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Report: Big 12 payout may not go up with expansion

Oklahoma quarterback Jones drops back to pass in Dallas, Texas AP

When the Big 12 reaffirmed its “commitment to 10 members” yesterday during spring meetings, it (rightfully so) drew the scoffs of many. Now in our third straight offseason of realignment talk, no one’s sure who to believe anymore.

But as skeptical as many are about the Big 12′s expansion brake-tapping, there could be a rather important detail that actually supports yesterday’s announcement.

The Big 12′s new TV deal is expected to be finalized within the week — it was the “No. 1 priority” of spring meetings, according to the Dallas Morning News — and the payout to each school on a per-year basis could play an important role in expansion talk. Via Dennis Dodd of CBSSports, there’s a clause within the new deal “that will give any new expansion candidates the same money as the current members (estimated to be at least $20 million per year).”

Dodd continues that “one industry source said that number applies whether the Big 12 invites, ‘Appalachian State or Florida State.’”

Where you could see a concession on expansion from UT is if the Big 12 added two (or four) teams that provided such tremendous value to the league’s new TV deal that the annual payout from first and second-tier rights increased significantly.

Take the additions of Missouri and Texas A&M to the SEC, for example. The Sports Business Journal reported last week that CBS, the SEC’s first-tier rights holder, “wants to pay a prorated increase to its original contract 15-year deal with the SEC (signed in 2008) – and has balked at paying a significant increase because of the additions of Missouri and Texas A&M.” The value of A&M and Mizzou is in the new SEC Network, the soon-to-be third-tier rights partner, because their additions equal more inventory.

The Big 12 doesn’t have a conference network for third-tier broadcasts, and because of Texas’ Longhorn Network, it won’t. So, if more additions don’t equate to more significant payout per school, where’s the need to expand?

That is all assuming, of course, that Dodd is correct and there is no increase in payout for any additions to the Big 12. Clearly, that goes against realignment intuition, and we’ll find out the actual details sooner than later. How the Big 12 responds, combined with Notre Dame’s place in a four-team playoff, will ultimately have the greatest effect on whether or not the Big 12 stays at 10 members.

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9 Responses to “Report: Big 12 payout may not go up with expansion”
  1. weavergm says: May 31, 2012 1:28 PM

    That actually makes sense. ESPN also owns the ACC content, so they have zero incentive to make a deal with the Big 12 that entices them to raid the ACC. That won’t stop Florida State from wanting to leave (if they do) but it might leave them without a place to go.

  2. frug says: May 31, 2012 1:37 PM

    I think it is slightly inaccurate to say that the “payout will not go up with expansion”. Even the 1st and 2nd tier TV rights were merely prorated to keep the payout for current members the same, adding two new teams would allow the conference to resume a championship game which could then be sold to TV networks.

    It would also let the conference get better deals in terms of bowl tie ins which would also increase the conference payout.

  3. deadeye says: May 31, 2012 1:39 PM

    “If true — and I need to stress “if” — that would dampen any incentive for the Big 12 (i.e. Oklahoma and Texas) to expand beyond its current 10-member lineup.”

    ============================

    Your logic is backwards. This is a guarantee that the revenue won’t go down on a per school basis regardless of expansion. In effect, it’s a license to go ACC hunting.

    There are plenty of other reasons for the BIG12 to expand, not the least of which is to firmly establish beyond any doubt that it one of the four power conferences. That point remains debatable (and hence they are vulnerable) as long as they are sitting at ten.

    Additionally, going to twelve would allow them to re-introduce the championship game and garner that revenue. Even though Texas and Oklahoma may not need the cash, that extra income will help prevent other BIG12 universities from wanting to leave. After losing four programs in the last two years that’s an important point.

    And finally, all contracts come to end. If the BIG12 waits until the end of their current contract to expand, it may be too late. If they expand now, the next contract will be even larger than it would have been without expansion. So logically, if teams are guaranteed the same revenue today, and more revenue in the future, expanding today makes sense.

    FSU get ready…

  4. burntorangehorn says: May 31, 2012 2:04 PM

    frug says:
    May 31, 2012 1:37 PM
    I think it is slightly inaccurate to say that the “payout will not go up with expansion”. Even the 1st and 2nd tier TV rights were merely prorated to keep the payout for current members the same, adding two new teams would allow the conference to resume a championship game which could then be sold to TV networks.

    It would also let the conference get better deals in terms of bowl tie ins which would also increase the conference payout.
    ========================
    Bingo. And since the B12CCG does not currently exist, it could represent significant leverage for the conference in the negotiations, as there’s the possibility it could be free to open up bidding for it as an a la carte broadcast item. Of course that’s not true if there’s something in the existing IMG (Disney/ABC/ESPN) or FOX contract about what would happen to B12CCG media rights in the event it returns. I think there’s actually a good possibility that there is such existing language left over, since the conference’s contracts with both IMG and FOX remained intact when the conference went down to eight and then up to ten members.

