The ESPN/SEC financial bubble? Discuss...

[DrMickey]

I've been thinking about the layoffs at the four letter network that everyone loves to hate. It occurred to me that the financial boon the SEC and other conferences have enjoyed lately could some day be in jeopardy. I wonder if there is a financial bubble in college sports, not unlike the mortgage bubble of 2008, and if the collapse of a giant like ESPN could crash the whole system. Of course, no one is predicting anything major like a collapse of ESPN, but that's the thing about bubbles...

The easiest story about revenues I could find was from 2015. It estimated payments to the SEC of well over 250 million through ESPN and the SEC network, which is tied to ESPN. CBS money was far behind at about 55 million. Of course, ESPN is also doing this for the other major conferences, too, further stretching the budget.

So, this raises a long term question. With the rapid changes in the cable market, plus well documented drops in revenue for ESPN over the last few years, is it possible that ESPN could be in real trouble?

So far, the cuts have been in personnel, not content. But how tight can this get? Is there a point where ESPN is paying more than it can afford for content? And if so, could college sports potentially lose a cash cow that they have grown completely dependent on? I love our facility improvements, but I'm surprised we haven't named a building or arena after ESPN yet, considering the many millions we get through them. It has become commonplace for us sports fans to complain about TV dictated start times, but we are often sitting on seats that were paid for by the TV networks, at least partially.

I don't know the answers, obviously, but I thought this would make a good discussion point if anyone wants a go. At the very least, it is a tightly intertwined relationship.

 

[jeff2001]

SEC network is making a lot of money. But, ESPN's problem is they have to many channels. And people cant pay for all of them. Plus ESPN is definitely losing its ass with the longhorn network.

 

[crouterhead]

ESPN is one of the most profitable media outlets of all time. They are not going anywhere. Like every other network, they will be completely different five years from now. But they will be there.

 

[topdecktiger]

I've been thinking about the layoffs at the four letter network that everyone loves to hate. It occurred to me that the financial boon the SEC and other conferences have enjoyed lately could some day be in jeopardy. I wonder if there is a financial bubble in college sports, not unlike the mortgage bubble of 2008, and if the collapse of a giant like ESPN could crash the whole system. Of course, no one is predicting anything major like a collapse of ESPN, but that's the thing about bubbles...

The easiest story about revenues I could find was from 2015. It estimated payments to the SEC of well over 250 million through ESPN and the SEC network, which is tied to ESPN. CBS money was far behind at about 55 million. Of course, ESPN is also doing this for the other major conferences, too, further stretching the budget.

So, this raises a long term question. With the rapid changes in the cable market, plus well documented drops in revenue for ESPN over the last few years, is it possible that ESPN could be in real trouble?

So far, the cuts have been in personnel, not content. But how tight can this get? Is there a point where ESPN is paying more than it can afford for content? And if so, could college sports potentially lose a cash cow that they have grown completely dependent on? I love our facility improvements, but I'm surprised we haven't named a building or arena after ESPN yet, considering the many millions we get through them. It has become commonplace for us sports fans to complain about TV dictated start times, but we are often sitting on seats that were paid for by the TV networks, at least partially.

I don't know the answers, obviously, but I thought this would make a good discussion point if anyone wants a go. At the very least, it is a tightly intertwined relationship.

Yes, there is a bubble, and yes, the big contracts won't go on forever. A lot of these games aren't worth what anybody, ESPN or otherwise, paid for them.

 

[chucktowncock]

ESPN: From Powerhouse To Bloodbath

http://theweek.com/articles/694772/how-espn-went-from-powerhouse-bloodbath

 

[LAST MANGO]

ESPN is one of the most profitable media outlets of all time. They are not going anywhere. Like every other network, they will be completely different five years from now. But they will be there.

ESPN in name won't go anywhere anytime soon, but it will never be the network it used to be. Profits and viewership probably hit the high-water mark around 2010. Then it became a soft, politically-slanted, condescending cringe-fest.

And it's not like they can go out an innovate a new version of it. They already tried that and it's what's killing them. Good riddance.

