Tuesday, 20 November 2012 17:15

Exploring the Big 12's expansion dilemma

Written by Jay Beck
Exploring the Big 12's expansion dilemma Kevin Jairaj-US PRESSWIRE

The news of the Big Ten adding two more teams this weekend came as a bit of a shock to anyone and everyone who thought conference realignment was going to take back seat for the time being.

We should have known better.

It also brought to the forefront that the Big 12 has a problem and it's a problem that has no easy solution.

Maryland and Rutgers are now in the Big Ten giving the conference 14 members.. The ACC loses a team in Maryland but will likely add another to stay at 14 teams. The SEC is already at 14 teams. The Pac-12 remains at 12 teams. The Big 12 remains at 10 teams.

The numbers themselves aren't the real problem. In theory, who's to say 14 is better than 10 or that 12 isn't better than 16? In reality, those numbers are simply a snapshot of how things stand today. Tomorrow? Who knows. The Big Ten could go to 16 members, so could the SEC. So could the ACC, but they also stand the greatest chance of losing members if the Big Ten and SEC continue adding teams.

What's true today might not be true tomorrow.

So how does all this affect the Big 12?

On the surface, it's easy to say that it might not have any affect. There is nothing wrong with the Big 12 having ten teams. It's an easy manageable number. Scheduling is simple. Rivalries are intact and more will be developed over time given the fact teams are playing each other every season. The league has big television contracts in place that allows its member to make significantly more money than ever before. The new contract with Fox has provided additional national exposure on a weekly basis.

Things are good. Today, that is. But the world as we know it is changing which brings up several problems for the Big 12. Namely, under the current structure of the league, it's simply not set up well to capitalize on expansion.

The Big 12 has said repeatedly it won't expand unless there is a school out there that brings significant value with it, or said another way, it won't expand unless it means a significant increase in a renegotiated television contract. Otherwise, why divide up the pie into more pieces meaning schools will be making less than they are now? You just don't expand for the sake of expanding especially when it means each school is making less money.

Well, that is, unless you're the Big Ten. Why? Because its structured to be able to do so. It's schools won't be making less money no matter who they add. The Big 12, not so much. The other three conferences (SEC, B1G, Pac-12) don't need to reel in the big fish in order to capitalize, necessarily. That's not the case in the Big 12 as it stands now and therein lies the problem.

"We’re not always going to be able to add a member that has got a nationally relevant, top-tier program like Penn State and Nebraska. If that’s the litmus test, then there wouldn’t be a lot of expansion around the country,” Big Ten commissioner Jim Delany said on Monday.

If the Big 12 can indeed lure schools such as Florida State and Clemson, for example, then it might be in business. If not, it's going to be in real trouble in the future. And I don't necessarily mean in trouble in the sense the Big 12 might cease to exist, but it's going to continue to fall further and further behind if it stands for the status quo.

The problem, however, isn't just standing for the status quo. The problem is it might not have any other choice but to stand for the status quo. Do you think TV executives are going to come running with bags full of additional money if the league adds say, Louisville and Cincinnati?

Not exactly, which is likely one reason the league has decided to stand pat for the time being with ten teams.

The Big Ten just added Maryland and Rutgers which in essence would be similar to the Big 12 adding Louisville and Cincinnati, for example. The Big Ten can capitalize where the Big 12 cannot.

Let's look at the primary reason the Big Ten is expanding. Demographics. There's the recruiting angle for one, which isn't a problem for most of the schools in the Big 12 based on their access to the athletes in Texas.

The Big Ten struggles in recruiting to a certain extent based on where the bulk of its schools are located. This opens up potential new recruiting inroads in areas that are highly populated. Again, not an issue for the Big 12 per se.

But the Big Ten now moves into two new areas which are what, again? Highly populated. And highly populated means there are a lot of TV sets being watched. And the Big Ten has something to sell those companies that are filling those TV sets with programming, the Big Ten Network.

