbed) and Duquesne (great institutional and market fit, yet they have zero on-the-court credentials).

If I were running the Big East, I certainly wouldn’t see Davidson or Duquesne as panaceas that are worth holding off expansion for. University presidents have proven to be a strange bunch in conference realignment decisions, though. To me, SLU is a lock to get into the Big East when it expands (and I say when because I just don’t see Fox being satisfied with the level of inventory and market coverage that the 10-team setup offers in the long-term), with Dayton as a slight front-runner for the 12th spot. Now, VCU might end up being too much to ignore if they have another Final Four run and, maybe more importantly, keep having fans showing up in droves in Brooklyn for the Atlantic 10 Tournament (as the Big East needs to maintain ticket buyers for its own tournament at Madison Square Garden). The public school profile is definitely a major problem for VCU’s candidacy, though. That factor can’t be underestimated with the Big East presidents.

For the long-term (the next 10 to 20 years), it probably won’t look too much different than now when it comes to U.S. spectator sports: (1) football, (2) basketball, (3) baseball and then a big dropoff to get to hockey and soccer. (This is different than levels of actual participation in sports, where soccer and basketball will likely dominate.) When looking at the metrics, basketball is clearly ascendant compared to baseball: the NBA Finals have been consistently drawing better ratings than the World Series, NBA players are more recognizable to the general public, neutral sports fans are more likely to watch an NBA game that doesn’t involve their favorite team than an MLB game without their favorite team, and, most importantly, the NBA viewing audience is younger and more diverse across economic and racial lines.

I wrote a piece on soccer’s issues with viewership back when David Beckham joined the LA Galaxy a few years ago and the main thrust of that post still holds true: viewership of soccer in the U.S. will be capped as long as Major League Soccer fails to import the best players in their primes like they do in Major League Baseball, the NBA and NHL. Americans want to watch the best of the best, which is why they’re willing to watch the U.S. Men’s and Women’s National Teams play in the World Cup and other international competitions, but aren’t interested in what they perceive to be minor league pro soccer compared to the English Premier League and other top European leagues.

Think of it this way: most sports fans can recognize the difference in the quality of play between an MLB game with a 1-0 score and a minor league baseball game with the same 1-0 score. Likewise, even relative soccer watching novices in America can see that the level of play in a World Cup or EPL match is vastly different than MLS. That’s why I’ve long said that the drag on soccer’s popularity in the U.S. has nothing to do with the supposed lack of scoring*. Instead, it’s that soccer is the main sport where we’re exporting the best players as opposed to importing them, which means we’re getting a worse product than other countries (unlike in basketball, baseball and soccer) and we know it. So, soccer can grow, but it will be limited as long as we don’t get to watch the best players here.

(* Scoring is an artificial construct, anyway. A 21-14 football score sounds a lot different than a 3-2 score (as in 3 touchdowns to 2 touchdowns) even if it reflects the same amount of on-the-field action. The “lack of scoring” argument for why Americans don’t watch soccer en masse is one of my sports pet peeves because it’s so simplistic and misses the larger picture.)

What will it mean for NCAA 14 that the conferences aren’t represented? – @Devon2012 

Ah, yes. Yet another toothless action by the NCAA and conferences in attempting to deflect criticism that they’re taking in billions of dollars on par with the largest pro sports entities in the world. I guess the NCAA has a bit more skin in the game since its brand is in the title of the game itself, but it’s pointless for the conferences to remove their names from video games, but then allow their members to continue to be included under their own separate agreements with EA Sports (and all but one of them have such agreements). We’re not talking about going to some Blades of Steel era logoless and nicknameless labeling of teams here: the Illinois Fighting Illini, Michigan Wolverines, Ohio State Buckeyes and all of their other conference-mates will be playing in a video game league that’s not named the Big Ten but everyone will recognize is the Big Ten. (I’m sure that EA Sports will simply use the mathematically correct “Big 14″.) Why the Big Ten, SEC and other power conferences give up their branding control when their member schools are still participating in the game is beyond me.

I don’t think ESPN and Fox are battling over conference realignment per se in the sense that the only conference where it really matters at this point for them is the Big Ten. In fact, the Big Ten’s next TV contract (which would start in 2016) is in an environment where it’s the only power conference that’s going out to the open market for the next decade, so ESPN and Fox (along with NBC and maybe even Turner) could fight for the conference with realignment being a tangential factor. At the end of the day, I believe that the Big Ten will end up with a Pac-12-style deal where the Tier 1/Top Tier 2 rights are split between ESPN and Fox and then the Lower Tier 2/Tier 3 rights go to the Fox-affiliated BTN, so neither ESPN nor Fox will push the Big Ten or the other conferences to do one thing or the other simply for the sake of TV rights. If anything, the last thing that ESPN and Fox would want is further realignment, as it has resulted in significantly higher rights fees that they’re footing the bill for. The Pac-12, Big 12, SEC and ACC rights are all locked up for a long time, so the networks are just going to end up paying more if any other schools end up defecting to the Big Ten.

Which is more likely for the NHL – expansion or contraction? Which NFL franchise(s) are most likely to land in LA? If none do in next 5-10 years, would NFL expand again? – John O

A couple of key overarching points about about pro sports realignment:

(1) Having an “acceptable” stadium is non-negotiable -  It doesn’t matter how attractive a market might be – if it doesn’t have the right stadium (which means having the requisite amount of luxury suites and sweetheart revenue streams), then it won’t be considered. (See the lack of an NFL team in LA for the past 2 decades.)

(2) The top 4 U.S. pro sports leagues will NEVER contract – Believe me – if I could wave a magic wand, there would be 8 to 10 NHL franchises eradicated tomorrow. However, when franchise values for even the worst pro teams in the worst markets are worth hundreds of millions of dollars, owners would rather (a) collect entry fees from new buyers of those dog franchises, (b) move those dog franchises to new markets with “acceptable” stadiums and (c) simultaneously scare current markets into building new “acceptable” stadiums in the process.

So, the first question is fairly straightforward at a high level – the greater likelihood for the NHL is expansion simply because contraction isn’t a viable option. That being said, when you dig down deeper, how much is it worth for any league to expand at this point? Most NBA and NHL franchises are better off using Seattle as a threat to current markets within their footprints to ram through new stadium deals than putting a team in Seattle itself. Leading into your next question, the NFL has used this type of threat better than anyone with the lack of a franchise in Los Angeles. Think about it if you’re Jacksonville, St. Louis or San Diego – if the NFL won’t put a team in LA for not having an “acceptable” stadium, then they sure as hell won’t care about you if you don’t have the right building.

The team that should move to LA is the Jaguars (nothing against Jacksonville, but it truly doesn’t make sense how that market has an NFL franchise), but it appears that their stadium lease is extremely difficult to break. That leaves LA’s two prodigal sons of the Rams and Raiders as frontrunners (franchises with aging stadiums and relatively low contractual barriers to deal with) along with the Chargers (a fairly short geographical move).

Of course, remember point #1: LA must have an “acceptable” stadium. That has always been the dilemma. The proposed Farmers Field in downtown LA near the Staples Center and LA Live had always made the most sense to me from afar since it presents the best opportunity to be a catalyst to further economic development in that area. Downtown LA still isn’t anywhere near as walkable as New York City, Chicago or San Francisco, but a football stadium is a logical addition to what the LA Live complex has already brought there. Unfortunately, that proposal seems to be dead right now.

The problem is that the massive size of the LA market almost works against it in an environment where getting the right stadium deal matters more than anything else in attracting an NFL (or any other pro sports) franchise. The LA market is so lucrative that tons of potential high profile investors want to get into the action, which means that the region as a hole continuously fails to coalesce around a single stadium proposal. The City of Industry and Orange County, for example, see Downtown LA as a competitive threat as opposed to a partner, so we’ve been seeing lots of stadium proposals from various municipalities and factions over the past two decades without any of them getting broad support. In contrast, smaller markets have a better ability to get behind a single proposal with little infighting.

I’ve been thinking that LA would have an NFL team within the next 5 years for the past 15 years, so while it makes sense to virtually everyone with half a brain, it’s pretty obvious that the NFL won’t budge whatsoever on the stadium issue even with a gaping hole in the #2 TV market in the country. Roger Goodell would rather work with markets that have top tier stadiums in place… like London*.

(* Look – I love London. It’s one of the few places that I’d ever consider moving to by choice from Chicago. However, Goodell’s continuous rhetoric about possibly putting a Super Bowl and/or team in London is wearying. The NFL needs to separate the interest of the American expat population in England that’s interested in the league with the fact that native Brits are unbelievably resistant to the overtures of U.S. sports leagues much more compared to other European countries. The most successful franchises in terms of attendance in the old NFL Europe developmental league were actually located in Germany, while Spain, France and many Eastern European countries are solid followers of the NBA. London simply isn’t a good growth spot for the NFL at all.)

Enjoy the upcoming games, everyone!

(Image from HitFix)

(Note: In case you’ve missed it, I had Q&A with Burnt Orange Nation on conference realignment with a Big 12 and Texas focus last week. Here are parts 1, 2 and 3.)

