Tag Archives: Conference Realignment

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Conference Realignment Timeline

When I was writing my business of college football book, Saturday Millionaires, it was practically a full-time job keeping up with conference realignment from 2010-2013. Lucky for me, all got quiet about the same time I published the book, so you’ll find Chapter 4 is still a completely accurate tale of not only this round of realignment but previous rounds as well.

Feeling nostalgic for the good ole days when you never knew what conferences might look like in a week or a month or a year? Here’s a detailed timeline of how it all played out….

A big thank you to my intern extraordinaire, Lauren Nevidomsky, who helped me put this together!

Mountain West Stable, For Now

The Mountain West appears to have won a large victory with the recent additions (or not losses if that’s how you choose to look at it) of Boise State and San Diego State.  That may in fact be the case.  However, there is also the possibility that in its quest for stabilization and increased stature, the Mountain West endangered itself by giving away crucial member equality in order to re-acquire Boise State.

Reports indicate the Mountain West has or will (among other things): 1) re-negotiate its television contract with CBS Sports Network which will allow teams on national television (i.e. Boise State) to make more money through bonuses, 2) sell Boise State’s home games in a separate package, and 3) allocate half of BCS (and future equivalent) bowl game revenue to the participating team (i.e. Boise State) before splitting it among the remaining conference members.

From the quotes of Big East commissioner Mike Aresco, it sounds as if Boise State wanted to stay in the Big East if it would match the Mountain West’s offer.  Smartly, Mr. Aresco and the remaining Big East schools’ (bonus points if you can name them) presidents said thanks, but no thanks.  In a time when it must feel like everything is crashing down around them, the Big East brass found a line they wouldn’t cross.  Good for them. Let’s face it, Boise State to the Big East wasn’t exactly the perfect mix of chocolate and peanut butter.  So for the Big East to grant unprecedented perks to a school 2,600 miles removed from the conference office didn’t make a whole lot of sense.  Navy Athletic Director Chet Gladchuck even went public with his disdain for the proposed deal, saying:

“What Boise State wanted was outrageous and unprecedented. It was not palatable to any of the other Big East institutions,” Gladchuk said. “In the final analysis, Boise wasn’t worth it. There is zero television interest in Boise along the Eastern seaboard. What it tells me is the Mountain West was desperate. Clearly, the Mountain West was willing to make whatever concessions necessary to keep Boise in the fold.”

But surely it made sense for the Mountain West to do whatever was necessary to bring Boise State back under its tent, right?  Maybe, maybe not.  The money grab that is conference realignment also has an undercurrent of trying to create and/or maintain stability and long-term viability.  As mentioned earlier, the Mountain West seems to have stabilized at 12 members.  But when gross member inequality is part of a league’s structure, there can be problems.

Example:  When the Big 12 was formed in the mid-90s, its structure was similar to how the Mountain West is currently proceeding.  Most notably, it did not share bowl and television revenue monies equally among the members.  Rather, the participating teams were first entitled to a larger share.  This obviously funneled most of the revenue toward the traditionally successful programs, and smaller amounts to everyone else. (Berry Tramel of The Oklahoman wrote about this structure in 2010.) As time passed the Big 12 and its membership experienced the difficulties of operating a conference successfully when there’s a sense that a few schools are driving the bus and collecting the checks, and the rest are just passengers along for the ride.  Ultimately, that and other issues led to the departure of 1/3rd of the Big 12’s schools (Nebraska, Colorado, Missouri, Texas A&M), and a near collapse of the conference entirely.

Whether the Big 12 leadership decided the original structure was a mistake, or that times had changed and therefore the structure needed to change with it, the powers that be agreed to a more (though not completely) equal distribution of revenue in the summer of 2011.  It also put a stake in the ground on stability by having each member grant its television rights to the conference for a long period of time (initially six years, but recently extended to 13), essentially removing the largest incentive to other conferences who may wish to come poaching in the future (the importance of this “grant of rights” was well articulated by Mat Winter in a BusinessofCollegeSports.com post last month).  I have not read or heard anything along the lines of Boise State or the other Mountain West schools making similar commitments.

