Conference Realignment

[RamblinRed]

Bungled opportunities to raid Big 12, passive leadership has Pac-12 on brink with Colorado departing in 2024

The Pac-12 had multiple chances to solidify its membership and grow the conference; instead, it finds itself fighting to stay alive

www.cbssports.com

"It wasn't Oregon and Washington -- the best remaining Pac-12 brands -- that made the move. They may have desire to join the Big Ten, but there's little interest from the nation's richest conference at the moment. "

"Big 12 commissioner Brett Yormark said earlier this month he'd like to cap expansion at 14 teams once Texas and Oklahoma depart. "

"The Big 12 likes to think it is in a fight with the ACC to become part of the Significant Three."

"The industry's economic downturn certainly contributed to the Pac-12 problems. It's doubtful ESPN, which holds 63% of the Big 12's $2.3 billion value, could afford to do that deal today given the company just went through another massive round of layoffs."

Pac-12 plans to 'embrace expansion opportunities' in wake of Colorado's departure for Big 12

The Pac-12 is presently set to have just nine teams in 2024

www.cbssports.com

"While Oregon and Washington are the most prominent programs remaining in the league, potential exits to the Big Ten are unlikely for the programs with the conference not presently considering further expansion beyond 16 teams. Therefore, Arizona, Arizona State and Utah -- the so-called "Four Corners" schools alongside Colorado -- are most at risk of departing the Pac-12."


I'll add one other note. There was reporting a few months back that the ACC looked into PAC schools and the financials did not make sense to try to add any of them. I think that is starting to become the biggest obstacle that has to be overcome in order to move from one P5 conference to another. Any program that wants to move has to add value to the conference that makes up for the additional share. As contracts have escalated that number has increased and we are getting to a point where it makes little financial sense for most of the conferences to add more schools as it is going to dilute the share for the current members.

 

[Roswellgoldmember]

I'll add one other note. There was reporting a few months back that the ACC looked into PAC schools and the financials did not make sense to try to add any of them. I think that is starting to become the biggest obstacle that has to be overcome in order to move from one P5 conference to another. Any program that wants to move has to add value to the conference that makes up for the additional share. As contracts have escalated that number has increased and we are getting to a point where it makes little financial sense for most of the conferences to add more schools as it is going to dilute the share for the current members.

Totally agree but I could see a win/win type opportunity if you are talking about teams moving to the BIG or SEC given the financial disparity between those conferences and the rest where incoming teams agrees to a less than full share of the payouts. Given the gap, it could still be more than they are getting in their current conference.

 

[g0lftime]

When our former prez was prez of the board of NCAA govonors (COLLEGE PREZ) , """he did nothing""" about paying the players as employees He left it to the lawyers.
He did not adjust the number of scholarships by university be final season standing.
Now college sports is wholly dependent on tv money and schools ljke Colorado are scrambling.

The COLLEGE EXPIERENCED acc commissioner thinks that the tv BUSINESS people who are pressed for money ( read disney, espn, etc) will jonor our GOR 12 more years.

For 5 years we better double down on donations, game environment for tv presentation, and KEY better make us us look good on field or we are headed to G5.
The acc is not going to help gt

It was obvious when the group of 7 in the ACC met recently and GT was not included. We were only one of two schools that voted not to change the way revenue is distributed. We are now a nonfactor member of the ACC in terms of influence. Wouldn't bother me at all to see us leave the conference and I live in the middle of tobacco road.

 

[1979jacket]

I agree but I could see a win/win type opportunity if you are talking about teams moving to the BIG or SEC given the financial disparity between those conferences and the rest where incoming teams agrees to a less than full share of the payouts. Given the gap, it could still be more than they are getting in their current conference.

I could see the day we have tiered payouts
emeber
Class V - Big fan followings and top 10 team
Class IV - Big Fan following
Class III - Marginal fan base but strong team
Class II - Long time member of conference
Class I - New conference member

This is crude but it sends the message. The same payout for each member policy is on the way out - I am sure of that.

 

[RamblinRed]

Totally agree but I could see a win/win type opportunity if you are talking about teams moving to the BIG or SEC given the financial disparity between those conferences and the rest where incoming teams agrees to a less than full share of the payouts. Given the gap, it could still be more than they are getting in their current conference.

This has never made much sense to me when you think it through.
So you moved to a 'higher money' conference and are making more money than you were in your previous conference - but you are actually at a bigger financial disadvantage than if you stayed put.
You are no longer really competing against your 'old' opponents. You now have new opponents who are getting more media revenue than you are, unlike the current situation where you are getting the same revenue, (and likely getting more non-media revenue than you as well - as most are larger schools). So in raw terms you are making more money, but in adjusted terms you are actually making less relative to your primary competition.

