Will Texas Hold 'Em? 'Horns Can Make, Break Big XII
There has been an abundance of denials from rumoured Big Ten candidate schools in the Big 12 , angry sounding talk from the commissioner about finding out, "who is with us and who is against us" , talk about fighting to keep Missouri , catty talk about the optimum number of members in a conference , and talk from the have-nots in the conference; some of it frank , and some optimistic about the future of the Big 12 conference.
The bottom line with it all appears to be a basic understanding that The University of Texas' decision will define the future of the conference—or even if there is a conference.
So let's try to take a deeper look at the financial matters and peer down the paths available to UT.
Paths they could walk:
1) Express an interest and join the Big Ten
2) Go with Texas A&M and become the Pac-10's 13th and 14th members
3) Go with A&M & OU to the SEC
4) Stay in the Big 12 and rebuild
Paths that they could blaze:
5) Negotiate a merger of sorts with the Pac-10 that at minimum lands UT, Tech, A&M, OU, Kansas, and Colorado in the Pac-10.
6) Build a more streamlined Big 9 or 12?
The Big Ten
If reports can be believed—which based on UT's history of conference flirtations they probably can—UT and the Big Ten have recently had substantive talk about UT joining the conference.
The fact that UT didn't join and the rumors have died out suggests that UT thought Big Ten membership had some significant downsides. I suspect they thought the travel and the weather would impede their odds of winning and competing for football national championships by creating some stark home field advantages in conference vs. the warm weather Longhorns.
UT has strong programs in just about any sport that potentially generate revenue. This led them to take in more money than any other program in the nation last year ($138M).
A loss of competitiveness would equal a significant loss of fan generated and contributed revenue. Retaining a top five team in football is especially a key to that.
All schools and athletic departments crave consistent annual revenue streams. That is what makes Big Ten membership, where everyone shares a cut of the network payout equally, more attractive to most Big 12 schools than Big 12 membership where revenue dispersal is weighed.
But one has to consider that the importance of TV revenue varies widely depending on where a school's athletic budget falls.
UT drew the largest share, 12 million dollars, of TV revenue in the Big 12 this year. That amounted to a little over 8.5 percent of their total athletic department revenue.
Missouri, on the other hand, took in 58 million dollars in revenue last year; nine million of it (or 15.5 percent) from the Big 12 TV deal. Adding a guaranteed increase of 13 million—a 22 percent increase to their athletic budget—would be tough to pass up. The potential loss of income from leaving behind conference rivals would certainly be less than 13 million in the short term and would be made up in the long term.
For UT the numbers play the opposite way. For UT it would be gambling the 91.5 percent of their revenue for the chance to increase TV revenue by 10 million, only a 7 percent increase.
The odds are the loss of a game like the OU game and possibly also the A&M game would consume that.
The academic windfall is certainly appealing, but the potential for an athletic bloodbath outweighs it.
That dynamic might have UT looking a lot more leery at a move to the Big Ten than schools like Nebraska and Missouri. If UT blew that math, they would have a lot more to lose in athletic terms.
UT may have looked at the Big Ten and thought that travel and weather would cost them 1-5 games in each sport dropping them from likely champs to slightly above middle of the pack teams.
Going 10-2 in football for example could have UT looking at a top 10 finish vs. a top five finish, with national title talk, that they might have in the Big 12. That title talk excites alumni and boosters and feeds the UT revenue machine.
Football is very popular in Texas. UT may feel that they cannot afford potentially strangling the golden goose that drives so many alumni to donate.
Along those lines UT makes a ton of that football money selling alumni and boosters choice seats to the OU game in Dallas. Many feel that the OU and BYU game in Dallas was a warning shot to UT that they better keep OU in mind when they make their conference decisions. OU can play anyone and sell out in Dallas.
Today the Big Ten has all kinds of leverage allowing them to land their choice of schools. OU does not appear to have the acceptable combination of acceptable academics and a large research budget to entice the Big Ten. They appear to offer a lesser version of what Nebraska offers and they are farther away.
The Big Ten might have offered UT and A&M slots hoping to land both, but A&M probably has no illusions about their athletic potential in the Big Ten and would likely dramatically prefer SEC membership over Big Ten membership if they had to change conferences.