So while the Big 12 (barely) escaped the inequality trap and the Big East has avoided it for now, the Mountain West may have fallen right in it.  Sure, Utah State and San Jose State are excited to be new members in a league which just got considerably stronger.  And the other Mountain West schools no doubt see the tremendous value Boise State brings to all of them.  But give those non-Boise State presidents and athletic directors a few years of conference meetings looking over financials, and watching the revenue flow into the conference and out to Boise State.  Give them a few years of conference meetings observing how decisions are made.

The camaraderie that exists today may not continue very long.  And without a grant-of-rights or similar level of commitment, Boise State is for all intents and purposes a perpetual free agent, available to accept the next best conference offer that comes along.  The Mountain West’s current and future members no doubt wanted to make decisions which ensured stability over the long-term.  And while the league certainly got immediately stronger with the addition of Boise State, it may be that the deal they made guarantees the long-term will be anything but stable.

Follow Daniel on Twitter: @DanielHare

Grants of Television Rights, Not Increased Exit Fees, Are The Solution To Realignment Frenzy

A number of Division I conferences have recently increased the fees a member school must pay when it withdraws from the conference.  These fees are commonly referred to as exit fees.  The ACC is one of the conferences that recently increased its exit fees.  And its exit fee provision has been receiving a lot of attention lately because of Maryland’s departure to the Big Ten.

The ACC actually increased its exit fees twice in the span of a year.  The ACC first upped the fees from around $12-14 million to $20 million in September 2011 when it announced it would add Syracuse and Pittsburgh.  The fees were then upped again this September after the conference added Notre Dame (in all sports except football and hockeyl).

The ACC’s current exit fee calls for a withdrawing member to pay an amount equal to three times the conference’s total operating budget at the time of withdrawal.  Based on the ACC’s 2012-13 operating budget, this equates to an exit fee of more than $52 million.  It is this amount that the ACC is seeking in its lawsuit against Maryland for the school’s move to the Big Ten.

When the ACC and other conferences increase their exit fees, the general thinking is that it further discourages members from leaving the conference.  But, because of how courts analyze the legality of these exit fee provisions, increasing the amount of the fee can actually increase the chances of the exit fee provision being deemed unenforceable.  So, instead of discouraging schools from leaving, it can actually embolden them to do so.

In legal terms, conference exit fees are known as liquidated damages.  Liquidated damages provisions are commonly added to contracts.  They set the amount a party to the contract must pay in the event it breaches the contract.  Liquidated damages provisions are useful because they theoretically save the parties the time and expense of litigating the amount of damages caused by the breach.

But, the amount of liquidated damages specified in a contract cannot be randomly selected.  Courts will generally only enforce liquidated damages provisions if (1) the anticipated damages in the event of a breach are difficult to ascertain at the time of contracting, and (2) the amount of liquidated damages is a reasonable estimate of the actual damages that would likely be caused by a breach.  If a liquidated damages provision does not meet this test it is deemed a penalty and is unenforceable.

Assuming that the ACC’s liquidated damages provision fulfills the first element of the test, it is questionable whether it would meet the second element.  The requirement to pay three times the conference’s operating budget does not appear to be related in any way to the actual amount of damages the ACC would suffer if a member withdraws.  It just seems like an easy way to ensure that the exit fee continues to grow without having to continually vote on it.  This makes it look like a penalty.

And the actual number that results from this provision, $52 million, is not a reasonable estimate of the ACC’s actual damages.  For example, Maryland’s departure will not result in the ACC’s tv deal being reduced by $52 million.  A good argument can be made that the ACC actually suffered no damage when Maryland left.  Maryland’s departure allowed the conference to add Louisville.  And the general consensus is that the ACC is now stronger athletically as a result (at least in the two sports that matter for tv revenue purposes, football and men’s basketball).

This is consistent with recent realignment history.  Over the past two years the Big 12 lost Nebraska, Colorado, Texas A&M, and Missouri.  Yet, after adding TCU and West Virginina, the Big 12 signed the most lucrative tv deal in the conference’s history this year. (The one exception to the no damage upon withdrawal argument would be the Big East.  The defections in that conference have definitely hurt the value of its tv rights).

When a liquidated damages provision is determined to be invalid, the party attempting to enforce the provision is allowed to instead seek its actual damages from the breaching party.  But, as discussed above, conferences often suffer minimal damage when a member withdraws, either because the member added little value to the conference or because the conference quickly replaces it with a new member of equal value (at least in tv executives’ eyes).