One of the major topics that has been on my list to address this summer is whether there is a sports TV rights bubble, which has turned out to be prescient with a recent blog post from Patrick Hruby at Sports on Earth and a front page article in today’s Wall Street Journal (subscription required) addressing the subject. Both pieces are well-written and informative and generally come to the conclusion that sports TV rights are heading upward in a bubble-like manner. Hruby provides a lot of background on the cable subscription model that is funneling massive amounts of revenue towards sports while pointing out the risk of that collapsing with more people “cutting the chord” to reduce costs and the rise of Internet streaming options, such as Netflix, Amazon and Hulu. Meanwhile, the Wall Street Journal looks at the sports rights fees situation from the perspective of the cable operators themselves that are dealing with the rapidly rising costs of sports networks (particularly new regional sports networks). These stories play into the broader increasing calls for a la carte pricing for cable (meaning that a subscriber would purchase only the channels that he or she wants as opposed to paying for large packages). I’ve written previously about why sports have been increasingly and disproportionately valuable compared to other types of programming since they are watched live and, as a result, viewers will watch commercials in a way that they no longer do with other types of shows that they watch on their DVRs or online streaming sites. That’s generally common knowledge at this point. However, here are a few thoughts on some items that I believe a lot of “sports rights skeptics” are glossing over:

(1) The values of sports TV rights overall have never, EVER dropped – While past returns are not a guarantee of future success, as any financial adviser in CYA mode will tell you, we’ve seen the “We’re in the middle of a sports TV rights bubble!” story on a consistent basis ever since the 1980s, yet they have never dropped overall. Deadspin had a great comparison of quotes from “bubble” articles from 1989 and 2013 and you could hardly tell when either one was written. Now, certain properties might not have enjoyed the same increase in rights as others (see the Oympics, where NBC actually is paying about the same or even less on an inflation-adjusted basis for the 2016, 2018 and 2020 games as it did for the other Games that it has broadcast during this century), but the marquee sports properties (NFL, NBA, Major League Baseball and power conference college football) have been rising in an unfettered manner for nearly four decades straight. Once again, that doesn’t mean that this will continue on in perpetuity, but on the flip side, it’s simple-minded of observers to argue that the rapidly rising sports rights fees being paid out today must indicate a bubble.

(2) Bundling is the real culprit of rising cable prices – I appreciate Hruby spending a quite a bit of time on the bundling aspect of the cable subscription model, which I believe is a larger cause of increased cable prices more than anything. A lot of sports TV rights critics love to point out that ESPN is receiving $5.00 per subscriber per month from every cable household in America, whether they watch it or not, but that isn’t necessarily an unfair deal considering how much high value sports programming that it provides. There’s a fairly substantial segment of the population that wouldn’t bother subscribing to cable at all without access to ESPN, so it behooves any cable operator to pay whatever price it takes to keep the Worldwide Leader on the air. However, when ESPN’s parent Disney uses that leverage to force cable operators to buy 10 or 20 other commonly-owned channels to have any access to ESPN at all, that’s where you truly see large scale increases on your cable bill. Turner, Fox, Viacom, Comcast (which is both a cable network owner and a cable operator) and other cable network companies take the same tact, where they will only allow operators to carry their most popular channels, such as TBS, TNT, FX, MTV and USA, if they pay for larger bundles of channels that might not otherwise survive in the marketplace on their own. To me, bundling is the real market inefficiency right now when it comes to cable pricing: cable operators are being forced to give money and channel space to a whole host of channels simply to have access to the most popular ones that have common parents. This is distinct from the individual consumer-based complaint of not being able to pick and choose individual channels on an a la carte basis, which is something that I don’t believe would ever legitimately fly. Americans definitely like the idea of a la carte pricing (after all, it’s “un-American” to have to pay for channels that you’re not watching), but their actions show that they would still rather have all-you-can-eat buffet pricing.

(3) Netflix and other streaming websites are all-you-can-eat buffets just like cable (as opposed to being a la carte) – Further to the last point, we’re seeing a rapid rise in the popularity of Netflix-style on-demand streaming. While a lot of cable detractors point to the popularity of streaming as an indicator that support for a la carte is gaining traction, it’s really the opposite. Think of what Netflix (or Amazon or Hulu) actually does for the consumer: it aggregates content from a whole slew of providers and provides an all-you-can-eat (as opposed to pay-per-view or a la carte) price to access such content. I can’t only ask and pay for the Disney shows being streamed on Netflix any more than I can try to get only the Disney-owned cable channels from DirecTV. The entire value proposition of these streaming sites is you can get an entire universe of shows from a whole variety of sources (including Netflix itself with its in-house productions like House of Cards and the resurrection of Arrested Development), which is much different than a la carte pricing (where you receive a limited set of programs from a single source). In fact, the main reason why Hulu was formed in the first place was that the major TV networks were failing to gain traction with streaming their shows on their own respective websites. Consumers ultimately wanted to go to one place online to watch all of their favorite TV shows, which is an Internet mirror of the experience of turning on the TV and flipping through the channels with a remote.

By the same token, the business model of The Asylum, which is the B-movie studio that produced last week’s Twitter-fueled SyFy sensation Sharknado!, is actually based upon producing as much inexpensive filler content as Netflix desires. Seriously – Netflix explicitly asks the studio to produce cheap and terrible movies in order to create the perception that the website has a vast library of content. From the linked Pacific Standard article (which I highly recommend reading in its entirety):

At surviving brick-and-mortar stores like H. Perry Horton’s, renters gravitate toward the big-studio releases shelved at eye level. But on Netflix, “You click through and see all the titles—new Hollywood releases mixed in with direct-to-video,” Davis says, all crammed into a grid of thumbnail posters. Filtering in low-budget films with the high-budget versions “fuels this perception that there’s a wealth of new content.” And in the endlessly filterable world of Netflix, where your preferences are sorted into hyper-specific genres, a full page of results for horror films with nightmare-vacation plotlines makes you feel like Netflix is tailoring its product just for you. “The bottom line is that it’s there, and you saw it,” [DePaul University assistant professor Blair] Davis says—even if you didn’t actually watch it.

Much like the vast number of cable channels that people are paying for but never watch, Netflix is providing a ton of movie titles that subscribers are also paying for and never watching. Sounds like basic cable, no? Netflix is simply a horse of a different color when compared to cable – the underlying buffet approach of providing lots of content that you’ll never end up watching is the same with only the delivery system (Internet instead of cable or satellite) being different. Of course, $9.99 per month for Netflix streaming is a helluva less daunting than paying $100 or more per month for cable service, so it’s easy to see why it has gotten so much traction so quickly.*

(* If you have young children like I do, Netflix streaming is right next to food, water and shelter on Maslow’s hierarchy of needs at this point. There are still a lot of limitations on the movie and TV show offerings on Netflix streaming right now, but the suite of children’s programming makes it indispensable to parents.)

So, Netflix and the like might very well encroach upon the territory of cable operators, but the point is that no one should mistake the rise of streaming with a desire for a la carte pricing. The likelihood of most Americans having the desire or tolerance to try to choose a customized lineup of channels on an a la carte basis is fairly small. Besides, the economic underpinnings of the cable industry mean that a la carte pricing would likely kill all but a handful of the most popular cable channels (i.e. only the basic cable lineup from circa 1990 would survive), which destroys the overall desirability of a la carte in the long-term. Instead, what people really want is the same type of buffet access to content at a lower price point, whether it’s via cable or the Internet.

(4) Sports streaming is inherently different than movie and TV show streaming – The rise of streaming websites is undeniable and flattening the content distribution universe. However, what I think a lot of observers miss is that the desire to stream movies and TV shows is inherently different than streaming sports. Specifically, the single biggest attraction for streaming movies and TV shows is that it’s on-demand: a viewer can watch the content whenever and wherever he or she wants.

Now, the “wherever” component still applies to streaming sports, as you can use the Internet to watch games on your tablet or smartphone. That’s huge for convenience for any sports fan that’s away from home. Yet, a key distinction is that the “whenever” advantage of streaming doesn’t apply to sports. While many people have made the connection that fans generally watch sports live, which in turn makes them attractive to TV networks since that means that such fans are much more likely to watch advertising (thereby increasing revenue all around), they seem to have a blind spot that this is a large deterrent to a mass movement to watching sports online. The typical sports fan doesn’t have a preternatural need to watch a replay of an NFL game on Tuesday where the outcome has already been determined – the entire value of sports is that there are a lot of people that want to watch the exact same event at the exact same time. That happens to be exactly what television has done (and probably will always do) better than the Internet.

In essence, the convenience of streaming sports is primarily based on mobility, whereas the value from streaming movies and TV shows is based on both mobility and time-shifting ability. While a broad sports streaming platform like ESPN3 could turn into a “Netflix of Sports” (if it hasn’t already), it isn’t clear that it could ever really be a more desirable option for the standard run-of-the-mill sitting-at-home-on-the-couch viewer compared to live television in the way that Netflix/Amazon/Hulu can very much be the preferred vehicle for such viewer simply because on-demand viewing is such a game changer for movies and TV shows compared to sports.

Of course, that’s not to say that sports entities are going to be in the clear and enjoy massive media rights profits forever. In my next piece, I’ll take a look at some factors that are dangerous to sports leagues and teams that not even the “sports rights skeptics” are paying much attention to right now and could kill the proverbial golden goose.

(Follow Frank the Tank’s Slant on Twitter @frankthetank111 and Facebook)

(Image from Apple Insider)

The sports world has been throwing me some curve balls over the past week, with my Bears and Illini combining for only 3 fields goals worth of offense, the Lakers trying to tell the public with a straight face that Mike D’Antoni is a “better fit” as a coach for their team than Phil Jackson, and the Marlins just handing over half of their team to the Blue Jays after fleecing Florida’s citizens out of public funds to build a brand new ballpark.  Let’s try to digest what has actually occurred with the new college football playoff system by answering some frequently asked questions:

(1) What exactly is the new playoff and top tier bowl format? – For someone like me that constantly dives into the minutiae of these details, this seems like a basic question, but it’s apparent to me after reading a lot of questions from people out there that the powers that be haven’t really done a good job of explaining how the new postseason format is going to work very clearly to the public.

What we know is that there will be 6 top tier bowls, with 3 of them being “contract bowls” with contractual tie-ins (Rose Bowl with the Big Ten and Pac-12, Sugar Bowl with the SEC and Big 12, and Orange Bowl with the ACC and SEC/Big Ten/Notre Dame) and the other 3 being “host bowls” (likely the Cotton Bowl, Fiesta Bowl and Chick-Fil-A Bowl) that provide “access” slots (the equivalent of at-large bids in today’s BCS system).  The major new news is that the FBS conferences just announced that one of those access slots will be allocated to the highest ranked champion of the conferences that do not have a tie-in with a contract bowl (the Big East, Mountain West, Conference USA, Sun Belt and MAC, who are generally referred to in the media as the “Gang of Five” and I call the “G5″ here).  Over the past month, the powers that be had considered adding a 7th bowl that would match up the top G5 champ against a team from the Big 12 or Pac-12, but the feedback from the marketplace was that such game would not be worth very much.  Thus, the compromise was to incorporate that G5 access into the 6-bowl rotation.