 

[LAST MANGO]

I'll also add that ESPN used to have a monopoly on sports information and highlights, but it doesn't anymore, and it will never get that back. Now people can watch any sport at any time instantly, from dozens of viewing platforms that aren't ESPN.

 

[radcock]

Yes, there is a bubble, and yes, the big contracts won't go on forever. A lot of these games aren't worth what anybody, ESPN or otherwise, paid for them.

They try to be fair to everyone, but hype won't create subscribers for college football, so they have many bad investments out there. SEC network is currently not one of them.

 

[ExpatCarolinian]

They try to be fair to everyone, but hype won't create subscribers for college football, so they have many bad investments out there. SEC network is currently not one of them.

None of their rights fees are bad investments, except maybe this latest NBA contract. The problem for them is technology has disrupted the model. Those that don't care about sports no longer are forced to pay ESPN 7 bucks a month. Their live sports content is still excellent.

 

[radcock]

None of their rights fees are bad investments, except maybe this latest NBA contract. The problem for them is technology has disrupted the model. Those that don't care about sports no longer are forced to pay ESPN 7 bucks a month. Their live sports content is still excellent.

I think they got a deal on the SEC, we watch anything. Not so sure about a couple others that shall remain nameless (hint texas, NBA, even NFL 4x overpay, also essentially controlled acc expansion, etc)

I don't think that they will implode, its just that they can't afford to experiment and fund failing concepts like they have been doing. Live sports is what they are the best at....time to return to roots.....except it may include direct subscriptions.....ultimately....it may be game by game.

It will be interesting to watch how it all plays out.

 

[gamecock1999]

As market forces limit the amount ESPN can charge, they'll obviously squeeze internal costs as well as the amount paid for the content, which of course means less to the schools. But, hell, how many facilities can these big schools build anyway? They'd colonize Mars if it kept going like this. Bigger risk to college althetics is the athlete compensation issue.

 

[IrmoRed]

This is one slippery slope!
Finebaum alone saves the SEC Network.

 

[jonesz21]

This is one slippery slope!
Finebaum alone saves the SEC Network.

And he is terrible

 

[dreamer1]

Can't help but wonder if it does actually go pay per view per game as someone above said, then I would think that would drive more butts in the seats at stadiums which is what I worry more about. Fans, bands and traditions are what make college football fun to watch imo.

 

[germangamecock]

It definitely is a bubble and athletics directors should be careful not to stretch their debt too much these days. As others have pointed out, the SEC Network is probably one of the best deals ESPN has and they are hurting because of other contracts. Still, be mindful that the cash currently coming in is no garuanteed income forever.

The bigger issue is the entire higher education bubble. When that one pops, enrollment will drop and universities will have to really examine their budgets, cut the bells and whistles and get back to focusing on solid education.

 

[jonesz21]

It definitely is a bubble and athletics directors should be careful not to stretch their debt too much these days. As others have pointed out, the SEC Network is probably one of the best deals ESPN has and they are hurting because of other contracts. Still, be mindful that the cash currently coming in is no garuanteed income forever.

The bigger issue is the entire higher education bubble. When that one pops, enrollment will drop and universities will have to really examine their budgets, cut the bells and whistles and get back to focusing on solid education.

I laugh at that last sentence.
-UNC

 

[Quisp]

It definitely is a bubble and athletics directors should be careful not to stretch their debt too much these days. As others have pointed out, the SEC Network is probably one of the best deals ESPN has and they are hurting because of other contracts. Still, be mindful that the cash currently coming in is no garuanteed income forever.

The bigger issue is the entire higher education bubble. When that one pops, enrollment will drop and universities will have to really examine their budgets, cut the bells and whistles and get back to focusing on solid education.

I can't remember if it was UCLA or San Diego St. but someone posted a listing of all their "diversity","climate awareness" and similarly PC administrators. I doubt they were all that unusual in academic circles. That's where to cut.

 

[Bongsummers]

SEC network is making a lot of money. But, ESPN's problem is they have to many channels. And people cant pay for all of them. Plus ESPN is definitely losing its ass with the longhorn network.

