How Much Does A&M Stand To Gain From SEC Move?

This writer gained some new friends in College Station (that's me in the middle of the maroonmayhem.com gang)

Aside from a chance to exit the shadow of the Longhorns, Texas A&M also stands to gain some revenue from its move to the SEC.

For the 2009-2010 school year, A&M received $10.17 million from the Big 12. Included in that figure is $841,381 for bowl game expenses, so A&M’s actual Big 12 share was $9.33. Each member of the SEC that year received $17.42 million.

Texas A&M expected to receive $12.71 million for the 2010-2011 school year, $1.48 million of which was for bowl expense reimbursement. Its $11.23 million Big 12 share (exclusive of bowl money) paled in comparison to the SEC’s $18.33 million per member.

According to A&M’s budget for this school year they expect to receive a conference distribution of around $15.83 million from the Big 12. Reports immediately following the announcement of A&M’s acceptance into the SEC today stated ESPN would be increasing rights fees to allow SEC members to receive at least the same compensation they would have received prior to A&M’s addition. That means A&M will see a minimum bump of $2.5 million, and closer to $3.4 million if the SEC repeats last year’s over 5% increase in overall conference monies to be distributed.

Aside from any conference buyout, A&M may also experience some additional travel costs as they join the SEC. However, don’t expect it to decimate the additional revenue they’ll be receiving. An open records request of Nebraska shows an increase of $1 million in travel costs following the school’s move from the Big 12 to the Big Ten.

In speaking with Aggies during my recent visit to College Station, the real value in this move isn’t in conference distributions, its in the ability to build a national brand for the school. As part of the Big 12, A&M was “one of the Texas schools.” In the SEC, they’ll be the Texas school. There’s a lot to gain from this move if the Aggies capitalize on the opportunity.

Note: I should note that I didn’t compare the estimated revenue members of the Big 12 have been projected to make beginning next season under the new FOX deal. That’s because I firmly believe the SEC will have an improved contract after a fourteenth member is added. I’ll wait until the time comes for a comparison.

17 thoughts on “How Much Does A&M Stand To Gain From SEC Move?”

  1. Being “the Texas school” in the SEC had better translate to better recruiting, fast (and possibly better coaches, though I’m still standing with our current staff for the time being.) Our continued inability to beat OSU is all the evidence we need of that fact.

    However, anyone who thinks this move wasn’t first and foremost about money is deceiving themselves. The facts stated above (combined with our departure after the formation of TLN) ought to be sufficient proof of that.

    Part of the irony of A&M’s move is I lived for 13 years (Mis’sippi) in the middle of the SEC west division and moved back home near Lubbock 5 years ago. It sure would have been nice to drive only 45 minutes to Starkville or 90 minutes to Oxford to see A&M play during all those years.

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  3. iakobos –

    “However, anyone who thinks this move wasn’t first and foremost about money is deceiving themselves.”

    I think the aggies are the ones deceiving themselves. If Texas can become the most financially successful program in the country while being in the Big 12, why can’t TAMU generate similar numbers? The financial revenues generated by schools is obviously not entirely a function of what conference a school is in. If the motivation of TAMU was purely money, TAMU would want to be more like UT, not less. They would want to remain in the conference where the UT model has proven successful, not switch to another conference that erects barriers to implementing the UT model.

    The motivation of TAMU to switch conferences wasn’t about money. It was about ego and TAMU is going to pay a lot more than the $30mil exit fee to be able to indulge their ego driven dreams.

  4. Al, I don’t deny that A&M has a big ego. I should know I went there. However, your assertion that if all A&M wanted was more money they should have staid in the Big-12 is easily proven false.

    1. Kristi’s article proves that A&M will make more money in the SEC
    2. If A&M was ever going to make more money in the Big-12, relative to t.u. then after 16 years they would be well on their way to that goal. The fact is A&M, and everyone else in the Big-12, is falling farther and farther behind t.u.

    A&M’s move to the SEC is a business decision pure and simple. Sure there are other factors but college sports is big business and money is the principle factor.

  5. Al,
    t.u. has done a vastly superior job in marketing their brand compared to A&M, or any other school. Because of the uneven revenue sharing in the Big-12, this has led to far greater profits for them compared to everybody else. tu also has marketing and branding advantages that A&M does not enjoy (and pretty much all other schools too.) tu is the flagship university of the state of Texas, A&M isn’t. As tu would put it they are THE UNIVERSITY OF TEXAS. The Longhorn silhouette logo is one of the most brilliant logos in all of college sports. It looks cool, it’s unique and it has an immediate recognition factor that no one else can really compare to. Because of their mascot they have been able to tap into the Texas cultural awareness (and even American awareness of Texas culture) in a way that no other team has done. Clearly I’m not down on tu for this nor jealous. It’s all just very good marketing of their brand. It’s the same reason the Dallas Cowboys franchise will always be worth more than say the Detroit Lions or the NY Yankees compared to any other MLB team.