A 4-team playoff will be played within the confines of those 6 bowls, meaning that 2 bowls will be designated as semifinal sites each year and the other 4 bowls are “normal” bowl games.  In a year when a contract bowl is designated as a semifinal, the champions from each conference that it has tie-ins with are guaranteed a spot in one of the host bowls if such conference champ is not a semifinalist.  For example, if the playoff were in effect last year and the Rose Bowl was a semifinal site, Wisconsin, as the Big Ten champion that did not make it to the semifinal, would have an automatic slot in one of the host bowls.  On the flip side, when a contract bowl is not a semifinal, it is guaranteed to have teams from its tie-in conferences no matter where they are ranked.  So, in another example, if the playoff were in effect this year where the Rose Bowl is not a semifinal site and Oregon is the Pac-12 champion and finishes in the top 4, the Rose Bowl would take another Pac-12 team to replace Oregon whether such team is ranked #5 or #50.

The 4-team playoff field will be determined by a selection committee, presumably with at least one representative from each FBS conference.  That selection committee will also determine who receives the at-large host bowl slots and which G5 conference champ is the highest ranked.

(2) How will the revenue be split? – Some of it is very clear while other parts of it is up in the air.  While every conference expects an increase in revenue on an absolute basis, a chosen few are going to receive the lion’s share of the gains.  The contract conferences (Big Ten, Pac-12, SEC, Big 12 and ACC) will retain the media revenue from their respective contract bowls in the years that such bowls are not hosting semifinals.  The Rose Bowl signed a TV contract with ESPN worth $80 million per year.  The Sugar Bowl is believed to be making the same $80 million figure under an ESPN deal finalized today while the Orange Bowl is estimated to be worth $60 million per year.  This means that all of the contract conferences are expected to make $40 million each in the years that their respective contract bowls are “normal” non-semifinal bowl games.  The G5 doesn’t touch this money.

A separate pot that includes the national championship game, semifinals and host bowls has a tentative deal on the table from ESPN worth approximately $475 million to $500 million per year.  This is where the revenue distribution issue gets a bit murkier.  The FBS commissioners have said that a portion of that pot will distributed in the form of fixed annual payments to the various FBS conferences and independents, while another portion will be allocated based upon who actually attains bids to the semifinals and host bowls.  It is unclear how those portions will be split up.  The current understanding regarding the fixed annual payments is that the contract conferences will take the bulk of that money on top of their contract bowl revenue in equal shares among those 5 leagues, with a CBSSports.com report that it would be an overall 80%/20% split with G5 conferences compared to the current 85%/15% split in the current BCS system (although that “give” by the contract conferences is a quite misleading since that doesn’t include contract bowl revenue that the power leagues keep 100% of in the new system yet was shared in the current BCS system, so the net effect is essentially nothing in terms of overall percentage splits).

(3) Is the Big East a winner or loser in all of this? – I’ll give the lawyerly answer here: it depends.  The new G5 access slot to a host bowl has been positioned by a lot of people in the media as a “win” for the Big East*, but whether it’s truly a win is different for each of the members of that conference.

(* Regardless of what anyone thinks about how much the Big East will be worth in the TV and bowl marketplaces going forward, a massive amount of credit has to be given to the league’s new commissioner Mike Aresco for completely managing the media in all aspects on this playoff issue along with the recent Notre Dame defection.  If this announcement were made during John Marinatto’s tenure as Big East commissioner, the news stories would be talking about how the Big East is dead with the loss of an auto-bid as opposed to being anything close to a winner.)

The Big East is really the entity that is most affected by the changes in the postseason system since it went from being an AQ league where its champion was guaranteed a spot in a BCS bowl (the equivalent of a contract conference in the new format) to one where its champ is pooled in with the champs from the other G5 leagues to fight for one spot (the equivalent of a non-AQ conference in the current format).  From that vantage point, it’s very difficult to call the old members of the Big East (Louisville, UConn, Rutgers, Cincinnati and South Florida) as “winners” since this is a clear downgrade.  Even if they make more money in absolute dollars in the new system, they will be behind the power conference teams that they were once grouped with on a relative basis in terms of revenue and access.  The old members of the Big East in the negotiations with the powers that be in the playoff negotiations were basically in the position of Lando Calrissian in The Empire Strikes Back, where Darth Vader told him, “I am altering the deal.  Pray that I don’t alter it any further.”  As a result, the best that you could say for the old members of the Big East was that it could have been worse, where the power conferences might not have provided any dedicated bowl slot to the G5 at all.

On the other hand, the new Big East members (Temple, Central Florida, Houston, SMU, Memphis, San Diego State and Navy) are definitely winners.  They have received an upgrade in top bowl access (albeit not a great of an upgrade as they might have originally anticipated) and will take home multitudes more revenue compared to the current BCS system.  There’s really very little downside for any of them, if only because they could only go up from where they are in the BCS landscape.

In theory, the Big East is in the best position to win this G5 bowl access slot year-to-year since it is the strongest conference of that group from top to bottom.  That being said, I believe that theory only holds true where the Big East champ has the same record as any of the other G5 champs.  The danger for the Big East is not necessarily other conferences passing them by, but simply when another team from one of those conferences has a hot year.  For example, a 1-loss Louisiana Tech team is 1 spot ahead of 1-losss Rutgers and only 1 spot behind 1-loss Louisville in this week’s BCS rankings… and that’s while playing in a WAC league that will no longer be in existence when the new playoff starts in 2014.  That seems to indicate that a 1-loss Louisiana Tech team would definitely jump 2-loss Louisville and Rutgers teams if the new system were in place today (and it’s already virtually dead even with all of them having the same records).  At the same time, even though the Big East conference games will provide its league members with stronger strength of schedule rankings compared to the conferences games in the other G5 leagues, that can be mitigated by the fact that other G5 teams are more willing to take one-and-done guarantee games on the road with power conference teams.  Using Louisiana Tech as an example again, they have stronger BCS computer numbers than both Louisville and Rutgers this year based on playing one excellent SEC team (Texas A&M) and two craptacular Big Ten (Illinois – ugh) and ACC (Virginia) teams in road one-and-done games.  As a result, Big East teams can’t get very comfortable at all about thinking that this G5 slot is always going to go to their league.  That might be true when all records are equal, but if the Big East champ has a worse record than one of the other G5 champs, then it’s a major risk.

(4) What other winners and losers are there? – The other G5 conferences are overall winners since they have managed to obtain better access and revenue compared to the current system despite generally having weaker leagues on the field due to defections with conference realignment.  Of course, lest that you believe that the power conferences have been charitable, the Big Ten and SEC are definitely large winners, as well.  In part of the announcements this week, the champions from the SEC and Big Ten will always play in one of the host bowls if they are not semifinalists instead of the Orange Bowl (which those leagues have a secondary tie-in with shared with Notre Dame).  So, instead of, say, a #5-ranked SEC champ heading to the Orange Bowl when the Sugar Bowl is hosting a semifinal (thereby freeing up a host bowl slot for someone else), that SEC champ will go to one of the host bowls and the Orange Bowl can take another SEC team on top of that.  Jim Delany and Mike Slive definitely pulled a fast one there, particularly when the media seems to intimate that this was some type of concession.

(5) What happens to independents, particularly Notre Dame and BYU? – Independents (excluding Navy who will be joining the Big East in 2015, these currently consist of Notre Dame, BYU and Army and will include conference-less Idaho and New Mexico State next year) do not have any prescribed access to the semifinals and host bowls outside of ranking high enough for the selection committee to choose them for those slots.  However, Notre Dame has a contractual tie-in with the Orange Bowl, so host bowl access would have been gravy to them, anyway.

Most speculation about the impact on independents has centered around whether the new G5 bowl slot will spur BYU to join the Big East.  As I’ve stated in other blog posts, I don’t believe that BYU will end up in the Big East because its interests are much more about providing maximum TV exposure for the football program and the LDS church as a whole, which is exactly what they get now as an independent with an ESPN contract, as opposed to making the most TV money possible.  Now, I do believe that the bowl access situation will give BYU and LDS leaders (never forget that they are intertwined here) something else to chew on, but if you take a step back, you’ll realize that nothing has actually changed for the school in terms of top tier bowl access.  As of today, the only way that BYU can get automatic access to any BCS bowl is to qualify for the national championship game itself, which is practically no different than BYU only gaining automatic access if it qualifies for a semifinal in the new system.  Since BYU chose independence under the current BCS circumstances with virtually no prescribed access at all, no one should assume that the new G5 bowl spot will seriously alter their thinking.  At the end of the day, I continue to believe that Air Force will end up as football school #14 in the Big East while BYU will maintain its independence.

(6)  Any other unusual details? – Well, Sugar Bowl CEO Paul Hoolahan has some loose lips, where he provided some quirky information from the BCS meetings to the Baton Rouge Advocate (h/t to Alan from Baton Rouge):

While the nonplayoff Sugar Bowls will be exclusively between SEC and Big 12 teams, much as the Rose Bowl is exclusively between Big Ten and Pac-12 teams, the semifinals can feature teams from any conference, although if an SEC or Big 12 team is seeded first or second, its game will be in the Sugar Bowl.

********

The rotation for the semifinals is yet to be set. Hoolahan said he did not know which year would be the first for New Orleans to host a playoff game but understood the Sugar Bowl would be paired with the Rose Bowl.

“That way, we’ll have an uninterrupted afternoon and evening of playoff games,” he said. “That’s going to be exciting.”

