Posts Tagged ‘Maryland to the Big Ten’

I don’t exactly have a perfect record of predictions on this blog (as evidenced by the regular stream of friendly visitors from TexAgs that still remind me of what I wrote about Texas A&M and SEC expansion a few years ago), but one big picture issue that I understood from day one (meaning literally right when it was announced in 2006) was that the Big Ten Network would be a massive game changer for the conference and college sports overall. What others saw as vanity project destined to fail compared to the SEC’s then-traditional TV deal with ESPN, with the harshest criticism coming from Big Ten country itself, I looked at as the platform to turn the Big Ten into the New York Yankees of college sports financially. Many sports fans look at the BTN as shooting fish in a barrel money-wise now, but a lot of them have collective amnesia about how much criticism the network took in its first year of existence (including Tom Izzo publicly calling it a “PR nightmare”) and beyond when the SEC signed what was a then-large guaranteed deal with ESPN in 2008. Even when the Big Ten initially announced that it was looking to expand in 2009, many commentators didn’t bother taking into account how much the BTN would drive the process. If it wasn’t clear with the addition of Nebraska (which, despite its small market, could effectively have the BTN charge whatever it wanted to games and Husker fans would pay up), it was blatantly obvious with the expansion with Rutgers (New York/New Jersey market) and Maryland (Washington, DC/Baltimore market).

So, I can imagine how satisfied Big Ten commissioner Jim Delany and the rest of the conference officials must feel with the BTN on the precipice of capturing the great white whale of college sports: the New York City market. According to the Star-Ledger, BTN has entered into deals with Time Warner Cable and Cablevision for basic cable carriage of the channel in the NYC area (with discussions with Comcast moving along well). That means every the BTN (and by, extension, every Big Ten school) is going to receive a significant chunk of change from each Time Warner Cable and Cablevision basic subscriber covered under the deal. (Awful Announcing had a back-of-the-napkin calculation of at least $48 million per year for the Big Ten just from this single carriage deal, although that likely overstates the immediate impact since it doesn’t take into account Fox’s 51% ownership interest in the network and various expenses. Still, this market represents tens of millions of dollars per year for the Big Ten solely based on the BTN.) The skeptics of whether Rutgers would pay off for the Big Ten (myself included) are about to eat crow. This was the financial end game for the Big Ten when the expansion process began nearly 5 years ago: the addition of a massive market the size of either Texas or New York for the BTN. The Texas Longhorns weren’t willing partners on the former, so the Big Ten moved onto the latter.

Frankly, the fact that the BTN was able to negotiate a deal this quickly (several months before football season starts) in any part of the New York DMA was surprising (and bodes very well for the Washington and Baltimore markets where Maryland has a stronger sports presence compared to Rutgers in the New York area). Cable and satellite industry consolidation (the ongoing regulatory approval process of the Comcast acquisition of Time Warner Cable and AT&T’s newly announced deal to acquire DirecTV) is likely in the backdrop, while BTN co-owner Fox has the ability to leverage its cross-ownership of YES (and there isn’t much more powerful programming in the NYC market than Yankees games).

Now, no one should be naive enough to believe that this cable TV money train will run into perpetuity. Cord cutting is on the rise and that will likely continue to accelerate among non-sports fans that can get their programming fixes from online sources such as Netflix, Amazon Prime and Hulu. However, sports are still the killer app when it comes to live TV, which is why NBC/Comcast signed yet another expensive long-term extension of its Olympics rights that will last until I’m close to retirement age in 2032. Meanwhile, the Big Ten itself is gearing up to go to market with its first tier sports rights (with the new contract starting for the 2016 2017 football season) and will almost assuredly sign what will be the largest TV deal in college sports history without even including BTN money in the equation.*

(* For what it’s worth and this is strictly my semi-educated guess, but I believe that the Big Ten will end up with a split of rights between ESPN and Fox similar to how the Pac-12 and Big 12 deals are structured. It makes sense from the exposure and financial perspectives, while ESPN and Fox have clearly shown a willingness to partner with each other on large deals. The latest example of this is the recently-announced MLS/US Soccer deal with ESPN and Fox splitting the rights.)

With the Midwest having a lower proportion of the US population each year**, the East Coast has become a critical focus for the Big Ten out of necessity. The recent announcements of the Big Ten/Big East basketball challenge and the awarding of the Big Ten Tournament to the Verizon Center in Washington, DC in 2017 are important pieces to the league’s Eastern strategy, but the BTN carriage is definitely the clinching factor in all of the B1G plans.

(** Note that this different than the gross misnomer of the Midwest “losing population” that is often perpetuated in the national media, which simply isn’t true. What’s occurring is that the Midwest’s growth is much slower than other regions of the country. Granted, the legacy populations of places like Illinois, Ohio and Michigan are still extremely large to the point where it would still take many years, if not decades, for smaller faster growing states to catch up to them.)

(Image from CBS Chicago)

About these ads

When it comes to conference realignment-related lawsuits, every school that has left a conference has attempted to claim that it owes nothing in exit fees. In turn, every conference has attempted to claim that the defecting school owes every single penny. Ultimately, though, it’s all a dance to get to a settlement (as is the case in 99% of all lawsuits as a general matter) and the parties invariably meet somewhere near the middle.