 

[HOOVERCOCKFAN]

The whole thing is getting out of control in college athletics. The salaries, facilities, collateral development and everything else. We have forgotten it's a game. Time to step back a few steps.

 

[jeff2001]

I think they do away with ESPN classic. How many people really watch it.

 

[silverspur4life]

I think MLB and the NFL are bigger issues than College sports. MLB is almost unwatchable and NFL is just asking way too much to be on the air. Mark my word the day is coming that ESPN drops both and we see more college football going head to head on Sundays with the NFL.

 

[Bongsummers]

It definitely is a bubble and athletics directors should be careful not to stretch their debt too much these days. As others have pointed out, the SEC Network is probably one of the best deals ESPN has and they are hurting because of other contracts. Still, be mindful that the cash currently coming in is no garuanteed income forever.

The bigger issue is the entire higher education bubble. When that one pops, enrollment will drop and universities will have to really examine their budgets, cut the bells and whistles and get back to focusing on solid education.

The reason a college degree is increasingly expensive is because state government's have divested from higher education. Nevertheless, enrollments have increased because the average BA holder makes about 48k a year and the HS diploma holder makes on average 23K. the unemployment rate for HS grads is also much higher. Those numbers are even wider for STEM majors and those with graduate degrees. Unless there's a shift in those numbers, the enrollments will not crater. Unfortunately, the drop in funding and the increase in enrollment means that colleges will continue to hammer students with tuition hikes and jacked up "fees" that will saddle people with crushing debt that keep them from owning homes, cars and other big ticket items. Sorry, your kids are coming back home after to college, so don't convert their rooms to a home office just yet.

 

[Superior7]

The SEC Network could possibly expand to 2 channels and be successful. Instead of bidding the conference as a single package, they should offer contracts for basketball, baseball, football, gymnastics and let all the networks bid on them. Maybe package 2 sports together for more
content. Might result in more revenue than anyone could imagine.

 

[Cock-a-Doo]

Feels to me that both college athletics and college education are in line for some type of adjustment in the coming years...a burst in the education bubble would I think impact the athletics....a burst in the athletics bubble Im not so sure would have a huge impact on the education side of things though.

But I admittedly don't know much about the ins and outs of such things

 

[jimnasium]

It's the Russians.

 

[coolcock2001]

I think MLB and the NFL are bigger issues than College sports. MLB is almost unwatchable and NFL is just asking way too much to be on the air. Mark my word the day is coming that ESPN drops both and we see more college football going head to head on Sundays with the NFL.

MLB is making record money. Their regional tv deals are huge. Sports bars need something to show every night and 162 games of the local team is huge for them

 

[midline]

A couple of things are putting ESPN in peril. First, they vastly overpaid for some platforms without realizing how fast technology was changing. They have now realized that cable isn't the only game in town anymore. And I think saturation plays a point. Years ago it was a thrill to see whomever might be on TV. But on any given Saturday nearly every football game that is played seems to be on TV in one form or another. Many have reached the point where if it isn't their team, they don't watch. May casually flip by, but not start to finish. And then there is also the leftist political stances ESPN has taken over the last couple of years. A lot of folks now only watch ESPN when they have no other game option because of that. Normal folks have a very hard time digesting how Bruce Jenner can win the Courage Award when so many truly courageous candidates are passed over.

 

[Gradstudent]

Yea the Bruce Jenner thing was ridiculous, im with Brett

 

[NOLAwdt]

Never say never. With technology expanding at light speed there are no sure things. At the time of the deal I thought wow that seems like to much for to long. Exposing yourself that far ahead seems crazy to me.

I think ESPN will survive.

 

[willmac99]

I think I read recently that ESPN reported profits of one billion + for the last quarter. So they are not going out of business any time soon.

 

[atl-cock]

Since most of my ESPN/SECN viewing is live USC sporting events, I don't pay much attention to the political babble.

How many cord cutters are now subscribing to streaming services such as SlingTV and PlaystationVue? How many people have Watch ESPN installed on their smartphones? My guess is that they are examining how to best use their resourced for the future.