The first portion of Hoolahan’s info doesn’t surprise me, where the contract bowls would get preferences to host their respective conference partners when they are semifinal games.  It makes complete sense that a #1 or #2-ranked Big Ten or Pac-12 team ought to go to the Rose Bowl if that game happens to be a semifinal site for that particular season.  However, the second portion about how the Sugar Bowl and Rose Bowl would always be semifinal games in the same year is completely perplexing to me.  I understand Hoolahan’s point that the years when both of them are hosting semifinals would make for an exciting New Year’s Day, but the flip side is that there would now be no New Year’s Day semifinals at all in 1 out of every 3 years.  A clear and logical annual setup of 1 host bowl being a semifinal on New Year’s Eve and 1 contract bowl being a semifinal on New Year’s Day seems to be thrown up in the air with this information.  Usually, I’m able to understand the intent and reasoning behind various actions by the powers that be (even if I don’t personally agree with them), but I’m at a loss as to why the commissioners believe that this is a good idea.

All-in-all, there has been a flurry of progress over the past couple of weeks on the playoff front after a long pause in deliberations.  Hopefully, we’ll get some final information about how the semifinal rotation will be set up, confirmation that ESPN will be the television partner, and where the national championship game itself will be played sooner rather than later.

(Follow Frank the Tank’s Slant on Twitter @frankthetank111 and Facebook)

(Image from Sports Illustrated)

As some of you may know, I’m the father a two-year old twins (a boy and a girl).  At this age, the Walt Disney Company is constantly vacuuming funds out of my wallet.  In the past year alone, I’ve bought Lion King and Toy Story Blu-rays, movies tickets to see The Muppets, a dancing Mickey Mouse (complete with the ability to moonwalk, which is actually pretty sweet), Lion King dolls, Disney Princess books, Disney Princess clothes, Disney Princess purses, Disney Princess stage show tickets, Disney Princess toys and of course the granddaddy of all Disney wallet sucking experiences, a trip to Disney World staying in a Disney hotel complete with a Disney Princess breakfast at Cinderella’s Castle.

For all of the money that people like me spend on Disney toys, movies and theme parks and others that watch TV properties such as ABC and the Disney Channel, the Mickey Mouse-controlled  subsidiary that provides more profit to the company than any other by a massive margin is ESPN.  In fact, it’s not even close.  Currently, ESPN is in close to 100 million households clearing over $5.00 per month from every single one of them in subscriber fees.  This means that ESPN is making around $500 million in revenue per month and $6 billion in revenue per year before even selling a single advertisement.  ESPN isn’t just the most powerful sports network in America.  That would be vastly understating the network’s power.  Here’s the real bottom line: ESPN is the most powerful media and entertainment company in America.  Period.

It’s against this backdrop that we have to analyze the prospects of Fox, NBC/Comcast and, to a lesser extent, CBS becoming viable competitors to ESPN in cable sports world.  Fox has just announced that it is forming a new national cable sports network, NBC/Comcast has rebranded Versus to be the NBC Sports Network, and CBS is trying to turn what was once a college sports-focused channel into a broader sports network.  Certainly, it makes sense for all of them to try to get a piece of ESPN’s cable sports pie.  As I noted here last year, there are three key factors in television viewership today:

  1. More old people watch TV than young people*
  2. More women watch TV than men
  3. More people are using DVRs

(* For TV purposes, “old people” are defined as people older than 49 and “young people” are between 18 and 34 years old.  The only rating that matters for advertisers for a network prime time TV show is what it draws in the age 18-49 demo, while age 18-34 viewers command the greatest premiums.  It doesn’t matter that people older than 49 actually have higher incomes – this is about simple supply and demand, where younger viewers are in shorter supply.)

As a result, the most valuable property on TV on per viewer basis is the program that draws the age 18-34 male that watches it live. This is what sports does more consistently and dependably than anything else on TV, which means that advertisers and cable providers pay a significant premium for sports programs even though their overall viewership numbers (outside of the NFL) generally aren’t that large compared to the average network prime time show or even the movie of the night on TNT or USA.  As a result, ESPN is able to charge the highest monthly subscriber fee of any channel on cable by a significant margin.

The problem is that competing with ESPN is much easier said than done.  Fox and NBC might be spinning their networks as “new competitors” where they just woke up yesterday and realized that ESPN needs some competition, but the reality is that they’ve been trying to compete with ESPN for decades to no avail.  Cablevision created SportsChannel America back in the 1980s, which was a consortium of regional sports networks that bought national TV rights to NHL (in the glorious days when the Norris Division was alive) in attempt to create a competitor to ESPN.  Many of those regional sports networks got bought by Fox in the 1990s, where they tried create a similar type of ESPN competitor by buying national cable rights to properties such as the Big 12 and Pac-12 along with creating studio programs such as “The Best Damn Sports Show”.  That has been done a bit better than the old SportsChannel America, although it’s still been fairly lukewarm and the new national Fox sports network (dubbed “Fox Sports 1”) appears to be simply a vehicle to put air the national rights that it already has on a coast-to-coast network as opposed to through regional networks.  In the meantime, NBC Sports Network has been in existence for quite awhile, with it initially being called the Outdoor Life Network.  Comcast already attempted to rebrand the channel as Versus several years ago in order to try to position itself as a direct ESPN competitor, and it’s now doing a rebranding again with its recent purchase of NBC.

So, when I see sports fans that are exasperated with ESPN (for good reason)* cheering the prospects that someone is finally competing with the Worldwide Leader, the problem is that they’re falling for the spin that these companies are just starting from scratch with something brand new.  It’s simply not the case.  The core problem for any network that wants to compete with ESPN is the lack of access to what I call “Tier 1″ content, which I would consider to be the NFL, Major League Baseball, NBA, SEC and Big Ten.  These are the properties that a network can use as tent poles to drive casual sports fans to flip over.  “Tier 2″ content would be the other major college conferences, the NHL and the elite levels of golf, tennis and soccer, while “Tier 3″ is everything else.  A network can fill airtime with Tier 2 and Tier 3 content, but can’t rely on that programming alone to break through to legitimately compete with ESPN.

(* Note that I’ll always consider this blog to be a Deadspin baby, as I was in one of the early sets of commenters on that site due to the graciousness of former editor and fellow Illinois alum Will Leitch.  That original commenter group ended up spawning a whole bunch of blogs with much wider reach than this one, such as Kissing Suzy Kolber and With Leather.  The point is that I’m well-schooled in the lampooning of ESPN, culminating in what is quite possibly the funniest story that I’ve encountered in all of the years of writing this blog: the comically insensitive ESPN college basketball commercial casting call that was real.  I still laugh my ass off at that one.  So, this post is not a defense of ESPN in terms of its editorial and promotional practices, which can be nauseating at times.  However, ESPN is absolutely the best run media organization in the country when it comes to the business side.  That side of the equation should be unquestioned.)

NBC Sports Network has been able to get Tier 2 and Tier 3 content, but nothing at the Tier 1 level (which has been the case for many years).  As a result, the ratings lately have been nothing less than horrible.  Viewership during the first quarter of 2012 for NBC Sports Network is down 22% compared to the same period last year and is actually at its worst levels since 2004, when it was still the Outdoor Life Network (meaning that the ratings this quarter right after the NBC re-branding are worse than at any point when the network was called Versus).  Even worse is the rating in the target demo.  Remember when I noted above that the whole reason why sports networks get a premium is that they are supposed to draw age 18-34 males?  NBC Sports Network’s rating in that demo was 0.4 this past quarter.  By comparison, Lifetime (yes, Lifetime) had a 0.5 in that demo.  There’s no good way to spin those figures.

Fox has a better stable of sports rights to draw from with the Pac-12, Big 12 and international soccer rights such as the English Premier League and Champions League.  However, that’s still a limited amount of content to power an all-sports network that’s aiming to draw a broad audience (not just niche fans) on par with ESPN.  Fox still doesn’t have any Tier 1 tent poles.

In theory, NBC/Comcast and Fox could overcome these disadvantages by simply bidding more for Tier 1 content than ESPN.  That sounds logical, but it’s not quite as easy in practice.  First, there’s not much Tier 1 content available.  The NFL decided to grant its own NFL Network a full season Thursday Night Football package, which means that the biggest potential tent pole of all is now off the table.  The Major League Baseball package will come up for bid likely later this year (the current deals run through 2013), while the NBA and Big Ten will have their packages opened up in about 3 years (with their respective current deals ending in 2016).  The SEC is locked up through the mid-2020s.  That’s not very much out there and even if a network can get one of those packages, that can only take it so far.  A viable ESPN competitor really needs 2 or more of those packages.

That gets to the second point, which is that the Tier 1 content leagues like being around other Tier 1 content leagues.  As much as we believe that sports leagues will simply take the most money no matter who it comes from, the Tier 1 entities aren’t very interested in being pioneers on an upstart network (unless they actually own that upstart network a la the NFL Network or the Big Ten Network).  It’s no different than really wealthy people generally preferring to buy houses in neighborhoods with other really wealthy people instead of going to a place where they’d clearly be the wealthiest people on the block.  During a panel of top sports media executives at the recent MIT Sloan Sports Analytics Conference*, this was called “optimization instead of maximization”, meaning that sports leagues aim to optimize their media audiences and not necessarily maximize revenue.  That might sound like MBA speak gobbley gook, but it’s really just a newfangled way of saying, “Don’t kill the golden goose”.   For instance, the NFL could theoretically make the most money by keeping all of its games for the NFL Network and effectively charge whatever it wants for the channel, which cable providers would almost certainly have to pay.  The Big Ten could do the same by sending all of its games to the Big Ten Network.  However, neither entity wants to do that because that’s taking short-term revenue at the expense of long-term viability.  The Tier 1 sports leagues got to that position because they are able to combine a passionate core fan base with interest from casual sports fans.  League-owned networks and lower distribution channels can still draw the passionate core fan base, but the casual fan segment won’t move over and will deteriorate over time.

(* I highly recommend watching this panel discussion that features the presidents of ESPN, Fox Sports, NBC Sports, NFL Media and MLB Media.  They go through a whole slew of issues, including rising TV sports rights fees, the impact of Internet streaming and on-demand viewing, league-owned networks and cable chord cutting.)