In areas that already offer the BTN, they'll be able to increase the subscription rates which means millions and millions of more dollars in additional revenue. It can also move into new markets entirely which again means millions and millions of new dollars. Even if it doesn't all happen initially, the potential is there and is something the Big Ten can continue to try and capitalize on over the long haul.

What does the Big 12 have to sell in new markets? Nothing, which is why they need a big fish to renegotiate its first tier TV package. Without it, all the Big 12 does is dilute their pool of money as mentioned earlier.

The schools that would quickly jump on board with the Big 12 right now simply don't move the needle nationally. That means the Big 12's first tier rights holders aren't going to offer a significant dollar increase in a renegotiated TV deal.

What is the Big 12 going to sell into those new cable/satellite markets? The Longhorn Network? The can barely sell that in Texas. And even if they could, who does that benefit? Texas and Texas only.

All the Big 12 can offer a school is the rights to their third tier content which unless you're Texas, Oklahoma, or potentially Florida State or maybe Clemson, doesn't add a significant dollar increase.

Most of the schools in the Big 12 have already partnered with Fox for their third tier rights which no doubt adds to the value they'll take home annually from their overall TV deal, but it pales into comparison to the potential the Big Ten (or the SEC and Pac-12) stands to make over the long haul from their television contracts and conference networks.

Again, the Big Ten can stand to add schools whose athletic departments don't have, on the surface, the national clout that moves the needle. And to hammer home the same point, that's not the case in the Big 12 which severely limits the moves it can make.

So why is this a potential problem for the Big 12? One, because it's not about how things stand today. It's where things are going five, ten, and 15 years from now. As conferences continue to expand, so does the potential for additional revenue and we're not talking chump change here.

And secondly - let's switch gears away from the financial concerns for a moment - is because of scheduling. Take a look at the current BCS standings. It is littered with teams from the SEC. Are these teams simply better? Maybe, but they're also maximizing on the fact they play only an eight game conference schedule and the fact that schools don't play five teams every season from the other division (six division games, two cross division).

Some might argue that is actually a disadvantage and they would have a point. But not when it comes to what really matters at season's end; wins. You can argue until you're blue in the face about who played who during the year, but what do people really look at in the end? Team A is 12-0 (they must be good). Team B is 12-0 (they must be good). Team C is 11-1 and on down the line.

Yes, the new strength of schedule component in the upcoming playoffs might help that to an extent because you'll now have a selection committee which could award a team for having a tougher schedule. But you know what? You're not even in that conversation if you're 9-3 or even 10-2.

The SEC could finish this regular season with six teams having at least 10 wins and a seventh team with nine wins. The Big 12 could have three teams with 10 wins and another win nine wins. Part of that is the numbers (14 teams vs. 10) but it goes deeper than that.

The Big 12's nine game conference schedule where everyone plays every team in the league is nice and tidy, but it's also hurting the teams within the conference in the overall standings. And not necessarily because of the nine games, but because you have to play everybody else in the conference.

On one hand, that's an extremely weak argument as a reason for adding teams. On the other hand, you don't think Alabama benefited by not having to play Florida, Georgia or South Carolina this season? (In the Big 12, remember 2007? Kansas went 12-1, won the Orange Bowl, and got there without having to play OU or Texas in the regular season).

That takes us right back to the financial implications of adding new teams in the Big 12. Are there two, four, or six teams available the move the needle nationally or at least enough to require the TV networks to rework the newly inked TV contracts?

From a sheer numbers standpoint, would adding four or six teams bring, at a minimum, an additional $20 million per school. We're talking about adding an additional $80 to $120 million annually to the current deal. And that just keeps everyone in the conference making the same as they are now. You would have to think that by expanding, schools would expect to make even more which only adds to the numbers that would be required to make expanding financially feasible.

The new Champions Bowl agreement with the SEC (the Sugar Bowl going forward) certainly helps what each school pockets in the future. But in the big picture, that's essentially a wash when comparing it to the other conferences. The SEC will also be splitting that money as will the Big Ten and Pac-12 in the Rose Bowl.

So what is the solution? That is probably for people smarter than me to figure out but here are a couple thoughts.

