College Football is undergoing a TV revenue bubble. ESPN is overpaying for content – be it conference deals, bowl games, or the playoff – to muscle out competition. With the cable model changing, ESPN’s outlook looks anything but promising.
ESPN has billions committed to rights deals in multiple sports through the next decade. However, its revenue stream, based on widespread, bundled cable subscriptions, is fading. ESPN has lost millions of subscribers the past two years due to outright cord-cutting.* Were cable to be unbundled, a survey found that more than 50 percent of users would cancel expensive ($8 per month) ESPN/ESPN2. At least one analyst sees ESPN tanking Disney’s stock.
We may already be seeing significant early effects. ESPN’s College Football postseason, for a number of reasons, was a ratings debacle. Perhaps more indicative was Monday Night Football viewership on ESPN declining for the second-straight year, while NFL viewership on all other networks increased.
We’re only at the cusp of what appears to be a sea change. What happens to cable when there are other, viable, and faster Internet options?
The future impact of cord-cutting may be far more dramatic. Where does that leave college football? The sport’s present sugar daddy ESPN, at the very least, will be shelling out far less. The same cord-cutting that harms ESPN may kill off the viewer-less conference TV networks as constituted. College football may see a finite, diminished revenue pool, concurrent with increased business costs as it resolves its amateurism conundrum and perhaps deals with increased insurance premiums as medical research continues.
Projecting specifics is murky. But, the broad direction is clear. College Football will operate more like a business, optimizing itself to create revenue (rather than just distributing it). We can expect far greater centralization and collective action. Many of the sport’s lovable little inefficiencies may be cast aside.
Without cable, college football would be attracting viewers, not trying to collect what amounts to a college football tax over the largest population footprint. The focus would move toward producing the most quality games possible. That impetus could precipitate radical changes to scheduling and the way the sport is structured.
For an example, let’s look at Michigan in 2016. Jim Harbaugh had a promising first season. Most of that team returns. Many are projecting the Wolverines into the playoff. Michigan is Michigan. It’s safe to assume they will be the most discussed story entering 2016.
at Michigan State
at Ohio State
If college football were the NFL (or a mere competent business), Michigan would get the “Patriots” treatment. Their schedule would be flush with high profile games. They’d be playing in prime time as often as feasible. College Football is not the NFL.
Presuming Wisconsin is good, Michigan probably plays one competitive football game before meeting Michigan State Halloween weekend. There’s no reason for a non-Michigan fan to tune in to at least eight of their games. Despite eight home games, it’s unlikely College GameDay will visit Ann Arbor.
That soft run is great from a competitive perspective. It’s terrible from a business one, especially in a potential new environment dependent on active viewers. Let’s say you’re the casual Michigan fan who shows up for big games. Are you buying a year-round subscription or are you going to a bar for those games?
Scheduling must improve to create more premium content. We’d guess the improvement will need to be more substantial than an extra conference game or one mandated Power 5 opponent. We’re likely looking at another round of realignment after the TV contracts end.
The same realignment tensions reemerge that were extant before the last round of contracts. Texas isn’t happy with its underwhelming schedule. The ACC football schools are frustrated. This time, the pressure isn’t being part of the awesome windfall coming. It may be more existential, protecting what schools have, or fighting for limited resources. It’s easy to see a Big 12/ACC merger, perhaps with Notre Dame, to create a fourth super conference.
For the scenario’s sake, the B1G grabs UNC and UVA. The SEC grabs Virginia Tech and N.C. State. Some of the smaller, less valuable football schools get shafted.
East: Clemson, FSU, Miami, Notre Dame, West Virginia, Georgia Tech, Pittsburgh
West: Texas, Oklahoma, Oklahoma State, Texas Tech, Baylor, TCU, Louisville
Now it’s the Power 4. Those leagues could close off scheduling, break away, and with title games form a de facto 8-team playoff.
That change feels substantial. Of course, it may just be a modest scenario. Cable TV could be dead in ten years. College football may be streaming itself (or partnering with Google etc. to do so). The resource pool could be very limited. How strong is traditional conference affinity? Could we see an NFL-style “Super League” with 30-40 teams and set scheduling?
The ESPN/Cable well appears to be drying up. College Football facing a potential revenue crisis appears to be more “probable” than “possible.” It’s not clear how the sport, as constituted, would weather that without radical changes.
* For what it’s worth, I’m turning 32. Most of my friends are college-educated, relatively affluent, and on the older end of millennial. None are egregious, anti-television hippies. Not a single one of them has had a cable TV subscription since college.