So you move up in terms of dollars but the odds are high that you become less competitive.

This of course doesn't even account for any exit money you have to pay to make the move. The ACC has both an exit fee and the GoR to deal with. The exit fee by itself is over $100M and then the value of the GoR is effectively the media payment on each remaining year. Everything can be negotiated, but the ACC really holds the leverage, not the programs and the conference would likely be starting in the $500M range before negotiations begin

 

[Techster]

It was obvious when the group of 7 in the ACC met recently and GT was not included. We were only one of two schools that voted not to change the way revenue is distributed. We are now a nonfactor member of the ACC in terms of influence. Wouldn't bother me at all to see us leave the conference and I live in the middle of tobacco road.

GT just needs to start winning again. It's funny to see other fans talk about GT on Twitter...they think we're a horrible program. While it's been true the last 4 seasons, they ignore the previous 30 seasons. VT fans are especially brutal when it comes to GT. Their fans are internet jockeying to join the B1G, and think all it takes is winning and a large fanbase and talking down about GT. I don't think they understand it will be the B1G university presidents that will ultimately decide. B1G presidents have multiple other factors they weigh. The heights of Beamer ball has passed for them.

GT will always have the biggest advantage of any ACC school in terms of market and potential to impact for a league. There's a reason why the B1G is keeping tabs on GT (and invited us in 2013), and why GT continues to be mentioned with the SEC. There's always the caveat that "GT is not a good program", but that's up to GT to fix.

AT the end of the day, whether GT stays in the ACC or moves to another conference will ultimately be in our control. If our administration invests in our program, and it looks like they are, and GT wins 7-10+ games a year for the next decade (which is achievable for GT), there will be a place for GT in the B1G (and possibly the SEC...though that's a smaller chance).

 

[ThatGuy]

Totally agree but I could see a win/win type opportunity if you are talking about teams moving to the BIG or SEC given the financial disparity between those conferences and the rest where incoming teams agrees to a less than full share of the payouts. Given the gap, it could still be more than they are getting in their current conference.

Tiered payouts seem like a likely thing to come to most conferences, based on stature and other factors. But that aside, I agree with both this and the sentiment you were responding to.

That being said, I think we're seeing it confirmed now that it's all in the timing. The Pac 12's extended media negotiations are evidence that the time to get a blockbuster media rights deal was years ago, when the Big10 and SEC locked in their deals. Pac 12 is now trying to negotiate with an ESPN that's on the ropes (layoffs and bad balance sheet, largely having to do with overpaying for certain media rights during the "land grab" that happened over the past few years). This puts the Pac in an awful place, as there's no money to pay them a competitive rate.

TL;DR - we're in a period of media contraction right now, after our lengthy expansion phase. Media companies are realizing they overpaid for many rights deals - likely including the SEC and Big 10 - and they're not willing to overpay again on optimism like they did before.

The reason Colorado is able to go to the Big 12 and get a full share payout is because the Big 12's commissioner negotiated it into the contract that all new teams get a pro rata share of the contract. I imagine most other conferences don't have that clause - so even if the Big 10 wanted to add someone, there might not be a financial incentive to do so, as given the contraction, they may see a decline in or close-to-flat payouts at the next media rights deal time anyway.

All of which is to say, to your point, incoming teams might agree to less than a full share of the payouts, sure. But if the BIG isn't expecting to significantly grow revenue in their next contract round due to the cooling media rights situation, I don't see them being keen on adding more teams (as most conference members aren't willing to take a decreased payout "for the sake of the conference").

If an addition doesn't immediately add an additional large market ($50MM+/yr revenue) to a conference, it likely won't make financial sense. In this climate, a team has to be able to pay its own way, likely from day 1.

Which. incidentally, brings us back to GT. Once the GOR expires, I can still see Tech making a compelling case, given the dynamics of the Atlanta market. But it remains to be seen if the value of linear TV will be the same at that point. A lot can happen with streaming in 10-12 years.

 

[CEB]

Tiered payouts seem like a likely thing to come to most conferences, based on stature and other factors. But that aside, I agree with both this and the sentiment you were responding to.

