I still have this one nagging thought about conference expansion.

I continue to read about Larry Scott’s valiant effort to lead the Pac-10 into a new age of mega-conferences (the conventional wisdom has swung from “visionary” to “Colorado and Utah – is that all?” and now seems to be heading back in the direction of visionary again) and remain puzzled about something.

Yes, going to twelve schools and two divisions is going to reap a financial reward with a conference championship game.  And it’s quite likely that the Pac-10 is going to benefit from the insatiable sports programming needs of TV broadcasters.  But they’re getting all that with a twelve-team conference.

So, as I read Dennis Dodd’s potpourri of Larry Scott – Pac-10 – college expansion speculation (ain’t it all great?), I keep wondering one thing:  what’s so fabulous about going to sixteen-team conferences?  There should be something more compelling than this:

Start with the assumption that Big Ten commissioner Jim Delany and SEC commissioner Mike Slive don’t particularly like each other.

It goes back to this treatise posted on the Big Ten’s website almost 3½ years ago. Pay attention to Delany’s line, “… it seems premature for us to lower our admission standards.” That’s a clear shot at the SEC and seems more pertinent today with the league having won the last four national championships. We all know that expansion is about money and market share and television, but could it have an ulterior motive? Consider the Rose Bowl’s place in a world of 16-team super conferences. With an expanded Pac-10 and Big Ten, the Rose would be partners with 32 of the biggest and best football programs in the country, almost 27 percent of Division I-A. That list would include USC, Ohio State, Michigan, Texas and Oklahoma.

In that scenario, the possibility of national titles being monopolized by the Pac-10 and Big Ten suddenly goes up. The possibility of a mere 16-team SEC becoming marginalized also goes up. That’s a long way to go for payback by Delany but it’s worth contemplating.

Skip the Delany-is-a-prick nonsense for a minute.  If mega-conference expansion is indeed all about money, how come nobody can point to where all that new money is coming from?  Texas stayed in the Big XII for a reason.  The Big Ten, fueled, we’re told, by a network that’s all about adding financial value by adding big media markets, didn’t expand by taking Rutgers, Syracuse or Missouri, but by bringing in Nebraska.  And stopping at twelve.

Mike Slive isn’t stupid, at least when it comes to enhancing the financial coffers of his conference.  If it was as obvious to him as it is to so many in the media that taking the SEC to sixteen teams would be a huge boon money-wise for its members, why would he sit back and be reactive to other conferences’ expansion moves?

Maybe I’m missing something here, but for the life of me, I can’t figure out what it is.

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27 Comments

Filed under College Football, It's Just Bidness

27 responses to “I still have this one nagging thought about conference expansion.

  1. Honestly Senator the only money I see in it is the football/basketball separation from the NCAA. Football the separation numbers would be marginal in my opinion. Basketball would be an interesting story because “March Madness” the regular seasons biggest enemy and truly “Robin Hood” act that it is would be handled completely different in terms of cash.

    Instead of the huge contract the NCAA has with CBS the 4 league’s would directly ink that deal and instead of splitting cash with no-names the big schools, with big fanbases that power the tourney would share the revenue amongst ourselves.

    But as it stands now that’s the lone, clear benefit.

    And, question, am I the only one who is of the mindset that if Texas goes to a couple BCS title games with this new “beat OU and you’re 12-0” setup they have that they’ll fight tooth and nail to keep the HOV-lane to the title open.

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    • That’s what I don’t get about all the Texas-is-in-the-Big XII-for-now talk. How are the ‘Horns going to get a sweeter deal than what they’ve got? And on the flip side, where could schools like Kansas and Iowa State go that would result in financial improvement?

      Maybe I’m crazy, but to me the Big XII looks like it’ll last longer than most people think.

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      • Basically the dysfunctional Big 12 relationship guarantees that the conference will fall apart IF better money is on the table. There will be no “We’ll take less money just to stay in this great league” loyalty. But you are correct — right now, better money is not on the table.