As a result, Maryland’s new counterclaim filed on Monday against the ACC (see the full complaint here) needs to be viewed through that prism. Maryland is now claiming that the ACC is liable for $157 million, which reflects treble damages for allegations of anti-competitive behavior (which we’ll get to in a moment). The ACC’s original claim states that Maryland owes the entire amount of the $52.2 million exit fee that the conference passed a couple of months prior to the Terps defecting (although Maryland and Florida State voted against it). The reality is that Maryland doesn’t truly believe that the ACC is going to pay $157 million and the ACC doesn’t truly believe that Maryland will pay the full $52.2 million exit fee. It’s just that they can’t say anything less along those lines in court or public or else they’ll lose a massive amount of leverage.

The headlines for the counterclaim focus on two tantalizing allegations that the ACC (1) attempted to recruit 2 Big Ten schools after Maryland announced that it was leaving and (2) received “counsel and direction from ESPN” on expansion targets. Now, my semi-educated guess is that these allegations are blowing some fairly mundane conversations out of proportion. Conferences are constantly recruiting schools, as the Big Ten has done quite a bit over the past several years. The word on the street is that Penn State was definitely one of the Big Ten schools that was contacted, while Northwestern appears to be the most likely other target. Note that Maryland stated that the ACC did not recruit any schools west of the Mississippi River (which was a distinction to bolster their argument that the “relevant market” that needs to shown in antitrust cases was as limited as possible and that the ACC had market power in such market), so it looks like the ACC didn’t want to go after Minnesota, Iowa or Nebraska.  Regardless, the fact that representatives from Wake Forest and Pittsburgh* attempted to recruit Big Ten schools in and of itself doesn’t mean very much other than showing that there’s no limit to John Swofford’s hubris. Pitt’s president calling up Penn State’s president with a “Want to join the ACC, bro?” inquiry and quickly getting rebuffed is a recruitment on paper, but it never went anywhere. The real test is whether there was any evidence of reciprocal interest (i.e. the Big Ten entering into confidentiality agreements with multiple ACC schools besides Maryland in 2012) and Maryland didn’t present anything to that effect.

(* It’s not surprising that Wake Forest and Pitt were chosen as the schools to put out feelers because they are probably the last two schools from the ACC that would garner any interest from the Big Ten. Now, that doesn’t mean that there’s anything wrong with them, but rather they are the two schools that do the least to fill what the Big Ten specifically would be looking for in expansion. Wake is a small enrollment undergrad-focused private school that shares its state with 3 other schools with larger fan bases, while Pitt is the only ACC school that is located in a current Big Ten state and wouldn’t bring any new markets to the table. Everyone else in the ACC would bring in a new TV market and recruiting territory to the Big Ten at a minimum putting aside any academic and cultural fit issues.)

At the same time, ESPN’s “counsel and direction” isn’t unique to the ACC. While I have seen a number of people try to argue today that the ACC is an “ESPN property” while the Big Ten is a “Fox property”, this belies the fact that ESPN’s top college football package still consists of the Big Ten’s first tier rights, the Big Ten continues to receive more money from ESPN than the BTN even under an older pre-sports rights boom contract, and Disney will very likely be paying a monster amount (as in the largest contract in college sports history) to retain those rights sooner rather than later (which is a topic for another day). The reality is that ESPN is having these types of conversations with everyone. If the ACC lobs in a call to Bristol and asks whether they’d be willing to pay more if they added Penn State, they’re probably giving an honest affirmative answer. Likewise, if anyone thinks that Jim Delany and the Big Ten didn’t have the exact same conversations with ESPN about what they’d be getting if Maryland and Rutgers joined (the latter being the old Big East that had all of its rights owned by ESPN), then that’s a serious case of naivete. That doesn’t mean that ESPN is actually directing conference realignment decisions, although it highlights the substantial conflict of interest that ESPN has by having so many contracts with a multitude of competing parties.

Separately, it appears that the quote of former Boston College AD Gene DeFilippo in Boston Globe after the ACC added Syracuse and Pittsburgh, where he says, “We always keep our television partners close to us. You don’t get extra money for basketball. It’s 85 percent football money. TV – ESPN – is the one who told us what to do. This was football; it had nothing to do with basketball,’’ will probably live on in infamy for the foreseeable future in conference realignment lawsuits. Granted, my belief is that the quote is taken a bit out of context where the emphasis that DeFilippo was likely trying to get across was that ESPN was telling conferences that football was worth more than basketball as a general matter as opposed to providing actual membership directions, but it shows that the public will pounce on any hint of meddling from Bristol because they want to believe that ESPN constitutes the Conference Realignment Illuminati behind every move.

For all of the lawsuits, mudslinging and public posturing, we’re probably going to see the ACC and Maryland end up splitting the baby in a settlement in relatively short order. Absolutely no one involved – Maryland, the ACC, the Big Ten, ESPN – wants anything to do with this matter going to trial. A year ago, I thought that this would settle for between $25 million and $30 million, and that still seems to be the likely outcome from my standpoint.

(Image from Fansided)

For the past year, I’ve been pointing out that conference realignment really hinges on three primary schools: Texas, Notre Dame and North Carolina. The first two are fairly obvious to football-focused fans, but UNC is really the true lynchpin to the ACC. So, it was interesting to see the emails that were circulated within the UNC leadership ranks in the wake of Maryland’s defection to the Big Ten last year that The News & Observer procured. Here are some key excerpts and my thoughts:

Emails to and from Cunningham, the UNC athletic director, reflect the uncertainty that fans, boosters, administrators and Cunningham himself shared in the days after Maryland announced its decision to leave the ACC. Financial concerns drove the speculation surrounding conference realignment. According to Maryland, those concerns also drove it out of the ACC.

