Archive for June 27, 2010

A couple of weeks after the frenetic events of this round of conference realignment almost fried my brain and then settled down into fairly modest changes to the college landscape, I’m re-charged enough to collect a few overarching thoughts:

(1) Big Ten is Done Expanding Until Notre Dame Changes Its Mind – For all of the talk about demographics, academics and TV markets, the Big Ten’s expansion process has been about three schools: Texas, Notre Dame and Nebraska.  Those are the only schools that the Big Ten really cared about and anyone else would’ve been coming along for the ride.  Now, adding Nebraska alone doesn’t really do much to address the demographic shift of the the U.S. population toward the Sun Belt.  However, the indications that I’ve received are that the Big Ten’s appetite to add any Eastern-based schools such as Rutgers or Syracuse is very low unless Notre Dame is coming along, too.  The financial barrier to enter the Big Ten as team #13 is much higher than Nebraska’s barrier to entry since any schools added from this point don’t receive the benefit of the $15 million pop from the addition of a conference championship game.  Believe me – if the Big Ten was convinced that Rutgers and/or Syracuse could deliver New York/New Jersey households for the Big Ten Network, then they would’ve been added already.  The problem is that they are not convinced and don’t believe that it would ever be possible without Notre Dame.  Other markets, such the DC/Baltimore area that could be added with Maryland, are nice but not necessarily enough to justify a larger expansion.  I’ve long said that it would take the equivalent of adding either the state of Texas or the NYC market in order to make a 14- or 16-school conference financially viable, so you won’t see the Big Ten do anything less than that if it attempts to expand again.

(2) Entrenched Interests Don’t Want Superconferences – Another drag on the prospect of the Big Ten expanding further is what I believe has been a relatively underplayed aspect of the Big 12 Lite (or as some of the commenters have referred to, the “Big IIX”) surviving: a ton of entrenched interests in college football, including ESPN and Fox, worked to killed the formation of the Pac-16.  This actually contradicted a common argument that I’ve seen stating that TV networks actually would rather have superconferences so that they can obtain rights to more marquee schools while dealing with fewer entities.  If the TV networks don’t want superconferences to happen, and they are the ones that provide the financial basis of expanding toward superconferences in the first place, then that’s going to dissuade the Big Ten and other conferences from expanding beyond 12 schools (at least for the time being).

(3) National Brand Value Trumps Local Markets – For all of the talk about TV markets and cable subscriber rates, expansion decisions really came down to a pretty basic calculation: which schools do Average Joe Sports Fan in Anytown USA want to watch?  After Notre Dame and Texas, the consensus has long been that Nebraska fit that bill better than anyone.

I’ve receive a lot of questions about how Nebraska could add financial value to the Big Ten compared to schools like Missouri and Rutgers that could bring in more households on paper.  There are several factors at play here.  First, even though a lot of focus has been on the Big Ten Network, the Big Ten still receives more TV money from its national ABC/ESPN contract than any other source.  The Big Ten Network is really just a very strong supplement to that national TV income as opposed to a replacement, which is something that a lot of people have missed.  Therefore, a school like Nebraska that brings in national TV viewers does much more for the ABC/ESPN side of the equation and seeing how the ACC and Big IIX are in line for larger paydays in their own contracts, Jim Delany must be salivating at the potential increase to the Big Ten’s deals by adding such a strong national brand name AND a conference championship game.

Second, there is the advertising argument that Patrick set forth on this blog a few months ago.  The higher the ratings, the higher the advertising rates can be charged.

Now, there have been a number of questions about that analysis, but it needs to be coupled with the final point, which is that the oft-quoted $.70 per subscriber per month rate for the Big Ten Network in the Big Ten states is an average as opposed to an across-the-board rate.  Cable providers in markets where there is extremely strong demand for the channel, such as Columbus, pay a higher rate than markets where there is weaker demand (i.e. Philadelphia).  So, a lot of fans have made the mistake in assuming that the Big Ten Network could just automatically charge $.70 per subscriber in places like New Jersey, New York and Missouri simply by adding a school in those respective states.  Fan intensity matters, and in the case of Nebraska, the Big Ten will likely be able to charge a higher subscriber rate in the Huskers’ home market than anywhere else.  So, Nebraska’s 700,000 households might be much smaller in number compared to Missouri or New Jersey, but the flip side is that the Big Ten Network can effectively name its price there (i.e. an ESPN-level subscriber rate, which is the highest rate in the cable indsutry) and it will receive it.  At the same time, since Nebraska games will draw more interest within the Big Ten footprint and nationally on DirecTV (where it is on the national basic tier), that positions the Big Ten Network to charge higher rates to its current households in its next round of negotiations.

Please note that there were two schools in the soon-to-be-defunct Big 12 that looked seriously at starting their own networks: Texas and Nebraska.  The former obviously has the households, but the latter’s fan base is so intense that they will pay any price to watch every Husker event.  I’ve seen figures that Nebraska cleared about $2 million for every single pay-per-view game that it has offered, which is an insanely high number for any college football team regardless of the population base along with providing evidence that the Big Ten Network will get a massive subscriber fee in the state of Nebraska.  Therefore, the Big Ten Network isn’t passing up on subscriber revenue in the manner that a lot of people who are just looking a population figures believe.  Besides, Notre Dame is widely assumed to be an automatic money-maker for the Big Ten, but the Irish are also completely about national name brand value as opposed to adding actual markets.  What’s good nationally for the Big Ten is good for the Big Ten Network.