As a result, exit fees often leave conferences in a tough position.  They have to be high enough to discourage a member from leaving the conference.  But, if they are too high they could be declared an invalid penalty.  And, if the exit fees are invalid, the conference would then have to prove its actual damages, which are usually much less than the amount of the exit fee.  As a result, exit fee disputes have always settled without a court deciding the validity of the liquidated damages provision.  Recent examples include the Big 12 settling with Nebraska, Colorado, Texas A&M, and Missouri for less than the mandated amount of exit fees.

So, what is the solution to the problems with exit fees?  Grants of television broadcast rights.  In these agreements, all of the conference members grant their television broadcast rights to their athletic contests to the conference for a certain period of time.  If a member leaves the conference during that time, the conference retains the member’s television rights.  Because the value of a school to a conference is the television revenue it can help generate, a grant of rights agreement makes the members essentially worthless to another conference that is looking for new members.

While grant of rights agreements do have potential issues (sovereign immunity issues being the biggest), they are not subject to a subjective test like liquidated damages provisions.  Thus, they are much more likely to hold up in court as valid contracts.

Currently, only the members of the Big Ten, the Pac-12, and the Big 12 have executed grant of rights agreements.  Other conferences that want to ensure stable membership would be wise to insist on their members signing similar agreements.  (Yes, even the mighty SEC should have its members sign grants of rights).  If the ACC had one in place, Maryland likely would not be joining the Big Ten.

Maryland and Rutgers Move to the Big Ten Conference

By: Shanette D. Buford-Brazzell

The University of Maryland and Rutgers University recently made national headlines, surprising all college sports fans, when they both accepted invitations to join the Big Ten Conference.

On Monday, November 19, 2012, Maryland’s Board of Regents voted to accept the invitation to join the Big Ten, and leave the Atlantic Coast Conference (ACC). All competition within the Big Ten will begin during the 2014-15 academic year.

On Tuesday, November 20, 2012, Rutgers University made their announcement, that they too would join, becoming the Big Ten’s fourteen member. The Rutgers Board of Governors had passed the vote on November 19, which gave Athletic Director Tim Pernetti the authorization to accept the invitation to the Big Ten and leave the Big East conference.

According to a press release, the University of Maryland president Wallace D. Loh said, “Today is a watershed moment for the University of Maryland, membership in Big Ten Conference is in strategic interest of [University of] Maryland.” Maryland is only the second school to leave ACC. The first to do so was South Carolina in 1971, when they departed and became independent.

In response to Maryland’s departure, the ACC’s Commissioner, John Swofford, sent his best wishes to Maryland, and even stated that,  “Since [the ACC’s] inception, [Maryland] have been an outstanding member of [the] conference and we are sorry to see them exit.” Furthermore, Maryland will pay a $50 million exit fee to the ACC.

Both schools will join Ohio State, Penn State, Wisconsin, Purdue, and Indiana in the Leaders Division of the Big Ten Conference.

The Big Ten is best known for its football programs, yet Maryland and Rutgers may add to its prestige by bringing along their great basketball programs as well. When Maryland leaves the ACC, its basketball program will say goodbye to some long-storied rivalries with North Carolina State, Duke, and University of North Carolina. Maryland basketball coach, Mark Turgeon, welcomes this move and stated, “It doesn’t change anything – we’re going from one great league to another.”

Both Maryland and Rutgers will welcome the additional dollars that will come along with being members of the Big Ten. According to Kristi Dosh of ESPN, Maryland had a deficit of $473,482 in 2010-2011, even with despite $9.5 million in student fees and $6.4 million in institutional support. Rutgers needed even more help to break even, taking in $9 million in student fees and $19.4 million in institutional support.

Both the ACC and Big East will be looking to find replacement teams to fill the void left by Maryland and Rutgers, respectively.

A Look Back at Conference Realignment 2004-2005

Conference realignment is nothing new. In 2004 and 2005, 16 schools moved from one FBS conference to another. Earlier this week, I wrote a piece for ESPN detailing how those schools have fared financially (and even academically) since their respective moves. Those who know me know I love Excel spreadsheets, and I had quite a few that we didn’t include in the ESPN.com piece. Below you’ll find a chart for each public school who moved in 2004 and 2005 detailing the growth each school saw in major revenue categories from the year before they moved conferences to the year after. Check out my ESPN.com piece for details on expense growth and overall financial picture for each school.

