Are those guys really as smart as they think they are?

For all the things I get about the conference expansion crazy talk – which boils down to if you’re a Big East school or a Big XII school on the short end of a bad revenue distribution arrangement, Big Ten membership would be a godsend – what I don’t get is the general assumption that a sixteen-school conference is a win-win for everyone concerned.  Or that any expansion is necessarily going to grow a conference’s bottom line.

Yet Larry Scott is being lionized today, Jim Delany is regarded as the shrewdest SOB in college football and the Mountain West is praised for putting Boise State on hold and waiting for the Big XII’s collapse to grow.  How much of this is justified?  I’m not sure, but I can point you to three things that ought to raise some questions in your mind about that.

Example #1:  Matt Hinton links to a CNBC post that raises the same concern I have about what the Big Ten and the Pac-10 are up to.

… The Big Ten divided about $220 million in television revenue last year. By giving a full share to one new team, each team would be giving up $1.7 million each. That means that the new team not only has to be worth what another team in the league is worth, but it has to add value.

If the Big Ten wants to give a full share to a new team, and they want to make the same amount of money, they have to hope that that team alone can generate $20 million by itself. [Emphasis added.]

How many teams can do that? Notre Dame. Maybe Nebraska. Rutgers, if you think that gets you the New York and Philly market…

… TV revenues might double if a Pac-10 network succeeds, but if there are 16 teams involved, no one is doubling their money. Right now, TV revenue for the Pac-10 is around $100 million a year. Let’s say a new network deal after the 2011-12 season and a new network of their own adds up to $200 million in TV revenue a year.

Assuming equal splits of all 16 teams, original Pac-10 teams would only be making $2.5 million more than what they have now. And don’t forget the UCLA softball, and all its other non-generating sports, might have to travel to Texas now.

So there it is:  two slam dunks and a whole lot of hope.  To me, this expansion talk makes much more sense as elaborate forms of blackmail (call it leverage if you’re squeamish) to force Notre Dame into accepting Big Ten membership and to force recalcitrant Big XII schools into some sort of TV cooperative with the Pac-10 than it does as a straightforward plan.  But maybe I’m underestimating the role of ego here.

Example #2:  John Pennington has been on the SEC-must-expand-or-die bandwagon for a while now.  One thing he’s continued to harp on as justification for his position is that the ACC’s new deal with ESPN is more lucrative than the SEC’s deal with ESPN is.  Well, duh – ESPN is the ACC’s primary broadcast partner; CBS is the SEC’s.  It wouldn’t be reasonable for ESPN to hand over the same kind of money in both instances.  But Pennington sees a new threat on the SEC’s horizon.  Asia. I kid you not.  Asia.

… While the SEC is patting itself on the back for a huge ESPN contract (that has already been passed on a year-to-year basis by the ACC’s new deal), the Pac-10 is looking five steps down the road.

“How can we tap into the Asian market?  How can we get television money from that continent?  How much revenue can we generate in terms of cap and t-shirt sales by creating a few Asian fans across the globe?”

If Larry Scott wants to tap into some non-existent market by scheduling a USC-Oregon game in Tokyo, I doubt Mike Slive is going to lose much sleep over it.  The NFL has spent decades trying to grow an overseas market and has failed miserably.  It’s hard to see how college football could better the best marketed sports league in existence in that regard.  Again, this strikes me as another situation where ego is getting in the way of making money.

Example #3:  I understand why Boise State is hot to trot for admission to the Mountain West, but why does the MWC want BSU?

… Right now the MWC is signed up for a 10-year $120 million TV deal. That is paltry compared to the reported $200 million and $150 million per year deals with ESPN for the SEC and ACC, respectively.

We saw a partial answer to some of these questions in 2005 when the league added TCU and went from eight to nine. The MWC just adjusted the payout, divided the pie into another piece…

How much does a school from the nation’s 112th largest TV market grow that pie?  Not much, if any.  Now, if BSU comes in along with a rump group from a dissolved Big XII that gives the Mountain West the opportunity to generate a new and improved broadcast contract, maybe that begins to make more sense, but on their own, the Broncos don’t enhance Utah’s or BYU’s revenue streams.

In the overall scheme of things, Notre Dame is an obvious expansion partner.  So is Texas.  So are Big XII schools headed to the Mountain West (assuming that’s even a possibility).  The rest of the expansion scenarios seem like a stretch, financially speaking.  And if that’s the case, why consider them at all?


Filed under College Football, It's Just Bidness

10 responses to “Are those guys really as smart as they think they are?

  1. Doug

    I think the MWC’s main attraction to Boise State is the prospect of earning automatic-qualifier status to the BCS should BSU continue earning top-10 rankings and BCS bids. But when the Big XII started looking shaky last week, they realized they could sit back, wait to see if the B12 curled up and died, and then move into AQ status by default, perhaps snagging a B12 leftover in a rich media market (i.e. Colorado) rather than taking a flier on a comparatively tiny market in Boise.