        If you believe Chip Brown (not sure why you would, but IF you do), Fox and/or ESPN are interested enough in avoiding having to deal with 16-team conferences that they might be willing to keep throwing a bit more money the Big 12’s way. That could keep things in place for well into the future, especially since Texas really has no motivation to leave with the Bevo Network getting up and running. We’ve learned through this process that Texas will always get what they want … and even if you choose (like me) not to believe that Ol’ Chipper completely knows what he’s talking about, the “Texas gets what Texas wants” theorem will keep things in place for the foreseeable future.

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      • Prove It

        “Texas-is-in-the-Big XII-for-now talk”

        The problem is, Texas doesn’t fully control their own destiny.

        What if the PAC signs a $15 Million TV contract (reasonable) then in a few years adds another $10+ Million from their own network and considers expansion again.

        Would Texas Tech, Okie Lite, and Texas A&M find their $15 million check (likely less) from the Big 12 less satisfying? We know Texas won’t renegotiate the revenue sharing.

        Heck, the Big Ten expansion was pushed up by the moves by the PAC. What if the Big Ten came back within the next year or a few years from now and made an offer to Missouri… how viable would the Big 12 be as a 9 team conference with a regional population of only about 35 million?

        The talk may not be “Texas for now.”
        It may be “The Big 12 for now.”

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  2. Xenon

    The money comes from “Consolidation through expansion”.

    IF the PAC-16 had worked out, what basically would have happened was kicking KSU, ISU, Baylor, etc OUT of the BCS … meaning the money for the remaining teams goes UP because it divided by less school. IF the BigTen takes a couple of schools from the BigEast, and the BigEast either drops Football or is no longer a BCS conference, you just effectively kicked out UConn and Cincy and Louisville and Syracuse. Meaning more money for the remaining schools.

    Right now, the BCS money is split between 65ish teams. It really EARNED (at least in their minds) by about 20 power schools. So each power school has 2 non-power schools taking some of their money. IF the 16 team SuperMegaConference thing were to happen, you end up if THREE 16 team SuperConferences (PAC-16, B16Ten, and SEC-16 after the SEC takes 4 from the ACC). That means 48 schools, with 20 or so really power schools. Each power school only has to share with 1 other non-power school.

    “Consolidation through Expansion” gets those that survive more money by kicking out ISU, KSU, Cincy, Louisville, WakeForest, NCSt.

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    • Prove It

      I am not so certain the loss of 7 teams would have ended the Big 12.

      The remaining teams could have used their BCS AQ status to attract Utah, BYU, TCU, maybe BSU (not certain how that might work since Boise just changed), maybe Cinci if the East dropped football, and some other candidates to keep the BCS at 6 AQ conferences and no other mid major in position to displace them.

      As long as the new Big 12 looked more like the other AQs than the mid majors, their BCS status would have remained.

      If a major FBS conference disappears, it will be the East – they have already made contingency plans to drop football rather than add more football schools if they get poached next.

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  3. JC in Powder Springs

    Considering how long it’s taken the big 10+2 to get around to adding a 12th team (and when they did it wasn’t ND), I don’t give much credence to Delany’s abilities as a commish. Same can be said of the PAC and Scott. Think of all the years and how much $$ the SEC raked in while the champs in these other conferences sat home watching the SEC championship game. The SEC commissioners have been laughing all the way to the bank!

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  4. ConnGator

    Oh, because USC, Ohio State, Michigan, Texas and Oklahoma have monopolized the BCS championships in the past, right?

    Wait, by my count they have four, while the SEC has six. Hmm…

    BTW, still waiting for Michigan (“the winningest program in history”) to, you know, win something. Besides a Citrus bowl.

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  5. Prove It

    “Mike Silve isn’t stupid, at least when it comes to enhancing the financial coffers of his conference.”

    Not to take a cheap shot, but yes, Silve is stupid in finances and political maneuvering.