Virginia Tech

2003-2004 2010-2011 Growth
Ticket Sales $12,684,737 $18,979,129 50%
Student Fees $5,782,195 $7,237,091 25%
Guarantees $784,257 $2,551,600 225%
Contributions $8,561,075 $15,849,981 85%
Comp and Benefits by Third Party $55,000 $185,000 236%
Direct Institutional Support $408,962 $353,531 -14%
NCAA/Conference Distributions $4,960,919 $12,467,870 151%
Broadcast, TV, Radio, Internet $1,907,452 $3,954,669 107%
Royalties/Licensing/Ad/Sponsor $503,186 $1,384,437 175%

Cincinnati

2004-2005 2010-2011  Growth
Ticket Sales $3,889,980 $8,485,966 118%
Student Fees $0 $0
Guarantees $1,232,500 $871,905 -29%
Contributions $4,636,229 $5,848,897 26%
Comp and Benefits by Third Party $0 $0
Direct Institutional Support $5,642,852 $14,708,672 161%
NCAA/Conference Distributions $3,492,095 $7,731,939 121%
Broadcast, TV, Radio, Internet $0 $0
Royalties/Licensing/Ad/Sponsor $1,000,000 $1,841,836 84%

Louisville

2004-2005 2010-2011  Growth
Ticket Sales $12,767,307 $26,467,598 107%
Student Fees $1,633,024 $1,861,502 14%
Guarantees $1,030,000 $1,001,150 -3%
Contributions $11,507,810 $28,224,908 145%
Comp and Benefits by Third Party $0 $0
Direct Institutional Support $1,500,000 $2,152,967 44%
NCAA/Conference Distributions $2,430,632 $8,629,513 255%
Broadcast, TV, Radio, Internet $1,643,061 $1,180,000 -28%
Royalties/Licensing/Ad/Sponsor $2,875,850 $3,527,018 23%

South Florida

2004-2005 2010-2011 Growth
Ticket Sales $2,975,011 $5,828,048 96%
Student Fees $9,183,299 $15,231,708 66%
Guarantees $1,058,491 $1,704,000 61%
Contributions $2,675,193 $2,735,003 2%
Comp and Benefits by Third Party $0 $95,550
Direct Institutional Support $1,093,589 $1,329,909 22%
NCAA/Conference Distributions $1,426,973 $8,873,398 522%
Broadcast, TV, Radio, Internet $400,000 $507,577 27%
Royalties/Licensing/Ad/Sponsor $1,042,549 $4,885,785 369%

Central Florida

2004-2005 2010-2011 Growth
Ticket Sales $1,317,224 $5,167,757 292%
Student Fees $11,932,441 $18,818,806 58%
Guarantees $788,430 $663,750 -16%
Contributions $3,357,302 $6,370,570 90%
Comp and Benefits by Third Party $0 $0
Direct Institutional Support $1,474,967 $2,424,099 64%
NCAA/Conference Distributions $749,684 $3,826,564 410%
Broadcast, TV, Radio, Internet $65,000 $0 -100%
Royalties/Licensing/Ad/Sponsor $615,374 $3,684,133 499%

Marshall

2004-2005 2010-2011 Growth
Ticket Sales $1,961,713 $3,946,607 101%
Student Fees $3,667,214 $4,287,724 17%
Guarantees $966,967 $1,231,653 27%
Contributions $3,256,311 $3,855,746 18%
Comp and Benefits by Third Party $0 $0
Direct Institutional Support $2,430,614 $5,439,689 124%
NCAA/Conference Distributions $1,087,603 $2,911,073 168%
Broadcast, TV, Radio, Internet $652,990 $1,231,121 89%
Royalties/Licensing/Ad/Sponsor $206,704 $176,079 -15%

UTEP

2004-2005 2010-2011 Growth
Ticket Sales $3,639,657 $3,308,099 -9%
Student Fees $2,952,176 $4,219,929 43%
Guarantees $430,000 $983,700 129%
Contributions $3,029,606 $3,071,855 1%
Comp and Benefits by Third Party $0 $109,307
Direct Institutional Support $4,994,481 $6,424,788 29%
NCAA/Conference Distributions $1,130,878 $3,124,801 176%
Broadcast, TV, Radio, Internet $7,828 $337,744 4215%
Royalties/Licensing/Ad/Sponsor $1,272,179 $1,415,759 11%