That being said, I think we're seeing it confirmed now that it's all in the timing. The Pac 12's extended media negotiations are evidence that the time to get a blockbuster media rights deal was years ago, when the Big10 and SEC locked in their deals. Pac 12 is now trying to negotiate with an ESPN that's on the ropes (layoffs and bad balance sheet, largely having to do with overpaying for certain media rights during the "land grab" that happened over the past few years). This puts the Pac in an awful place, as there's no money to pay them a competitive rate.

TL;DR - we're in a period of media contraction right now, after our lengthy expansion phase. Media companies are realizing they overpaid for many rights deals - likely including the SEC and Big 10 - and they're not willing to overpay again on optimism like they did before.

The reason Colorado is able to go to the Big 12 and get a full share payout is because the Big 12's commissioner negotiated it into the contract that all new teams get a pro rata share of the contract. I imagine most other conferences don't have that clause - so even if the Big 10 wanted to add someone, there might not be a financial incentive to do so, as given the contraction, they may see a decline in or close-to-flat payouts at the next media rights deal time anyway.

All of which is to say, to your point, incoming teams might agree to less than a full share of the payouts, sure. But if the BIG isn't expecting to significantly grow revenue in their next contract round due to the cooling media rights situation, I don't see them being keen on adding more teams (as most conference members aren't willing to take a decreased payout "for the sake of the conference").

If an addition doesn't immediately add an additional large market ($50MM+/yr revenue) to a conference, it likely won't make financial sense. In this climate, a team has to be able to pay its own way, likely from day 1.

Which. incidentally, brings us back to GT. Once the GOR expires, I can still see Tech making a compelling case, given the dynamics of the Atlanta market. But it remains to be seen if the value of linear TV will be the same at that point. A lot can happen with streaming in 10-12 years.

Woah... can you clarify the B12 comment? Did you mean the B12 negotiated that new teams come in at the same rate as existing teams? Essentially, everyone they bring extracts another $35m (or whatever their figure is) from their media partner? That’s crazy!

I agree on the contraction and also add that the size of the conferences are playing a large factor now. It’s hard for any school to move the needle enough for a net positive effect on 14-15 existing members... regardless of whether or not the media market is slowing.

I don’t think unequal rev is the answer... at least not in terms of establishing tiers within the conferences. keeping your own postseason appearance bonuses seem reasonable and I could see conferences bringing new members on a partial payout for a period of time to insure current members don’t take a cut. Establishing tiers within the conferences seems destructive and kind of goes against the notion of being a member...

 

[Roswellgoldmember]

This has never made much sense to me when you think it through.
So you moved to a 'higher money' conference and are making more money than you were in your previous conference - but you are actually at a bigger financial disadvantage than if you stayed put.
You are no longer really competing against your 'old' opponents. You now have new opponents who are getting more media revenue than you are, unlike the current situation where you are getting the same revenue, (and likely getting more non-media revenue than you as well - as most are larger schools). So in raw terms you are making more money, but in adjusted terms you are actually making less relative to your primary competition.

So you move up in terms of dollars but the odds are high that you become less competitive.

This of course doesn't even account for any exit money you have to pay to make the move. The ACC has both an exit fee and the GoR to deal with. The exit fee by itself is over $100M and then the value of the GoR is effectively the media payment on each remaining year. Everything can be negotiated, but the ACC really holds the leverage, not the programs and the conference would likely be starting in the $500M range before negotiations begin

I was primarily thinking of teams who view themselves as national competitors like Oregon/Washington to the BIG or FSU/Clemson to either the BIG or SEC. Teams that have traditionally done very well within their conference and have competed nationally but will eventually fall way behind their competition from the BIG/SEC.

 

[slugboy]

Woah... can you clarify the B12 comment? Did you mean the B12 negotiated that new teams come in at the same rate as existing teams? Essentially, everyone they bring extracts another $35m (or whatever their figure is) from their media partner? That’s crazy!

I agree on the contraction and also add that the size of the conferences are playing a large factor now. It’s hard for any school to move the needle enough for a net positive effect on 14-15 existing members... regardless of whether or not the media market is slowing.

I don’t think unequal rev is the answer... at least not in terms of establishing tiers within the conferences. keeping your own postseason appearance bonuses seem reasonable and I could see conferences bringing new members on a partial payout for a period of time to insure current members don’t take a cut. Establishing tiers within the conferences seems destructive and kind of goes against the notion of being a member...

The Big 12 has 4 pro-rata slots in their contract—up to 16 teams. Colorado uses 1.

Yes, the payout grows proportionally. I believe it’s for P5 teams—not sure about the UCFs and Cincinnati’s.

