This won't be your ordinary expansion article. Nope, this one is different.
Today, I am going to tell you what is going to happen to the Big 12 over the next two years, and why, based on actual facts, figures, and quotes.
No bias, no rumors, just educated guesses of the highest standard.
So let's break this down into two categories: Expansion to 12, and the conference championship game in football. While these are two separate discussions, they are also linked at the hip, so we must consider them equally.
At this point, I think it is safe to say that the Big 12 is going to expand. The principle argument against expanding has been A) There are no great teams to add and B) At the end of the day, the big players in the Big 12 want out after 2025 so there is no reason to add teams today.
Both of these rumors are, in my mind, false.
First: There are no teams available, yes, but expansion today wouldn't be about adding immediate top shelf value, but rather adding stability and continuity to the conference in anticipation of adding teams in 2025. We want the Big 12 to be in a position of strength by 2025 so that we can renew the Grant of Rights and hopefully poach a few teams from the ACC. The SEC won't likely break up considering their lead in media revenue as of today
On top of that, the idea that teams want out of the Big 12 is also not quite accurate, as the Big 12 offers something that only the Big 12 can offer: Control over your Tier 3 rights. This is worth $13m a year to UT, $5m for Oklahoma, and $2m to TCU, the bottom end of that spectrum. The only other conference that could feasibly offer that would be the ACC, which is currently trying to start its own network but is having trouble doing so. If it fails, they will pivot to the Big 12's model.
Of course, there is this: Even if the Big 12 wanted to start a network, would there be a market partner to help them do it? Sounds doubtful.
So, come 2025, what will the discussion be? Who offers teams the best package for Tier 1-3 rights... A Big 12 with several big additions, like FL-ST and or Clemson, or the ACC with a few significant additions, like West Virginia? The answer will undoubtedly be the Big 12. The wildcard is the SEC, BIG, and PAC wanting to expand beyond their current limits, but I see this as being very unlikely given the nature of college media markets. At the end of the day, one of the ACC or Big 12 will be eaten up by existing conferences, likely the BIG or SEC, with the Pac on the sideline.
In short: The ACC Tier 1-2 media lags behind the Big 12 in a big way. If you assume Florida State could get the same Tier 3 deal in the Big 12 as they do the ACC, then the Big 12 is going to win that battle.
But, what about the naysayers who say the Big 12 isn't getting enough revenue to compete with the big guys?
So let's look at Big 12 schools, versus the media rights behemoth SEC... Who is winning?
|School||Tier 1+2 (2015-16 est)||Tier 3||Total Media Revenue|
|SEC Average||35.5||$ 35.5|
|West Virginia||29.0||5.0||$ 34.0|
|Kansas State||29.0||3.0||$ 33.0|
|Oklahoma State||29.0||3.0||$ 32.0|
|Iowa State||29.0||3.0||$ 32.0|
|Texas Tech||29.0||3.0||$ 32.0|
Now, before everybody freaks out, let me explain the numbers above. Tier 1&2 are the conference payout estimates for 2015-16, which is based on an anticipated 15% jump for each conference. Tier 3 revenue as noted above only includes revenue paid for tier three TV and streaming content, not radio, and NOT licensing deals with IMG or Learfield Sports. I had to do some information requests and math to get to the above numbers, but I am confident they are accurate as of this year.
So, at worst, TCU and Baylor are at 87% of SEC revenue, with a couple schools "tied" and UT leading at 100%+.
Based on the competitive nature of the SEC, I think a school would love to take 87% of the SEC and a less competitive landscape in the Big 12.
But the larger point here remains: The Big 12 is doing just fine when it comes to media revenue.
So why move to 12? As we said earlier, its all about stability. When 2025 rolls around, the Big 12 needs to be in a position of strength versus the ACC so that when schools are deciding where to place their athletics program, the decision is simple. Today, the Big 12 is in a fantastic position... Based on my estimates, the ACC Tier 1&2 revenue in 2015-16 will likely be $26m, trailing the Big 12 significantly, which is the basis for complaints from FSU board members and speculation on when, not if, that conference will break up after their Grant of Rights ends in 2026-2027.
