Month: July 2021

The Art of Deception: Big 12 vs. ESPN

On By Frank the TankIn Sports1,008 Comments

For most conference realignment moves, the timing may often be surprising, but the logic behind them makes sense. The SEC taking Texas and Oklahoma is a perfect example: the move came out of nowhere last week and shocked the college football world to its core, but it’s a move that makes perfect sense for the parties involved with increased money and power.

Every once in awhile, though, conference realignment causes a story that goes beyond the realm of reasonable possibility, such as a Power 5 conference commissioner publicly going postal on ESPN. Yesterday, Big 12 commissioner Bob Bowlsby sent a cease and desist letter to ESPN where he accuses the network of attempting to induce league members to join another conference. Then, he didn’t just let that letter speak for itself: he basically went to every media outlet out there (sans ESPN) and left no doubt about how he really feels. Conspiracy! Deception! Manipulation! Tortious interference! Backstabbing partner! All that we need is a missing body and this would be an episode of Dateline!

The only thing crazier than all of this is ESPN’s alleged plan: dissolve the Big 12 by having 3 to 5 members join the AAC. Not the ACC, but the AAC. Now, from a pure ESPN perspective, the dissolution of the Big 12 makes financial sense: that allows Texas and Oklahoma to move to the SEC without paying any exit obligations (likely in the neighborhood of $70 million to $80 million for each of those schools), move the most attractive remaining Big 12 brands to a less expensive AAC contract that’s 100% under the control of ESPN, and eliminate around $1 billion in rights fees that are remaining on the current Big 12 contract with ESPN. I have no doubt that ESPN would love everything to play out this way.

However, if these allegations are true, this is an insanely brazen and obtuse proposal regardless of incentives for ESPN. If we assume that no other P5 league is going to take any of the remaining Big 12 members, how on Earth did ESPN think this was going to work? Think of it from the perspective of the remaining Big 12 schools of the ESPN “offering”:

(1) This would have involved asking Oklahoma State to ask Tulsa for an invite to a league. It would have involved Texas Tech, Baylor and TCU to ask SMU and Houston to the same. Putting aside football, this would have required Kansas State and freaking Kansas (whose basketball program was founded by basketball inventor James Naismith) asking Wichita State to join the Shockers’ league!

(2) The Big 12 would just willingly disband and give up $140 million to $160 million of exit fees from Texas and Oklahoma.

(3) The Big 12 would further willingly dissolve and give up around $1 billion for the rest of the existing TV deal with ESPN.

Once we take a step back from the initial shock of how openly public this dispute is between the Big 12 and ESPN, the alleged proposal from ESPN is frankly comical. It’s no wonder that Bob Bowlsby claims that he has receipts that ESPN has been attempting this here: any Big 12 school that received a proposal from ESPN for them to join the AAC (not the ACC) so that they can dissolve the league and make less money in the process would have forwarded those texts and emails to the Commissioner’s Office with the subject line: “Dude?! WTF?!”

To be sure, nothing is going to change ESPN’s power position in college sports (or simply the sports world in general). However, I believe that this is going to backfire on the AAC quite badly. The AAC might get a few days of positive news cycles where they appear to be the aggressor as opposed to being the hunted in the conference realignment game. However, when anyone takes a step back and goes line-by-line comparing the Big 12 and AAC members, the fact of the matter is that the AAC would take every Big 12 member while there are several schools that the Big 12 wouldn’t touch from the AAC. That inherently means that the remaining Big 12 schools as a core are simply more valuable than the AAC and it makes more financial sense for the Big 12 to take the best schools from the AAC as opposed to the other way around.

Just 24 hours ago, I would have believed that the Big 12 was aiming to have as little backfilling as possible (maybe just taking 1 AAC school like Cincinnati plus independent BYU) or even simply stand pat at 8 schools. Frankly, the Big 12 has been spending the past several years convincing itself of reasons to not take AAC schools such as Cincinnati, Houston, UCF and Memphis. I believe those days are gone. With this accusation of the AAC coordinating with ESPN for the equivalent of a hostile takeover, my sense is that the Big 12 is going to find every reason to strip mine anything of value from the AAC to neutralize any real or perceived threat here. This may turn out well for the AAC schools that I just mentioned, but any current schadenfreude at the Big 12 predicament from the bottom half of the AAC is wildly misplaced.