Hours after Maryland announced its move, Sports Illustrated posted a story on its website that detailed how much more money Maryland would make in the Big Ten. The first paragraph read: “The University of Maryland stands to make nearly $100 million more in conference revenue by 2020 with its switch from the ACC to the Big Ten. …”

Martina Ballen, the Chief Financial Officer of the UNC athletic department, emailed the link to Cunningham and UNC’s associate athletic directors. She included a short note: “Wow! Big $$$ if this is accurate.”

***

Other emails Cunningham received expressed shock that Maryland would leave, and they questioned whether the money in the Big Ten was that much greater than in the ACC. One came from Cappy Gagnon, a longtime Notre Dame athletic department employee who retired in 2011.

“I don’t get this one,” Gagnon wrote to Cunningham, who started his college athletic administration career at Notre Dame. “Maryland is going to be nobody in the Big Ten, with zero natural rivals and long travel. Is the money from the Big Ten Network that much greater than the ACC TV money?”

Cunningham’s response: “Yes. Likely $20 (million)/yr by 2017.”

This was one of the more surprising points in the sense that there seemed to be a genuine lack of knowledge among top level people of how much more of an advantage in TV money that the Big Ten had (and continues to have) over the ACC. That wasn’t something isolated to UNC – recall that University of Maryland President Wallace D. Loh stated that he was “stunned” at the Big Ten’s financial projections and didn’t realize the extent of the financial disparities between conferences until going through realignment discussions. It would have been one thing if these were average sports fans just focused on on-the-field results, but it’s quite amazing that university leaders and athletic department officials didn’t seem to be as informed on college sports financial matters as, say, most of the people reading this blog or those that followed the reporting of mainstream media members like Brett McMurphy of ESPN.com, Andy Staples of SI.com and Dennis Dodd of CBSSports.com. It’s an indication of the insularity of many universities and athletic departments and partially explains why the inertia in favor of the status quo is often stronger than many conference expansionistas would like to believe. What we’re seeing is that it takes a real external crisis for the vast majority of power conference schools to take notice of the information that’s out there and consider switching leagues. (Note that this thinking doesn’t apply to the “Group of Five” non-power conference schools, who are going to be continuously and unabashedly actively looking for greener pastures.)

Cunningham had no shortage of input. A steady stream of emails from alumni, fans and boosters began on Nov. 20.

The notes came from everywhere: from people who graduated from UNC in the 1960s, and those who graduated in the past few years. Former athletes wrote in. There were Rams Club members. And emails from fans who had no tie to the school other than their allegiance.

One came from an Army major who wrote of how he’d followed UNC athletics throughout deployments in Afghanistan and Iraq. He expressed concern about a conference move and wrote, “I will always love Carolina, but my fervor towards our athletic programs would die a rapid death should we choose to enter the BIG TEN.”

The emails – many coming after UNC fans on the message boards at InsideCarolina.com organized a push to fill Cunningham’s inbox – shared roughly the same sentiment: Lead the Tar Heels out of the crumbling ACC, to a better place. The overwhelming majority of fans preferred moving to the SEC. Among the more than 150 pages of emails that Cunningham received in the 10 days after Maryland’s announcement, only one email favored joining the Big Ten.

This isn’t a shock that UNC fans preferred a move to the SEC over the Big Ten, as many purely sports-focused fans are generally ignorant or dismissive of the desire of university presidents to tie academic prestige to athletic conferences along with the TV dollars involved. As I’ve stated in previous posts, this plays to the ACC’s advantage in terms of retaining UNC: Tar Heel fans want a Southern-based athletic league, but university leaders care much more about being with their academic peers and maximizing revenue. So, the ACC provides the right balance of being Southern-focused (unlike the Big Ten) and having academic prestige (more so than the SEC).

And so it went, day after day. The most dire speculation was that Florida State and Clemson might also leave for the Big 12. The possibility came up in communication between Cunningham and Dean Jordan, an ACC consultant who specializes in TV rights contracts.

Jordan, who works for the Wasserman Media Group, worked closely with Swofford and helped convince Florida State and Virginia, among others, that the grant of rights agreement would help secure the ACC’s future. Jordan also discussed with ACC schools the possible benefits of developing a TV network devoted to ACC coverage.

Back then, in the days after Maryland’s announcement, Jordan was like everyone else, trying to figure out whether Florida State might actually leave. In an email to Cunningham on Nov. 21, Jordan wrote:

“FSU’s life won’t greatly change in the Big 12. The Big 12 TV deal is pro-rata for any new member and their TV distribution is only about $1 (million) more than the ACC. The Big 12 is going to take in $13 (million) more in BCS money – around $1 (million) per school.

“So for $2 to $3 (million) bucks, FSU is going to go through the trauma of switching leagues?”

The Wasserman consultant crystallized what I had always thought about the prospect of Florida State and Clemson going to the Big 12: it just didn’t make sense when you just took a step back and saw what was involved. The Big 12 might have had the advantage in pure on-the-field football performance over the past several years, but that league is a paper tiger in off-the-field conference realignment discussions compared to the ACC and other power conferences. Florida State might have used discussions (or the rumors of discussions) with the Big 12 as leverage to get an audience with the SEC and Big Ten, but the Seminoles were never seriously considering actually joining the Big 12.