Idaho

2004-2005 2010-2011 Growth
Ticket Sales $211,352 $1,077,790 410%
Student Fees $1,851,406 $2,317,147 25%
Guarantees $894,552 $1,063,980 19%
Contributions $2,022,954 $2,148,835 6%
Comp and Benefits by Third Party $179,000 $381,000 113%
Direct Institutional Support $2,153,302 $2,778,311 29%
NCAA/Conference Distributions $523,352 $2,004,217 283%
Broadcast, TV, Radio, Internet $128,042 $50,000 -61%
Royalties/Licensing/Ad/Sponsor $717,898 $730,462 2%

Utah State

2004-2005 2010-2011 Growth
Ticket Sales $1,032,946 $1,965,806 90%
Student Fees $1,602,768 $3,798,541 137%
Guarantees $1,430,500 $831,640 -42%
Contributions $985,783 $1,869,811 90%
Comp and Benefits by Third Party $0 $140,000
Direct Institutional Support $2,270,523 $9,109,963 301%
NCAA/Conference Distributions $436,950 $2,507,973 474%
Broadcast, TV, Radio, Internet $74,000 $0 -100%
Royalties/Licensing/Ad/Sponsor $710,719 $564,983 -21%

New Mexico State

2004-2005 2010-2011 Growth
Ticket Sales $1,029,077 $1,771,334 72%
Student Fees $1,776,389 $2,952,320 66%
Guarantees $861,000 $754,000 -12%
Contributions $1,409,625 $883,239 -37%
Comp and Benefits by Third Party $0 $0
Direct Institutional Support $3,347,148 $9,078,575 171%
NCAA/Conference Distributions $361,505 $2,118,375 486%
Broadcast, TV, Radio, Internet $0 $0
Royalties/Licensing/Ad/Sponsor $711,384 $2,414,076 239%

Keep in mind there are many reasons for fluctuations in revenue, including new stadiums, expansion of stadiums, and sometimes even changes in reporting methods. It’s important to talk to each school before drawing any conclusions about why a specific revenue category has increased or decreased.

Why Basketball Is Driving Conference Realignment For The Atlantic 10 Conference

Yesterday, the Atlantic 10 Conference announced that Butler University would join the conference on July 1, 2012–one  year earlier than anticipated.  Gaining Butler a year ahead of schedule grants the Atlantic 10 Conference the benefit of competing with 16 member institutions during the 2012-13 school year, before Temple and Charlotte depart the conference.  While this is definitely a perk for the conference, perhaps the biggest benefit the conference gains in Butler’s expedited admission is the chance to become a basketball powerhouse.

Although the Atlantic 10 Conference does not receive the same media recognition as BCS AQ conferences, in recent years, the Atlantic 10 has made its name as a conference which is consistently competitive in basketball.  Thus, it is no surprise that in selecting new institution members during the course of conference realignment, that the Atlantic 10 has aligned itself with some of the best-performing basketball schools in recent years:  Butler and VCU.

Much has been said about the roles that football and television contracts played and continue to play in conference realignment decisions.  However, one cannot turn a blind eye to the power of a strong basketball program when it comes to attracting conferences.  Although basketball does not have the monstrously large viewership numbers that football does, it does have a wide enough following to garner billion dollar contracts for the television rights to March Madness.  On top of the television contract negotiation potential strong basketball programs present, there is also the fact that the greatest portion of the revenue distributed by the NCAA is distributed to conferences based upon their team’s March Madness performance.  Given these factors, it is apparent why the Atlantic Ten Conference has based its stake in conference realignment not upon football prowess, but upon basketball.

As noted above, of the revenue distributed by the NCAA to conferences and member institutions, the greatest percentage goes towards something called the “Basketball Distribution Fund.”  Conferences receive payouts from the fund based upon their member institution’s performance in the Division I Men’s Basketball Championship over a six-year rolling period.  A basketball program earns one unit for each March Madness game they compete in, save for the National Championship game.  For the most recent year in which data is available, 2010-11, the NCAA distributed $479 million to conferences and member institutions through the Basketball Distribution Fund.  This amounted to 40.5 percent of all revenue distributed by the NCAA in 2010-11. 