That’s really the toughest part of competing with ESPN: it provides the best platform by far for drawing casual fans, which is what the Tier 1 content providers need.  The interesting thing is that the only successful cable bidder for Tier 1 content outside of ESPN and the league-owned networks has been Turner with the NBA (TNT), MLB (TBS) and NCAA Tournament (TNT, TBS and truTV).  That’s notable because TNT and TBS are not sports networks and are instead positioned as broad-based general interest channels that are the cable equivalents of the Big Four (ABC/CBS/NBC/Fox) over-the-air networks.  This means that TNT and TBS are able to draw in casual TV viewers in a way that, say, NBC Sports Network can’t, meaning that they are much more palatable to Tier 1 leagues.

As a result, the most realistic competitors to ESPN aren’t other all-sports networks, but rather the broad interest cable channels that draw high ratings such as USA (owned by NBC/Comcast) and FX (owned by Fox) alongside Turner’s TBS and TNT.  At least that’s how I’d approach it if I were running NBC Sports or Fox Sports.  It would take many years for an all-sports network to get the critical mass of content on par with ESPN2, much less the ESPN mothership, and that’s assuming that such network wins every competitive bid for Tier 1 and Tier 2 content until the end of this decade.  That’s simply a losing battle.  However, TBS and TNT have shown that they can make a dent on ESPN’s chokehold over cable sports rights and have been rewarded with higher rights fees as a result.  They are able to incorporate Tier 1 sports into their other entertainment programming that draw high ratings, which means that they are getting casual fans (not just the hard core fans) to tune in.  My belief is that it would be easier to sell rate increases for USA and FX adding on premier sporting events than to try to get brand new rights fees for separate new sports networks.  I don’t blame NBC/Comcast and Fox for trying their current all-sports plans because those ESPN-type rights fees are so enticing, but I think that in a few years, they’ll end up retreating and focus on beefing up the sports content on their general interest networks instead.  That’s where they can draw out value that ESPN isn’t able to provide.

(Follow Frank the Tank’s Slant on Twitter @frankthetank111 and Facebook)

(Image from American Progress)

This blog has been a hub of activity for conference realignment discussion and other issues in the business of sports for the past couple of years, but it has sometimes been difficult to get quantitative data to back up what many of us observe qualitatively (such as the popularity of fan bases and conferences).  So, the following presentation direct from Nielsen (the TV ratings firm) about the 2011 sports year provides a treasure trove of previously unknown (at least to me) and fascinating statistics about pro and college sports TV viewership, social networking buzz and ad spending:
This slide presentation was uploaded by ceobroadband at slideshare.net.  Nielsen analyzed everything from the four major pro sports leagues to the rising viewership of the English Premier League in the US, so there’s something here for every type of sports fan.  It’s key that this analysis is coming directly from Nielsen itself, whereas a lot of other viewership figures that get reported these days come from leagues, conferences and TV networks themselves and are spun to put them in the most favorable light.  As a result, the slide presentation is about as unbiased as you can reasonably get on the subject matters at hand.
One of the more interesting charts is on slide 4, where Nielsen tracked the social media buzz for the major pro sports leagues over the course of 2011 and news events where activity spiked on Twitter and Facebook.  Major League Baseball can’t be happy to see social networking mentions hover around the NHL’s numbers and its 7-game World Series last year didn’t produce a real spike in activity compared to the NBA Finals.  I’m not surprised by the fact that the NBA has more social networking buzz compared to MLB since the basketball league’s fan base skews younger, but I didn’t expect baseball to be on the social media level of hockey.  (Note that there’s no point in comparing any other sport to the NFL in America: pro football blows everything else away on every metric.  The only discussion is about who can take second place.)
For college sports fans, slide 9 presents some extremely pertinent information that few of us have seen before: the average TV viewer numbers per game for each of the 6 power conferences for both football and basketball.  With so many issues in college sports, such as conference realignment and a football playoff, driven by television money, these viewership figures are enlightening (and surprising in some cases).
Here are the average football viewership totals by conference according to Nielsen:1. SEC – 4,447,000
2. Big Ten – 3,267,000
3. ACC – 2,650,000
4. Big 12 – 2,347,000
5. Pac-12 – 2,108,000
6. Big East – 1,884,000
Here are the average basketball viewership totals by conference according to Nielsen:1. Big Ten – 1,496,000
2. ACC – 1,247,000
3. SEC – 1,222,000
4. Big 12 – 1,069,000
5. Big East – 1,049,000
6. Pac-12 – 783,000
Some takeaways from those figures:
A. The Big Ten and SEC deserve every penny that they receive and then some – The readers of this blog probably aren’t surprised by the football viewership numbers, but the proverbial icing on the cake is how strong both of them are in basketball.  ACC alum Scott Van Pelt of ESPN once said, “Watching Big Ten basketball is like watching fat people have sex.”  Well, the Big Ten even tops the vaunted the ACC in basketball viewership and it’s by a fairly healthy margin.
B. The ACC has an undervalued TV contract – The flip side of the Big Ten and SEC analysis above is that while the ACC’s basketball viewership strength isn’t unexpected, the much maligned football side actually has strong TV numbers.  If you take a step back for a moment, it makes sense.  Florida State and Miami continue to be great national TV draws (even when they’re down) and schools such as Virginia Tech bring in large state markets.
C.  Pac-12 Commissioner Larry Scott can sell ice cubs to Eskimos – The viewership numbers for the Pac-12 in both football and basketball indicate that they shouldn’t be in the vicinity of the ACC and Big 12 TV contracts, much less currently above the Big Ten and SEC.  The football numbers might be a little lower compared to a normal season with USC having the scarlet letter of not being able to go to a bowl this year, but one would think that some of that would have been countered by strong Stanford and Oregon teams.  Meanwhile, the basketball numbers are just awful – the Pac-12 definitely needs UCLA to resuscitate itself to be viable nationally.  The Pac-12 presidents ought to give Larry Scott a lifetime contract with the TV dollars that he’s pulled from ESPN and Fox.
D.  Big East basketball is a weaker draw than expected – No one should be surprised by the weak Big East football numbers.  However, the basketball and large market-centric side of the league actually had fewer hoops viewers than any of the power conferences except for the Pac-12, which doesn’t bode well with the league losing the strong draws of Syracuse, Pitt and West Virginia.  The Big East was also widely acknowledged as the top conference in basketball last year, so the league was at its competitive peak in the post-2003 ACC raid era.  This gives credence to the argument that large media markets in and of themselves don’t matter as much as large and rabid fan bases that draw in statewide audiences.
E.  The Big 12 is appropriately valued – For all of the dysfunction of the Big 12, it might be the one conference whose TV contracts are actually in line with their viewership numbers.  The Big 12 is ranked #4 among the power conferences for both football and basketball and the likelihood is that it will end up as the #4 conference in TV dollars after the Big Ten, Pac-12 and SEC when all is said and done.
There’s lots of other data to chew on here that I may examine in future posts, but for now, the college conference viewership breakdown is something that I haven’t seen before and puts some quantitative backup to what we have speculated was behind conference realignment moves.
(Follow Frank the Tank’s Slant on Twitter @frankthetank111 and Facebook)

(Slides from slideshare.net)

With school being out for the summer and commencement speeches (like this one from Conan O’Brien at Dartmouth) over, let’s take a quick look at possible pro sports franchise moves since all of the leagues have some potential realignment scenarios. I have a few key guidelines:

(1) Contraction is not a realistic option – Contraction is a popular proposal among columnists, bloggers and message board people since all of the leagues other than the NFL would probably be much more competitive top-to-bottom by dropping a franchise or 2 or 6. However, there’s a reason why no team has been eliminated in nearly 4 decades: when owners have been given the option of either (A) paying out hundreds of millions of dollars to dissolve a franchise or (B) collecting hundreds of millions dollars in franchise relocation fees and using those moves as examples of threats to get brand new stadiums for their own teams, they’ve logically chosen option B every single time. As a result, I will assume that any franchise that isn’t doing well would need to be moved as opposed to contracted.

(2) Favorable stadium deals trump markets – In a world where the NFL has a team in Jacksonville but not in Los Angeles, it’s clear that having the “right” stadium in place is more important than even market size to pro sports owners. As much as Seattle should never have lost the Sonics and deserves another NBA team, Key Arena has been deemed unacceptable due to its lack of revenue-generating suites (whether fairly or not) and, therefore, Seattle won’t be a viable market for the NBA or NHL until they get concrete new stadium plans into place. Outside of the NFL (where LA is still priority #1), I will only look at markets that have “acceptable” stadiums in place.

(3) Less is more – Much like college conference realignment, where our imaginations ran wild with various configurations and proposals but ultimately ended up with much more subdued changes, radical realignments to the pro sports leagues are very unlikely. The fewer teams switching leagues, conferences and/or divisions, the better.

With those guidelines in mind, here are my thoughts:

MAJOR LEAGUE BASEBALL

There’s been a lot of talk lately about MLB realignment ranging from a simple move of one National League team to the American League to scrapping divisions altogether. One of the issues with baseball is that the owners actually have veto power over whether their own teams move leagues or divisions, which means that no one can be forced to move against their will. Another issue is that no NL franchise is going to willingly move to the AL unless it gets placed in the AL East, where it would receive a bunch of seat-filling dates with the Yankees and Red Sox. The cornerstone franchises in the NL Central (Cubs and Cardinals) and, to a lesser extent, the NL West (Dodgers and Giants) are significantly greater attendance draws than their counterparts in the AL such as the White Sox, Angels and A’s (and I say this as a massive White Sox fan). That’s why the Brewers ran to the NL Central as quickly as possible when they received the opportunity – they get to enjoy sellout a dozen or more sellout crowds from traveling Cubs and Cards fans that never came when they were playing the White Sox and Twins.