 

[Oldgoldandwhite]

I would like to see us, FSU, Clemson, and Miami in the top 10 on a regular basis. Then let the chips fall where they may. Let’s make our own destiny.

 

[ThatGuy]

Woah... can you clarify the B12 comment? Did you mean the B12 negotiated that new teams come in at the same rate as existing teams? Essentially, everyone they bring extracts another $35m (or whatever their figure is) from their media partner? That’s crazy!

As @slugboy pointed out, yep - 4 slots. They foresaw the need to expand to 16, or at least give themselves the space to do so. Pretty strong move.

Further interesting downstream consequences:

I agree on the contraction and also add that the size of the conferences are playing a large factor now. It’s hard for any school to move the needle enough for a net positive effect on 14-15 existing members... regardless of whether or not the media market is slowing.

I don’t think unequal rev is the answer... at least not in terms of establishing tiers within the conferences. keeping your own postseason appearance bonuses seem reasonable and I could see conferences bringing new members on a partial payout for a period of time to insure current members don’t take a cut. Establishing tiers within the conferences seems destructive and kind of goes against the notion of being a member...

I agree on unequal rev being a bad thing. And yet, that seems to be where certain programs want to go. Many of them seem to be blatantly ignoring how transient success can be. Florida State is my favorite - they seem to still think of themselves as a top-tier program, in spite of the last 10 years. As we all know, you can go from first to worst pretty quickly, if the wrong decisions are made.

Given how so many are ignoring that fact (including ESPN, who's been voting UGA the preseason #1 for 20+ years now), it's easy to see the "perception versus reality" situation that's currently in play. I'm hopeful that reasonable minds will prevail, and not let the self-anointed "blue bloods" try to build a moat around their success by guaranteeing themselves higher payouts.

Will be interesting to see how it shakes out.

 

[RamblinRed]

FWIW, the B12 media rights deal did have a pro rata clause but it has some stipulations.
First, it only applies to P5 schools. So it applied for Colorado, but would not for any of the G5 schools. Remember, the 4 new schools outside of Colorado are not getting full shares the next 2 years. (They get $18M this year and $19M next year)
Second, the pro rata only applies to its contract with ESPN, FOX did not agree to it. ESPN has 63% of the rights and Fox 37%. So if they are giving Colorado a full share it means money has to be coming from elsewhere (i'm betting it is coming from the money they received from TX and OK to leave one year early - that was nearly $100M).

One other note. The B12's media deals and GoR are both up in 2030-2031.

On to a couple of other articles.

Why Big 12 luring Colorado back from Pac-12 is just a short-term solution with larger issues on the horizon

Colorado's return to the Big 12 is more of a bandage than a long-term solution

www.cbssports.com

Big 12 expansion candidates: Pac-12's 'Four Corner' schools lead potential additions after Colorado's move

The Buffaloes opened the door to Big 12 membership, but will more may follow in the near future

www.cbssports.com

 

[CEB]

As @slugboy pointed out, yep - 4 slots. They foresaw the need to expand to 16, or at least give themselves the space to do so. Pretty strong move.

Further interesting downstream consequences:





I agree on unequal rev being a bad thing. And yet, that seems to be where certain programs want to go. Many of them seem to be blatantly ignoring how transient success can be. Florida State is my favorite - they seem to still think of themselves as a top-tier program, in spite of the last 10 years. As we all know, you can go from first to worst pretty quickly, if the wrong decisions are made.

Given how so many are ignoring that fact (including ESPN, who's been voting UGA the preseason #1 for 20+ years now), it's easy to see the "perception versus reality" situation that's currently in play. I'm hopeful that reasonable minds will prevail, and not let the self-anointed "blue bloods" try to build a moat around their success by guaranteeing themselves higher payouts.

Will be interesting to see how it shakes out.

Could not agree more... especially with the “blue blood” programs insulating themselves further via unequal revenue.

Big 12:

 

[stinger 1957]

Stinger, being an OSU alum and having followed the Big 10 for over 50 years. Here is what I see.

Delaney, Warren and even the current Commissioner have said that the Big 10 ALWAYS is looking at expansion and expansion possibilities. At the introduction of the new commissioner, the President of Illinois said that expansion was not off the table BUT a pause to integrate USC and UCLA into the Big 10. They have said many times that they do not want to leave USC and UCLA on an island. But want to work out the logistics of a west coast pod/group (USC/UCLA are part of that experiment).

It has been reported many times what schools the Big 10 has vetted (believe GT is in this camp and has been favorable). Oregon, Washington, Cal and Stanford have all been vetted. Just a matter of the pecking order and what each school brings (and how do you fund it without the rest of the Big 10 having reduced payouts).