    Ben–I do think you could be right about the conference’s need to make the pot sweeter for programs that would greatly increase conference value, but that doesn’t necessarily have to come from the first- and second-tier media contract money. Like all conferences, the Big 12 has at least some cash reserves that could pay a sort of “signing bonus.” It could also agree to pay the buyout from other conferences (not unusual, it seems), grant a sweet stipend that’s earmarked to “re-brand” its conference affiliation, put the school at the front of the line for conference tournaments/post-season play, or allocated up-front advances or larger-than-average shares of merchandise royalties for a limited time.

  5. frug says: May 31, 2012 2:21 PM

    Of course that’s not true if there’s something in the existing IMG (Disney/ABC/ESPN) or FOX contract about what would happen to B12CCG media rights in the event it returns. I think there’s actually a good possibility that there is such existing language left over, since the conference’s contracts with both IMG and FOX remained intact when the conference went down to eight and then up to ten members.

    That’s where things get tricky. As part of the 2010 Big XII rescue package Fox agreed to continue to pay the conference for the CCG even though they dropped below the 12 team minimum to hold one, meaning Fox is currently paying the conference $10 million a year for a game that is not being played. The key then is convincing Fox that they are better off paying something like $17 million* for the right to broadcast a CCG than $10 million for the right not to.

    (I picked that number because A) it is right between what the PAC and Big 10 are getting which is likely where the game would be valued on the open market and B) the amount that would be necessary for the convince the current schools it is worth bringing the game back ($17 million a year would be worth an extra $416,000 per team for the current schools)

  6. hillbilleee says: May 31, 2012 3:34 PM

    if they are so dead set to remain at 10 teams, why are they not discussing what to change the conference name to? ? ?

  7. coolhorn says: May 31, 2012 11:47 PM

    A couple of minor notes on Dodds’ story…if he’s right, and everybody w0uld get paid the same, that is no deterrent to expansion by the Big XII. There has been talk of provisions in the TV deal that would increase the per team payout if the conference adds the “right” teams in expansion. Oh, and yes, FSU and Clemson would be considered “right” teams. Nothing is gonna happen on the realignment front until after the Big XII meetings, after the playoff format is set, and until new Big XII commissioner Bob Bowlsby comes aboard. There’s an August 15th deadline for ACC schools to notify that conference if they’re leaving, and IF FSU and Clemson, and any other ACC teams do a deal with the Big XII, it will be done in time for them to meet the ACC’s deadline.

    UT, now OU, and KSU all three have their own networks in one form or fashion, but there has been discussion of creating a single Big XII network for the teams in the conference that don’t plan on doing a network startup. The network, if it were to be developed, would help those teams to market their third tier rights for a reasonable amount of money above and beyond the tiers one and two payouts.

  8. jamietherazorback says: May 31, 2012 11:54 PM

    If you look at the schools who really want in from the ACC (FSU, Clemson) their athletic budgets are in the red. And even though the new contract will bring each team close to 17 million, it will take years to do that. It only goes up 1 million. So FSU could be making 14 million in the ACC this year or atleast 20 million in the Big 12. Even if you add an extra 1.5 million in travel cost, it’s an easy decision to make. I get the feeling the Big 12 only wants 12. And they want Notre Dame as one of the schools. They’ve made that clear. They also made it clear that if they go to 12, they might not want the conference championship game. All that being said, I wouldn’t be surprised if the BIg 12 just added FSU later this year and waited on Notre Dame. IT will be fun to watch

  9. coolhorn says: Jun 1, 2012 8:58 AM

    Anything anybody says about Big XII expansion for the next month is purely speculation.

    That being said, I doubt Clemson will be dismissed as a possible Big XII expansion target. They have a large fanbase, some success in athletics, especially football, and they provide access to an area where the Big XII would like to grow into. They may not be FSU or Notre Dame, but they don’t have to beg their way into anybody’s conference.

    Speaking of the ‘Domers, I can see them doing some kind of alliance with the Big XII that would be mutually beneficial, but I seriously doubt they’ll soon join the Big XII, or anybody else’s conference, unless forced to by the structure of the new championship playoff…and recent record aside, I still doubt Notre Dame gets left out in the cold by their independence…they’re just too big of a national brand.

    I don’t doubt that UT, OU, and maybe one or two others in the Big XII really like the current ten team format. Everybody plays everybody, and there’s no conference championship game to get in the way of a Big XII team making it to the four team championship playoffs. That being said, there’s simply too much money at stake for the conference NOT to expand back to at least twelve teams and reinstitute the conference championship game. I also doubt the conference wants to leave West Virginia on an island long term as the only team back east in the conference. FSU, Clemson, maybe Pitt, and maybe Notre Dame in some capacity would make great traveling partners for the Mountaineers.

    The Irish have both a blessing and a curse when they say “May you live in interesting times.” These are interesting times for the Big XII.

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