This is where the prospect of the Astros moving to the AL West makes a lot of sense. They’re going through an ownership change that needs to be approved by MLB, which means that this is a rare opportunity to force realignment by making such approval conditioned upon a league switch. The Astros likely would never have agreed to switch leagues on their own, but a new owner that’s trying to get into the MLB club is going to have to acquiesce to the iron-fisted demands of Bud Selig. Look at what Selig just did to Frank McCourt and the Dodgers. Bud might as well be sporting a “Thug Life” tattoo.

NHL HOCKEY

NHL realignment is also on the radar with the impending move of the Thrashers franchise from Atlanta to Winnipeg. It appears that the Thrashers (or hopefully the Jets) will end up staying in the Southeast Division of the Eastern Conference for next season, which makes some sense as it gives the Phoenix Coyotes another year to figure out whether they’re staying in that market and the league wouldn’t want to realign two years in a row.

What I was a bit surprised about was seeing how much the Red Wings and their fans seem to be pushing for (AKA whining about) switching conferences because they were supposedly promised by Gary Bettman first dibs on a move to the East back in the 1990s. (Apologies to the generally level-headed Wings fans that read this blog. All of you guys are OK.) First of all, why anyone would believe a thing Gary Bettman says about anything (especially something from nearly 2 decades ago) is beyond me. Second, the Red Wings presumably don’t want to move to the Southeast Division (as it appears that their goal is to reunite with Toronto in the Northeast Division), which means that the NHL would have to switch around a whole number of teams in the Eastern divisions (including possibly marquee franchises like the Bruins and Penguins) in order to make that happen. Why would the Penguins agree to be separated from the Flyers or the Bruins from the Canadiens to accommodate the Wings? Detroit moving conferences is the most logistically messy option out there. Third, switching the Red Wings to the East would mean 5 of the Original Six franchises would be in that conference along with breaking up the team’s rivalry with the Blackhawks. I know that a lot of Wings fans seem to think that reviving the Maple Leafs rivalry is more important (maybe absence makes the heart grow fonder or, more likely, there’s a denial of this self-evident truth), but let’s look at it from an NHL business perspective. The East is already receives a disproportionate share of TV coverage because it has 4 of the Original Six franchises plus 2 other marquee franchises in Philadelphia and Pittsburgh and currently another superstar in Washington (Alex Ovechkin). The NHL is almost solely dependent upon the Red Wings and Blackhawks for national TV drawing power in the West. Is the NHL seriously going to let the revitalized Chicago market sit out on an island when the Blackhawks franchise helped the league get the highest Stanley Cup Finals TV ratings in the last 4 decades? And forgetting about the Blackhawks (as one may argue that my status as a Hawks fan causes me to be biased), but why on Earth would the other franchises in the West let the Wings move? That would be like the Western Conference teams in the NBA allowing the Lakers to leave for the East in terms of attendance and TV ratings. It simply doesn’t make any business sense for any of them. Finally, there’s already one franchise located further east than Detroit in the Eastern Time Zone (Columbus) and another that’s much more geographically suited to be in the Southeast Division (Nashville), albeit in the Central Time Zone. There’s no reason why moving Detroit, which would cause a massive domino realignment of the entire Eastern Conference, makes more sense than simply plugging Columbus or Nashville in the Southeast without any other repercussions.

Therefore, going with the “less is more” mantra and assuming that the Coyotes work out some type of deal with Glendale where they don’t end up moving, I believe the best switch is simply slotting Nashville into the Southeast Division, putting Minnesota in the Central Division and sending Winnipeg to the Northwest Division. While Nashville is located in the Central Time Zone, the Predators are simply much more of a regional fit with the other Southeast teams (and geographic rivalries are arguably more important in hockey than any other sport). It also makes more sense from a regional rivalry standpoint to keep Columbus with the other Midwestern teams in the Central Division. I personally like the prospect of a semi-recreation of the old Norris Division with Chicago, Detroit, St. Louis and Minnesota. It would be nice if Toronto could switch back to the West so that there would be 3 Original Six teams in each conference again, but much like the desirability of the NL over the AL (outside of the AL East), none of the Eastern Conference teams would willingly move to the West barring an actual franchise move (like the Thrashers situation).

NBA BASKETBALL

The Sacramento Kings are the current threat to move markets if they don’t end up with a new stadium deal to replace ARCO Arena. Sacramento mayor (and former NBA star) Kevin Johnson has a proposal on the table for a new arena for that market, but with the long track record of aggressive stadium plans falling apart in California over the past decade, I wouldn’t bet on any groundbreakings there. While I’m personally not a huge fan of the LA market getting a third NBA team if the Kings ultimately move to Anaheim, I can see how it could financially work since drawing from Orange County alone (not to mention the San Diego market directly adjacent to it to the south) is more than enough of a population base to support a franchise. Add in the more valuable suite situation at the Honda Center and MUCH higher potential TV rights and it looks like a strong financial deal for the Kings by heading to Anaheim. The only caveat is that this would bail out the Maloof brothers, who don’t deserve it.

I’m a firm believer than an NBA franchise would make a killing in Las Vegas with its high-roller culture, yet that’s another market that can’t ever seem to get a concrete arena deal into place. Kansas City, on the other hand, has a beautiful state-of-the-art arena (the Sprint Center) ready-to-go without a regular major pro sports league tenant. That market seems to make a lot of sense for a franchise like the Hornets to move to if they decide to leave New Orleans. The Hornets were already struggling financially prior to Hurricane Katrina, but David Stern was committed to staying in that market in the wake of that disaster. After witnessing terrible attendance even with a great superstar in Chris Paul playing there, it seems that the NBA simply is not going to work in New Orleans.

The NBA Western Conference divisions are probably the screwiest of any of the 4 major pro sports leagues at this point where a larger realignment would be justified, yet it’s tough since, as we’ve seen in other leagues, you’re not going to get a franchise like the Bulls to willingly move from the East to the West. Sacramento moving to Anaheim wouldn’t require any type of change to the Pacific Division. However, if the Hornets move to Kansas City, I’d put Oklahoma City into the Southwest Division and move the new KC Hornets to the Northwest. It’s not that pretty, but that at least continues to provide Minnesota with a Central Time Zone mate and OKC gets to be with its natural geographic counterparts in Texas.

NFL FOOTBALL

The franchise that should move is the Jacksonville Jaguars. They’re in a small market that has to compete with 2 other NFL franchises in its home state (Buccaneers and Dolphins) and the fan base is apathetic. However, the Jags have a stadium lease deal that essentially handcuffs them to their market until 2029. There’s also been talk about the Vikings moving if they don’t a new stadium, but my feeling is that the political willpower will be there to push that through. The NFL letting them move would be almost Browns-like and I doubt the league lets that happen again. As a result, the Chargers and Raiders are much more likely candidates to move to the goldmine of Los Angeles (assuming that there’s a stadium deal, which is a dangerous assumption even though this latest downtown proposal next to the Staples Center looks perfect). There’s also a possibility of the return of the Rams, who can leave St. Louis in 2014 if the Edward Jones Dome isn’t renovated. Personally, I think the Raiders are best-suited for LA, as they have some history there (today was a good day, Ice Cube), the AFC would benefit more than the NFC in having an LA franchise (as the NFC already has the top team in the New York market plus Chicago, Dallas, Philadelphia and Washington, which results in Fox paying $90 million per year more for the NFC TV package compared to the CBS AFC TV package) and the San Francisco Bay Area might be the most overrated place to locate a pro franchise in the country. Don’t get me wrong – I think the Bay Area is fantastic and Napa Valley is on my retirement locale short-list. However, I’m continuously perplexed as to how many proposals that I’ve seen to move additional NBA and NHL teams to that market (Larry Ellison’s recent bid to bring the Hornets to San Jose, for example) when they’ve only proven to support the 49ers and Giants (and only after they built a ballpark that’s as much of an attraction as the team itself). A strong sports fan culture just doesn’t exist there and the Raiders should have never moved back to Oakland. Regardless, a Raiders, Chargers or Rams move to LA would be easy enough for the NFL and wouldn’t require any division switches (as they are all currently in one of the western divisions). The Vikings moving to LA would likely require the Rams to move into the NFC North, while a Jaguars relocation would kick the Chiefs to the AFC South (which would be sad considering the history that Kansas City has with the other AFC West teams, but ultimately necessary).

We’ve had a relatively long period of stability in the pro sports world with only the Sonics and Thrashers having moved within the past 5 years. The combination of a weak economy, a more cautious electorate regarding publicly-financed stadiums and a gaping NFL hole in LA is going to put that stability to the test in the near-future.

(Follow Frank the Tank’s Slant on Twitter @frankthetank111 and Facebook)

(Image from Nacho Donut)

There’s a fairly well-known story about how Bobby Knight, who had coached Michael Jordan on the U.S. Olympic team in 1984, called up his friend and then-Portland Trailblazer GM Stu Inman prior to the NBA Draft that year to sell him on taking MJ with the second pick.  (It was assumed and unquestioned by everyone at that time that the Houston Rockets would take Hakeem Olajuwon at #1.)  Inman kept saying, “We need a center.” Knight responded, “Then draft Jordan and play him at center!

Inman didn’t heed Coach Knight’s advice and ended up taking Sam Bowie, leaving the Chicago Bulls to pick Jordan at #3.  We all know what has happened since then: a Bulls dynasty, millions of Nikes sold, the Shrug and even coming full circle years later with Greg Oden spending more time taking cell phone pictures than actually playing, the Bulls getting Derrick Rose with a 1.7% lottery chance and the Taj Majal teabagging Dwyane Wade last Sunday night.  The lesson is that in the draft for any sport, you should take the best player on the board regardless of perceived need or fit.

In the world of non-AQ schools, the best school on the board to move up to the AQ level is BYU (and I don’t believe there’s a close second).  The school has an athletic department whose revenue and size is right in line with other AQ schools, sells out a 63,725-seat football stadium consistently, travels extremely well for bowls, has a nationwide following among members of the LDS, and even boasts a top-level basketball program.  However, the two most geographically accessible AQ conferences for BYU don’t really want them (the Pac-12 on religious grounds and the Big 12 for the lack of financial need for Texas and friends).

