Tuesday, September 15, 2015

Big 12 Expansion -- Part 3: What does the Big 12 REALLY need out of expansion?

Welcome to part 3 in this series on Big 12 conference expansion.

Several articles have been written lately that talk about potential expansion as a way to prevent the Big 12 falling hopelessly behind the other power conferences financially.  All of them present bleak scenarios that only marginally limit the likely future earning deficit between the Big 12 and the other power conferences.

As someone who likes looking at the minority view on sports business issues, I try to always question conventional wisdom...Because it is usually wrong. 

I have come to believe there is an achievable expansion path forward for the Big 12 that is more profitable than the status quo in the short term, delivers a strong power conference in the center of the US, and that might actually satisfy all parties (including OU and UT)  long term (in addition to yielding a very good return for Texans in general).

To get to that, I think a clear understanding of pressures that may be on the conference and the (to some, surprising) real needs of the conference is required.

Pressures that may be on the conference and pressure that surprisingly may not be there.

The power conferences seem to be moving towards what seems to be effectively a separate subdivision. 

There had been some talk when Missouri left that the Big 12 might be on their last legs and that their place among the power conferences might be in question.  Since then, it looks like the exact opposite may have occurred.

There has not been any talk of removing the Big 12 from the power conferences and there has been talk of actually modifying the  longstanding 12 team minimum required for a championship game.

This looks quite significant.   Remember the PAC-10 ---a conference much higher in the pecking order than today's Big 12 --- struggled with that rule for years and there was no real talk of modification.  That there now seems to be willingness to discuss it, suggesting a vested interest by the power conferences in keeping the Big 12 from adding 2 or more members.

This opens the door for the Big 12 to stay at 10 members or add a school like BYU for 11 and only play 8 or 9 games in-conference, making a championship games immensely sensible and frankly stronger than other conferences which have traditional divisions.  BYU's fan support puts them about in the middle of the power conference ranks, so BYU catching on with the Big 12 would actually solve a problem for the other power conferences.

Both solutions are in line with conference conventional wisdom, "Do the least you can to meet immediate needs.  Focus on preserving future flexibility."

The thing is this logic is last decade's logic.  The ACC has 15 teams, the Big 10 and SEC have 14, the PAC has 12.Conference USA has 14, just about everyone else has 12 and is looking at expansion candidates. ..We are already in the age of superconferences and that should be kept in mind while making expansion decisions.

Both no expansion and an 11 team conference really only addresses playoff needs.

The Big 12 is the bottom feeder in the power conference ranks.  If any of the five conferences will die to expand the ranks of the power conference membership, it will be the Big 12.

The networks will have to pay more schools at the Big 12 rate if the Big 12 expands.

Additionally if expansion becomes a public subject there is a thought that Houston area politicians could bring a little pressure on UT and Texas Tech.  The idea of a coordinated action against Tech and UT succeeding is probably not a legitimate concern.  The bigger issue might be a concern that some politicians might develop grudges after a failed effort.  By constantly downplaying the talk of expansion, UT and Tech can thwart any co-ordinated efforts taking shape.

There may be some real carrot and stick pressure felt by the Big 12 from multiple sources to keep expansion small, expand in certain directions, or not expand at all.

The needs of the conference

1) Recruiting needs to be important factor in expansion choices, but weighed in an honest way.

I addressed a lot of this concept in the discussion on Cincinnati as a school that brings a rich recruiting territory.  The nut of it is that not all rich recruiting areas are created equal.  And not all conferences can successfully recruit an area.

We need areas that have a lot of extra talent and the talent might be very willing to play at a number of Big 12 schools.

We need a recruiting solution where the Big 12's strong programs (specifically OU, TCU, Baylor, and to a lesser degree UT) can pull 4 star recruits from those states and the more marginal Big 12 programs might develop somewhat productive recruiting pipelines to these new areas that might deliver say 2-5 decent (likely 3 star) players a year.

2) Texas and OU need to remain in the recruting top 11 each year (a.k.a. Ours vs. theirs).

In the recruiting article I talked about the need of the Big 12 to keep UT and OU in the recruiting top 11.

