Examining the Big Ten Network and College Hockey

I've considered writing a bit about the Big Ten conference, and more specifically the Big Ten Network for a while now, and yesterday's news that the Big Ten is reportedly giving their hockey schools an extra $2 million per year seems like a good time to discuss it.(FWIW, I've heard conflicting reports on whether that $2 million figure is even true, but regardless, the point remains that the Big Ten Network has been pretty profitable, regardless of what the actual dollar figure is.)

I think the first reactions I saw to the news from most people was, "Wow, that's a lot of money," and "Where is all that money coming from?"

The key to the Big Ten Network's success came in the summer of 2008, when, after months of pretty vicious back-and-forth fighting, BTN came to an agreement with Comcast to put their channel on the basic cable tier, rather than on a sports-only premium tier of channels. The news didn't draw a ton of attention at the time, but that agreement changed the landscape of college sports pretty dramatically. Once they had an agreement with Comcast, nearly every other smaller cable provider soon followed suit. That meant that if you lived basically anywhere within the Big Ten conference's footprint, and had a basic cable package, you were getting the Big Ten Network as part of your cable package, and paying the $1 and change per month, or whatever in fees for the channel whether you wanted it or not.

The University of Minnesota explains it all in clear and borderline offensive language in this propaganda piece from the aforementioned BTN/Comcast cat-fight back in 2008:

MYTH: If I don’t like sports I shouldn’t have to pay for the network.
FACT: Everyone pays for channels they don’t watch. First, it is the cable operators’ decision whether to pass any fees they pay to the Big Ten Network on to their customers. Second, every month people pay their cable provider for channels they don’t watch. Elderly citizens pay for MTV and VH1. Single people pay for the Disney Channel and ABC Family. Men pay for Lifetime and Oxygen. Women pay for Spike TV. No channel on cable appeals to “most people.”

That system ended up being hugely profitable for the conference, with BTN producing enough revenue to send a pretty nice sized dividend back to their member schools every year. With the idea that they could rake in large sums of money whether people watched their channel or not, the Big Ten decided to expand by recruiting Rutgers and Maryland to the conference this winter. Rutgers and Maryland are two athletic departments that bring virtually nothing to the table for the Big Ten, other than the fact that they are near major metropolitan areas, and thus, expand the Big Ten's "footprint". It doesn't really matter that nobody in the Baltimore/Washington DC-area would ever watch a Maryland football game. As long as they have a basic cable package, they're paying money to the Big Ten.

So the Big Ten Network was sitting on a huge chunk of change thanks to moving their con to the next town over, and that meant another big payback to the schools. With hockey taking on a bigger focus on the channel next year, it only made sense to give a slightly higher percentage to the schools appearing on the channel.

The real question is just how long can their network survive on a model of most everybody paying for something they have no use for? Basic economics would say not very long, but the monopoly cable providers hold has been a strangely strong one. We may all be paying for the Bravo network even after the Zombie Apocalypse comes. It's a dangerous scenario though, because we seem to be at the peak of all these massive profits, and they could all disappear very quickly if cable companies were forced to become less bloated thanks to the changing trends of the market.

That bubble relates very strongly to the other topic I saw brought up with yesterday's announcement, which is the possibility of enticing Big Ten schools to start up hockey programs. The answer to that question really depends on how long you think the Big Ten Network can stay this profitable. If you could guarantee an extra $2 million added to the athletic budget--or a little less since you're slicing the pie more ways--every year in perpetuity, then yeah, schools would be silly not to consider adding hockey programs. But if you see this boom only lasting a few years, a couple $2 million checks don't make much of a dent against the overall costs of starting a new program, especially when you factor in the costs of building new facilities.

Now, more in the short term, what does this money mean for the Big Ten hockey schools, and college hockey as a whole? It's worth noting that this rumored extra money is for "hockey schools" not "hockey programs". That extra $2 million is being sent to the athletic director, not the director of hockey operations. Some of it likely will be funneled back into the hockey programs, but that money could just as easily end up going towards indoor rowing facilities, or 54" inch flat-screen TVs in every basketball players' locker, to help give perspective on just how big the the 84" TV that is already in there really is, or, in Minnesota's case, just thrown in a dumpster, doused with gasoline, and set aflame. Also, by and large, you're talking about programs that were already greatly outspending the rest of college hockey anyway, and at a certain point, you start to get diminishing returns on any extra dollars spent.