Enter the Big East, where BYU pretty much delivers everything that the conference could possibly want in an expansion candidate… except that it’s a juuuuuuust a bit outside of the Northeast.  I’d compare it to one of those draft decisions where there’s a player on the board with all of the talent in the world but has a little reefer problem – it’s a 99% dream pick with a 1% glaring issue.

Still, it didn’t really surprise me that much that the Big East apparently had a cup of coffee (or maybe a can of caffeine-free Diet Coke) with BYU to see if the Cougars would entertain a football-only invite.  Who knows whether this will really lead to anything, but count me in as someone that likes this line of thinking for the Big East.  I’ve proposed the Big Country Conference in the past (a coast-to-coast football-only conference with the Big East football members as the pillars) along with expounding the value of BYU.  My position is that if the Big East really wants to expand for football, then it needs a ready-made school to plug-in as opposed to searching for potential or focusing on geography.  (I was pushing TCU for the Big East many months before they were publicly on the radar for the conference.)  The usual suspects such as Central Florida, East Carolina and Houston are a bit more geographically-friendly for the Big East compared to BYU, but nowhere near the same level in terms of history, fan base size and financial resources.

Now, is this a good idea for BYU?  As a newly minted independent, it’s guaranteed at least three games per year on ESPN worth $800,000 to $1.2 million per game.  That means $2.4 million in TV money annually from ESPN at a minimum and with attractive games on the future schedule with Notre Dame and Texas, BYU is probably looking at closer to the $4 million to $5 million range just for football TV rights, which is more than what the Big East football members are currently making from ESPN for both football and basketball (around $3 million per year).  Coupled with BYU TV and from a pure television contract perspective, BYU may very well be better off as an independent than joining the Big East at this time.

At the same time, the travel burden of being a western outpost in an Eastern-based conference is really on BYU as opposed to the rest of the Big East.  Is it all worth it in order to join an AQ conference?

I would unequivocally say yes.  That status in and of itself is invaluable in terms of recruiting, national perception and certain in terms of competing with in-state rival Utah (who just hit the lottery with the Pac-12′s new TV deal).  The Big East TV contract is due for at least a market-based increase in a couple of years. So, even if BYU’s ESPN money looks good right now, it may not look so hot compared to a new Big East deal.  Also, a 10-2 BYU in the Big East is probably going to a BCS bowl, whereas a 10-2 BYU as an independent is going to be scrambling around to find a second-tier bowl bid.  Finally, if BYU thinks that it would be a good idea to wait around to see if the Big 12 would expand down the road, that certainly isn’t a guarantee and even if the Big 12 really did want BYU, the school would actually be even more attractive as having had AQ status.  Offers for spots in AQ conferences are few and far between and it wouldn’t be wise for anyone from the non-AQ level to pass those up.

Now, I could understand if BYU won’t consider anything less than a full invite to the Big East… and if I’m running the Big East, I’d give it to them.  BYU is really the only realistic “big” move that the Big East could possibly make where they would provide a material increase in the value of the conference’s deals on both the football and basketball sides.  Therefore, despite the fact that a Big East-BYU marriage would stretch the conference far west, that geographic issue is far outweighed by everything else that the Cougars bring to the table.  It may not be a perfect fit, but the Big East and BYU are ultimately the best players on the board for each other.

(Follow Frank the Tank’s Slant on Twitter @frankthetank111 and Facebook)

(Image from byucougars.com)

The Big 12 lost one of the best national TV draws in college football (Nebraska), the most popular college team in its largest and fastest-growing market outside of the state of Texas (Colorado) and its conference championship… and then signs a contract for a 350% increase for its second tier cable football rights with Fox.  Did Rupert Murdoch suddenly feel the need to go on a shopping free now that he doesn’t have to pay Glenn Beck anymore?  Is Dan Beebe getting a G5 and a pile of money so that Fox can cash in an insurance policy on Iowa State?  What gives?  Well, let’s take a look at some demographic shifts of the overall TV audience, how it has affected Fox’s most important property, American Idol, and how all of this explains why sports TV rights fees are generally going through the roof right now.

There are three massive changes to television over the past 5 years (and such changes are accelerating):

(1) More Old People Watch TV Than Young People – If you know anything about TV advertising, the overall Nielsen rating that a lot of networks like to trump in press releases is completely irrelevant.  The fact that CBS is the #1 watched TV network overall with top overall-rated shows in several categories has little bearing on what they are able to charge in terms of advertising rates.  Instead, the Nielsen number that really matters is what a show draws in the Age 18-49 demographic and, increasingly, the Age 18-34 demographic.  Historically, this emphasis on younger viewers has been justified with notions that older people are less likely to switch brands or purchase high-end products.  However, that really isn’t true anymore, as people over 50 generally have higher incomes and have shown to have more discretionary spending than their younger counterparts.

Now, the reasoning is a bit different: younger viewers are simply scarcer, therefore advertisers pay a premium to reach them.  Even though older viewers actually have more spending power than younger viewers, those older viewers watch more TV overall and can be reached throughout the day by placing ads on less expensive shows.

The difference between what advertisers will pay for a younger audience versus an older audience is massive – more massive than you probably could have ever guessed.  TVbythenumbers recently compared the ad rates for NCIS (which draws the largest overall audience of any scripted show on TV) and Glee.  It found that even though NCIS had 82% more overall viewers, the fact that Glee had 15% more viewers in the Age 18-49 demo and 92% more viewers in the Age 18-34 demo meant that Glee was able to charge 80% more than NCIS for every 30-second commercial spot.  It basically shows that viewers over 50 are effectively worthless from an advertising standpoint (and even viewers over 35 aren’t worth that much).  You can find a lot of shows that draw in the typical viewer of NCIS (even if that particular show brings in the most of them outright), while there are very few shows that bring in the demo that Glee delivers.  (For what it’s worth, I’m the type of person that enjoys dramas with deep and complex themes with subtle acting that doesn’t beat you over the head with blatant messages.  I can’t think of any show that provides less of what I’m looking for than Glee.)

With that type of advertising rate disparity, TV networks (both broadcast and cable) are continuously on the search for programming that attracts those younger viewers.

(2) More Women Watch TV Than Men – Here’s a fairly shocking statistic: out of the 63 prime time shows that were on the 5 major broadcast networks (for the purposes of this discussion, The CW gets counted as a “major network”) during the 2009-10 season, only 6 drew more male viewers than female viewers6 out of 63.  Three of those shows (The Simpsons, Family Guy and The Cleveland Show) are part of the Sunday night Fox comedy bloc that gets a lead-in from NFL games for half of the season.  Another one of those shows (24) is no longer on the air, a different one (Fringe) has been moved to a low-rated Friday night time slot and the last one (Chuck) has been on the cancellation watch list for a couple of years.  If you’ve ever wondered why ABC keeps churning out shrill high-budget prime time soap operas from Shonda Rhimes, there’s your answer.

Simply put, the TV networks are badly in need of a sausage fest and can’t seem to create any.

(3) More People Are Using DVRs – Nielsen recently reported that DVRs are in 38% of all U.S. households as of September 2010, exhibiting extremely rapid growth as that number stood at less than 5% in 2006.  Those users of DVRs are also younger and more affluent than the average television viewer.  While Nielsen argues that DVR users still watch commercials in decent numbers, the reality of it is that the attraction of the DVR is to be able to skip those ads (cutting down an hour-long show with commercials into around a 40-minute show without them).  As DVR penetration continues to grow (and frankly, I thought that current 38% number seemed fairly low), more and more people are going to be avoiding commercials like the plague.

These changes in who watches TV and how they watch it has had some fairly interesting implications in pop culture.  For instance, a couple of weeks ago, the American Idol audience shockingly voted off (or more accurately, did not vote enough for) widely-perceived front-runner Pia Toscano, meaning that she placed ninth and had a shorter run on Fox than The Heights.  It was enough to make J-Lo start crying uncontrollably while Steven Tyler rose from his crypt and started bashing America’s passion.  Now, seeing that Pia was clearly the top pure singer while also being the best-looking of the competitors, that typically indicates a Charlie Sheen bi-winning combination.  However, when looking at the demographics for American Idol, it reflects general TV viewing trends: its audience is getting older and skewing much more to the female side.  My impression is that these older women prefer the John Mayer soulful acoustic guitar-types as opposed to the hot young divas, which is the main reason why (1) soulful acoustic guitar-types have won American Idol for the past two seasons, (2)  5 out of the last 6 American Idol winners were male and (3) only 2 American Idol contestants left on this year’s show out of 8 are female (rose jacket Rod Stewart copy Paul McDonald became the first male eliminated since the initial public vote cutdown to the top 13).

What American Idol has going for it, though, is that people still generally watch it live.  In the latest week where figures are available, only 9% of American Idol Wednesday viewers watched it on DVR compared to 29% of the viewers of Modern Family and 28% of the viewers of Grey’s Anatomy.  Add in that it still draws a fairly good percentage of the younger demographics compared to most shows on television and it is a complete ratings cash cow for Fox.  Last year, American Idol was able to charge over three times as much per 30-second ad spot compared to Dancing with the Stars, the latter of which actually draws a higher number of total viewers but a lower number in the Age 18-49 demo.

So, when looking at how the TV audience has shifted, it has become clear what type of program obtains a premium greater than any other: the program that draws the age 18-34 male that watches it live.

Let’s take me as an example of the target demo.  I’m a professional 33-year old male that’s about a loyal to TV shows as Antonio Cromartie, can count on one hand the number of scripted TV shows that I watch regularly, and will purposely watch all of such shows on my DVR in order to avoid a single moment of watching any commercials.  I don’t know about you, but I put my DVR right next to food and water on Maslow’s hierarchy of needs.  The catch, though, is that I watch a lot of sports.  Even better, I actually watch them live with commercials.  There is no better vehicle to draw me, a member of the most valuable demographic of all (the male under 35), than sports… and there are tons of people like me in that respect.