    In his last TV contract…

    1. He sold too much (every game of every sport left him nothing else to barter) (do you really think he couldn’t have gotten just as much money selling 80-70% of the major sports games as compared to every last game?) (he sold away any chance of starting an SEC equivalent to the BTN)

    2. …for too long (15 years left him unable to respond unilaterally to expansion opportunities – to add a team without cutting shared revenue, he 1st has to negotiate with the networks, then the candidate schools)

    3. …for too little. Sure, $20 Million looks like a lot, but what is it after 15 years of inflation? The SEC is already behind the Big Ten in shared revenue, will soon be behind the PAC when they start their own network, and will even be behind the higher paid schools of the Big 12 (Texas, etc.). It may even be about the same as mid tier Big 12 schools if they can pick up a couple million from their own networks.

    Examples of Silve’s political ineptitude
    -he couldn’t stop his coaches from infighting
    -instead of looking to correct some blatantly bad officiating, he tried to sweep it under the rug by not allowing the coaches to comment on it
    -he had a knee jerk reaction to Big 10 and PAC expansion, initially throwing out teams names that didn’t make financial sense and wouldn’t have gotten increased TV revenue since ESPN already had rights to ACC games (ESPN isn’t going to pay twice, or pay more than they are for the same team in the ACC)
    -he followed up the knee jerk reaction with a quickly assembled stab at the Big 12 leavins.

    I am not taking a cheap shot, it is just the way it is. Silve is doing very little with the opportunities he has been given.

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    • You do realize that Slive negotiated five year-opt outs and a right to renegotiate the terms of the deals in any year following significant conference realignment, right?

      As for the possibility of an SEC Network, did it occur to you that several powerful members of the conference might not be interested in signing away their media rights to the conference? Slive can only do as much as the presidents let him.

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      • Prove It

        If all parties are in agreement, you don’t need a clause to change a contract. Silve still needs to negotiate with ESPN 1st to ensure he doesn’t cut into shared revenue for expansion. The existence of a paragraph dedicated to the topic is irrelevant.

        The SEC members signed away their athletic broadcast rights to ESPN for 15 years – how did they not sign away their media rights? The Big Ten is majority owner in the BTN – those schools maintain majority ownership and control thru the network they primarily own. Did this occur to you?

        It is no surprise the contract has an opt out clause… with a substantial penalty attached.

        It doesn’t change anything I noted – Silve:

        1. …gave away too much… (could have gotten the same money without selling everything)

        2. …for too long…

        3. …for too little. (averaging $20 Million a year isn’t much when you factor in 15 years of growth and inflation and look at the broadcast revenue of other conferences with smaller followings)

        He is lousy at handling other issues like coaching squabbles, series of bad ref calls, etc.

        …and he was behind in reacting to changes around him – possible PAC and Big Ten expansion was known for a very long time, but Silve was scrambling for an answer at the last moment rather than having a plan in advance.

        It is not a crack on the SEC – Silve just isn’t that great a commissioner. The SEC could do much better.

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        • The SEC members signed away their athletic broadcast rights to ESPN for 15 years – how did they not sign away their media rights? The Big Ten is majority owner in the BTN – those schools maintain majority ownership and control thru the network they primarily own. Did this occur to you?

          You’re not getting my point. Schools like Georgia and Florida have the right to create their own media networks – and do – and retain the revenues from that – which they do. The Big Ten schools can’t do that. That’s also one of the reasons Texas decided not to go to the Pac-10, because it didn’t want to relinquish that revenue stream to the conference.

          There’s a good post at Leather Helmet Blog about how the total numbers add up.

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          • Prove It

            The right to sell what sporting event broadcasts? They were sold to ESPN.

            Corportate sponsorship, stadium signage, internet, coaches shows – the article points out this is no difference – the schools maintain control of these in both.

            In apples to apples, the Big Ten sold the sporting event broadcast rights to ESPN and themselves (thru the BTN). Silve sold the same rights to ESPN. Both left control of the rest with the schools.

            …none of which counters that silve sold too much for too long for too little.