Currently, from various sources, the various networks are tapped out on funds. How much more can they get and what windows may be available. It has been reported, that Fox wants to add Washington and Oregon to the Big 10, but again an issue of funds is brought up (supposedly there is an escalation clause in the new contract if there is expansion). Can they squeeze out more money from CBS & NBC? The Big 10 Presidents (reported) are split on expansion. And the Big 10 is big on consensus.

And as reported, any new members might come in at a discount. In the past it was less than what current Big 10 members were earning BUT more than what they were receiving in their old conference, until the next contract.

With the current situation in the PAC (death of), it might open up expansion. The Big 10 does not want to be responsible for the death of the PAC but may want to come in and pickup some pieces . The next several weeks should be interesting how this plays out.

Just my 2 cents.

I like your 2 cents just because it makes a lot of sense to me and also some of it matches up with other info I've heard, just your info adds things I had not heard. There is something besides the AAU requirement that seems at this point obvious to me and that is their desire to go to really good media mkts, or maybe better said the larger media mkts. That seems to be a dominant underlying factor in where the Big 10 wants to go with their expansion. I heard your OSU Pres and/or AD make a point of the largest media mkts that the Big 10 was already in, so it sure appears to be important. It was interesting to me that the last round of invites by the AAU (which I see as being very political group with the Big 10 schools pulling a lot of weight) had CFB schools in what I perceive as very desirable media mkts in 4 of their 6 invites, Miami, S FL ( Tampa, Clearwater, St Pete, Sarasota) ND, and ASU ( Phoenix ) Thanks for your input.

 

[stinger 1957]

I could see the day we have tiered payouts
emeber
Class V - Big fan followings and top 10 team
Class IV - Big Fan following
Class III - Marginal fan base but strong team
Class II - Long time member of conference
Class I - New conference member

This is crude but it sends the message. The same payout for each member policy is on the way out - I am sure of that.

"The same payout for each member policy is on the way out - I am sure of that."

Think this will be a big, big mistake for CFB and could end up destroying it. Seems like the NFL faced something similar in their past and did not do it and many today feel it saved and went on to allow the NFL to become as successful as it has become. Every team cannot win 75% of their games every year within a conference, some have to lose, appears to me you want it to allow itself to get moved around amongst the teams over the years.

 

[billga99]

"The same payout for each member policy is on the way out - I am sure of that."

Think this will be a big, big mistake for CFB and could end up destroying it. Seems like the NFL faced something similar in their past and did not do it and many today feel it saved and went on to allow the NFL to become as successful as it has become. Every team cannot win 75% of their games every year within a conference, some have to lose, appears to me you want it to allow itself to get moved around amongst the teams over the years.

I am sure you are right on equal payout being on the way out. However, that should not be a fixed contract amount difference. It should be based on success. So give football teams a bigger split of a bowl/playoff amount, basketball based on how far they get in the tournament, etc. Maybe give 50% (or whatever is the right amount) of the actual payout to the school who is successful and the remainder goes into the general ACC pot. That means teams who strive for success get rewarded. But I am very against any formula which provides different payouts regardless of on the field success. The GOR TV money is not dependent on anything other than being part of the ACC, so why should that be skewed in any manner?

 

[orientalnc]

I believe the ACC is safe in the changes to the distribution of post season money because it's not a significantly large amount and any school could collect a share.

However, I bet a change to distribute media payouts in any manner other than equally will result in a breach of agreement lawsuit. If the conference can reduce a school's share by 10% they can reduce it to zero.

 

[1979jacket]

"The same payout for each member policy is on the way out - I am sure of that."

Think this will be a big, big mistake for CFB and could end up destroying it. Seems like the NFL faced something similar in their past and did not do it and many today feel it saved and went on to allow the NFL to become as successful as it has become. Every team cannot win 75% of their games every year within a conference, some have to lose, appears to me you want it to allow itself to get moved around amongst the teams over the years.

I really don't have an opinion. I just think it will happen. How it affects us is probably negatively but it is going to happen. I think it would be better if it was variable.

 

[1979jacket]

I believe the ACC is safe in the changes to the distribution of post season money because it's not a significantly large amount and any school could collect a share.

However, I bet a change to distribute media payouts in any manner other than equally will result in a breach of agreement lawsuit. If the conference can reduce a school's share by 10% they can reduce it to zero.

That may well be true. I was thinking longer term when the next agreement is made.