The follow chart shows the number of Basketball Distribution Fund units that the Atlantic 10 Conference has earned over the last three years.  The chart depicts what the conference earned through its actual members’ performances in a given year, and also notes how many additional units that the conference could have earned if Butler and VCU were conference members in a particular year.

2010 Units Earned 2011 Units Earned 2012 Units Earned
Richmond 1 Richmond 3 St. Bonaventure 1
Temple 1 Temple 2 St. Louis 2
Xavier 1 Xavier 1 Temple 1
Butler 5 + NC Butler 5 + NC Xavier 3
    VCU 5 VCU 2
  2010 Total:  3   2011 Total:  6   2012 Total:  7
  With Butler and VCU:  8 + NC   With Butler and VCU:  16 + NC   With Butler and VCU:  9

When considering the chart above, the presence of Butler and VCU in the Atlantic 10 clearly generates additional revenue for the conference.  In 2010, three Atlantic 10 schools participated in March Madness:  Richmond, Temple and Xavier.  These schools accumulated three units for the conference.  Had Butler been an Atlantic 10 member in 2010, the conference would have nearly tripled its Basketball Distribution Fund units, while also receiving a payout for Butler’s National Championship game appearance.  If Butler and VCU were Atlantic 10 Conference members in 2011, the conference would have earned an additional ten Basketball Distribution Fund units and again, received a payout for Butler’s National Championship game appearance.  Similarly, in 2012, the Atlantic 10 Conference could have received an additional two Basketball Distribution Fund units had VCU been a member of the conference.

While the amount of revenue generated from basketball contracts and the Basketball Distribution Fund is meager compared to the amount of money football generates, not every conference can woo college football powerhouses to their stables through conference realignment.  Thus, what the Atlantic 10 Conference has accomplished through conference realignment is noteworthy.  Although it will lose a historically sound basketball program in 2014 when Temple leaves for the Big East, it has replaced that leaving member with two noteworthy programs.  Additionally, the Atlantic 10 has attracted two members which in recent years, the general public nationally has been interested in watching.  With young, charismatic coaches that also boast successful track records in Brad Stevens and Shaka Smart, Butler and VCU respectively have garnered Cinderella story followings across the country.  One can expect the Atlantic 10 to capitalize upon this should either team have similarly successful March Madness runs in the future.

Overall, while the Atlantic 10′s conference realignment path was not driven by football, it appears that the conference has been successful in laying a new foundation for its future.

Is Temple Moving to the Big East?

Recently, the New York Times broke a story that Temple University officials were discussing a conference move to the Big East.  In the midst of the conference realignment landscape, Temple’s name has been thrown about as a potential incoming member of a variety of conferences, including the upcoming Mountain West-Conference USA merger.

Currently the member of three conferences–the Atlantic Ten Conference, the Mid-American Conference (football only) and the Eastern College Athletics Conference (gymnastics)–Temple was previously a Big East football member for thirteen seasons.  However, in 2004, Big East members voted Temple out of the conference due to what was described as the football program’s inability to compete and the athletic department’s unwillingness to spend the amount of funds necessary to bring the program up to competitive levels.

Given Temple’s history with the Big East, it is clear as to why the school is not rushing to join the conference.  However, should the Big East be quick to jump at the bait?

Recent Success

Since being ousted from the Big East in 2004, the Owls’ football program has achieved a steady level of success.  The football team has experienced winning seasons since 2009 and has participated in two bowl games since 2004.

Undoubtedly, the Big East is known largely for its basketball prowess.  Temple will fit into the conference’s basketball landscape.  In the history of the NCAA Division I Men’s Basketball Tournament, Temple has reached the tournament 29 times and has made the Final Four twice.  In the Associated Press’s most recent basketball rankings, Temple ranked 23rd.  Thus, the Owls are on their way to their 30th NCAA Tournament appearance.

Football Expenditures

As noted above, part of Temple’s ouster from the Big East in 2004 came as a result of the conference finding that the school was not spending enough to develop its football program.  Arguably, in the years since 2004, Temple has devoted greater resources to its teams in order to advance their success on the field.

