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The Big 12 May Have Their Final Four, But Expansion Hinges On Texas & The ACC

Sources tell us the Big 12 has their final four candidates, but they are still very much undecided on whether or not to expand, and it all hinges on the Longhorns and the ACC.

Getty Images - Peter G Aiken

Every morning I Google “Big 12” and click on the “News” tab. Of course, I see multitudes of journalists, columnists and bloggers writing about the Big 12’s expansion drama, and every one of them has a different prediction.

One respected paper says the Big 12 is just one vote short of the number required to expand (8 votes) with Cincinnati and Connecticut as the leading candidates. Another claims that FedEx will buy the University of Memphis a ticket to Big 12 membership. Yet another recalls West Virginia president E. Gordon Gee’s, who is member of the Big 12’s composition committee, trip to inspect the University of Houston. And, another speculates over Oklahoma president David Boren’s love letter to Cincinnati president Santa J. Ono.

And on and on it goes…

However, if you happen to take notice of such things, you quickly come to the realization that just about every report floating around the internet is somewhat contradictory. Why is that? Why can’t anyone get his or her story straight?

The answer is simple. The Big 12 honestly doesn’t know what it will do, and the majority of information circulating is a product of either leaks from the candidates or a misunderstanding of the process.

The Big 12’s composition committee has three members: David Boren, E. Gordon Gee and Baylor president Ken Starr.  As part of the process the three wise men vet candidates. Part of that vetting process is site visits and reviewing financial documents and other institutional data; both athletic and academic.

By nature, their correspondence with expansion candidates is very positive and complimentary.  That is the unofficial decorum of expansion. You never say no, but you might not say yes.

My point is, don’t buy the hype. The three wise men of the expansion committee can praise a candidate all day long, but what matters is who gets an invitation. Right now, that is nobody, and none of them may ever get their ticket punched to the Big 12.

The cruel fact is that, BYU aside, none of them meet the minimum standards for admission to the Big 12.  None of them add enough value to the Big 12 to be worth the pain of expanding. None increase revenues.

That’s what expansion is all about, increased revenues.  A slight increase in the odds of making the playoffs is nice, but not really important when revenue is the prime motivator.

What many of the reports of Big 12 expansion fail to point out is this: expansion is only feasible with the advent of a conference network and increased revenues. What should be painfully obvious, is that expansion without a network does more harm than good to the conference. Which, means Texas holds all the cards.

A Big 12 network is impossible without the Longhorns’ cooperation, and they are very reluctant to give up their cash cow.

The Longhorns receive about $15 million from ESPN each year for the Longhorn Network. Half of that money goes to the Athletic department, but the other half goes to the academic side. Outgoing president Bill Powers codified that agreement just prior to leaving office in order to thwart Steve Patterson’s attempt to retain all LHN proceeds for the athletic department. The result is that Texas can’t, and has been unwilling to, budge on the Longhorn Network.

Let’s also not kid ourselves, pride and ego are also factors. How many schools have their own network? Also, Texas can’t be seen as giving in to president Boren or Oklahoma, never that.

However, what if Texas can be assured of receiving the same proceeds, or more, as they do with the LHN with the Big 12 network?

Recently Bob Bowlsby told CBS reporter Dennis Dodd that the Big 12 was sitting on top of a gold mine of unrealized revenue. Currently there are 11 football games and 60 basketball games available for tier three rights, which are worth an estimated $75M per year to the conference..

Estimates are that a Big 12 network, with expansion eastward, would eventually be in 50 million cable homes with an average subscriber fee of around $0.50, of which the conference would get a split. How does $150 million per year sound?

Combine right fees and cable fees and the hypothetical total is around $225 million per year. Do the math and be prepared to gasp.

Give Texas $20 million off the top for their sacrifice, and the remaining 11 members bank $18.6 million before expenses.  Even if the Big 12 received only 50% of the $18.6 million the remaining $9.3 million would be in the ballpark of what the Big Ten and SEC bank from their networks.

Keep in mind, those revenues don’t include the Big 12’s share of advertising revenue from the new network, or sponsorship money for what would be a newly minted conference championship game. Nor does it include the percentage of  Big 12 revenues withheld from new members as part of the initiation to the Power Five. If the Big 12 is greedy, it could gradually raise the share new members receive so that they reach 100% just in time to start negotiating a net TV contract.

The math seems to work out, and Texas is aware of this. So, why are they reluctant? Maybe Texas truly doesn’t think any of the candidates available are worthy.

