SEC Network Aims for $500 Million a Year Launch
Published on: January 13, 2014 | Written by: Clay Travis
Outkick the Coverage has been a couple of years ahead of most media and fans in assessing the value of the coming SEC Network.
The math behind SEC expansion was simple -- new markets means new dollars.
While most focused on the question of whether or not the teams would be good fits, I was focusing on the money. That's why Missouri's addition as the 14th SEC team was a no-brainer compared to West Virginia, Florida State, Clemson or other rumored expansion candidates.
The SEC wanted new markets for a television network.
The moment that Texas A&M was added to the SEC, a network was a foregone conclusion.
In addition to adding two states, the addition of Texas A&M and Missouri added roughly ten million cable and satellite subscribers to the SEC's footprint.
Now the 14 team, 11 state SEC, has right at 30 million cable and satellite subscribers.
So what's that going to be worth to the league?
Well, that depends on what the SEC Network is seeking from cable and satellite carriers.
Prior to now I've just been guessing based on assessing the overall marketplace.
The SEC is asking $1.30 in the 11 state SEC footprint.
That's 30 percent more than the Big Ten Network gets in its footprint after seven years of existence.
So, remember when I told you that the SEC Network was poised to blow college television fees out of the water?
Multiply this $1.30 per month carriage fee request times the number of cable and satellite subscribers in the SEC's footprint -- 30 million -- and you've got nearly $400 million from the SEC alone.
That would be $28.5 million per team just from the SEC Network's money in the SEC.
That number doesn't include advertising money or the additional .25 cents per subscriber that the network is seeking from the other 39 states. (We also don't know what the revenue share will be between the SEC and ESPN either, but now you can start to see why the SEC Network is such a gamechanger.)
Right now the SEC teams make around $20 million each from television.
So at an absolute bare minimum the SEC Network is going to double television revenue for each school.
It's also important to keep in mind that this is just the start, those numbers are going to rise.
Regional sports networks actually cost quite a bit more than $1.30 per subscriber. (RSN's are the providers that carry your local games in market. The Fox Sports regionals or the CSN's of the world. Many of them cost over $3 a month.)
At $2 a month -- a number that will certainly be hit over the next decade -- the SEC Network would bring in $720 million a year just from the 11 state SEC footprint.
At $3 a month -- a number that's also not unrealistic -- the SEC Network would go over a billion dollars in revenue just from the 11 state footprint.
Again, none of these revenue figures even count what the league could make from the other 39 states or from advertising.
What's that worth?
Figure in another $100 million -- for roughly 40 million additional subscribers in the rest of the country at .25 cents a pop..
Then how about advertising?
Presently about a third of ESPN's overall revenue comes from advertising. Being conservative you could peg advertising revenue at a quarter of the overall subscriber revenue that the SEC Network will generate. That alone would be worth around $100 million a year.
So we're talking the SEC Network launching -- if they win the carrier battles -- with north of $500 million a year in revenue. (If the SEC got everything perfect, the first year number counting in-footprint, advertising, and out of footprint -- would be right at $600 million)
For those of you who want to focus on profit as opposed to revenue -- it's huge.
The SEC Network's costs are going to be relatively small since most programming will be fairly cheap. (Most programming will be just putting on existing sporting events. Toss in four hours a day of Paul Finebaum's radio show and a nightly highlights show, which is among the cheapest possible programming, and you're talking about money rolling in.)
This is going to be a total gamechanger for college athletics.
The best part?
The average SEC fan will only be paying $15.60 for over 45 games.
Remember when you used to pay $50 for crappy pay-per-view games?
Those games don't exist anymore.
You'll actually be saving nearly $35 a year to watch your team play every game. Plus, you'll get every football game that every SEC team plays in the process.
Get ready for the carriage battles with Comcast and Time Warner.
It's going to be a wild fall.
But the SEC is officially about to make it rain.