In the past week, I feel that a lot of fan chatter has overrated the chances of the Big 12 schools to get an invite to any of the other Power 5 conferences since they were ignoring institutional fits and simply how much more money a school needs to bring to the Big Ten, Pac-12 or ACC just for expansion to break-even for them (much less actually be more profitable). However, it seems as if though the tide has turned where the Big 12 is now underrated in comparison to the AAC and rest of the Group of 5 leagues. The truth is somewhere in the middle – the rest of the Big 12 may not be finding homes in other P5 leagues, but they still have absolute poaching power over the G5 leagues if only because of a combination of autonomy status with the NCAA, incoming exit fees from Texas and Oklahoma and existing NCAA Tournament credits. To say that I’m watching all of this from the sidelines while eating popcorn is an understatement: this is all worthy of downing an entire souvenir Chicago skyline tin of Garrett’s Popcorn.

(Image from the Big 12 Conference)

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Texas and Oklahoma Leave the Big 12: Why Newton’s Third Law Doesn’t Apply to Conference Realignment and the Big Ten

On By Frank the TankIn Sports474 Comments

Newton’s Third Law of Motion states that for every action in nature, there is an equal and opposite reaction. Ever since news broke last week that Texas and Oklahoma were looking to leave the Big 12 (which was made official today) and join the SEC, one of the most common questions has been how the Big Ten and the other Power Five conferences would react. As sports fans, many of us have a preternatural desire for clean and organized structures, such as seeing 4 superconferences with 16 schools each in college football as a logical endpoint. However, conference realignment doesn’t work that way: it is a messy uncoordinated process with a lot of different individual entities acting separately trying to advance their own respective self-interests. While the Big 12 would clearly seek to backfill with replacement members at a minimum as a matter of survival, there is absolutely nothing that requires the Big Ten, Pac-12 or ACC to react at all if it doesn’t make financial and cultural sense. There isn’t any master plan or rationale that says that other leagues need to go to 16 members simply because the SEC has done so. In essence, Newton’s Third Law of Motion simply doesn’t apply to conference realignment.

The fact of the matter is that the SEC adding Texas and Oklahoma is the most baller power move in conference realignment history because it doesn’t leave the Big Ten, Pac-12 or ACC with any logical moves to react at all. This is quite different than the 2010-13 round of conference realignment when there were many theoretically valuable expansion options actively looking to move on the table for the power conferences, fewer restrictive covenants locking schools into their home leagues (such as Grant of Rights agreements), more cable households being added every year for conference networks and lower revenue thresholds for new members to clear to ensure that expansion would actually make money for leagues.

With all of the hysteria with the admittedly outstanding power play by the SEC, let’s take a step back and remember where the Big Ten is today. An undercurrent in the media stories and fan perception back in the realignment wars of 2010 was that the SEC had to be the revenue leader and top power broker because of its prowess on-the-field, but that was never correct: it was always the Big Ten in front… and that’s still the case now.

In the fiscal year ending in 2019 (the last full season prior to the COVID-19 pandemic), the Big Ten distributed approximately $55 million to each school (outside of Rutgers and Maryland who had still been receiving reduced shares), while the SEC provided an average of $45.3 million per school (excluding Mississippi because of a postseason football ban that year). The fiscal year 2020 figures show a similar gap outside of the SEC advancing each member $23 million against future earnings for relief plus the general pandemic-related revenue reductions of the past 18 months (which should hopefully be aberrations).

To be sure, the SEC did sign a new deal with Disney/ESPN in December for its Game of the Week that will be worth $300 million per year on average starting in 2024. CBS had been previously paying $55 million per year for that package (the absolute TV rights steal of the century), so that in and of itself will increase per school revenue in the SEC by $17.5 million per year for 14 schools. Note that this is on top of the existing ESPN contract for the rest of the SEC’s TV rights and the SEC Network. Whether any of the amounts being paid by ESPN will be adjusted by the addition of Texas and Oklahoma is an open question. (The reports that UT and OU started talking to the SEC in December, which would have coincided with the new ESPN contract, might mean that such new contract is effectively funding the conference expansion, but that’s purely my speculative guess.)

