Issues behind College Football TV Networks

The recent conference realignments that took place in NCAA Division I Football may actually stem from the 1984 SCOTUS decision to break up the NCAA cartel in TV broadcasts and the lack of similarity among conference members which is critical in order for a joint venture, such as a conference, to succeed, according to Market Power blog. For example, teams in the Big XII Conference believe they should all serve the same market and split revenues evenly through a conference TV network. However, larger schools in the conference, such as Texas, are able to market themselves to larger markets and generate greater amounts of revenue for their school through their own TV networks. This leaves teams in the conference who have smaller markets, such as Nebraska and Texas A&M, fighting to earn revenues in the marekt they share and upset with how the market in the conference is distributed. Since Texas serves the largest market in the Big XII Conference, is it unfair for Texas to be able to have their own TV network to broadcast to their market so they maximize their revenue potential or should they be forced to cooperate with smaller market teams and split revenues evenly due to their conference affiliation (joint venture)? Should the smaller Big XII schools create their own TV networks in order to expand their revenue potential as much as possible to compete with Texas's TV network or should they coordinate a network with Texas that will allow both parties to be better off?


Dr. Tufte said...

Ooh ... this is a hugely complex issue. There's 3 ideas going on here.

1) Bundling: a conference is selling a bundled product — one that is worth more as a group than individually. Tons of really interesting but difficult results to get at. We only brush the surface of these in later chapters.

2) Pricing with market power: the whole point is to get something better as a group than they can individually. But this is collusion, and most collusive arrangements aren't very stable. This stuff is in Chapter 11, which is the chapter of this text I don't cover in this class. You can always read it though!

3) Regulation: obviously, where there's collusion there will be regulation. Sports leagues are funny though. There are some laws protecting specific leagues and their practices, and an overall impression in the judicial system that the unprotected ones need to be treated differently from other industries.

But ... this is just a blog comment ... so I'll shut-up for now.

Jack said...

If they can use collusion to benefit both parties legally then I would say go that route.
If not then I would say it is up to each party or team to generate as much profit as possible for their organization.
What kind of TV networks are available in each of these areas? Are some more limited to others? Would collusion compliment each team? In other words would profits increase the big teams even more by offering all of the games on a single network? Most people that watch one team will often watch other teams. And if Texas is only streaming on there network then what about the fans who would like to watch other games and teams?