The idea of UT joining the Big Ten only to see A&M and OU potentially moving to the SEC and really opening the door to Texas' four and five star recruits to the SEC is likely a deal breaker for UT. How could they compete if they have twice as much high level competition for the high school stars of the state?
UT might have reached the conclusion that as much as they loved the idea of being in the academic Big Ten instead of the Big 12, there was a chance the move could create a long run of mediocrity (in UT terms) in all sports, cutting their fund raising significantly.
Based on the one rumor out there, and that is all we have at this point, the Pac-10 is only targeting Colorado out of the Big 12.
Last time the Pac-10 seriously considered expansion, they reportedly initially targeted the two public Ivy's in the Big 12 footprint: UT & Colorado. Then they briefly flirted with adding A&M instead of Colorado before realizing they didn't have the votes to add either Texas school.
Ultimately Colorado was offered membership, but by that time the regents at Colorado had their fill of Pac-10 fickleness and declined the offer.
The idea that UT & A&M are lesser candidates today is fairly preposterous, so they would likely still be teams on the Pac-10 radar.
But the Pac-10 is rumored to be looking myopically at Utah as the 12th and likely final team of their next expansion.
As far as UT goes, being a distant outlier as team 13 in the Pac-10 and having to play a game Utah squad every two years in what appears to be a high altitude cold weather trap game can't sound appealing.
UT might look at this situation and think that the Pac-10 is trying to turn UT into another Washington - a former power school on the fringe of the conference with a clear lesser hand than USC.
UT is not likely to join any conference where they are seen as anything less than one of the elite powers.
Also the financial implications are staggering. UT would be putting the other $126 million of their revenue that was largely fueled by having great success against (somewhat) nearby schools totally at risk.
It seems hugely unlikely that UT would be willing to flush almost all of their local games and put themselves at a competitive disadvantage to get a comparably small payout.
A&M is also not likely to go along with that 14 team Pac-10 scenario as they would be perfectly content joining the SEC instead.
They both see that they have a lot more leverage than the Pac-10.
It seems likely that the Pac-10 knows they can't land UT on their terms (with no additional members beyond Colorado and maybe A&M), so they instead want to take over the dominant position in the sparsely populated mountain time zone and try to get the Big 12 and/or the ACC to form a multi-conference network.
A content alliance with the Big 12 would give the Pac-10 better access to thier fans in the Central Time zone without actually having to offer Pac-10 membership to Big 12 schools that the Pac-10 considers academically inferior.
Without UT taking decisive action, this is the direction UT and the elites of the conference appears to be drifting towards.
The SEC commissioner weighed in recently stating that although the SEC has no plans to expand, if there was major realignment at the BCS level, the SEC would attempt to maneuver to allow them to add teams to protect their future interest.
That seems to suggest adding new states with their new media markets. Texas would be a distant first option ahead of southeastern options.
The SEC raiding the twin powers of UT & A&M would totally diminish the TV drawing power of the Big 12 and would likely devastate the Pac-10's hope of using the Big 12 to generate supplemental income from central time zone viewers.
That said, it isn't as easy as 12+2 = goldmine for the SEC.
The SEC has a problem with expansion that is usually glossed over in SEC expansion talk. They are a victim of their own success. The SEC used the threat of starting their own network to negotiate a sweetheart long term deal that paid each of their members in the ballpark of $17 million last year and offers a very attractive, high per school payout for 15 years.
The economy has crashed since then.
If they were negotiating the same deal in today's post-crash market, the numbers would likely be a lot lower.
If the deal is not likely to get any larger, are SEC schools willing to give up a portion of their shares to add more members? Would they be willing to vote to cut their shares from the $17 million or so they got last year to $15 million for the privilege to add say Clemson and Florida State? Or to $13 million each to add OU and OSU as well?
I think you might find the financial bottom tier of the SEC membership (Miss St., Ol' Miss, Vandy, Arkansas) willing to "stay" and see how things shake out rather than pull money out of their wallets for expansion teams. Those are all western teams, so adding an eastern power like FSU or Clemson would likely not see increased game revenue offsetting their loss in revenue.