Cunningham didn’t just receive emails from interested colleagues and panicking fans. On Nov. 25 – six days after Maryland announced its move – former University of Cincinnati NCAA faculty athletics representative Frederick Russ wrote Cunningham in hopes of bolstering support for Cincinnati.

Russ and Cunningham spent time together days before at the Maui Invitational in Hawaii.

“As I mentioned in Maui, I’ve been hearing all kinds of rumors about which schools the ACC might seek to add, and I wanted to let you know why I think adding the University of Cincinnati to the ACC would benefit the conference and both UNC and UC,” Russ wrote, before listing his reasons.

The ACC, though, already was finalizing its plan. Less than two weeks after Maryland announced that it would be leaving for the Big Ten, the ACC on Nov. 29, 2012 announced that it was replacing Maryland with Louisville. About five months after that, the conference had secured a grant of rights agreement, which effectively put an end – at least for the foreseeable future – to speculation and rumors that were never more prevalent than in the days that followed news of Maryland’s impending departure for the Big Ten.

Give Cincinnati credit for this: that school has been tireless in getting its message out for conference realignment purposes and taking nothing for granted. To be honest, I didn’t even really consider Cincinnati to be a viable ACC candidate in the immediate aftermath of the Maryland defection, but they managed to at least shoehorn themselves into the conversation when all was said and done (despite the fact that Louisville was ultimately chosen). Being aggressive in and of itself isn’t going to change a school’s position in conference realignment, but with the insularity among university and athletic department officials that I described above, taking every opportunity to highlight successes and future facilities plans (particularly in football) to the right people is critical. Louisville (Cincinnati’s competition) did just that over the past couple of years and went from being a marginal ACC candidate and possibly being left out of the power conference picture completely to grabbing the last spot in the ACC against formidable athletic (at least in basketball) and academic competition (UConn). Keep an eye out on Cincinnati when (not if) the Big 12 inevitably comes to the conclusion that it needs to expand.

All-in-all, the UNC emails highlighted the consternation that school officials and fans feel in times of conference realignment instability. As much as people like me are interested in the topic, I can certainly understand that no one in a leadership position likes dealing with periods of high stakes uncertainty. That being said, UNC is one of the few schools that is legitimately in control of its own destiny – both the Big Ten and SEC would take them in a heartbeat. The worst case scenario for the Tar Heels is that they are forced to join a league against their will that is wealthier and more powerful than the ACC itself. A fellow ACC school like Wake Forest, on the other hand, would feel quite a bit differently in the face of a conference collapse (just as Baylor, Iowa State, Kansas and Kansas State feared back in 2010 and 2011 with the Big 12 defections and UConn, Cincinnati and USF feel today in not being able to escape the then-Big East (now AAC). Schools will continue to place quite a bit of value on stability even if there is the possibility of larger dollars elsewhere.

(Image from Now I Know – It’s Gotta Be the Shorts)

As expected, the Big Ten has officially added Rutgers as its newest member. (See the start of the Rutgers-Big Ten relationship above.) When looking back at the last 3 years of conference realignment, Rutgers is vying with Utah and TCU for the title of being the biggest beneficiary of the constant earthquakes, which I’m sure is particularly sweet for Scarlet Knight fans that were on the precipice of being the largest loser in the process after Syracuse, Pitt, West Virginia and Notre Dame left the Big East. Prior to today, the only schools that were members of the six original BCS AQ conferences (Big Ten, Big 12, the old Pac-10, ACC, SEC and Big East) when the current postseason system began in 1998 and hadn’t moved to one of the five “new” contract bowl conferences (Big Ten, Big 12, Pac-12, ACC and SEC) were Rutgers and Temple… and Temple had such a horrible football program that it was kicked out of the Big East even after Miami, Boston College and Boston College defected to the ACC in 2003. (The Owls rejoined the Big East as a full member this season.) In a way, conference realignment hasn’t necessarily been about expansion for individual leagues, but rather consolidation of all of the power schools from six “chosen” leagues into five. Rutgers moving to the Big Ten completes that consolidation process.

I’ve already spent some time in yesterday’s post addressing what the additions of Rutgers and Maryland mean to the Big Ten along with the possible reactions from the ACC and Big 12. So, let’s address some of the latest news and rumors flying around the country:

(1) Louisville might be the target for the ACC instead of UConn – Andy Katz of ESPN has indicated that “Louisville is a serious player to bump out UConn” for the 14th spot in the ACC. My bet would still be on UConn taking that last spot because of the academic, geographic and cultural fits with the ACC, but you never know if there might be a radical change in the mindset of that conference in the wake of a defection. Louisville has certainly done everything right as an athletic department over the past few years, yet let’s not forget that UConn isn’t exactly a competitive slouch, either. Both the Connecticut men’s and women’s basketball programs are at the elite level and the football program (as down in the dumps as it might be today) won the Big East and was in a BCS bowl only 2 years ago. As a result, I believe that there’s a bit of an overstatement in what seems to be a widespread belief that Louisville is far ahead of UConn athletically (as that’s colored by the “What have you done for me lately?” thinking of how well Louisville is doing today in football specifically compared to UConn). To be sure, the addition of Rutgers to the Big Ten certainly demonstrates how much TV markets matter. If the athletic departments at Louisville or Connecticut were able to swap locations with Rutgers, they would have been picked up by power conferences long ago and we wouldn’t be having this discussion.