On the other hand, the Big Ten’s current TV contracts with Fox and ESPN expire fairly soon in 2023. This gives the Big Ten another opportunity to reload in a still ever-increasing sports TV rights environment (once which saw leagues like the NHL, much less the NFL, get explosive new TV contracts in the past few months), so the Big Ten will very likely continue to be effectively even with the SEC (if not still ahead) in terms of revenue. The additions of Texas and Oklahoma simply keep the SEC on par with the Big Ten for revenue, not zoom ahead.

Now, the SEC expansion with UT and OU certainly exposes the long-term demographic issues of the Big Ten footprint that Jim Delany was trying to address over a decade ago with expansion. The Big Ten will still be in the same tier with the SEC revenue-wise for the next decade, but the SEC will now have the flagship of Florida on one end, the top two schools in Texas on the other end, and a complete stranglehold on the college football universe in all points in between with elite national brands like Alabama and the best pound-for-pound recruiting area.

The problem is none of that can be addressed by the Big Ten adding any of the Big 12 schools available. While schools like Texas Tech, TCU and Baylor are located in the State of Texas, they aren’t academic or institutional fits with the Big Ten and are far behind Texas and Texas A&M in terms of in-state power. Kansas may have some value as a blue blood basketball program and has membership in the Association of American Universities (AAU) that’s a key academic credential for the Big Ten, but it’s certainly not a demographic play. Iowa State has AAU membership, too, but it would be doubling up on a small population state that the Big Ten already has covered. None of the schools in the Big 12 meet the Big Ten academic standards.

Frankly, the only real options to address the Big Ten’s longstanding demographic issues that would also make enough revenue are in the ACC and Pac-12, but those are significantly tougher nuts to crack compared to all of the Big 12 schools essentially being free agents now. The Big Ten would clearly love to go after several ACC schools such as Virginia, North Carolina and Georgia Tech, but that league has a Grant of Rights agreement that won’t end until 2036. It will be difficult enough to see how Texas and Oklahoma deal with a Big 12 Grant of Rights agreement that won’t expire until 2025 (or more likely, the stiff financial penalties involved to get out of it early), so trying to convince ACC schools to put their TV revenue for the next 15 years on the line is realistically way too tall of an order right now.

The current Pac-12 TV contracts end in 2024, so the Grant of Rights issue isn’t as much of an urgent concern there, but the challenge with the Pac-12 is that they legitimately fit with each other institutionally and culturally similar to how the Big Ten schools fit with each other. Colorado would be a good fit for the Big Ten on paper and a logical westward expansion with great demographics, but that school is also already a perfect fit for the Pac-12. Meanwhile, the Big Ten would certainly take heavyweights like USC and UCLA from the Pac-12, but that’s the West Coast equivalent of trying to say the B1G should add UNC and UVA: that’s way easier said than done.

The bottom line: a new Big Ten school would need to deliver at least $70 million per year just for the league to not lose money on expansion. Notre Dame could do that along with UT and OU (who are now off the table) and some of the aforementioned options in the ACC and Pac-12, but it’s otherwise hard to see anyone else. (Plus, any “expansion plan” that is predicated on Notre Dame joining isn’t an expansion plan at all since they are committed to independence as an institutional identity. The ACC needs to be reminded of this just like the old Big East football conference.) The only Big 12 school that even has a chance at the Big Ten is Kansas (and that’s assuming that its basketball program is so uniquely and singularly valuable a la Duke/UNC/Kentucky that it overwhelms its football issues). As I discussed many years ago with the original Big Ten Expansion Index, a new school needs to be an academic and cultural fit, bring in a new market and/or national brand and, above all else, make a lot more money for the conference. At the end of the day, the Big Ten isn’t going to expand just for the sake of expanding.

(Image from Wired)

(Follow Frank the Tank’s Slant on Twitter @frankthetank111 and Facebook)

Red River Realignment: Texas and Oklahoma Talk to the SEC

On By Frank the TankIn Big Ten, College Basketball, College Football, Sports610 Comments
(Image from Omaha World-Herald)

When I first started writing about conference realignment over a decade ago, it was always clear to me which school was the biggest prize for every conference: the University of Texas. Whatever metric is used for conference realignment value, Texas has a perfect score in all of them – national historic football brand, rabid fan base, massive home state delivering multiple key TV markets, elite academics and a top recruiting area for football and virtually every other sport. Adding Texas was the original dream for Big Ten expansion and the Longhorns were the centerpiece of the Pac-16 proposal. The Texas power was so overwhelming that they effectively ran the Big 12 as their own conference.