            Texas went to the PAC with a request they knew the Big Ten would balk at – they wanted to keep the same unbalanced revenue sharing as they have now and their own network. If it was just the BTN issue, it is doubtful a single school can generate as much net revenue as the BTN.

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        • If all parties are in agreement, you don’t need a clause to change a contract. Silve still needs to negotiate with ESPN 1st to ensure he doesn’t cut into shared revenue for expansion.

          Or he could simply elect to sell the rights to those games to another broadcast partner.

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          • Prove It

            Depends on how the contract is written. I would expect the ESPN contract to be with the conference, not 12 teams.

            …but this is seperate from my point about a clause allowing for renegotiation – it isn’t needed in any contract if all parties are willing to renegotiate. Silve still has to go to the network 1st if he wants to provide for equal revenue sharing and not decrease the shared revenue amount.

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            • The contracts are based on the number of games being broadcast. More teams = more games = more product.

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              • Prove It

                Can you provide a reference for this clause? I doubt this is the case – ESPN doesn’t know 15 years in advance how many home games the SEC will have. The payment is not simply based on the number of games.

                Does this mean that the SEC would lose the same amount of money if a top drawing team (like Florida) left as they would if a low drawing team (like Vandy) left? ESPN is smarter than this.

                Does this mean that if the SEC added a program they would automatically get to market the excess games? Even if this is the case, ESPN could say no thanks – lets see if Silve can get $20 Million for the 7 worse games in the conference from another network.

                In all cases, Silve still has to negotiate with their network 1st or risk decreasing the shared revenue.

                No, based on other contracts, I believe Silve sold the rights for the conference, not just 12 schools.

                It still holds…
                Silve sold too much… for too long… for too little.

                I understand you hate hearing this about your conference commissioner, but it is the truth. Stretching their impact of possible clauses which we can only guess at by reading between the lines of Silve comments won’t change this.

                It is significant – if you don’t hold your commissioner responsible for his mistakes, you can expect these mistakes to continue.

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                • First off, he’s not my commissioner. I’m not a school.

                  I’m curious about what other contracts you’re aware of that cause you to draw your conclusions about what the SEC negotiated.

                  Here’s what Andy Staples has to say about the SEC TV deals:

                  … Thanks to its blockbuster 15-year deals with CBS and ESPN that began this past year, the SEC’s revenue jumped from $132.5 million last year to $209 million this year. Each school received about $17.3 million, and that figure doesn’t include local rights. (For example, Florida receives about $10 million a year for its local deal.) Without revealing specifics of the SEC’s deals Friday, Slive said most TV contracts include a clause that allows them to be renegotiated if a conferences adds or loses members. So if the SEC expands, it isn’t locked into a dollar figure from its TV deals…

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                  • Prove It

                    Look up any conference’s NCAAF contract, from the majors to the mid majors – whether it is with 1 TV broadcaster or many – the contract is for either a set number of games with the conference retaining rights to the rest (most common) or for the rights to all games with the conference maintaining no 1st rights. Reference Big Ten contracts if you want to blow smoke you need a specific example – they laid out their details at their conference web site.

                    The SEC contract has not been published, but it cannot be based on a set number of games for the SEC since the number of NCAAF games is unknown as the schedules have not been set – might as well blow away that cloud of smoke now.

                    Back to that which you try to stray away from so fast:

                    1. There is nothing – zero, zip zilch – to show the SEC can add teams and have the right to market the games of a future conference member seperate from the rest of the SEC. All print descriptions are that ESPN bought rights to the entire conference.

                    2. It would be expected ESPN would not be obligated to hand Silve another $20 Million per team without negotiating 1st. There is nothing to show this is the case.

                    3. Certainly it would be expected ESPN would have clauses if the SEC were to lose a current member.

                    4. Silve has to go thru the ESPN 1st before he can be assured adding a new member would not decrease shared revenue.

                    5. An undetailed clause allowing for the contract to be renegotiated is nothing – if all parties are in agreement, any contract can be renegotiated.

