Earlier this week, David Teel of the Newport News Daily press wrote this piece on the ACC Network, set to launch in 2019. It noted Michigan athletic director Warde Manuel had told the university’s Board of Regents last week that his department’s share of Big Ten revenue was $51.1 million in 2017-18, with $52.1 million projected in 2018-19.
That’s a stark comparison to the ACC’s $26.6 million divulged in its most recent federal tax filing, according to Teel.
Wow, I thought. The gap just keeps getting bigger and bigger between the Big 10 and the ACC.
Wow, I also thought. The ACC sure is taking its sweet time.
Some of it may be nothing more than the ACC being a victim of circumstances. Perhaps you can’t just turn a sports network around on a dime and it really does take three years.
But as a businessman, three years is an eternity in a product development life cycle. The market you think you’re pursuing may be the same in three years. Or it may be different. Or it might not be there at all in three years. Case in point: ESPN, the horse the ACC is betting on to get all of its programming into homes across the country and pay huge chunks of money back in return.
Three years ago, ESPN was the king of all sports broadcasting, and to a certain extent still is, as 800-pound gorillas don’t wound easily. But it has taken fire due to some missteps by the network and a change in the behavior of the younger sports fan. Outkick The Coverage’s Clay Travis has made it a point of documenting the daily stream of subscribers who are electing to leave the ESPN island, attributing a lot of it to the network leaning left politically, which for some of the talk shows on the World Wide Leader may be the case.
But the bigger – and scarier – statistic seems to be the loss of viewers to live sporting events. You’re seeing empty seats all over the place in the last year or two at sporting events, including college football. Some of it is the enjoyment of a 70-inch high definition television in the comfort of your own home, where the lines to the bathroom are short and the beverages in the fridge are cold and affordable.
But some of it is a new generation that doesn’t embrace a live game at Scott Stadium like some of us older fans. I’m the father of a 23-year-old who has no problem with spending money (or even receiving some from her Dad). But when you ask about where those entertainment dollars get spent, going to see a live game is not at the top of the list. And I hear that more and more from parents of other folks that same age.
Regardless of the reason, if ESPN keeps shedding subscribers at a rate of 15,000 to 17,000 per day, eventually it hurts. ESPN is still sitting on the Iron Throne as Lord of the Seven Sports Programming Kingdoms, but they’re not doing highly publicized layoffs and shedding longtime “name” employees unless the bottom line is starting to be squeezed. If this were indeed a “Game of Thrones,” a fire-breathing dragon might possibly be on its way to Bristol, CT.
We are far from it, but lose too much when you’re in a big corporate structure like Disney, and you may wake up one day and find the division has either been spun off or sold. And before you say that could never happen to ESPN, remember a company named America Online? They absolutely owned the internet at one time, had a huge campus here in Ashburn where I live, and some of their people walked around town like hot shots talking about big bonuses and “internet DNA.”
Not any more. The campus has been sold. The market changed. No one believed it could ever happen.
But it happened.
My concern is if you are an existing business in such a corporate structure with such potential storm clouds on the horizon, you weather the storm. And no matter what happens to ESPN, the SEC Network and many of their video properties are going to be just fine. But if you haven’t launched yet and the exodus of subscribers just keeps going, someone up in an executive suite might just have the idea that despite your hopes for a big payout for all the member schools, the launch should be postponed.
If something like that happened, this is not a situation where anyone in the ACC is going to go hungry. The power schools of the league are still going to keep winning championships, just as they have before. When one school has a few million more dollars to spend on cost of attendance or nice facilities, it honestly doesn’t make that much of a difference. But when that one school has 25 million more dollars, it does make a difference in only a few short years.
Maybe the ACC doesn’t think this could ever happen. But if you believe that is a real danger, you get moving. You figure out a way to make a 3-year launch into a one-year launch. Heck, when Jerry and I first met about this venture, we thought it would take 6 to 8 weeks to launch. We did it in five days, because we didn’t think we could afford to wait.
So here’s my advice to the ACC Network: light a fire under some folks and get moving. The economy is good. The teams in the league are good and desirable. People have disposable income. ESPN is still the World Wide Leader.
But economies change. Teams surprisingly lose coaches and aren’t as good the next few years. Somebody else comes up with a hot new device that people choose to spend their disposable income on. Businesses have rough patches.
Launch as soon as you can. Because despite your best wishes, tomorrow is never guaranteed.
