Obituaries for the Big 12 conference started pouring in early this month when the University of Nebraska jilted its century-old pals for much more green in the pastures of the Big 10 Conference. The next domino fell a day later, when Colorado decided its future would lie with the Pac-10 Conference.
But, like Mark Twain’s assessment of his own health, reports of the Big 12’s demise were an exaggeration.
Thanks to a diving catch by Commissioner Dan Beebe and his executive team, four South Division schools ended a two-week game of footsie with the Pac-10 Conference by renewing their commitment to the 14-year-old Big 12. Beebe effectively made the case that remaining members would fare far better financially by staying put than they would by tearing the conference apart. His 11th-hour appeal granted the kinds of concessions to the Texas interests—more specifically, the University of Texas—that North Division schools have come to expect and, ultimately, accept.
The issue is one of much more than mere fan loyalty for the Kansas City area: Its proximity to three Division I college football and basketball programs has generated untold millions of dollars for the regional economy. That investment spikes when the conference basketball tournament is at the Sprint Center or when the football championship game is played at Arrowhead Stadium.
One measure of that importance to the region was the attention generated as far away as Washington: “This is good news for research and academic pursuits,” U.S. Sen. Sam Brownback said after the southern schools’ recommitted, “and good economic news for areas like Kansas City, which create good jobs and grow the economy (by) hosting conference events.”
Nonetheless, long-simmering differences between the North and South divisions clearly proved too much for Nebraska and Colorado. But for the schools remaining in the conference, particularly the Kansas City regional institutions of Missouri, Kansas and K-State, the symbiotic relationship works.
The question is, for how long?
No Sudden Event
Almost no one should have been taken by surprise at how quickly the Big 12 moved from a year of record revenues to
the brink of breakup. The forces at work here have been pounding away on the conference’s foundation since Aug. 30, 2007.
On that day, the Big 10 Network made its debut, providing ’round-the-clock programming of all things related to that conference: live and recorded conference games in football, basketball, even the so-called non-revenue sports, historical “classic” game rebroadcasts, studio shows, and more.
The network is providing something else, too: Over a 25-year-period, an estimated $2.8 billion for the conference’s members. Revenue from that venture allowed the Big 10 last year to dish out an estimated $18–20 million to each of its member institutions. That’s at least twice what Nebraska was able to wring out of the Big 12, which at the moment has a far less lucrative television contract package.
One of the knocks against conference administration is that, even as the launch of the Big 10 Network was altering the cost structure of television rights, the Big 12 locked itself into that $480 million deal with ABC for eight years. Running through 2016, it generates just half the per-school payout that the Big 10 Network does. And the comparatively paltry $48 million supplemental package with Fox Sports Network to broadcast lower-profile games doesn’t begin to close the gap between Big 12–Big 10 payouts. That pact runs through the 2011–12 school year.
The vast sums involved in broadcast rights these days, says Clemson University sports economist Raymond Sauer, explain a lot.
“This is just in keeping with what’s been going on for a great many years, and what’s driving it is there’s more money available for athletic competitions that gain interest on a national scale,” Sauer said. “It’s got to be interesting enough to get people to pay money to watch you in big markets. It’s not as important now, in small markets, who is king of the state or winner of the border war; it’s a competition for national eyeballs.
“It’s television.”
The Power of the Tube
Indeed, a review of the Top 50 television markets ranked by Nielsen Media Research show that markets in states that are home to Big 10 and Pac-10 schools dominate the numbers of television households in the U.S. The Big 10’s reach extended farthest, to nearly 13.5 million households in Nielsen’s most recent calculations. And those are only the major metropolitan areas; the total number of eyeballs the network can reach within its region is at least triple that figure, the conference says.
As for the geography itself, the addition of Nebraska means the Big 10 now has extended its “Midwestern” sweep to include everything from New Jersey’s western border all the way to the Wyoming line.
The Pac-10, a close second, most recently encompassed 12.4 million television households in Top 50 markets. That figure that would have ballooned to nearly 21 million with the addition of four Big 12 South Division schools and their enormous Texas markets of Dallas-Fort Worth, Houston and San Antonio.
Coincidentally, one of the key players in the sudden burst of conference realignment speculation is Kevin Weiberg, the former commissioner who left the Big 12 in 2007 to help launch that very same Big 10 Network. He’s since been lured to the West Coast to help the Pac-10 with its expansion and television planning. Thus, the Pac-10’s failure to secure a beachhead in Texas this time probably isn’t a one-and-done deal. The phenomenon of richer television contracts through conference expansion, as Sauer noted, isn’t going to go away.
Quite the Contrary.
“This is where it’s been at for 20 or so years, going back, really, to the late ’80s,” Sauer said. That period immediately followed the explosion of cable television access throughout the nation, vastly increasing the number of programming possibilities.
“It’s been growing in all sports, not just college football,” Sauer said. “Seventy percent of the income generated by the NFL comes from broadcast rights they sell to TV. That segment of revenue dwarfs what you get at the gate.”
An Insider’s View
Longtime fans of the region’s Big 12 schools may recall the name of Chuck Neinas, a former Big Eight commissioner. He was credited with pioneering the “Big Eight Family” marketing concept that helped cement ties between member schools and regional business interests, such as chambers of commerce, that are still in place today. He went on to become executive director of the College Football Association, negotiating television contracts with the former Big Three television networks, as well as a relative newcomer known as ESPN.
The first of those packages, in 1984, coincided with the advent of cable television.
“That was kind of a new beginning,” Neinas said. “At that time, we didn’t know how extensive cable would be, period. Then for years, they talked about pay-per-view, when would pay-per-view come about. It did, eventually, and the CFA worked with ESPN and ABC so that you could
access games out of your area, for a fee.”
Soon came the sport-specific network concept, he said: “That has expanded so that you have Major League Baseball with its own network, the NHL, NBA and NFL. So the Big 10 says, ‘Well why don’t we try?’ ”
That was a logical development, given the potential market, Neinas said. “Those who follow college sports can be fairly passionate about it,” he said. “And if you look at the demographics of who is most interested in college football, they basically are from higher socioeconomic levels.”
Taking all those factors into consideration, he said, Big 10 Commissioner Jim Delany was smart to convince the conference members to give him all of their rights, including Internet, so the conference would have a bundle upon which to sell under a network brand.
“They struggled the first couple of years, but have done well since,” Neinas said in something of an understatement: The Big 10 television package generated $72 million for member schools last year, he said.
“You might say that Jim Delany was the architect,” Neinas said, “but Kevin Weiberg was hired to be the general contractor.”
Now, with the conference’s short-term future secured in part by agreeing to let Texas develop its own Longhorn sports channel, the collegiate embrace of television is about to go to a new level. Oklahoma has indicated that it will make the same leap, but it’s questionable whether the market would support similar efforts from the other conference members. So, once again, the trend suggests that television will generate huge dividends for the biggest names in college sports, padding their athletic budgets relative to their lighter-weight conference counterparts.
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