With UT, the question is just whether they will have enough talent to compete for national titles. That is not a question UT leadership will ever acknowledge.  They will blindly assume a good recruiter will have them at national title contention level rather than look at A&M's ascension as a lasting game changer.

UT and OU are the conference's national brands.  If both are strong, there is NO WAY the Big 12 can get frozen out of the playoffs.

OU and UT represent power conference credibility.  As powerful as UT's athletic program is, if OU stays in the 3 loss neighborhood --- something very possible in a conference with UT, TCU, Baylor, WV, and KSU --- the national perception will be that the Big 12 is UT and the 9 dwarves.   (For the record I think OU will have it's strongest season in the last few years this year, but I see little to lead me to believe that is a new status quo in this post-A&M Big 12.)

If OU stays in the 2-5 loss range of the recent past, that will dramatically increase the pressure on the conference from the other power conferences and the pressure UT boosters put on UT leadership to address the issue of a subpar conference home.

It is in the best interest of all members of the conference to steer the conference in a direction that that keeps both of those programs strong.

(I am not saying that TCU, OSU, KSU, Baylor, etc. should not compete for recruits or try to win titles.  TCU's staff has proven more than capable of finding gems in the 3 star ranks and moving them to different positions.  They have twice in the last decade built teams possibly worthy of a share of national titles almost entirely without blue chip recruits.  That is business as usual for TCU. Baylor and Kansas State have proven they can win at a top 7- 15 level with "lesser talent".  Frankly, even if the opposite were proposed  and the conference was built specifically to help TCU, KSU, and Baylor recruit, they would still get out recruited by OU and UT on a consistent annual basis, so complaining about the reality of it is pointless.  None of those schools are likely to make the playoffs if they do not have to beat strong OU and UT programs. I am saying, choose the right battles to fight.)

So how do you do that? Configure the conference to help the power duo's recruiting (...within reason).  If done right , everyone's recruiting can benefit.

But first you have to help UT and OU ---whether UT's leadership thinks they need the help or not.

Clearly the OU/A&M recruiting situation is something that needs to be addressed.  Does that require adding a school like Houston or Rice that the measureables do not support adding?

OU's leadership look at the effects of the collapse of longtime rival Nebraska's out of state recruiting in the Big Ten and it makes this issue is a big deal to OU's leadership --- very possibly a big enough deal to depart the conference over for the PAC-12 in a few years.  That makes it a serious issue for the membership to consider.

3) Retaining UT long term will require the conference to really focus on quality

UT boosters like the Big 12.  They always have.  But they think UT should be part of the best.

That kind of thinking had UT flirting with the PAC-10 when the Big 12 membership was considered significantly better than today's in terms of esteem, research efforts, and academics.

UT once rejected an SEC overture because Longhorn leadership considered the SEC academically unsuitable. Today the SEC is a better academic conference than the Big 12. That's a bitter pill that I don't think UT has swallowed yet.

Even candidate schools like Cincinnati who fans evaluate as an academic positive given a marginally power conference-like rank of 142 by US News, tends to only marginally look like power conference members academically to an academic blue blood like UT.

Now Cinncinati, 46th overall nationally with $433 Million in research dollars this year, is one of a handful of solid research schools in the nation not committed to power conferences, but overall the Big 12 already lost the battle for research schools while Deloss Dodds was doing his thing.  In-play research powers Pitt, Texas A&M, and Georgia Tech --- all whom might have been easily available long term to the Big 12 if Dodds hadn't pursued the LHN --- are off the table now.   That battle has been fought and the other power conferences have won. There is no easy path for the Big 12 to climb up the ranks.

UC Davis (#21 overall) with research totals of $713 Million is the rare 4 star research school at the Division I level that isn't already in  a power conference or isn't operating at a sub-Division I-level athletically.

At 41st overall (in the 3 star ranks of research universities with Cinncinati) , UAB, with research totals at $453 Million, likely would have hit just about every expansion checkbox for the Big 12 --- but that is probably why the Crimson Tide leaders crushed the UAB football program.  USF is 43rd at $443 Million .  That number has increased a lot recently and given their mission and enrollment that number could grow much larger in a few years.  In the same 3 star territory are The University of Illinois-Chicago (~$355M), UC Irvine (~$315M), Hawaii (~$305M), Colorado State (~$295), and IUPUI (~290M).