(2) Big 12 Observations – Barry Tramel of The Oklahoman has been looking at Big Ten expansion from the Big 12 angle, where he states that Louisville’s chances of getting into that league have improved. I agree with his assessment that the ACC’s loss of Maryland doesn’t mean that Florida State and Clemson (or other ACC schools) would end up bolting to the Big 12 and how he sees Louisville as the main realistic option. Now, I doubt that the Big 12 would add solely Louisville as school number 11 as he suggested (as the Big Ten staying at 11 schools with Penn State for so long was mainly based on the belief that Notre Dame was destined to be team number 12), so BYU and Cincinnati should get ready to polish off their resumes.

(3) BYU, Boise State and San Diego State Speaking with the Mountain West? – Last night, Brett McMurphy of ESPN reported that BYU, Boise State and San Diego State were having conversations with the Mountain West about re-joining (or in the cases of Boise State and San Diego State, not leaving) the conference. My knee-jerk reaction is that this makes no sense at all. Even if the Big East ends up losing Rutgers, UConn and Louisville, the remnants of that league would still likely cobble together enough to make substnatially more TV money than the current CBS payout of $800,000 per year per MWC school. BYU is even farther ahead with its independent TV deal with ESPN.

There was one plausible rumor out there that at least made a tiny bit of sense as to why this could happen. Essentially, BYU could be speaking with the Mountain West about joining as a non-football member with a Notre Dame/ACC-type deal where the school would remain independent with a partial MWC football scheduling arrangement (to aid BYU with late season scheduling). That could be enough to (a) spur Boise State and San Diego State to ditch its Big East obligations and stay in the MWC and (b) open the MWC TV contract back up for negotiation where that league could end up with revenue on par (or maybe better) than the remnants of the Big East.

I don’t quite buy that rumor (as I still don’t believe the TV dollars add up), but once again, you just never know with conference realignment these days.

(4) What does the Big East do? – Well, this could get somewhat ugly. At the very least, the Big East is going to have to replace 2 members (Rutgers and 1 of Louisville or UConn) out of the current 13 football schools in or about to be in the conference, might have to replace 3 members, or could even lose 5 of them (if Boise State and San Diego State get an MWC deal as described above). The good news is that even the worst case scenario, the Big East would survive as a conference with 8 members. There won’t be a case of schadenfreude in favor of, say, Conference USA where they will start picking off Big East schools. The bad news is that the already slim pickings for the Big East get reduced even further, as BYU (who I never believed would end up in the Big East even before the latest realignment news occurred) is completely off the table and, if the Mountain West becomes relatively strong again, there isn’t too much value to found in expansion candidates from Conference USA or the MAC. East Carolina is perpetually brought up as a Big East candidate since they have a solid fan base, but they’re a small market victim of the TV market-driven economics of conference expansion. Beyond ECU, there are schools such as Tulane (great academics and market, but needs a lot of help athletically), Rice (ditto and overlaps with Houston’s market), UMass (excellent geographic fit and a rare Northeast flagship school, yet only moved up to the FBS level last year), Marshall (will always be the #2 team in an already small West Virginia market)… I think that you get the idea.

The Big East’s main hope is that they only lose Rutgers and one other school. If either Louisville or UConn is still in the conference, that will make a world of difference in terms of the Big East trying to sell itself to the TV networks.

Of course, just when so much of the talk on Monday revolved around how much money was being made in college sports, Division II Chaminade went out and convincingly defeated Texas, the most powerful and richest athletic department in the country that can single-handedly control conference realignment, in basketball. (I did not witness this monumental upset since I was watching the NFL Division II level offense of the Bears get pummeled by the 49ers. Let’s hope my Illini don’t suffer a fate similar to Texas against Chaminade later tonight.) It’s a reminder that money will only take you so far – schools still have to prove it on the field or court of play.

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

(Image from ESPN)

From the moment that the Big Ten announced its intentions to expand three years ago, my attention immediately focused upon “What would be best for the Big Ten Network?” as what would be most critical.  When I kept seeing the media speak about rivalries, geography and on-the-field competitiveness as opposed to the BTN, I wrote the “Big Ten Expansion Index” post as a business-focused response that brought a lot of new readers to this blog (including many that are still commenting here today) since it came to the then-provocative conclusion that it was Texas (not Notre Dame) that would be the conference’s top target.

One of those readers ended up determining the Big Ten’s way of thinking better than anyone.  Back in April 2010, when massive conference realignment was still in the speculative stage and nothing had actually occurred, a reader named Patrick, who is long-time television industry veteran, sent in an analysis of how much various Big Ten expansion candidates would be worth to the Big Ten Network.  He went beyond simply looking at market sizes and cable subscriber fees and took into account fan intensity (which translates into the ability to charge higher cable subscriber fees in specific markets), national TV value and advertising rates.  In no surprise, Texas finished at #1.  However, look at who were the next three highest ranked schools after the Longhorns:

CANDIDATES TOTAL ADDED REVENUE ESTIMATE
 
Texas $101,369,004
Rutgers    WITH NYC $67,798,609
Nebraska $54,487,990
Maryland $50,818,889

Well, on the heels of the Big Ten inviting Nebraska a couple of years ago, Maryland has agreed to join the conference and Rutgers will likely be announced as a new member on Tuesday.  As a result, it turns out that we can proclaim Patrick as the Nate Silver* of Big Ten expansion.  As you can see from that post, most of my takeaways from Patrick’s analysis at the time were more Armageddon-like (particularly with respect to Notre Dame) and completely wrong (as I had assumed that the ACC wasn’t poachable), but his calculations did convince me that Nebraska, in spite of its small market, was going to be a lock for a Big Ten invite over anyone else (and that turned out to be correct several months later) since that Rutgers number was (and still is) much more speculative and it was crystal clear that the Cornhuskers would be more valuable than the other standard candidates mentioned at the time such as Missouri and Pitt.

