Why the 16 Team Mega Conferences won't happen Part 2

Simply put, I don't believe the Big 10 can make the TV revenue numbers work. To grossly oversimplify the math, the Big 10 members currently pull in $22 million each. That's $242 million total. To move to 16 teams and keep the per team revenue the same, you'd need to increase the total size of the pie to $352 million.

You would think that risk adverse university presidents wouldn't make a move that risky without thinking they could increase their yearly revenue share by at least 20 percent. That requires increasing the Big 10's total revenue to over $422 million.

That's a 75 percent increase in total revenue for the Big 10 simply by adding teams like Pitt, Syracuse, Missouri, Rutgers and UConn. Why not mention Notre Dame? Because if they could get Notre Dame, they wouldn't keep adding teams.

TV Revenue is based on eyeballs. Let's look at some numbers.

• Currently there are about 303 million people in the US.
  
• The Big 10 state by state footprint includes 67 million people. That's 22% of the nation's population.
  
• Adding Missouri, UConn, Pitt, Syracuse and Rutgers would increase their coverage by 37.5 million homes. Or about 56 percent.

Why are those numbers important? Well...I posted population...not number of households but the above percentages still give you an idea of the size of the footprint a 16 team league would get you. And again...there is no need to take on the risk of going to 16 teams if Notre Dame wants to be the 12th. In that case, you just stop at 12.

But I digress. About 3 weeks ago, Dennis Dodd pointed out this math:

Cable television analyst Mike Reynolds of Multichannel News estimated that the Big Ten is getting a subscription fee of 70 cents per month per subscriber within that eight-state Big Ten region. Outside of that area, he says, the fee drops to 10 cents.

Take the state of Missouri as an example of the profit potential for the Big Ten. The state had an estimated 2.2 million households in 2008. Let's assume that almost all of those have satellite or cable or both. If the Big Ten added the University of Missouri, it could potentially increase those subscriber fees from 10 cents per person to 70 cents. That's the difference between a gross of $220,000 and $1.54 million per month.

*UPDATE: I blew the math big time. Here's the better math. Adding Missouri changes the Big 10 revenue opportunity to $15 million in the state of Missouri. However, they need to add $22 million for the league to break even. The math isn't terrible for the Big 10 in theory (unlike what I wrote in the 2 paragraphs I'm striking below). But it's not clear that residents of New York, Connecticut and New Jersey will put the same value on the Big 10 Network that residents of Michigan and Ohio do.

Ok. So, adding Missouri changes the Big 10 Network's revenue opportunity in Missouri by roughly $1.3 million? Again, I don't get it. Missouri needs to add $22 million to the Big Ten pie to pay for themselves. Why is adding $1.3 million in net new TV fees a good deal for the rest of the league's media partners?

To make the math work, you'd basically have to double the value of the TV deal in the *existing 8 states* to $1.40 per household *and* double the non-Big 10 states fees to $0.20 per household to get to numbers that make sense for expansion.

As point of comparison, the NFL Network charges Comcast $0.40-0.45 per household (update: per month) for viewers of the most important sport in the United States (as of 2009). That's down from the $0.70 asking price that the NFL Network put in front of Comcast.

Now...can you get the massive revenue needed if Notre Dame is one of the 16? Maybe. But like I said earlier. Why go to 16, if you get Notre Dame in the fold. You're in a less risky position to just stop at 12.

Like I said...I don't think the 16 team Super Conference is coming. Not right in the next 2 years anyway.

PWD