    Another aspect to tu’s success vs A&M is due to having a more successful football program. But since the start of the Big-12 their program has been on par with OU and yet OU trails far behind tu in annual football revenue too (so it’s not just about the best football program.) Consider that the Big-12 nearly imploded this month because OU is likewise fed up with being left behind in the unequal revenue sharing. OU made it clear that unless things changed monetarily they would leave for the PAC-12. Only when they tried it they didn’t get invited to join.

    I was not in favor of A&M leaving the Big-12 for the SEC (though I accept the move and look forward to our future there now) but I’ll give the leadership at A&M credit for seeing the flaws in the Big-12 for what they are and making a good business move at the prime opportunity to do so. Clearly A&M is going to have to step up it’s game big time to be competitive in the SEC. I think the best or most likely opportunity for that to happen is with better recruiting of 5* players from the state of Texas. Right now the majority of those players go to tu and OU. I have no doubt a lot of them would jump at the chance to play in the best conference in the country (quite a few already do.) A&M’s chief selling point is they can now do that and not have to leave their native state to do so.

  6. Miss Dosh hasn’t proven anything (still a good read) she simply compared A&M recent Big12 payout to the estimated SEC payout, A&M was set to make over 20 million in the new Big12 and while I agree with Miss Dosh that the SEC will ‘probably’ get a bigger TV contract with the addition of Texas into the SEC footprint by no mean is that a fact. The fact is that A&M would have made more money in the revamped Big12 than what they will make in the SEC as it stands at this moment. While Miss Dosh does note this at the end of the article I think it is slightly flippant of her to overlook the facts of this case which would significantly change the substance of this piece. A&M is rolling the dice with it’s finances but they are getting out of the shadow of Bevo, most Aggies I know would gladly trade a few million a year for that…

    1. This post is typical of KD: slant (pro SEC swallowing up a Texas school) presented as proper analytics. Here’s the basic:

      a) Big 12 new (from next season) payout for A&M was to be $20m/yr. SEC deal is currently $18.3m/yr.

      b) Even if you add in the 5% annual kicker on that SEC #, which is not by any means guaranteed, that’s $915k, and add that to the $18.3m and A&M’s new rev total will be $19.215m – at best.

      c) A&M additional travel expense will be at least as expensive as Nebraska’s was; in fact it will probably be 25-50% more given the actual geographies and distances involved, but call it the same: $1m). So the Aggies will best case generate $18.215m next season from the SEC.

      d) Now add in exit fees: b/w forfeiting 90% of this season’s Big 12 rev ($14m; this % loss of rev is mandated by conference bylaws) + an exit fee of approx $10m (again, conservative estimate; it could be twice that amount), that’s $25m + the $1.8m minimum lost in switching conferences, so basically a $27m negative swing for A&M.

      (Now that wasn’t difficult, was it? Writing the above post based on obsolete financials – well what’s the point in that? No guarantee of a 14th SEC member for next season, so even mentioning that as a reason for not using accurate next season’s Big 12 info is woeful.)

      So the Aggies athletic department will be entering a much tougher competitive environment with huge financial constraints on their athletics budget (KD has also noted that boosters will save the day here – that’s not practical w/ this type of budget hole). And as for the ‘value in becoming a national brand’ – that’s only realistic if your club wins consistently; not likely to happen given the financial and competitive realities this move to the SEC will engender….

      All in, this is a recipe for competitive disaster for A&M.

  7. None of this talk about money is valid. The NCAA head honcho just said that college sports are not the NFL or NBA, they are not a business, that money, although necessary, is not the priority. So, that should put that issue to rest once and for all.

    Boy, that was a close one, though, wasn’t it? There we were, on the brink of having college sports become big business and money-driven and at the last moment the NCAA boss rode to the rescue and pulled college sports back from the edge of business and money.

    Thanks, Mr. Emmert, for saving college sports. Somebody should give him an award for doing this – maybe a Nobel prize or something. Or a banquet, at least. And a raise! Oh, wait, that would involve money, so no raise. But the banquet, if they can find a sponsor. Oh, wait again, that would involve business. Bummer. Oh well, just take an old trophy from somewhere, maybe that Heisman trophy that was recently returned to the NCAA, polish it up and give it to Emmert. Attaboy, Mark!

  8. Well said, “Still Incredulous”

    It is amazing to me how so many people armed with so little knoweldge keep bashing the Longhorns about making more money and not sharing.