(4) Basketball Doesn’t Matter AT ALL – I think most of us understood that expansion and college sports revenue are football-driven.  However, there was a small part of me that believed that basketball would at least be a minor factor (as evidenced by the fact that I made “Basketball Brand Value” worth 10 points out of the 100-point Big Ten Expansion Index scale).  After Kansas ended up being passed around like a bad doobie and looked like it was Mountain West-bound for the better part of a week, though, it showed that absolutely NO consideration was or will be given to basketball in conference realignment.  Adding Kansas to any league for basketball is akin to adding Notre Dame or Texas for football, yet no one cared.  So, be forewarned if you’re a fan of a “basketball school” that might worry more about saving rivalries with, say, Georgetown or Duke instead of being concerned about how the football program is doing.  Being in the best football conference possible is the only thing that can guarantee overall athletic program stability (even if you think that basketball in a particular conference might be “boring”).

(5) Big Ten Needs to K.I.S.S. With Divisions – The more that I think about it, the more that I’m convinced that the Big Ten needs to just keep it simple with divisional alignment and go with a straight East/West split.  As a reminder, there’s how that would look like:

EAST
Michigan
Ohio State
Penn State
Michigan State
Indiana
Purdue

WEST
Nebraska
Wisconsin
Iowa
Illinois
Northwestern
Minnesota

I know that a lot of the national sportswriters are not in favor of sticking Michigan, Ohio State and Penn State together in the same division, but I’m extremely wary of gerrymandering divisions in a way that could reduce the juice of a lot of natural rivalries.  The main argument for moving Penn State away from Michigan and Ohio State is for “competitive balance”, yet trying to guess what would be the most “balanced” divisional alignment is a losing cause.  The ACC attempted to do this by putting Florida State and Miami into separate division and then blindly drawing the names of the other schools out of a hat.  The football gods voiced their disapproval by not allowing a Florida State-Miami ACC championship game occur even once so far even though the conference clearly jerry-rigged its divisions to do exactly that.  The much-aligned and soon-to-be-defunct Big 12 North was actually the much stronger division in the Big 12 for the first several years of that conference’s existence.  Meanwhile, the SEC was perfectly fine with having Florida, Tennessee and Georgia in national title contention at the same time while in the same division.  With football play on the field being so cyclical, a divisional alignment that creates strong natural geographic rivalries is better in the long-term than trying to force an alignment that looks like a TV executive searching for short-term ad dollars put it together.

Besides, Nebraska is a great anchor for the West division that’s going to draw national TV viewers and fill up stadiums no matter who they are playing.  Wisconsin and Iowa are both top 15 revenue athletic programs while Illinois manages to put together a massive run once or twice per decade and then crush its fan base by horrifically underachieving for 5 years thereafter (rinse, lather and repeat), meaning that it’s more of “national brand” perception of strength in the East as opposed to being a real competitive disparity.  Plus, I don’t think it makes sense for Penn State to be separated from Ohio State and Michigan, which are the two main schools that the Nitanny Lions care about playing (and from a Big Ten perspective, are the matchups that best leverage the conference’s exposure on the East Coast).  As I’ve stated before, the SEC hasn’t had a problem with loaded geographically-friendly divisions before while the ACC has had massive issues with its “balanced” divisions, so the Big Ten shouldn’t think too hard about the division issue.  A logical geographically pure East/West split is the way to go.

(6) Chicago is the Best Home for LeBron (and I’m not just saying that as a Bulls fan) – OK, this doesn’t have to do with conference realignment, but please note that I’ve written more about Bulls trade and free agent rumors than any other topic over the years.  After trading Kirk Hinrich to Washington (which will be effective July 8th), the Bulls can add one mega-star free agent (LeBron/Wade/Bosh) and one “next tier” free agent (Joe Johnson/Boozer/David Lee) outright.  If the Bulls can clear about $3 million more in cap space (which would likely necessitate moving Luol Deng), then they can add 2 mega-star free agents.  I’ve always had reserved optimism about the Bulls being a player in the LeBron James sweepstakes ever since a couple of weeks into Derrick Rose’s rookie season, but the Hinrich trade has skyrocketed my confidence level.  The main argument that the Knicks had other than the lure of New York City was that it could sign 2 max free agents.  With the Bulls now in the position to sign another top-of-the-line player besides LeBron on top of its young nucleus of Rose and Joakim Noah, I believe that Chicago is unequivocally the best pure long-term basketball destination for the King.  The fact that Chicago is a great market is a bonus, yet that doesn’t mean as much as having a substantial upgrade compared to LeBron’s current roster in Cleveland.  Up until the Hinrich trade, I thought it was 60/40 for Cleveland over Chicago in the competition for LeBron’s services.  Now, I believe that it’s flipped around in favor of the Bulls.  Cavs fans are pretty much resorting to emotional home-based arguments for LeBron to stay home and/or thinking that they can just sign-and-trade for a top-line player such as Chris Bosh.  The former is a certainly a factor, but considering that LeBron would make more money if he’d re-sign with the Cavs before July 1st, I don’t believe that the “Cleveland/Akron = Home” angle is going to be dispositive.   As for the latter, a sign-and-trade only works if the free agent target actually wants to move to Cleveland as opposed to signing with New York, Chicago and Miami AND the free agent’s old team actually wants to take back anyone (or more specifically, anyone’s contracts) from Cleveland, which is a lot easier said than done.  If the three-headed GM monster of GarPaxForSonManDorf  is able to land the biggest free agent in the history of free agency (and I don’t think that’s hyperbole), then this blog might have to totally shut down since I really don’t know what I’ll write about without conference realignment discussions or complaints about Bulls management.  Regardless, the course of the entire NBA for the next decade will likely be decided within the next 10 days and I’ll be eating up every tidbit in the meantime.

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

(Image from Mr. Pressbox)