Big XII Television Partners' Disapproval of Expansion Is Bad News for UH
If ESPN and FOX have their way, it looks like Houston (and others) may have to wait on Big XII expansion.
Waiting on the sidelines for the Big XII to move on expansion has to be an absolutely excruciating process. I don't envy what fans, alumni and employees of the University of Houston (and about a dozen other schools) are going through as this process plays out.
I mean, it's bad enough trying to sell your wares to a conference that has seemingly no clue about its selection criteria, or even if it will expand at all. Outwardly, the Big XII had no intention of expanding until the ACC announced it was creating a conference television network a couple of weeks ago, and then literally 24 hours after that announcement, the Big XII got hot-to-trot, going all in on reassessing expansion.
It's the behavior of a crazy person, a schizo with no clue what he wants or why he wants it. That's the Big XII. The only thing we know about the Big XII's intentions is that, when in doubt, you follow the money trail. And the Big XII's contracts with its television partners (ESPN and FOX) call for the network to tack on full annual shares of TV money (roughly $20 million annually) for each school the conference adds.
Since presumably the Big XII would ask any new members to take a diminished portion of those $20 million shares, at least early on, it's obvious the ten existing Big XII schools would be adding expansion partners as a cash grab and nothing else, a chance to use ESPN and FOX as a glorified ATM for a few years.
On the surface, the Big XII's plan would appear to be legal, but somewhat diabolical, when you consider the following:
1. None of the expansion candidates is a property whose sporting events, namely football, are worth anything remotely close to $20 million. Houston, Cincinnati, BYU, UConn, Memphis...I mean, those are the good expansion candidates, and none of them has sports content worth close to half of $20 million annually. So ESPN and FOX are inherently being asked to overpay for content that won't draw nearly enough eyeballs for them in return.
2. Back in 2010 and 2011, when the Big XII was losing Colorado, Nebraska, Texas A&M and Missouri, and replacing them with West Virginia and TCU, FOX and ESPN kept their rights payouts at the level of a 12-school league, even though the Big XII was left with only ten schools. In other words, ESPN and FOX did the Big XII a solid. And now, five years later, this is how the conference treats them?
Well, according to Sports Business Daily, the networks have stepped in and, like Lee Corso, said, "Not so fast, my friend":
The original deals pay $2.6 billion over 13 years, or about $20 million per school annually. Expansion by two schools, theoretically, would force ESPN and Fox combined to pay an additional $40 million per year in rights fees. Expansion by four teams could mean another $80 million per year.
Both networks, according to sources, are digging their heels in against paying those kinds of increases based on expansion with schools outside the power five.
Among the schools reportedly being considered for expansion are Brigham Young, Cincinnati, Connecticut, Houston, Memphis and others. The Big 12, which has 10 teams, has not said if it will expand by two or four schools, but both options are in play.
The drive to expand is fueled by the opportunity to almost immediately generate more money for its schools. The conference’s TV deals run through 2024-25 and the Big 12 already trails the rest of the power five conferences in revenue, so expansion stands out as the only way for the Big 12 to increase revenue.
While the conference would appear to be contractually within its rights to expand, the risk the Big XII would run would be alienating its primary television partners, ESPN and FOX, to the point where they could both say, "Fine, here's your money, but we are not bidding on your rights when the deal is up in 2024-2025," a move that would likely spell the end of the conference in 2025.
Of course, nine years is an eternity in the technology world, and who knows if ESPN and FOX won't have all sorts of competition from the Internet (Amazon, Google, Twitter, Apple) to stream Big XII games as opposed to running them on cable television? With cord cutting, who knows where cable television will be nine years from now? And to go next level on cord cutting, who knows if ESPN and FOX will be able to pay all these rights fees to all their sports partners — college football, MLB, NBA, NFL — over the next several years as they bleed more subscribers every year?
These are all valid questions that it feels a little silly even to ask when it comes to the Big XII, an entity known for impulsive decisions based on the next ten months, not strategic ones based on the next ten years.
The bottom line would appear to be, well, the bottom line — if expansion allows for additional revenue for the ten existing Big XII schools in the near term, TV partners be damned, Houston (and the other expansion candidates) should feel okay about their chances. If the Big XII decides to pump the brakes, then Houston and the others had better settle in for the long haul outside the Power Five (or, if you're Houston, hope another Power Five conference wants to add a Texas school).
For what it's worth, Texas's Lieutenant Governor, Dan Patrick, made his feelings known on the topic of Big XII expansion on Tuesday (as if anybody was asking) by issuing this proclamation:
"The start of the school year means football season is upon us. As a former sportscaster I know that Texans take their football seriously, and so do I. I previously commented about my support for the University of Houston's desire to join the Big 12. For many of the same reasons, I also support the inclusion of SMU. The impact to Texas would be big. Dallas and Houston are top TV markets and the Big 12 would be foolish to leave SMU and U of H on the sidelines. The economic impact to the state and to the schools is significant. I urge the Big 12 to carefully consider the addition of these two fine schools and all they have to offer. I hope Baylor University, Texas Christian University, the University of Texas and Texas Tech University will join me in supporting the addition of these two Texas schools. And, I trust these two schools will support each other."
I'm sure the Coogs are thrilled that one of the state's top officers is lumping in SMU, and its 3-21 record over the past two seasons, as a "must-have" travel partner for U of H.
I'll say it for you, Coogs — thanks for nothing, Dan.
Listen to Sean Pendergast on SportsRadio 610 from 2 to 6 p.m. weekdays. Also, follow him on Twitter at http://twitter.com/SeanTPendergast and like him on Facebook at https://www.facebook.com/SeanTPendergast.
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