Plus, remember, if the SEC doesn't expand and the Pac-10 doesn't expand, the SEC can always pull in those Big 12 powers at the END of their very lucrative TV deal.
This suggests SEC expansion may be a slow, protracted exercise as much as their commissioner might crave quick action.
That opens the question: how do you get the networks to pony up an increase that would speed up expansion by still allowing all members to pull in the same individual payout?
I think the answer is that they likely cannot pursue schools they might ordinarily prefer, like Georgia Tech, Clemson, and Florida State that are in territory the SEC already can deliver (in TV terms). Likewise, plans like adding small state schools like an OU and OSU or a West Virginia and OU don't add a lot of media bang for your buck.
Now there is an argument that at least at the top of the ACC attendance curve the greater fan support of schools like FSU and Clemson might be able to generate more revenue for teams in the SEC East, off-setting any losses in TV revenue.
However, to be frank, that kind of analysis is a few more Bleacher Report articles down the road. As mentioned earlier this scenario does nothing to address the western imbalance where expansion resistance in the SEC is likely to originate.
It seems far more likely that to generate new TV money, the SEC would have to add new territory. North Carolina State (maybe?) and Virginia (Tech likely) might generate sufficient new TV income to have the broadcasters pay enough to pay 14 SEC schools at their current rate.
Adding Texas with its 24 million residents would likely be enough to allow the SEC to expand as they wish. A&M has had a long term crush on the SEC. If the SEC landed both of them, it is likely they would have the ability to expand to a 14, 16, or even, if they desired, a seemingly ridiculous 18 team lineup.
It would not be unrealistic to see a UT, A&M, OU, & FSU expansion to 16, for example. Even an 18 team SEC with Georgia Tech and Clemson might be possible as the SEC would be adding almost 29 million new viewers in Texas and Oklahoma.
Adding Texas TVs could very well open the SEC to add whoever they like rather than having to add teams to add new markets. As such it has to be the SEC's plan A.
If UT does anything without A&M and OU, it seems likely those two schools join the SEC and SEC expansion could be brutal for UT's recruiting doubling the number of schools with real recruiting pull in Texas. This dynamic appears to have UT somewhat reigned in.
Overall any kind of SEC expansion into Texas would destroy Texas FBS football. Having five OU level programs with the kind of recruiting pull in conference members have would be brutal to Texas FBS schools.
UT would have to learn to function without a significant talent advantage every week. Right now only OU has similar talent in the Big 12. I mean no disrespect to the staff there, but it would be an adjustment.
With a narrowing of the talent differential, rivalry games against A&M could become very dangerous to UT again. LSU would possibly move back into the top five level with one or two additional top Texas recruits. Arkansas would be able to renew the Texas recruiting pipeline that had them in the top 10 at the end of their time in the SWC. And OU will be OU.
It would be difficult for UT to escape a western SEC division without a loss and they'd still have the east champion to face to make a title game. If UT being in the national title hunt is a big part of their massive athletic revenue streams in recent years, the move could make less financial sense for UT than staying in the Big 12.
With UT, OU, Arkansas, LSU, and A&M all fighting over the four and five star talents in Texas, things could get very tough for schools like Texas Tech, TCU, and Houston who have gone through recent resurgences.
Their efforts to compensate could really hurt lower level schools in the state like SMU, UNT, and Rice. Add in FBS upgrades Lamar, Texas State, and UTSA also pulling the local talent and it could be an awful decade of Texas collegiate football.
The SEC is not a research consortium like the Pac-10 and Big Ten, so there is absolutely no benefit in academic terms. In fact, it might be seen as a downgrade.
If UT joins, they would likely never be able to leave without taking a big recruiting hit due to A&M and OU probably choosing to stay in the SEC.
Moderate to bad for UT. Somewhat good for A&M. Very bad for everyone else in the state.
The Big 12 (or 9...Or 14...or...)
Let's start with some quick math.
TV is generally tracked by DMAs (Designated market areas) which measure in "TV households" rather than simple population counts.
That is great for looking at a school with a following that is almost exclusively in a community, like TCU in the Dallas/Fort Worth DMA or Temple in the Philadelphia DMA, but loses some relevance when discussing state flagships with strong statewide followings.