                    6. If semantics is your issue, let me rephrase:
                    I understand you hate hearing this about your FAVORITE TEAM’S conference commissioner, but it is the truth (the addition of the 2 words changes squat).

                    …none of which goes against the premise Silve sold too much for too long for too little. You have nothing to show this isn’t the case.

                    If you want to play internet comment slots, I am all game – please insert 4 tokens and try again… because you are trying to play more than the single line on the machine and still not getting a payout.

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                    • I don’t understand your point about the number of NCAAF games being unknown. The number of SEC games is known: 48. You seem to believe that Slive has handed CBS/ESPN a free shot at any increase in those. That strikes me as such an elementary oversight if it were the case that Slive would be dismissed from his position and the attorneys retained to negotiate the deals sued for malpractice as a result. That neither has happened would indicate to me that your interpretation of what’s contained in the contracts doesn’t reflect reality.

                      The other point of yours I’m not getting is your focus on renegotiation. Of course if both parties are willing to change the terms of a contract that can be done at any time. But what if only one party wishes to do so? That’s what opt-outs are for. If the SEC isn’t satisfied with the revenue streams being generated five years hence, it can elect to find new partners or force new terms.

                      For that matter, it’s not like the BTN has insulated that conference from similar concerns. A per viewer rate has been negotiated between the BTN and its cable partners; if the BTN is dissatisfied with that rate, how are its options any different in nature than those of the SEC with the networks? (Indeed, Delany had a very bloody and public battle with Comcast over that very issue.)

                      And there’s one thing that the SEC has that the Big Ten doesn’t as a result of its dealings: national exposure on commercial TV. Free TV may have a dwindling role in viewership these days, but it’s not insignificant. That CBS contract is a big deal.

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                  • Prove It

                    …and for the quoted article, again it only notes the ability ot renegotiate (something that can be done anyway).

                    All articles also go back and forth between 3rd tier broadcast rights and multimedia agreements.

                    The $10 Million is mostly from advertising, etc. – the amount in line with major programs around the country.

                    The article you referenced listed the lack of differences as it used tOSU as an example, it is just hard to find as the author tried to bury it to appease his audience.

                    If you found a notable difference, specifically list it and the source… google likes hunts for information that doesn’t exist.

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                  • Prove It

                    I started a new response below back on the left margin.

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  6. Prove It

    “…how come nobody can point to where all that new money is coming from?”

    1st look at the current shared revenue per conference member. The most reliable numbers I could track down before Nebraska was added:
    $9.1 Million – Football TV contract thru 2016
    $5.5 Million – BTN licensing fee
    $6.0 Million – BTN shared profits (split 51%/49% with Fox)
    $2.2 Million – BCS and Shared Bowl Revenue
    $0.2 Million – Basketball contract thru 2016
    $23 Million total

    Adding a new team doesn’t help much with the BCS and shared Bowl revenue – adding another bowl doesn’t add much after the team is allotted expenses.

    The basketball contract isn’t worth much by comparison (why expansion is all about football).

    It hasn’t been specifically noted, but I believe based on ancillary comments the licensing fee was increased with expansion – it isn’t more revenue, but it didn’t drop either.

    The football TV contract is all about TV ratings. Large fan bases trump large population states. The contract isn’t for every game, only the top games – the buyer isn’t looking at the ratings of Indiana, it is looking at the ratings of tOSU, tSUN, PSU, and next time Nebraska.

    The BTN profits come from 2 sources – subscriptions and advertising.

    …but far more comes from advertising than subscriptions. It isn’t just the candidate’s fan base, it is also putting on games that will attract other fan bases (mostly from the Big 10). A team playing Nebraska will get more interest (viewers) than playing Missouri or Rutgers.

    In the short term, Nebraska is a big revenue boost because of the ratings they can add to the BTN. In the long run, they will have an added boost when the TV contract is renegotiated.