Or, maybe it’s something else?

Maybe, Texas thinks there will be better options available in the near future, and they want to wait and see how the landscape changes over the next year before rushing into expansion with candidates that seem less than perfect.

There is speculation that at least one current member of another Power Five conference is interested in the Big 12. Two events must occur before that school would seriously consider a move though, and the Big 12 directly controls only one of those events.

First, the Big 12 must have a network, and second, ESPN must pass on the ACC network.

The likelihood of the Big 12 poaching a Power Five school is slim, but if the Big 12 is thinking of the possibility, maybe we should too.

The ACC has a grant of rights modeled on the Big 12’s. However, there is something fishy about the way John Swofford and media consultant Dean Jordan met individually with members of Florida State’s board of trustees to purposely circumvented Florida’s public disclosure laws.

We don’t know what promises were made, if any, to FSU, and we don’t know if the ‘Noles can use what was said in those clandestine meetings to wiggle out of the ACC grant of rights. We can assume though, if  ESPN decides to pass on an ACC network, FSU will want out and the Big 12 is their only legitimate landing spot.

Sources within the ACC all agree that the network is must for the ACC, or revenue challenged schools like North Carolina, Georgia Tech and Florida State will be forced to look elsewhere. Each of them also claims the ACCN is just around the corner. Like Vladimir and the weary Estragon waiting in vain day after day for the arrival of Godot.

ESPN owns the rights to the entire ACC inventory. Why should they pay even more for something they’ve already bought? Well, they don’t really have a choice. ACC TV voice Wes Durham explained to Louisville Sports Live that should ESPN not launch an ACC Network by the start of July of this year, then the sports television conglomerate would owe the ACC some more money.

“ESPN has a clause in their contract that if they do not offer a network by July 1 of 2016, they owe the ACC – reportedly I should say – a clause in the contract that requires ESPN to pay the ACC $45 million a year to be divided among its schools,” Durham said.

So why isn’t there a network yet? The reality is the financial risk is too high. Even with being forced to pay an additional $45 million to the ACC. The TV landscape isn’t what is once was, and ESPN’s viewership is not what is was five years ago. Many believe there is a live TV bubble just waiting to burst.

That’s where the Big 12 has the advantage over the ACC. LHN is bleeding money from ESPN, and they are“desperate” to transform the black hole that is the Longhorn Network into the Big 12 Network.

Regardless of the availability of Florida State or any other Power Five program, the Big 12 has an opportunity to solidify the conference and cement their place as a power conference.

The good news is that Texas seems to be open to the upcoming report by media consultants Bevilacqua Helfant Ventures (BHV). They are expected to quantify the revenue potential of a Big 12 network, and the report is expected to have far more impact than Navigate’s playoff analytics. Dollars signs open more eyes than percentage points.

The good news doesn’t end there either. A media industry expert tells me that the potential value of a Big 12 network is unaffected by who the Big 12 adds.  The value of the network is the Big 12 as a whole and would generate more than $225 million a year in new revenue.

That’s why the Big 12’s composition committee continues it’s work in the hopes that pressure from ESPN, and diplomacy, can convince Texas a conference network is in all their best interests, including the Longhorns’.

Now comes the good part, the part that is certain to start a lot of debate.

As first reported by Chuck Carlton of the Dallas Morning News, The Big 12’s composition committee has settled on a final four: BYU, Cincinnati, Colorado State and UCONN. Whispers are that UCF, USF, Memphis and Houston are no longer being considered. Keep in mind this, if the Big 12 expands who they add will be based more on which school can get the needed eight votes, rather than the merit of the individual programs. Merit does not automatically translate into votes, especially when each of the Group of Five candidates have nearly identical metrics. Compromises will be made and the opinions of Texas and Oklahoma will weigh more heavily than others.

Some of the Group of Five candidates mentioned also have factors other than merit working against them. Houston, for example, could never get 8 votes despite the quality and history of their football program. Texas, Texas Tech, TCU and maybe even Baylor would not want the competition from yet another Power Five program in Texas, especially with Houston’s success last year. That doesn’t mean Houston isn’t worthy. It means Houston can’t get the votes for reasons beyond their control.

In the end it may not matter. According to my sources, the Big 12 maybe has five schools solidly in favor of expansion, with three against expansion and two undecided. Texas may never allow expansion under any circumstances, and if Texas votes “no” then Texas Tech and TCU will vote with them.

One thing is for certain: no network means no expansion and that’s the end of this story, and possibly the ultimate end of the Big 12.

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