After all, it would be silly to credit UT with TV relevance only in Austin, the state's fourth largest DMA, rather than having a statewide following. To count them properly you have to credit them with media relevance in all of Texas's many DMAs.
The top five BCS conferences are filled with schools that have statewide followings. This allows for quick and dirty comparisons between those five conferences by totalling the populations of each member schools' states.
The Big 12 has a total of 47 million people in the states in which they operate today. Divide that by 12 members and you have 3.9 million people per school. This is the lowest total among the 5 major BCS conferences.
Conference total per school
Big 10 67.3 million = 5.6 million
Pac-10 54.0 million = 5.4 million
ACC 62.5 million =5.2 million
SEC 58.6 million = 4.9 million
Big 12 47.1 million = 3.9 million
Now obviously this is only part of the picture. The Pac-10's revenue potential is dramatically hurt by their time zones. The Big 12, conversely, is helped by theirs. The SEC is helped by the tremendous fan support they enjoy and their eastern location. The ACC probably blew their expansion last time, at least in TV terms, but still just landed a very solid TV deal likely due to their total numbers and their location.
In some regions it might be better to have a collection of small DMAs; in some it is better to have a few really big ones. It is better to have rich DMAs than poor ones.
Basically, there are a lot of factors, but resident counts and the per school resident count are big ones, conceptually easy to understand, and very, very relevant to the discussion of the Big 12.
Here's where they come into play.
Colorado appears to be a given to be invited again to join the Pac-10. There seems very little indication they won't join.
If the rumors are true that Nebraska and Missouri will be invited to join the Big Ten, I cannot join OU's president in thinking those two schools will simply walk away from the money.
The people in charge at Nebraska resent UT and have long been dissatisfied over the fact they are now simply a member of the Big 12 and not "one of three powers". The fact the Big 10 offers better money, more exposure, a weaker division in the west they should be able to dominate, and a major improvement in academic stature makes it a total no-brainer for them.
Missouri appears frustrated with the unequal distribution, but it appears to have a lot more to do with them wanting into the Big Ten rather than them resenting the Big 12.
If the offers come through, it is probably not a stretch to say all three leave.
That leaves nine schools totalling 34.3 million or 3.8 million per school.
Now networks also look at what you can bring in as a conference overall. For example, The SEC brings in 58.6 million of the US' 307 million residents, or 19 percent of the country's population. The ACC has schools with noticeably lesser fan support (the quick and dirty is average attendance), but offered 62.5 million of the US' residents or 20 percent. The size of the population they could offer (plus the bidding war between ESPN and Fox) probably really helped them to land the kind of deal that they did.
Neither one of these conditions appear to work in the favor of a Big 12-3.
The Big 12-3 would own under nine percent of the population of the US. That will work against them in competition with other BCS conferences for broadcast dollars. Networks would probably want something more "worth their while".
Now there is a lot of talk from people affiliated with the conference have-nots that the conference can just add replacements. The problem is none of the replacements offer strong state flagship level support in large states.
They can add BYU, but Utah only has 2.8 million people. They can add UNM, but New Mexico only has 2.0 million people. They can add Colorado State, but they draw about half of what Colorado does and are further from Denver. It's still Colorado with its five million people, but the fan support is nowhere near as strong.
That might get them to 44.1 million (14 percent of the US population) with 12 schools (3.7 million per school), but the fan support for that combined trio is not nearly as strong. It is likely the TV contract would take a hit vs. what today's Big 12 would bring.
They could add more schools.
With the exception of basketball, candidate schools Memphis and Louisville are more city teams or regional teams than teams with state-wide followings. Their excellence in basketball could lift the conference to even a higher level in that sport piling up tournament revenue shares, but they don't offer a lot for UT individually to be excited about.
They can scrape together the totals to get back into the same ballpark that will get a decent total payout, but they might have a conference of 14 or even 16 members splitting the money they have today. And the conference will be a lot less prestigious.
UT will get their money. If this conference pulls $78 million in TV revenue, UT will still pull their $12 million or so leaving $66 million to be split by the other 13 or so members.