    This makes it hard to predict expansion and why the Big Ten hired a search firm to research the issue. For a team to make sense, they have to either add a lot of TVs tuned to college football, or add a lot of interest from fans. TVs can be estimated from state populations, but ratings aren’t readily available.

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  7. Prove It

    “Texas stayed in the Big XII for a reason.”

    Texas expects to get over $20 Million from the TV contract because of the imbalanced shared revenue model of the Big 12.

    Texas expects to add a couple million more from their own network.

    It would have cost Texas a couple million more in travel expenses to the Big Ten, even more if they joined the PAC.

    Less tangible – conference titles help donations. It is easier to win the Big 12 than the Big 12 AND PAC. It is easier to win the Big 12 than the better teams from the Big 12 and the SEC. It is easier to beat OU and some notable contenders than travel north to beat Nebraska, tOSU, PSU, and some day UofM (RR won’t last forever, they are still recruiting well for the next coach) as well as the Big Ten’s own list of notable contenders.

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  8. Prove It

    “I don’t understand your point about the number of NCAAF games being unknown. The number of SEC games is known: 48.”

    False. This is the number of SEC conference games. The total number of home games the SEC teams have is unknown.

    This alone rules out your assertion that the contract is based on the number of games.

    From every report, Silve sold the rights to all of the conference athletic games and matches. If he didn’t, there would be no need for a renegotiation clause in the contract. This scraps the idea that he could market the games of a new conference member separate from the rest of the conference (do you really think this is likely?).

    You can scrap the rest of your 1st paragraph.

    It doesn’t take a lot of thought to cross reference the statements with the likely… unless you are just dropping $5 in quarters hoping hoping for a $2 payout.

    “The other point of yours I’m not getting is your focus on renegotiation.”

    You pointed out that Silve noted there is a clause for renegotiation if the conference expands. This does not equate to an opt out. This isn’t even a worthwhile clause – there is nothing binding ESPN or the SEC to accept any results of the re-negotiations.

    My point is, this clause, if it exists, is useless.

    “If the SEC isn’t satisfied with the revenue streams being generated five years hence, it can elect to find new partners or force new terms.”

    An opt out is a completely different issue. Of course there are opt out clauses. They also carry hefty penalties to dissuade either party from breaking the contract. The existence of an opt out doesn’t equate to it being financially feasible for the SEC to drop their contract with ESPN, and does not counter my assertion Silve wrote the contract for too long.

    “… if the BTN is dissatisfied with that rate, how are its options any different in nature than those of the SEC with the networks?”

    I do not know how long the rate runs before being renegotiated, but the rate per subscriber is a small portion of the BTN revenue. Most of the revenue is derived from advertising.

    It differs in that the main BTN revenue stream – the same that networks depends on – is advertising. As ratings (and advertising revenue) goes up, so does the BTN revenue.

    This is also irrelevant – the SEC is not in position to capitalize on an increase in subscription revenue.

    …but this isn’t the only benefit of the BTN over selling the rights to a network. To add Nebraska, the Big Ten did not have to renegotiate a contract for the TV games to ensure there isn’t a drop in shared revenue. The network contracts are for 1st selection of 41 games a year. The added games from expansion goes to the BTN – no negotiation needed.

    At most, there might have been an incentive to renegotiate the licensing fee for an additional member, but I suspect that even this is written into the BTN agreement. Even if its not written in, it is an easy sell – with profit sharing, the net change for Fox is only 49% of the licensing fee – well under $3 Million using last year’s license fees. Fox would be happy to do this to have 7 or so more football games to air.

    The BTN absolutely does insulate the Big Ten from these concerns.

    “And there’s one thing that the SEC has that the Big Ten doesn’t as a result of its dealings: national exposure on commercial TV.”

    Is this a red herring? Aside from digging really, really deep to make this significant, the Big Ten gets games on ABC, with regional games aired on ABC also aired on ESPN to capture outlying markets.

    Please insert another $5 in quarters, because nothing here goes to counter that…

    Silve sold too much…
    …for too long…
    …for too little.

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