(*Speaking of Nate Silver, it’s interesting to look back upon this piece that he wrote about conference realignment last year in the New York Times.  The data inputs that he used might be a bit flawed compared to the polls that he leveraged for the 2012 Presidential election, but it shows at least the argument as to why the Big Ten would look to add Rutgers.)

Essentially, the Big Ten executed a two-pronged strategy with its expansion: get a marquee football program at the national level (Nebraska) as a headliner and add top academic flagships at the regional level (Maryland and likely Rutgers) for depth.  As much as fans want every expansion move to be as sexy as adding Nebraska, the reality is that pretty much all of the conference realignment moves in the power conferences were about depth as opposed to headlining.  Texas A&M being added by the SEC was probably the best pure football move from a fan perspective in the last three years outside of the Big Ten expanding with Nebraska, but even then, the draw of the Aggies was predominantly about the SEC getting into the state of Texas for TV purposes (as they will likely have their own conference network coming together sooner rather than later).

The notion of a “Midwestern conference” is over for the Big Ten just as the notion of a tight Southern-based conference has long been over for the ACC ever since it decided to add Boston College (along with Miami and Virginia Tech) in 2003.  As Teddy Greenstein noted in the Chicago Tribune, the addition of Rutgers and Maryland is a long-term play for Jim Delany and the Big Ten driven by demographics.  Arguably, the Big Ten has been in the worst position of any of the power conferences when looking at long-term population trends, as the SEC, Pac-12, Big 12 and ACC all have large presences in fast growing Southern and/or Western states.  The additions of the states of Maryland and New Jersey mitigate that a bit while still not going completely expanding with geographic outliers.  It also doesn’t hurt that these are both recruiting rich states (at least by Northern standards) for football and basketball.  For the Big Ten fans that bemoan the loss of “Midwesterness”, the demographic makeup of the league was legitimately something that had to change regardless of the presence of the Big Ten Network or TV dollars.  Maryland and Rutgers may not be very exciting additions in 2014, but they’ll be extremely important for the long-term health of the Big Ten in 2024 and beyond.

With respect to those TV dollars, as I stated in my post on Saturday, I unequivocally believe that Maryland can deliver the Washington, DC/Baltimore region for the Big Ten Network (and when I say “deliver”, I mean basic carriage at a high “Big Ten footprint” subscriber rate as opposed to the sports tier and/or lower out-of-footprint rate).  That’s why this expansion hinged upon Maryland accepting since they are considered to be a sure thing business-wise.  The real all-in bet for Jim Delany and the Big Ten, though, is with the addition of Rutgers.  Judging by the media commentary and Twitter reactions, there is a healthy skepticism out there about whether Rutgers has the ability to deliver the New York City market, which I agree with at a certain level and have pointed out on this blog numerous times.  This is definitely not a slam dunk by any means.

However, I also don’t believe the Big Ten is naive enough to think that it is just about Rutgers alone delivering that market.  Instead, the conference is likely banking on the immediate geographic presence of Rutgers combined with the large number of other Big Ten alums living in the New York City metro region (particularly from Penn State, Michigan and newly-added Maryland) to gain just enough traction to make it viable.  If you have read Malcolm Gladwell’s “The Tipping Point”, the Big Ten is betting that the network effect of Rutgers being added to all of the existing Big Ten alums in the Tri-State area will have a greater impact than Rutgers alone (or Rutgers combined with the various past and present members of the Big East).  I’m not saying that this will definitely work – this is big-time risk for a conference that isn’t known for big-time risks.  The main point is that this move is not just about what Rutgers alone can deliver in the New York City market, but rather what Rutgers plus all of the other Big Ten fans in that region can deliver just enough there.  No one in the Big Ten is expecting New York sports fans to follow college football like people in Birmingham – the percentage of fans that need to be interested in college sports in that market for the conference to garner the value it needs there is much lower than anywhere else.

Some other thoughts:

  • As much as a lot of people have pointed out the “cultural differences” and geographic distances between Maryland and the rest of the Big Ten, this is a fairly mild change on those fronts by conference realignment standards.  In terms of being a large research institution with excellent academics, Maryland fits in very well with the Big Ten as a school.  At the same time, Maryland won’t exactly be sticking out like a sore thumb in the league, especially with Rutgers being added at the same time and Penn State being in a contiguous state.  This is nowhere near the cultural and geographic differences between West Virginia and the rest of the Big 12 or the current-football-setup-that’s-about-to-change in the Big East.
  • Despite my belief that Maryland would have been foolish to turn down an invite from the Big Ten, I still continue to think that the ACC is stronger than people give it credit for.  The fact that Maryland is leaving doesn’t mean that it’s going to spark an exodus from the ACC overall, particularly with respect to never ending speculation that Florida State and Clemson would consider jumping to the Big 12.  There are two key differences between the Maryland situation and the Florida State/Clemson scenario: (1) outside of money, Maryland is moving to conference that it still fits into as an overall institution without insane geography issues, whereas FSU and Clemson have no real connections at all to the Big 12 and (2) when looking at the money, Maryland is going to receive a LOT LOT LOT more of an increase in TV rights fees by moving to the Big Ten than FSU and Clemson would receive in the Big 12.  Pete Thamel from Sports Illustrated pointed out that the Big Ten is anticipating $30 million to $35 million per school per year in just TV money when it enters into a new deal in 2017… and this appears to be a low end estimate that assumes that there won’t be full BTN carriage in markets covered by Maryland and Rutgers.  (If the Big Ten Network can get a full in-market rate in the NYC and DC markets, then those numbers are going to go up even further.)  The current ACC contract with ESPN that runs through 2027 will pay out an average of $17.1 million per school per year, which means that Maryland is looking at a 100% increase in TV rights money as a conservative estimate.  Contrast this with Florida State and Clemson, where they’d be looking at a bump up to $20 million per school per year in the Big 12’s national TV deals plus whatever they’d be able to garner for third tier TV rights locally.  That’s not an insignificant amount of money, but likely not enough considering that there would be much worse cultural and geographic headaches compared to the Maryland move that will yield far more revenue for the Terps.  Therefore, my semi-educated guess is that the ACC doesn’t lose anyone else in the near-term.
  • Assuming that what I just said about the ACC only losing Maryland holds true, I continue to firmly believe that UConn is going to end up as the Terrapins’ replacement.  From a pure football and even overall athletic department perspective, Louisville is probably the better choice for the ACC, but the league is still one that considers institutional fit and academic profile as being extremely important factors in expansion.  Connecticut is in alignment with the ACC on such factors in a way that Louisville isn’t and, when looking at the ACC’s long-term vision, the Huskies match what the league is looking for in terms of getting into the Northeast as much as possible.  The network effects that apply to Maryland/Rutgers/Penn State for the Big Ten can also apply to UConn/Syracuse/Pitt/Boston College (albeit that’s effectively going back to the old Big East).
  • That leaves Louisville likely praying for the Big 12 to get antsy.  Chip Brown of Orangebloods has stated that the Big 12 isn’t looking to move off of 10 teams for now and I tend to believe him in the short-term.  However, as much as we parse objective TV revenue and demographic data in conference realignment, there’s also a subjective psychological element of “bigger means better” that has been permeating throughout the land.  So, let’s say that it’s about a 60% chance that the Big 12 doesn’t expand within the next few years and a 40% chance that it goes up to 12 (with Louisville being the top target, BYU likely getting consideration, and schools like Cincinnati and USF begging to get in).  That’s up from a 90/10 split prior to the latest Big Ten expansion news, so we’ll have to keep an eye on the Big 12.  (As I’ve noted earlier, I still don’t buy any ACC schools moving to the Big 12.  If anything, it wouldn’t shock me if Texas goes independent and strikes a Notre Dame-type deal with the ACC by the end of this decade.)

The crazy thing is that we’ve only touched the surface here, as the likely defections of Rutgers and Connecticut will leave the Big East searching for new members once again (or maybe preventing Boise State and San Diego State from heading back to the Mountain West or the Catholic non-football members from splitting).  Assuming that Rutgers announces that it’s accepting an invitation to the Big Ten tomorrow, I’ll have more on what the Big East can and/or should do at this point along with the trickle down effect on all of the other conferences.

Until then, welcome to the Big Ten, Maryland!

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

(Image from Testudo Times)

The University of Maryland Board of Regents has accepted an invitation to join the Big Ten.  Rutgers might be soon to follow.  I’ll have some further thoughts later today, but for now, here is an open thread to discuss the latest conference realignment news.

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

(Image from University of Maryland)

What started off as a few rumors on random local radio shows earlier this week has turned into full-blown national news: the Big Ten is speaking with Maryland and Rutgers and could be expanding as soon as next week.

As Dan Wetzel pointed on in his column on the latest news, this isn’t a no-brainer move for the Big Ten on the level of adding Nebraska (or schools such as Notre Dame or Texas).  However, I believe that it ultimately makes sense overall (especially the addition of Maryland).  The timing of the move is a bit curious just as I was surprised by the timing of the SEC adding Texas A&M (and subsequently Missouri) last year, but the additions of Maryland and Rutgers fit what Big Ten commissioner Jim Delany stated was one of the long-term objectives of the conference’s original expansion exploration announced three years ago: making sure that the Big Ten keeps up with the changing demographics of the United States for next several decades. There is only going to be so much growth in the Big Ten’s base of the Midwest (although the “decline” of the region is often overstated by many non-Midwesterners that often just think of the classic Rust Belt images in Michigan and Ohio while ignoring the fact that the Chicago, Minneapolis and Indianapolis areas have more diverse economies and are growing well population-wise), so that can affect the long-term attractiveness of the conference’s members in recruiting all types of students, whether athletes or valedictorians.