If Big 12 expansion consists of adding say Houston and Memphis --two schools with non-power conference-level academic and research resumes --- that will not be looked upon favorably by UT in the long term (say about 2023) when the Longhorn leadership next makes their decision on the value of staying in the conference.

4) The conference needs to resolve the Longhorn Network issue in a way that UT can tolerate.

A conference network would allow most members to extract more optimal money out of their tier 3 rights.  The trouble is the Longhorn Network.

The Longhorn Network may be seen as kind of a failure because in effect it has damaged the UT product that fuels it, but UT has a contract and will get paid. Even with a program hobbling around, there is a very good chance UT makes almost $10 Million more a year in TV revenue than TAMU in the SEC.  The LHN has evolved into an arguing point for both rival fan bases to prove their decisions were correct.

The SEC payouts were $31.2M.  The Big 12's TV shares were $25.6M and the Longhorn's TV guaranteed minimum annual TV payout from the LHN was an additional $15M.

Great for UT, not so great for the rest of the Big 12.

In terms of TV revenue, UT's leadership is --- forgive the term --- "fat, dumb, and happy".  The status quo is tolerable with them.  They do not like the scarlet letter the LHN represents, but they are used to the checks and the total revenue has them where they want to be.  Financially they are comfortable and entities that are comfortable are not motivated to change things.

In this mindset, they are not inclined to make financial decisions on expansion specifically with a goal of equally favoring the other members of the conference.  They probably need to be overruled.  UT's leadership will not accept that unless the opposition is lead by OU.  Luckily, OU's president David Boren seems very willing to lead a rebellion today.  Will the rest of the conference recognize that for the gift horse it is and back Boren's play?

The trouble for the Big 12 is that, as long as the LHN exists, the value of a Big 12 network is marginal as there just are not that many TV's in the conference footprint.

The only leverage the Big 12 has with regards to the LHN is the bad PR that comes to UT due to the LHN.  The LHN is a headache a lot of UT fans and administrators would be OK with seeing gone.

5) The conference needs TV sets.

The math is horribly stacked against the ten member Big 12 should they get the Longhorn Network issue resolved.

The conference has statewide fan support in Texas, Oklahoma, Kansas, Iowa, and West Virginia.  There are just under 38 million people in this footprint.  That is only 11.77% of the nation's population.  Even if you (rightly) throw in the population of the Pittsburgh Combined Statistical Area (2,659,937) as supplemental West Virginia territory, that still only totals 12.60% of America.

(And the picture is even more bleak when you consider the projected growth rates of Oklahoma, Kansas, Iowa, and West Virginia over the next 15 years.  While the US is expected to grow by 41 Million in that time period, the Big 12 states outside of Texas are expected to only see a population growth of 164,994 combined!)

For comparison here are the other power conferences...

Conference Total Population % of country
SEC 94,905,563 29.44%
Big Ten 104,148,566 32.31%
ACC 118,043,058 36.62%
PAC-12 66,414,537 20.60%

Now you'll note that the Big Ten, ACC, and SEC are all in that 1/3 of the country's population range.   A part of the computation is of revenue sources with a conference network involves getting a cable carriage fee for states where a member school is located.

You can see that 3 of the five power conferences have similar raw numbers.

The Big 12 is in a huge demographic hole that limits the ways it can generate revenue.

Now the Big 12 Grant of Rights deal expires in about 10 years.  When that occurs OU will look at it's options--- as will UT.

Both like the Big 12, but would consider other homes.

If pressed OU would likely reject the SEC --- OU has had issues with keeping boosters in line and has no real desire to revisit that --- and the ACC --- no local in-conference opponents makes it a no sale with OU boosters.  There is also little indication either of those conferences would also take Oklahoma State, which would very much simplify an OU move.

Rival Nebraksa is in the Big Ten and the academics are top notch. While OU's leadership likely thinks Big Ten membership would strongly hurt their recruiting in a similar manner as it has Nebraksa's,  it would be tough for OU to turn down an offer with Kansas to join the Big Ten, should one be made.