Dennis Dodds, who has his own excellent write-up on theories on why sports TV rights are rising, stated the following:

Sports have become one of the safest and highest-grossing buys for media companies. There are no coked-up, petulant stars to deal with. Well, at least not a lot of them. The only “winning” is done on the field. Sports are somewhat cheap to produce.  Sports are true reality television, almost immune to being DVRed. Advertisers love that. There is a built-in following whose interest doesn’t wane with time. Even the strongest TV series are canceled. Try taking Alabama-Auburn off the air.

The success rate of new scripted TV shows has become abysmal – ABC may end up not renewing any of its new shows from this season.  In contrast, sports programs are considered to have “high floors” – ratings may not necessarily go through the roof for every single game, but there’s always a good base of viewers , that base includes a lot of members of the most valuable demo, and those viewers watch it live.  The Nielsen DVR report linked above stated that sports and news programs are watched on DVRs the least of any TV categories.

Sports programming also skews toward the younger demographic than the average show on TV.  During the week that ended April 10th, the only shows in the top 10 of the overall ratings that had more than 30% of their audiences under the age of 50 were the two editions of American Idol (approximately 40%) and the NCAA Tournament National Championship Game (47%).  This is consistent with the demographics for other major postseason sporting events, where the World Series, NBA Finals, BCS bowls and NFL postseason last year all had more than 40% of their respective audiences in the Age 18-49 demo.  (Note that if you were able to buy stock in a league, you ought to bet on the NBA.  It’s the only major sports property that draws over 50% of its audience from the 18-49 demo as well as being the most popular in the growing minority populations just using last year’s figures.  With the NBA now having legit contending teams in New York, Chicago, Boston and Los Angeles along with the Miami superteam, the viewership numbers have been record-setting this season across all of its platforms of ABC, ESPN and TNT.)

Does this necessarily mean that all sports rights fees will necessarily rise at such dramatic rates?  The Pac-12 is looking for even a better deal than the Big 12 (you can count me in as someone that’s more skeptical that they’ll hit those numbers) and the Big East is looking at a possible tripling of its current rights fees.  One ongoing negotiation that may be a better indicator of where rights fees might go for those two conferences is for the NHL, which is a league whose current deal was signed when it was at rock bottom in terms of popularity, has had a resurgence in a couple of key markets (Chicago and Boston), but still largely has a regional as opposed to a national fan base.  The NHL is looking for a substantial increase of around 2.5 times the current deal with Comcast/NBC most likely being retained as the broadcasting partner.

A rising tide lifts all ships in an outright manner, but where the conferences sit relatively each other will likely remain the same: the SEC and Big Ten at the top, the ACC, Big 12 and Pac-12 in the next tier, the Big East at the next level, and then everyone else.  Similarly at the pro level, the NFL stands alone at the top, NBA and Major League Baseball are in the next tier, and the NHL will be behind them.  Still, the circumstances are good for all sports entities.  While the rise of Internet streaming and mobile devices are going to complicate matters for sports leagues to continue cashing in on cable dollars over the next decade, they’re all getting the benefit of a revenue boom today.

(Follow Frank the Tank’s Slant on Twitter @frankthetank111 and Facebook)

(Image from Huffington Post)

The Chicago Tribune had a drawing of LeBron James dressed up as Santa Claus with the headline “Christmas in July” on the front page of today’s sports section, but since we’ll have 8 full days of speculation before any NBA free agent can officially sign with a team, it’s a little more appropriate to call this once in a lifetime holiday “LeBronukkah: Where Joe Johnson Gets $120 Million Because Teams Get Trigger-Happy Happens”.

As far as sports blog topics go, speculation about where LeBron and other of the top NBA free agents end up is right up there with Big Ten expansion.  My personal connection to all of this is that Henry Thomas, my old sports law professor, is representing both Dwyane Wade and Chris Bosh in the NBA free agent sweepstakes.  Thus, he’ll be receiving what will likely be the largest sports agent haul in history over the next few days.  Thomas is a classy guy that built up a Chicago-based agency over many years and put himself in a position to join the Hollywood sports and entertainment super-agency CAA last year while steering clear of all of the Jerry Maguire stereotypes, so kudos to him.  I hope that he remembers that he gave me an A on my paper analyzing the line of cases pitting the Bulls and WGN against the NBA regarding national TV rights and cable superstations and maybe send me a little of that 4% commission that he’s going to bank.

As many of you know (and probably to the chagrin of many of the Ohio State readers out there that double as Cavs supporters), I’m a massive Bulls fan that will be partying for the next 10 years if LeBron ends up in Chicago.  Personally, I believe that he’s going to choose the best long-term basketball situation when push comes to shove, which points to the Bulls (who happen to also offer a massive media market), although no one (including myself) can discount the power of him wanting to stay close to home.  On that front, I’m just another Unfrozen Caveman Lawyer with an opinion.

However, I can’t accept the main argument that I continuously hear being brought up as the main reason why LeBron wouldn’t go to the Bulls: Michael Jordan’s “shadow”.  Supposedly, LeBron wouldn’t want to deal with the legacy of MJ and wants to make his own mark somewhere else.  Well, ESPN’s Chad Ford presented one of the more intriguing (or at least different) stories from this free agent period on a Bill Simmons podcast (near the 39 minute mark) which Deadspin also picked up on:

Michael Jordan, after games in Chicago, would go down to Gibsons Steakhouse on Rush Street, and he had a particular table that he would sit [at] in the back, and he would smoke cigars, and he would eat, and he had his own waiter and everything else. … When LeBron had heard that story — when he’s in Chicago, he goes to Gibsons, sits at the same table, has the same waiter. … When I was [at] the draft camp in Chicago, I went to Gibsons, and I heard this story from I think a pretty good source. So I started asking around: “Who was Michael Jordan’s waiter?” And I found him, and I came to ask him, “Whaddya think?” Because this guy was apparently a confidant to Jordan. Jordan knew him well. … I said: “Whaddya think about LeBron. Is he coming to Chicago?” He said, “He’s coming to Chicago. He already told me to reserve his table.” So a waiter is going to scoop the story.

Now, Ford told this story in a light-hearted manner and doesn’t actually believe that this is concrete evidence of where LeBron is ultimately going to end up.  However, it does provide a lot of insight into the mentality of the King.  First, he has some great taste: Gibsons is a fantastic steakhouse and if you ever go there, be sure to get the twice baked potato as a side.  Trust me on that one.  Second, and more importantly, this shows that LeBron worrying about MJ’s supposed shadow is not only ridiculous, but James actually WANTS that shadow to the point where he copies the postgame routine of his childhood idol in a way that makes Kobe Bryant look like a wannabe Jordan stalker.

Think of it this way: I was fortunate enough to have spent virtually my entire childhood growing up in the Chicago area during the Michael Jordan era.  MJ’s rookie season was when I was in first grade and his shot over Byron Russell in Game 6 of the 1998 NBA Finals was right after my sophomore year of college.  Basketball was the sport that I loved to play the most by far and I dreamed of BEING Michael Jordan.  Never mind that I eventually topped out as a 5′ 11″ half-Polish/half-Chinese guy whose best skill was a streaky long-range jumpshot.  I, along with millions of other kids in Chicago and across the world, wanted to be all things MJ: the basketball domination, championships, Nike shoe line, commercials, house, cars, clothes and movies with Bugs Bunny and Newman.  In fact, this dream of an entire lifestyle was encapsulated in the classic Gatorade commercial with the song, “Be Like Mike”.

LeBron James was just like me and all of those millions of kids that grew up in the ’80s and ’90s.  His favorite team growing up was the Bulls as opposed to the Craig Ehlo/Mark Price Cavs.  He wore #23 and decided to switch to #6 this upcoming year as an honor to MJ (saying that no one else should wear that number).  He took less money to sign with Nike compared to what Reebok offered.  If there’s one thing that we know about LeBron, it’s that he has always idolized Michael Jordan.

However, unlike me and all of those millions of other kids, LeBron is the one person of that entire generation that can actually achieve his childhood dream to BE LIKE MIKE.  He is the only one in the world that saw that Gatorade commercial as a youngster that is now in a position to live it out in real life.  The Gibsons story is an additional tidbit showing that LeBron still wants to emulate MJ in every way possible.  As a result, I don’t believe that the fact that Michael Jordan played for the Bulls is a bad thing in terms of luring LeBron at all.  In fact, it will likely be one of the best selling points for GarPaxDorfTibs on their Saturday recruiting visit with LeBron and his “team”.

Continuing on a tradition of excellence is something that top athletes embrace.  It’s why Shaq decided to sign with the Lakers in 1996, where he didn’t seem to worry about the multiple “shadows” of George Mikan, Wilt Chamberlain and Kareem Abdul-Jabbar (and those are just the centers that played for that franchise, much less guys like Magic Johnson and Jerry West).  It’s also why top high school players would rather sit on the bench at North Carolina for a couple of years instead of starting right away at East Carolina.

LeBron is no different.  He has an understanding of history and knows that less than a handful of marquee franchises can add to his “brand” just because of who they are: the Lakers, Celtics, Bulls and Knicks.  Other teams might not detract from it (well, except for the Clippers), but they’re not going to provide any multiplier effect, either.  At the same time, LeBron is going to be compared to MJ no matter where he goes, so the only possible way to meet or exceed those monumental expectations is to go to the best basketball situation possible.  (Look at this synopsis of stories about Kobe after the Lakers won the championship this year and note who he’s compared to in every single one despite playing far from Chicago.)  The fact that such situation may be with Jordan’s old team which is still well-known internationally because of the ’90s dynasty is actually a bonus.

There are plenty of reasons why LeBron won’t end up with the Bulls, including but not limited to the fact that the Cavs are closest to home in Akron.  However, let’s immediately scorch the suggestion that he would actually want to avoid the shadow of the player that he has emulated his entire life around (from basketball to business) up to this point.  LeBron’s singular dream has been to “Be Like Mike”, so he’d be the first person to embrace the shadow of Michael Jordan and merge it into his own.

(Follow Frank the Tank’s Slant on Twitter @frankthetank111)

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