In a perfect world, it's creating a Big 12 network that maximizes every school's second and third-tier content. It would give the Big 12 a valuable product to sell into those cable markets. We all know, however, that isn't happening. Maybe it was possible a few years ago, but Texas simply has too much invested, as does its TV partner, to pull the plug and change course on the Longhorn Network now.

That's leaves two options: one, stay as is and just ride this out. Obviously since I'm writing this, that's not really an option at all, at least not for long term sustainability.

And two: expand. Find the best four teams (six if you can) and bring them on board. The Big 12 might be rolling the dice with its TV partners, but then again, when the new TV deal was announced, there were supposedly stipulations in the new agreement for expansion. Who knows what exactly those stipulations were, but they had better be good.

This is mission critical, especially if you believe both the Big Ten and SEC are going to 16 teams. Better to pick first than to wait and have to rummage through the left-over's.

The Big 12 was reactive once and nearly got picked apart. You'd have to believe it's going to be proactive this time around, that is if it wants to keep up with Jones'.

Aim high and go for the biggest fish out there (looking at you FSU) which likely includes adding one or more schools from the ACC.

It's only option available unless the Big 12 is content with continuing to play second fiddle to the SEC and Big Ten.

Last modified on Tuesday, 20 November 2012 17:35
Jay Beck

Jay Beck

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  • Comment Link Jay Beck Sunday, 25 November 2012 08:00 posted by Jay Beck

    I like that thought. While it wouldn't be ideal to have a Big 12 network minus Texas, it very well could be the next best thing.

    There would be plenty of logistics to work out having to exclude Texas sports (primarily outside of football) from the programming, but it just might work, especially if they had the teams you mentioned.

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  • Comment Link MrTemecula Saturday, 24 November 2012 18:04 posted by MrTemecula

    Good read. The Big-12 finds itself in the same position the Pac-12 was a couple of years ago - a 10 team conference. This fact, and the Big-12 commissioner should know since he was from the Pac-12, only advantage is the flexibility that if the conference is willing to go big and invite 6 teams, the Big-12 has the slots. The time is now though. The ACC is dead-conference-walking because the SEC and Big-10 are about to make Godfather offers to North Carolina, Virginia, NCST and V-Tech.

    However, adding 6 from the ACC will only work if FSU, Clemson, Georgia Tech see Big-10 money and the only way to see Big-10 money is through a conference network. Fortunately for the Big-12, a Big-12 network with Oklahoma, FSU, Clemson and Georgia Tech would work even without Texas. A good commissioner should definitely sound out Fox to see if Fox would be interested. Throw in Miami, Boston College and Duke and Fox would have a lot of programming for their proposed national network and a new Big-12 network.

    But the Big-12 has to work fast. Things change fast in conference realignment and if the Big-12 dawdle, those 6 might find other arrangements. (ESPN, of course, will try to muck everything up (see Longhorn Network)).

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  • Comment Link Jay Beck Wednesday, 21 November 2012 12:41 posted by Jay Beck

    All great questions and there really aren't any easy answers. I'm guessing ESPN would say these things take time and it's far to early in the process to say the LHN won't work. The problem is even if it does work, it only benefits ESPN and Texas.
    Most of the other schools in the Big 12 simply don't have the reach to do anything similar on their own.
    Maybe that's fine in the current structure, I guess, but the league's whole stance of "every school retains their third tier rights + one football game," is one reason it's harder when it comes to expansion without landing a nationally relevant program. And those schools are few a far between.

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  • Comment Link Mark Wednesday, 21 November 2012 12:14 posted by Mark

    At what point does ESPN decide they are sick of losing money and making enemies by owning the Longhorn Network? The conference network infrastructure is already built on ESPN's dime. All the Big 12 needs to do is make them an offer at pennies on the dollar. Then you repaint the sets from burnt orange to something school neutral & re-brand it as The Big 12 Network. So what if it's Austin based? The Big 12 officials seem to be Austin based too. It's as good a place as any for the studios.

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