In 2010-11, Temple’s football team had expenses of $10,099,156.00 and revenues of $10,099,156.00.  Thus, although Temple’s football program did not turn a profit in 2010-11, it appears that the university is investing a large amount of money into the football program.

However, it is to be seen whether this amount of expenditures is enough to compete in the Big East.  In 2010-11, the top-three ranked Big East football programs incurred the following expenses:

WVU:  $13,230,226.00

Cincinnati:  $11,148,347.00

Louisville:  $15,582,161.00

While Temple’s football expenses are clearly less than the top-three ranked 2011 Big East football programs, what should be noted, is that Temple’s expenditures are within the range of these programs’.  If Temple can expend at least $1 million more on its football programs in the coming years, it should remain competitive in the Big East.

Recruiting Expenses

If Temple joins the Big East, one area in which the Owls will need to expand their budget in is recruiting.  In 2010-11, Temple spent $289,671.00 on recruiting for its men’s sports teams.  It spent $100,877.00 on recruiting for its women’s sports teams.

Temple’s total recruiting expenses of $390,548.00 do not even break into the top-100 recruiting spenders.  In terms of recruiting expenses for Big East teams, Temple’s expenditures are not so dire when it comes to men’s sports.  While big recruiting spenders Marquette ($1,289,560.00) and Notre Dame ($1,612,608.00) blow Temple’s recruiting expenses out of the water, Temple still falls short of other Big East Members.  Consider the top-three ranked Big East football teams from the 2011 season and winner of the NCAA Division I Men’s Basketball Championship:

WVU:  Spent $462,785.00 on recruiting for its men’s teams

Cincinnati:  Spent $392,288.00 on recruiting for its men’s teams

Louisville:  Spent $786,574.00 on recruiting for its men’s teams

Connecticut:  Spent $515,666.00 on recruiting for its men’s teams

Thus, given these numbers, it would be in Temple’s best interest to increase its recruiting budget should it join the Big East.

4.  Media Market

Arguably, the biggest draw for the Big East in inviting Temple to join as an all-sports member, is the school’s location in Philadelphia.  In 2010-11, Philadelphia’s television market was ranked fourth in the nation.  This ranking only fell behind New York, Los Angeles and Chicago.

The Big East is set to renegotiate its television rights contract with ABC and ESPN after the 2013 season.  Given that Pittsburgh is leaving the conference for the ACC, adding Temple and tapping into another school with a presence in the Philadelphia television market would benefit the conference in negotiations.  Having both Villanova and Temple as members, would arguably allow the Big East to raise the price it’s willing to agree to for terms of a television contract.  As such, the television contract payout to Big East members would subsequently increase.

While there are clear benefits to Temple joining the Big East, if the school is fully committed to becoming a conference member, it must further bolster its team and recruiting expenditures.  Given the Owls’ previous attempt at Big East membership, should Temple not fully demonstrate its commitment to spending a significant dollars to gain on-the-field success, the school can plan on waiting a bit longer for the Big East to come fully calling.

Big East

Does Memphis to the Big East Make Sense? (Part 2)

Guest author: Dr. Michael Lorenzen

Dr. Michael Lorenzen is the principal owner of Collegiate Athletics Strategy Advising, a firm that provides advisement services to collegiate athletics administrators.

This is the second part of a two-part series on Memphis’ move to the Big East. You can read Part 1 here.

The Big East is one of the older and more established conferences, though it does not have the weighty history of some of its more senior BCS brethren.  It is also distinguished by the nature of its origin–it was founded primarily to be a gathering of basketball affiliated schools.

However, much of the last thirty year history of the conference has been characterized by a nearly annual ritual of wrestling with a vision for how to be successful in football as a complimentary activity to its primary mission.  There has always been an inherent tension within the conference as a result of its diversity, with the much smaller, largely private institutions that have long since given up on football at odds with the needs of the larger, all-sport schools that aspire to financial freedom through football.

The result of the football dilemma has been a regular acquisition of schools from lesser conferences that have become virtual farm teams for the power conferences seeking expansion.  For example, nine current members of the Big East have moved over from C-USA, which is also the victim of Memphis’ departure.  With consolidation and stability seemingly having arrived for the Big Ten, the Pac 12, the Big 12, the SEC and the ACC, it is left to the remaining conferences to find a path to financial sustainability with a model that does not rely upon 100,000 seat stadiums, monolithic regional fan bases, 100 year old rivalries, and geographic isolation from professional sport competitors.