I know there's been a push for a la carte channels selection over the past few years, but it appears that little headway has been made.

Yes, I have wondered over the past couple of years if ESPN would be able to meet their financial obligations. I wonder also if they will hire back some of those layed-off on contract for specific "projects?"

 

[crouterhead]

I think I read recently that ESPN reported profits of one billion + for the last quarter. So they are not going out of business any time soon.

Yeah, they are now only 10 times as profitable as any other sports outlet. What a dumpster fire!

 

[photontorpedotube]

The ESPN model, built on cable subscribers who pay $7 p/month for ESPN whether they watch sports or not, is going to end. They will lose many more subscribers before it is all over. Cord cutting is going to accellerate unless cable goes ala carte in the future where each cable customer picks his channels individually. The days of monopolistic cable companies dictating those ridiculous bundles is over. Please explain why are we allowing those subsidized cable companies to do this again?

That means grandma and aunt gene are not going to subscribe to ESPN anymore. Their model is toast because they cannot raise their price much more or we will all just jump on Sling and pay less. So ESPN's revenues will drop.

The biggest loser in all this is the ACC. They haven't even launched their ESPN channel yet. I'b be wiling to wager the ACC Network will never launch.

 

[uscg1984]

I think ESPN will survive, but no market can continue to expect the increases in revenue we've seen from college football over the last 10 years. Sooner or later, you run out of new customers willing to pay the entry fee and your revenues just level off. Combine that with the changing cable/internet market and ESPN's insistence on taking political positions, and I think it's reasonable to expect ESPN may contract.

 

[lazenge44]

If they don't launch the ACC network, their is language in the contract with espn that results in a lump sum payout to the league. So very unlikely for the ACC network to not launch in 2 years.
This was only article i could find that addresses possible demise of acc network.

https://www.google.com/amp/www.nune...rtunity-for-acc-network-syracuse-espn-layoffs

 

[atl-cock]

............ The days of monopolistic cable companies dictating those ridiculous bundles is over......

I don't think it's the cable companies dictating this; it's the channel distributors bundling several as a package deal.

Bottom line is that it's "annoying" regardless of who's doing it.

 

[FortMTiger]

I may be missing something here. Although ESPN doesn't collect the subscriber fee from the cable companies in the case of cord cutters, aren't you still having to subscribe to ESPN to get the content even through Apple, etc? Wouldn't you be paying that $7/mo yourself? You are still going to pay ESPN if you want the football games they show.

 

[achilles#]

The reason a college degree is increasingly expensive is because state government's have divested from higher education. Nevertheless, enrollments have increased because the average BA holder makes about 48k a year and the HS diploma holder makes on average 23K. the unemployment rate for HS grads is also much higher.

Neither one of those is quite true.

Subsidies to state schools dropping is certainly one reason college costs have increased.

But colleges now are brick sh*thouses compared to those of say 1970. More admin, much more admin staff. Buildings out the wazzoo. Real estate acquisitions (though sometimes it's done with eminent domain). Heck just look at Carolina eating Columbia.

Your second point is kind of a lengthy thing to write about. But in many cases you are better off NOT attending college, unless it is a sure thing that your degree will make you employable in a field that pays.

Once upon a time you could work as a lifeguard in the summer and make enough to pay for tuition at least at a lot of fine schools, even if you were doing something just because you loved it or wanted to.

That's a pretty serious pricetag to pay for something like that now.

It is nothing now to have 100K + in student loans when you graduate with a four year degree.

It's most definitely a bubble.

It also distorts things. It used to not be necessary to have a college degree to work in many fields. Take journalism. Once upon a time most writers at even the NY Times didn't go to college. The prose has only gotten worse since that time (just look up columns from the 50's and compare them to what you see in that rag today).

 

[king ward]

This is one slippery slope!
Finebaum alone saves the SEC Network.

People watch him whether they love him or hate him. His impact is undeniable.

 

[goldengamecock]

People watch him whether they love him or hate him. His impact is undeniable.

Finebaum is not the key to SEC Network. Games are. People will always watch games.