So how does the Big 12 achieve strength and stability? Make all the members happy. About 40% of the conference favors expansion, 40% has come out against it, with a couple swing votes in the middle. BUT, I think if the Big 12 Network comes off the table, and buy-ins for potential new teams are substantial (like TCU and WVU were), everybody will get on board. The Big 12 only needs eight votes for expansion, and I believe they will get it.
So who are we adding? Well, let's start with who we aren't adding: UCONN.
I like UCONN, I wish they weren't terrible at football, but unfortunately UCONN's entire value to the Big 12 is their media market, which is only valuable if the Big 12 tries to start a conference network. As we outlined earlier, that isn't happening, so I will take UCONN off the board.
Other teams we aren't adding: BYU, Boise State, USF, UCF, or Memphis.
Unfortunately, each of these schools fails in one of a series of areas: No investment in football, horrible APR, bad market, restrictive religious affiliations, and/or a total lack of support from their fan bases. BYU is easily the best of that list, but the departure of Bronco Mendenhall signals to me that they know it isn't happening. There is just too much going on their with the Mormon Faith, the Big 12 seems convinced that touching it would be a bad idea. Too little, too late.
So, that leaves: Houston, Cincinnati, ECU, and Colorado State.
I think we can take Colorado State off the board right away. The Big 12 has shown no interest in heading west, and C-State just can't seem to get its act together regarding any piece of its athletic program.
ECU comes off for the same reason, they simply haven't invested in their overall athletics program to the point that they would be a good fit. Spending $9m a year on football simply won't help you make the big time.
So, we are left with Houston and Cincinnati. For me, I can make a lot of sense of this move.
Both schools have made significant investments in their athletic programs, especially Football and Basketball. Both schools have had consistent success in recent times, both schools have historical successes to point to, and for me both solve critical needs: Getting a travel partner for WVU, and keeping the Big 12 a southwest/east conference.
Believe it or not, I think that opposition to adding Houston will be much less than others anticipate. There are several benefits to adding Houston from a competitive balance and market perspective, and I think the argument of "making recruiting harder" is actually BS. So you are telling me Houston isn't already the most recruited market in the country? All major conferences hit the area hard for talent, adding Houston to the Big 12 won't make a significant impact on that competition.
And while Cincinnati isn't a football power today, they are clearly making strides to get there. Hiring Tommy T was a significant move, while they have also put considerable money into facilities and other sports, namely basketball. I have no doubt Cincinnati would be a significant competitor in the Big 12 north.
And now we circle back to the other part of this conversation, the championship game. With 12 teams, it is an absolute must. Why? It's all about revenue balancing. In order to keep Big 12 shared revenue equal, both new teams will need to take seven year buy-ins, from 2017-2018 through 2024-2025, as well as add an anticipated $35 million from a conference championship game, or roughly $3m a year for each Big 12 member.
If you do this, the Big 12 will be able to attain 100% of the shared revenue estimates as they stand today, a key part of the decision to add a member or two. And, of course, the consensus still believes that adding a championship game will solve the "13th data point" concern, wherein the Big 12 is being penalized for not holding the penultimate game.
So, in summary:
- The Big 12 should add two members, Cincinnati and Houston, in time for the 2017-2018 season.
- The Big 12 will ultimately not add a network, the Tier 3 deals currently in place are too valuable.
- The Big 12 will add a championship game for the 2017-2018 season.
- Current Big 12 members will not see a drop in distributed revenues through the current Grand of Rights, maxing out at an anticipated $45 million per year by 2024-2025.
And, at the end of the day, I think everybody will be happy with these changes. Nothing is perfect for TODAY, but really this isn't about TODAY, its about 2025... If the Big 12 can maintain a strong market position, above the ACC, moves today are really about positioning the Big 12 to poach members from the ACC once it becomes feasible (their GoR runs out). And, with strong decisive action, I think the Big 12 is well suited to make those moves when the times come.