OU clearly would like to be in the PAC, but so far the PAC is unwilling to take Oklahoma State unless Texas comes along.  Now if the PAC invited OU and Kansas, you might see the Big 12 Grant of Rights tested early --- legalities and state politics be dammed.

UT's new leadership allegedly looks upon PAC membership less favorably than previous regimes.  Their preference appears to be the status quo.  

Should OU leave for the PAC however, I think the odds are UT would go with them.

UT boosters will never allow UT to follow little brother TAMU into the SEC.  The ACC was looked on very favorably by DeLoss Dodds and likely some in the administration share those views, but I think the boosters --- like OU's boosters --- would not support a proposed schedule full of ACC schools.

Independence is another discussed possibility that seems unlikely.   The bottom line there is that UT without a conference is just a big gadfly --- more like BYU as an independent than Notre Dame.  An acceptable power conference gives UT power in power conference discussions.

The Big Ten may be this administration's hoped for alternative home, but even with familiar faces like OU mentioned as options, that potential schedule would be resisted by a lot of boosters.   The PAC would also be resisted, but at the end of the day, the southwest and west coast are a lot more culturally similar to Austin.

The PAC may have the upper hand on other power conferences when the GOR is winding up.  The choice may boil down to:

Conference Total Population % of country
PAC w/UT & OU 96,662,032 29.99%
Big 12 37,949,323 11.77%

When you consider the substantial edge in academics, co-operative research between member universities, total research dollars, and the prestige the PAC owns, returning to this ten member Big 12  or an academically watered down twelve member version would seem an unlikely choice for UT or OU to make.

6) Good basketball is a cash cow.

Basketball fills a conference network TV schedule.  High quality basketball with lots of teams pulls great ratings, sells TV ads, and makes people want to pay for a network.

Additionally, as the old Conference USA and hybrid Big East proved, a conference stacked with good teams will drag up the conference RPI and push conference bubble teams into the tourney netting additional tourney shares.

Being at ten teams with 5-7 tourney caliber teams will not generate as many bubble team tournament invites (and shares) as being at say 14 teams with 9-12 teams playing at tourney level.

In basketball, being big with quality is more lucrative (in terms of NCAA tournament shares) than being small with quality.

Likewise adding teams that do not play at tourney level will drop conference bubble teams out of the NCAA tournament, negatively impacting the bottom line.

7)  Building an understandable conference brand vs. just stringing together markets.

Honestly I do not know if anyone cares about this in Big 12 leadership.   They should.

Having a conference brand has value. It creates the perception of stability.

The US can be viewed as 3 regions of roughly equal populations.   The Northeast quarter, the southeast quarter and the western half.  Where does the Big 12 fit?

The PAC-12 is the conference of the west.  The Big 10 is the conference of the northeasten quarter of the US.  The SEC identity is the southeastern quarter of the US.  The ACC is kind of an overlay, the conference of the east coast. 

Since Missouri left, the Big 12 media-wise is viewed as the state of Texas and some random tiny states to the north.  That has to be fixed.

If the goal is to have a conference that owns the middle of the US, then that goal needs to be addressed pointedly by expansion decisions.  That is not how the Big 12 leaders have thought in the past.

The Big 12 added West Virginia because they wanted a quick commit from a strong athletic program. Although the Big 12 couldn't ask for a school with a better combination of revenue sports, a commitment to athletics, and a devoted and sizable fan base, West Virginia on an island was a horrible add for the Big 12 in terms of conference identity.

Louisville was the correct choice and one the conference leadership should have waited for because from a fan's or booster's perspective, Louisville was a much better fit geographically, demographically, in terms of conference recruiting, and frankly they were better athletically.

If the Big 12 could have a do-over, they might very well have chosen a larger expansion ----something like Pitt, WV, Cincinnati, and Louisville.  That could have been a sensible expansion that included WV, but WV on an island has unintended costs.

Adding Cincinnati because WV is isolated, stinks of trying to fix one mistake by making another mistake.