    I agree with you, though, that the whole idea of a “Pac-16” seems to be grounded more in pride and dick-swinging rather than practical benefits. I’ve been surprised to see how few people have bothered to spot any parallels with the mid-’90s WAC, which only survived a few years as a 16-team leviathan before the top teams said “the hell with it” and went their own way. Granted, the Pac-10 has a lot more money-making clout than the WAC did, but as you pointed out, the numbers don’t quite support the idea that a 16-team superconference is necessarily an automatic road to skyrocketing profits, no matter how marketable the individual teams might be.

    Or, heck, look at the Big XII itself: Part of the reason the league is in such a weak state right now is because the old-guard Big 8 members (most of all Nebraska) have never quite trusted the newcomer Texas schools to look out for their interests. If the Pac-10 bogarts the entire Big XII South, you’ll have what amounts to the same situation: The tradition-bound original Pac-8 in one division, and in the other, a “Red Dead Redemption” division (to borrow Spencer Hall’s phrase) full of newcomers who have no connection to Pac-10 traditions like the Rose Bowl but still know they pull the strings because the Pac-10 was so desperate to get into their media markets. Why is Larry Scott so convinced that kind of mash-up is going to work any better for him than it did for the Big 8/XII — particularly when it appears that Texas could carve out just as lucrative a niche for itself by going completely independent?


    • I agree with you about the MWC and BSU. It’s just that’s such a bass-ackwards model for building a football conference. And it almost guarantees that five minutes after the MWC gets its AQ berth in the BCS, it’ll be lobbying for an expanded playoff.


  2. Regular Guy

    Yeah, I’ve been trying to figure out for a while myself why it would be a bad thing if the SEC stayed at 12 teams, even if the Big 10 and Pac 10 went to 16. For the life of me, I can’t see why the SEC’s hand would necessarily be forced to expand. Maybe I’m just ignorant on such matters. Outside of adding Texas, which apparently Texas is not at all interested, I just don’t see any schools out there that would bring that much more value than what we already have in the fold, since you’re dividing the pie between more schools at that point. Now maybe if we could TRADE some schools, that would work, I wouldn’t mind doing a Vandy for Clemson swap!


    • Doug

      Agreed. Texas and Texas A&M are the only acquisitions that would substantially increase both the wealth and competitiveness of the SEC; if the Pac-10 manages to snag them, any expansion attempts by the SEC would just be fixing what ain’t broke. Surveying the landscape as it stands now, any expansion prospects other than the Texas schools would dilute either the league’s profits or its competitiveness (or in some cases both).


      • Gen. Stoopnagle

        And the thing about Texas is – and it’s what’s at the bottom of the Osbourne Ultimatum (sorry) – that they don’t want to share. Texas managed to rig the revenue distribution for the Big 12 where it gets the lion’s share.

        I don’t think the SEC wants Texas because it doesn’t want to cut that kind of deal. And Georgia (and the rest of the SEC) lose if the SEC decides to participate in a bidding war for Texas.


  3. JasonC

    Look, I live in Hong Kong and I would love to see more- heck, any college football on TV (without using a slingbox). But as it stands now, all the SEC, Texas, OU, Ohio State and USC fans I know are SOL when it comes to watching games live on TV. Actually, us SEC fans have it better than anyone, because we are able to see the game on the SEC within a day of it’s live airing. Sometimes, a bar will show a game if the owner is a big fan and it is a big game, but that usually means getting up at 3am or 6am if you are lucky.

    Most of the Asians I know have no idea how American football is played. Furthermore, there just aren’t enough fans here to make it financially lucrative. Of course, I can’t see it bringing in less ad $ than stinking billiards, which we can watch regularly, along with soccer, tennis, rugby, golf and formula 1 racing.


  4. Other than ND joinng the little 11, I do not see where any conference betters itself through expansion except maybe to get to 12 teams & have a conference championship game like the SEC.
    Geography & regional rivalries are still the cornerstones for D 1 football / athletic success.


  5. gernblanski

    The ACC should have an advantage over the SEC in Asia considering they have two brand names in basketball while the SEC has only one.

    Basketball would be the only sport that might resonate with the Asian market but it would far trail the NBA.

    If ANY conference is thinking about expansion as a way to tap the Asian market, then they must be reviewing macroeconomic trends that I will never understand.


  6. Will

    I pointed this out over at Dawgsports a while back, but you have to factor in the added money from a championship game to both the Pac-10 and the Big-10. If the numbers are right with the SEC, you’d see a big jump in revenue on the order of ~15mil overall for the whole conference. That right there is the majority of the 20mil a year the new team needs to bring, so “paying for itself” would be much easier than you suppose.