The Big XII's New Math

by Benjamin Domenech on 6:14 am June 15, 2010

Texas

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I’m curious to learn the details of the financial package put together to save the Big XII — essentially, it appears a conference that has always been hamstrung by its uneven revenue sharing agreement is surviving by making it even more uneven. According to Yahoo Sports and Orangebloods, the eleventh-hour deal comes thanks to “a promise from Big 12 commissioner Dan Beebe of a new cable television deal with Fox.”

Split up among fewer schools, that deal is expected to net almost double the conference’s current deal with Fox, paying the Longhorns somewhere in the neighborhood of $20 million per year while still allowing Texas to form its own, all-Longhorn network, an option it probably wouldn’t have in the Pac-10, which favored a conference-wide network on the Big Ten model. (The new Big 12 deal will reportedly pay out an average of $17 million; UT’s share, naturally, will be higher.)

So Beebe is keeping the schools together by predicting revenue will double for everyone thanks to a reworked cable deal with Fox Sports — three schools would apparently get $20M a year in revenue from that deal, while the other seven schools would see $17M a year. Texas would get the cherry on top of their own TV network, and the associated ~$5M in revenue.

But is all this added revenue just thanks to a massively expanded Fox Sports deal? It can’t be that the calculations rely on a bigger piece of the pie from the ABC/ESPN contract — that’s supposed to run through 2016, but just lost about 8-9 percent of its value thanks to Nebraska and Colorado leaving, so that’s basically a wash, a slightly bigger portion of a slightly smaller pie.

There are so many questions to answer: How will Beebe double the revenue for the smaller schools? Why does a rather mediocre A&M program get $20M in revenue from Fox, the same as Texas and Oklahoma? It’s hard to believe that moving from 12 schools to 10 is enough to double the value of the Fox Sports contract — is that value frontloaded, where the deal becomes less appealing in later years? What if they want to add two more schools to get the conference game back? How will a conference with no championship game and an internal competing network for the most attractive program for television be worth double what it was under the prior arrangement? Most of all, why does he think Texas’ rising tide will essentially raise all ships when the addition of a team-only network diminishes the value of the rest of the package — amounting to fewer cable viewers on Fox, not more?

The PAC-10 offer might not have been the right move at the end of the day for Texas, but it’s hard to see how this new arrangement will help the other programs involved. The potential revenue from an annual USC/Texas or similar matchup in a conference championship game in December would’ve dominated the television sets of the South and the West. Instead, the Big XII schools are essentially counting on the success of being a more condensed regional conference. This is cheaper to do, certainly — the costs of travel up and down the West Coast would’ve been tough to bear for, say, Texas Tech — but it also has a lower ceiling. And unless there’s a major revenue source I’m missing, at the end of the day, Beebe may simply be appealing to the fears of the small schools for being left out, and the egos of the larger programs involved by convincing them they will get SEC money based on their own regional fanbases.

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