Likewise adding BYU on an island cheats the conference of most of the benefit of adding BYU.   There are Mormons all over the western US.  If BYU is the only add west of Lubbock, the Big 12 misses most of them and BYU will likely be just like West Virginia and Kansas...another Big 12 school that cannot land quality recruiting depth.

The conference needs to re-establish it's identity and that does not seem possible with a 1-2 school expansion.

If the Big 12 adds a pair of random schools that do not fit the geography, like say BYU and UCF or Cincinnati,  UT and OU's leaderships are going to have a tough time selling their boosters the merits of that kind of moth-ridden map of the Big 12 vs. a conference with a clear identity when decision time (2021-2023) arrives.

8) The wants of the other power conferences need to be ignored --- damn the circumstances.

The Big 12 appears to be functioning off the goodwill of their network partners and the desire by the other 4 power conferences to keep total number of schools in the power conferences under control.

The likely Big 12 goals of the other power conferences are not in line with building a financially stable Big 12 conference that UT will want to be in long term. 

In simple terms, every member of the Big 12 has already thrown their University's lot in behind building a conference around UT.  That doesn't mean the other members should defer to UT on decision making --- given UT's comfort level today, I doubt UT's leadership will be leading the charge for the kind of needed larger expansion these points dictate. 

All I am saying is the members schools need to achieve an internal peace with the idea that they all actively bought into UT as their path to power conference checks.  The member schools need to be honest with themselves and build with the question, "How are we going to create a conference that UT and OU want to remain in long term?"

Now again, that doesn't mean just doing what UT says...Forget even the motivations of UT today --- lets call a spade a spade.  The Big 12 under UT's leadership  has shown little understanding of when to expand.  Their expansion leadership has been WAC -level disasterous.

In 2005 the Big 12 was where the SEC is today in the conference pecking order --- oddly ahead of the PAC-12 due to TV revenue.  Being fat dumb and happy and not taking advantage of expansion opportunities has turned the Big 12 into the a new football Big East likely 8-10 years out of falling out of the Power conferences entirely.

The conference members outside of UT need to make big expansion decisions now that UT may not totally support in the short term in order to evolve into a conference that UT will actively want to be a part of in 2023...Because the ten member Big 12 of today or a twelve member version is not going to be that conference in 2023.

9) The TV partners will influence expansion, but they cannot be allowed to dictate teams.

The goals of the TV partners are simple --- to keep control of UT and OU at a somewhat discount rate.  They want little or no expansion.  They have no desire to see the Big 12 become a 14-16 member superconference (with the slight potential of kicking off another round of realignment fueled renegotiations).

TV will push for a big bang/small cost increase expansion if expansion has to occur, but that isn't in the conference's best interest. A two team expansion is not going to fix the demographic deficiencies in the Big 12 that limit the conference's ways to generate future income.

TV will want no expansion or a small expansion, but at the end of the day, history suggests they will pay market rate for whatever the Big 12 ends up being.  OU's president has already pulled back the curtain this year and said that TV has said the Big 12 can go to 12 (it sounds like with pretty much any schools) and TV will pay more money so no Big 12 school's payments will drop. 

It sounds like the TV partners recognize a change to the status quo may be required to keep the Big 12's golden geese healthy.

The TV networks don't have to get the deal they want in order to agree to pay more schools, they just have to get a deal that makes sense.  That needs to be kept in mind.

10) Beyond false pride, there is no reason to offer full memberships to flawed candidates.

The other power conferences would likely frown on football-only or Olympic-only memberships, but they do not operate in the hobbled Big 12. 

Screw them.

UT,OU, KU and the others are in this situation because the other power conferences already screwed the Big 12 by taking a huge chunk of the conference's revenue generating assets.

Offering partial memberships (even possibly temporarily) would certainly maximize the Big 12's ability to dig out of their demographic hole and narrow the gap with the other power conferences.

It makes no sense to offer a useful football candidate an all-sports membership if doing so will drop the conference basketball RPI and move a Big 12 bubble team or two out of the NCAA tournament.  That just costs the Big 12 money for no reason.  Offer them a football-only membership.

The difference between a power conference payout and a non-power conference payout is large enough that any non-power conference school would still take a football-only or Olympic-only membership. 