To be sure, it also doesn’t hurt to have a massive amount of potential television revenue tacked on from the Big Ten Network getting onto basic cable in the Washington/Baltimore and New York City media markets.  This is certainly where Maryland clearly adds financial value to the conference: there is no doubt in my mind that the Terrapins have enough pull to get the BTN into homes in their home state plus DC (and probably Northern Virginia on top of that).  While I agree with Wetzel that Washington is a pro sports town, it’s more of a place like Chicago (another pro sports city) where, with the addition of Maryland, there will be enough of a critical mass of Big Ten grads for the conference to claim that market for TV purposes.  Plus, while there has been so much focus on football in conference realignment because that’s what the national TV networks such as ESPN and Fox are throwing out massive contracts for, basketball is actually fairly important to the BTN specifically in terms of leverage against cable operators for basic carriage.  As a result, Maryland’s strong basketball program and fan base are key factors here despite some struggles on football field for the past few years.

The risk for the Big Ten is more with the addition of Rutgers.  Obviously, there’s enormous potential value in having a large public institution that plays directly in the New York City metro area.  That market has been the Holy Grail for several difference conferences, but that’s because it has been so tough to crack.  In sheer numbers, the NYC area has a large number of Big Ten grads along with legions of Rutgers alums, but percentage-wise, there is nowhere near the market penetration that Illinois and Northwestern plus the other Big Ten schools provide for the Chicago market or USC and UCLA plus the other Pac-12 schools provide for the Los Angeles market.  As a result, I tend to agree more with Wetzel’s line of thinking with respect to Rutgers more than Maryland.

What the Big Ten is banking on is that the combination of Rutgers, Penn State, Maryland and Michigan (along with bringing in marquee schools such as Ohio State and Nebraska into town) is going to drive interest for the casual sports fan in New York and New Jersey.  Jim Delany and the powers that be in the Big Ten must have finally gotten comfortable with the belief that this combo is going to work or else they wouldn’t be pulling the trigger on the move.  This is a conference that doesn’t take chances with its membership ranks because it doesn’t need to.

As a pure football move, Maryland and Rutgers won’t move the meter like Nebraska, but I’d say that from a market value perspective, this is a better expansion than the ACC with Syracuse and Pitt (the non-football addition of Notre Dame is a different comparison) and the Pac-12 with Utah and Colorado.  The SEC got the best combo of on-the-field football value and off-the-field market with Texas A&M (while Missouri, which has a good market itself, got the benefit of being school #14 for a league that needed another school that wouldn’t take away revenue).

Some other thoughts:

  • There have been few non-ACC people that have argued about the strength of the ACC off-the-field more than I have over the past couple of years, so that’s why I was very hesitant to jump full-bore on Maryland to the Big Ten rumors that started earlier this week.  This was a move that myself and many other conference realignment aficionados had long thought was possible and looked good on paper, but questioned how willing Maryland was going to be in leaving a stable conference that it founded.
  • The $50 million exit fee that the ACC instituted back in September when Notre Dame joined as a non-football member is certainly a deterrent for Maryland to leave, but we have learned in conference realignment that no one has ever turned down a conference upgrade because of an exit fee.  These types of exit penalties inevitably get negotiated down to lower figures.  At the same time, it’s doubtful that Maryland (whose athletic department is about as solvent as Greece) will have to pay that exit fee out-of-pocket.  The Big Ten might front some of that money and deduct an amount from Maryland’s conference earnings for several years.  (This is what the Big 12 is doing with West Virginia.)  So, $50 million might sound like a lot, but the reality is (1) that number will likely end up being much lower and (2) someone other than Maryland itself is probably going to be paying a lot of that in the beginning.
  • What I didn’t ever buy was the popular fan-based thought that Maryland wouldn’t join the Big Ten because it was a “basketball school”.  Please take a look at the top 5 of both the AP and coaches polls this week for evidence about how asinine of a position that is when looking at conference decisions.  At the same time, unless you’re a legit basketball blue blood (Duke, UNC, Kentucky, Indiana, Kansas and UCLA), the best way to have a top tier basketball program in the modern era is to have a massive amount of football revenue to pay for it.  Florida, Ohio State and Texas have shown the way on this front over the past several years and the trend is only going to increase further with the latest moves in conference realignment.  To paraphrase what Jim Calhoun stated a couple of years ago, the best decision for your school’s athletic department is whatever is the best decision is for your school’s football program.
  • Speaking of Jim Calhoun, the athletic department that he largely brought to prominence at UConn will likely end up being the largest beneficiary out of the Big Ten’s expansion outside of Maryland and Rutgers themselves.  UConn is unequivocally next in line to get an invite into the ACC, so if Maryland really does end up leaving one spot open there, it’s there for the taking by the Huskies.  The only way that UConn doesn’t end up in the ACC at this point is if the Big Ten pulls an even greater surprise and takes two ACC schools, in which case I could see that conference staying at 12 all-sports members.
  • On the flip side, Louisville is probably the school most damaged by this Big Ten expansion.  When looking purely at the Cardinals athletic department, there is no doubt that it belongs in a power conference.  However, the academic requirements of the Big Ten and ACC have always meant that they would never seriously consider Louisville, while the SEC has never had much incentive to add that school since it already has that state covered by the University of Kentucky.  Louisville essentially has to hope that the Big 12 is going to get skittish with this latest move by the Big Ten and that they can’t stand pat at 10 members.  From a personal standpoint, I believe that Louisville deserves better because that athletic department has truly done everything right over the past few years.

All in all, Maryland and Rutgers going to the Big Ten is a solid off-the-field move for the conference in the long-term even if it won’t be sexy on-the-field (outside of lacrosse) in the short-term.  For the rest of the college sports world, conference realignment chaos is back in effect.

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

(Image from WBAL)