While Conference USA and the Mountain West appear to be on the verge of a full merger for all sports that would span the nation, perhaps the Big East has stumbled into a strategic evolution that will create a unique and sustainable competitive position for the future, albeit with a model that is distinct from the traditional power conferences. “Stumbled” because it is hard to look at the Big East’s rejection of the $1 billion offer from ESPN prior to the loss of valuable football properties like Syracuse, Pitt, and West Virginia as a brilliant tactical move in retrospect, but it may yet work out.

If we let go of all preconceived notions of what an intercollegiate athletic conference should be, and accept the premise that they are really the ultimate expression of college sports as a fully commercial entertainment enterprise, then it may be possible to define this new position that the Big East will occupy.  As an example, there was a day when media outlets were largely independent or collected into groupings of common geography, size, vision, editorial bent, etc.  Technology, economics and culture dictated that at some point consolidation entered the picture and the geographic footprint expanded as media conglomerates bought up smaller players, diversified their offerings, and gobbled up greater share of more markets.

It is not inconceivable that a similar transition will work for athletic conferences.  The power conferences have tremendous share in local markets, and they have tremendous fan and alumni bases across the country that boost ratings in even the largest media markets.  But they don’t have much of an actual, local presence in those media markets.  The SEC has Atlanta, Orlando, New Orleans…and not much else.  The Big 12 has Dallas…and not much else.  The Big 10?  Chicago.  The Pac 12? Los Angeles, San Francisco, Phoenix…and not much else.

Those conferences are largely comprised of schools located in small college towns that benefit from their isolation and the lack of competition for attention with professional sports franchises.  They are attractive in a regional and sometimes national sense to big media players and sponsors because of their national fan bases, the highest level of performance (great recruits follow big budgets and media glory) great marketing and branding, and a love of big-stage tradition among sports followers.  But they don’t have significant local representation in any of the major media markets.

At the other end of the media spectrum, the 2015 iteration of the Big East will have access to more than 30 million television households and a presence in major media markets unmatched by any other conference.  It will also have the advantage of national representation that creates some interesting possibilities on the programming front.  Picture a Saturday football lineup of four sequential games, no overlaps, running from morning into the wee hours.

While no one will argue that teams ranked in the 40s and 50s will generate the kind of buzz that the Red River Shootout or Ohio State vs. Michigan do every year, perhaps there is a cumulative benefit to having a number of competitive teams in a variety of large markets that advertisers and sponsors will find compelling.  If football almost becomes a loss leader that attracts media customers who are interested in being a part of the nation’s most powerful basketball conference, with the biggest basketball attendance, most of which is happening in major urban centers, maybe the Big East will have carved out a unique and interesting niche in the market place.

The new conference will have remarkable diversity in size of institutions, public and private status, cultural norms, levels of spending, and academic standards.  The majority of them have no historic rivalries within the conference and may have non-conference matches that have greater appeal to fans than brand new rivalries.  The non-revenue sports are surely to face economic challenges with increased travel expenses and the football and basketball players will almost certainly have more missed class days as they traverse the country during conference play.

The uncertainty of the future of the BCS automatic berth could present a major hit in both prestige and financial terms.  The loss of the automatic $22 million payout and the potential of another $6 million for a second team would be painful.

But Memphis has the opportunity to contribute to this new conference model in some meaningful ways that might help explain why they are a good acquisition.  The Tigers did qualify to five bowl games from 2003-08 and have enough of a foundation and history that they could be competitive in football.  The Tiger basketball program lends significant prestige and instant rivalry possibilities within the region.  It also places the Big East on the doorstep of both SEC and Big 12 country, which may open some recruiting doors for northeastern and midwestern schools.

If the Big East can package all of the diversity and unique features of their membership and sell it well to an oversaturated college basketball market, then there could be additional upside that might eventually match the $15 – 20 million annual upside realized by the other conferences.  Added on to a $40 million current budget for Memphis and you’re in the range where schools seem to have the ability to suddenly turn their athletic entertainment business into a serious generator of profits that could ultimately be self-sustaining.  That is the pot of gold for which every athletic director pines and if it all works out, RC Johnson and the Big East Commissioner will look like geniuses.