While it has long been assumed that Oklahoma would take an invite from the SEC under the right circumstances, the conference where it just means more has been a relative underdog when it comes to courting Texas. Sure, the pure football fan base out of Austin would love a schedule full of SEC opponents, but the academic and administrative sides at UT have always viewed the SEC was a wary eye. Add on top of the fact that Texas A&M moved to the SEC on its own back in 2011 and there was an undercurrent that the Longhorns couldn’t ever be perceived to be following the Aggies on principle.

At the same time, much of the value of the Big 12 to both Texas and Oklahoma was political peace. Fellow in-state institutions such as Texas Tech and Oklahoma State could continue be protected as a part of a Power 5 conference with the bargain being that UT and OU would be calling the shots for the league. In fact, it had been becoming difficult to see how Texas and/or Oklahoma could proactively leave the Big 12 without any of their “little brothers” with such a huge divide between the Power 5 and Group of 5 conferences, especially when they turned down the Pac-16 proposal that would have largely incorporated them all.

As a result, the Houston Chronicle breaking the story today that Texas and Oklahoma have reached out to the SEC is an earthquake followed up by a tsunami for conference realignment purposes. To quote Dr. Strange, “We’re in the endgame now.” The past two decades of conference realignment (starting with the ACC’s original raid of the old Big East football conference by expanding with Miami, Virginia Tech and Boston College) have been leading up to this moment.

The COVID-19 pandemic also crystallized something very clearly for schools both large and small across the country: no one can afford to leave material amounts of money on the table any longer. That can’t be emphasized enough. It’s not an accident that a 12-team college football playoff is coming down the pike sooner rather than later and now, several months after the SEC has signed a Game of the Week deal with ESPN worth around $300 million per year (and note that this is on top of their existing ESPN deal and the SEC Network), it appears that all of the overarching concerns and obstacles that UT and OU may have had (whether internal or external) might be melting away.

Another important point is that SEC Commissioner Greg Sankey has become the unambiguous alpha dog of college sports. While the SEC was always well-managed and clearly had the best product on the field for many years, it was really former Big Ten Commissioner Jim Delany that was the main visionary of college sports during his tenure and who changed how leagues look at media rights (particularly the invention of the conference network) and conference realignment (where growth outside of the existing footprint became the focus). Ever since Delany retired at the end of 2019, Sankey has really positioned the SEC to be as bold off-the-field as it has been on-the-field. Within the past month, he has spearheaded the development of the new college football playoff system, completely called out the NCAA and put out a thinly veiled threat that the Power 5 could leave on their own… and now appears to be on the precipice of a once-in-a-generation SEC expansion.

It’s hard to say where this leaves competitor leagues such as the Big Ten. I can’t imagine that Texas and Oklahoma searching for a new home alone without their little brothers would have just been ceded to the SEC under Jim Delany’s watch. This isn’t a critique of current Big Ten Commissioner Kevin Warren, but rather that Sankey’s dominance compared to the other P5 leaders right now is unchecked. If UT and OU end up in the SEC, I could see the Big Ten having a lot of interest in Kansas. Note that KU has had the largest third tier rights TV deal in the Big 12 outside of UT’s Longhorn Network (even higher than OU), which shows the particularly unique value of the Jayhawk basketball program. There are few basketball programs that move the P5 conference realignment needle today, but KU is one of them as a true blue blood. Basketball content is quite relevant to the Big Ten Network in particular. Still, it’s difficult to find another great fit for the B1G outside of a much more difficult raid of the ACC (e.g. Georgia Tech, Virginia) or (gasp!) Pac-12 (e.g. Colorado).

Now, there have already been rumblings that Texas A&M will work try to block this SEC expansion. While I could see the leadership of Texas A&M voting against adding Texas and Oklahoma in order to superficially placate their alums, it’s completely insane for me to think that any other SEC member would oppose those additions regardless of any past history (such as Missouri’s experience with Texas in the Big 12). Any conference that has the ability to add two of the biggest brands in college sports in one fell swoop will hammer this through, particularly with a leader like Sankey.

The bottom line is that Texas and Oklahoma going to the SEC would be the greatest heist in conference realignment history. We’re in the endgame now.

(Follow Frank the Tank’s Slant on Twitter @frankthetank111 and Facebook)