    All schools in all conferences keep their tier-3 broadcast revenue and do not share any of it. The only exception will be the new Pac-12 contract but it doesn’t kick in until next year, so until then the statement is still true – no one shares tier-3 broadcasting revenue.

    The tier-2 tv contract (over 1.1 billion with FOX) for the Big-12 is shared equally by all the schools. Key word …… equally.

    50% of the tier-1 tv contract (480 million with ESPN) for the Big-12 is divided evenly and the other 50% is distributed based upon the number tier 1 and 2 football and basketball appearences for each school. All the schools in the conference agreed to this in the beginning of the Big-12 (including a&m). The reason they did this is because more tier 1 and 2 appearences meant fewer games available for tier-3 broadcast.

    Kansas made over 7 million on tier-3 revenue, OK State made over 6 million, Nebraska and Missouri both over 4 million. I could go on but the point is that Texas made less than 340 thousand on tier-3 broadcast revenue. When you add all three tier revenues together, Texas didn’t make more money than everyone else, in fact they were more at the bottom of the list for all the Big-12 schools. EXACTLY WHAT WERE THEY SUPPOSED TO SHARE???

    Granted the new LHN will move Texas to the top for tier-3 broadcast revenue, Are we supposed to despise them for being smart and creative? The LHN only involves tier-3 games. No one in the SEC shares their tier-3 revenue (Alabama 8.4 million and Arkansas 950 thousand) Why are people not claiming Alabama is being a bully to Arkansas and greedy for not sharing? The ACC (UNC over 11 million, Florida State less than 350 thousand) why are people not accusing UNC with the same crimes as Texas.

    Also it should be worth mentioning that Texas made a proposal over a month ago for the Big-12 to share all of the Tier-1 revenue equally. They will then be the same as all the other conferences (except new Pac-12 that requires tier 1,2,3 and your school web page)

    Also remember that Nebraska claimed they would have had their school network in operation before the LHN if they hadn’t switched. OU has announced they will have a school network, and a&m was looking into having their own network before deciding to switch.

    1. This is super informative. KD, hope you read your comments. BCHorn did the rigour and wrote the article you should have written.

  9. Good points BCHorn I would also add that last year after the Big 12 was saved from the PAC16, the schools even increased the tier one equal revenue sharing to 75%, and now like you point about they are talking about upping it to 100%. Facts are fun.

  10. Dosh continually does backward-looking analyses. She fails to consider the new Big 12 TV contract, nor what happens with the SEC splitting the pie 13 ways. The SEC is saddled with TV contracts that are out of date, and little incentive for the networks to renegotiate. A&M was promised $20 million in TV revenue by the Big 12, and they’ve turned that down to accept a smaller portion from the SEC.

    The SEC is banking on renegotiating those contracts, and getting the BCS to give them one more slot. Neither is a sure thing.

  11. BCHorn and stillincredulous…if you take a look through my archives you’ll see I defended LHN from day one and wrote a number of posts about it. I have no issue with Texas creating LHN.

    1. My comments above speak only to the quality of the article/post above. If you want to post opinion, call those articles that. You are v v pro A&M going to your conference; I get that.

      Dressing it up as analytics, using the wrong data is not OK. Just reading BCHorn’s post….it’s properly rigorous. My back of the envelope cals at least attempt to address the situation accurately/transparently….

      You have a great platform. I enjoy reading you; just want to see appropriate rigor – or split out the opinion from the real analysis….

  12. I am just at a complete loss regarding this article. I took your calculations for the SEC and Big 12 for 2009/2010, previously published, and for the life of me I can’t figure out how you think the Aggies will improve.

    The Aggies were 4th behind UT, OU and Nebraska for football revenue at 41.915 million. Their football profit was also ranked 4th at 25.316 million, however their total athletic profit was 8th behind the previously mentioned three and OK State, KA, KA State and Texas Tech! Now maybe that is due to having to repay their loan to the academic side of A&M, but it speaks of a school that doesn’t manage their business affairs well.

    If you take your figures for the same time period for the great SEC you find that AL (which made 22 million less than UT), GA, LSU and FL are ranked 1-4 in football revenue. You think the Aggies will make 68.7 million (FL)? No way they make more than Auburn, SC or TN (56.6 million). I bet they end up around 8th like Arkansas (48.5 million). This doesn’t even begin to count lost revenues, as pointed out by previous posts.

    As you point out in another story, they don’t even own their basketball stadium, they rent. All the SEC did was pay for another lower tier school to beat up on and to gain the Texas recruiting market. It is already working just last week the Aggies lost a commitment in football to, surprise, LSU.

    I am just as happy they are going to the SEC, but do not try to put lipstick on this pig. That dawg just will not hunt.

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