Even if the money goes up 60 percent to say what might average out to $125 million for the conference, the percentages will probably remain the same due to the weighed payouts. UT probably would take home $19 million while the other 13 schools divided up $106 million.
Now obviously it is a have your cake and eat it too deal for UT athletics, but it does nothing for academics and only further irritates the membership of the conference.
That doesn't seem to be a recipe for long term growth.
That just means the the differences between the haves and have-nots in conference will just get wider. How long will A&M and OU be content taking home nine million a year when UT is making more than teams in the SEC?
Losing OU and A&M to the SEC would meet the SEC's needs. That scenario or losing OU and OSU would be just as destructive to the Big 12 as losing UT.
I think you could see OU and A&M balking and leaving for the SEC and UT realizing they have no choice but to go with them.
Those options all suck.
Yep, they do.
I only see two good options for UT and both require UT to show leadership and do a heck of a lot of work, not just to took out for their best interests.
I have written a couple pieces on this. One from the Pac-10's point of view and one from the point of view of the teams that would potentially join the Pac-10 with UT , so I am going to touch on this very lightly from UT's perspective.
This is by far the best option for UT, the Pac-10, and for the state of Texas.
It lands UT in a conference with the academic reputations and research budgets to increase the value of UT degrees while still allowing UT to do very well in sports by protecting Texas recruiting and the rivalries that generate the revenue streams UT currently enjoys.
It creates a new conference that in the short term would rival the SEC as the premiere football conference. This would have the effect of turning the attention of the top Texas recruits who might consider the SEC today westward towards the "new hotness"; a Pac/SW conference.
As most current Pac-10 schools are pretty far away and current Big 12 Texas talent leeches Nebraska and Missouri would be out of sight out of mind in the Big Ten, this would actually increase the odds of Texas landing the elite talents in the state.
UT would be stronger and Texas teams down the line (TCU, SMU, UNT, etc.) would be stronger.
If the Big Ten goes to a 16 team money printing conference, the Pac-10 might be a lot more inclined to talk merger with the better schools in the Big 12. After all, they don't want to be seen as the Big Ten's junior partner.
If presented the right way, UT and Colorado could organize a package deal dragging along A&M and some big 12 schools that rival the bottom end of the Pac-10 like OU and Kansas as well as needed Texas ally Texas Tech. Heck UT could even bring along Arkansas if they wanted (and the Pac-10 membership allowed).
If UT tells the Pac-10 that UT's days in the Big 12 are coming to a close, that could spur the Pac-10 to act. Without the Big 12 as a content partner, the Pac-10's current expansion plan might be a real stinker.
A new highly desirable super-conference that owns 85 million viewers (28 percent of the nation) and can deliver great match-ups like USC at UT or Washington at OU with Eastern fan and media friendly eight p.m. starts would be something Turner, ESPN, and Fox would almost HAVE to have a bidding war to possess.
The payouts could be staggering and the increases in UT's research revenue would likely dwarf any TV revenue. This is the home run scenario for UT.
Leaner, meaner, and fairer Big 12
As we addressed earlier, if the conference loses Colorado, Nebraska, and Missouri, they would essentially have too many mouths to feed with the TV markets that remained.
Booting Baylor would be sensible if the Big 12 rules allow it. They have been non-competitive in most of the revenue sports since the Big 12 was formed. It is very unlikely there would be any political push back in Texas for this kind of move if it was sold as a way to ensure the survival of the Big 12.
That "minor" move, booting Baylor for a school that has a unique new market, could help the conference tread water.
That would still give the conference 34.3 million residents. Adding BYU, CSU, and UNM would make for a 11 team conference with 44.1 million residents. Adding Louisville as a 12th team (metro population 1.2 million) would bring the conference total to 45.3 million (14.7 percent of the nation) and the individual average to 3.8 million per school.
If UT was willing to cap its best potential conference TV share take home at what an SEC school takes in, the conference could possibly hold together, but is that something UT would do?
Could it work out to UT getting an SEC sized share and the other 11 schools dividing up $100 to $108 million? Yes, and that might work long term, but it is a lot of work and concessions to reach a payout that does not appear to be optimal.
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