Assuming a  2/3 to 1/3 split,  football-only membership in the Big 12 would yield annual payments of about $16 Million and basketball-only membership would yield payments around $8 Million.  That still smokes any non-power conference payouts. That means partial memberships can land any non-power conference schools the league wants.

And your network partners are never going to complain about paying $32 Million to land the Big 12 football-only rights to say UCF and Cincinnati or the $24 million to land Olympic rights to San Diego State, UNLV, and BYU vs. $25 Million for the all-sports rights to Houston.

11) If Big 12 expansion hurts the SEC, it is great for Texas and good for the rest of the country.

The SEC mentality may grate me to the core, but there are two things I can't say a word about --- the SEC's finances and their recruiting.

The two gives the SEC schools high end athletes and access to high end coaching.

The finances I honestly feel the Big 12 could match.  The recruiting....that is tougher.

Right now the SEC is playing with a stacked deck.  They may produce 10-12 schools with loads of blue chip talent while the Big 12 produces 1 (UT) and occasionally 2 (OU).

To compete, we need to attack the SEC's recruiting. Big 12 schools that are capable of doing so need to win the battles for those blue chips recruits from those SEC states who are not SEC to their core. The other schools need to do everything we can to weaken their depth. 

That help can come from the most surprising of places.  There are schools (both existing big 12 members and candidate schools) that can be weapons against the SEC if arranged properly.

Membership decisions should strongly consider the potential impact on SEC recruiting.

12) Revenge is OK --- TAMU and Missouri

I think  the Big 12 should not be hesitant to poke former members in the eye if it comes to that.  In fact, if an opportunity presents itself they absolutely should poke them in the eye, as it sends the right message.

Outliers in conferences SHOULD suffer.  That is a great message for all Big 12 schools.

Colorado, Nebraska, Texas A&M, and Missouri each had reasons to leave the Big 12, but at the end of the day, in return for a fat check, they were willing to be a geographic outlier in another conference in order to walk on the Big 12.  They accepted this lot and were willing to prop up another conference by providing them something of TV value, be it a strong TV market or fan base.

They may have paid lip service to caring about the schools left behind, but they still left.

The Big 12 has every right to rebuild.  Should those additions undermine an outlier in another conference....well, realignment is about looking at the bottom line.  Such a thing would probably help the Big 12's bottom line.

Colorado is a program in distress.  In the Big Ten, Nebraska appears to no longer have access to recruit the supplemental blue chippers from out of state that made them a national program.   While these are minor motivations, anything the Big 12 might do to prolong both situations does help Big 12 schools make the playoffs.

Missouri has done well in the SEC.  A&M as well.  TAMU has been recruiting Texas at a level usually reserved for title contenders for the last 4 years.   Any actions that happen to undermine both schools' recruiting and the media attention they receive, could roll back those programs to previous historic levels.

Taking two top 15 level programs off the SEC map would be a big deal.  It would reduce the number of quality playoff warm-up games that Auburn and Alabama would play in-conference and reduce the number of valid playoff candidate schools in the SEC.  This would have a visible benefit for Big 12 schools in making the playoffs.

So how does the Big 12 address all this?

 A 1-2 team Band-Aid expansion is just not going to fix many, if any, of these issues.  It won't play any role in UT's or OU's decisions in 2023 or so.  Given all of these goals, I think it is clear that a larger expansion should be strongly considered.

And that should not be resisted. Every other power conference is already a superconference of 12-14 members at least.  That is also the status quo in the non-power conference ranks.  Those are good number to address your financial goals.

I think it is time for Big 12 schools to get a little angry and take what they need.

The viability of the Big 12 has been actively compromised by the other power conferences repeatedly.  Since when do Texans take that crap?  College athletics is driven by football.

Texas's sport.

Our sport.

Is the state of Texas's role going forth to be that of a pawn to the rest of the country, exporting our talent to prop up other power conferences as our conference erodes in importance?

Adding two schools would be a effete half-measure.  Now is not the time for half-measures.  The next eight or so years is the Big 12's window to save itself.  

Be bold.

My next article will spell out the boldest Big 12 expansion plan I can imagine.

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