tkalmus wrote:
I agree with everything he said but disagree about their forward thinking on expansion they left "more money than the entire Big East" (or something like that on my phone so hard to quote) on the table for 20 years, add that up and it's pathetic...B1G as a conference is great the members work together well because they have the same goals and the BTN is a huge success for them however if you think they will invite others into that club that could disrupt it's perfectness then you're wrong. They left money just sitting out there for years and I bet they will leave plenty more out there in the future. Thus, going back to my original point, I doubt they expand and I doubt they have every option on the table next time around. The B1G is going to get less and less appealing after the other four pass it by in TV revenue/relevance and their rust belt population continues to decline while the coasts and South continues to grow. They need to at least get a foothold in some better markets now (Mizzou/Rutgers) to have a chance at attracting anything more than Kansas/Pitt in the future since Maryland/BC/Cuse/ND will be very happy in their East Coast League.
What I meant was that there is the natural progress in the business model that you need to consider. For instance, imagine a world where google and Bing are close in market share, but google still about 10% higher than Bing. Now imagine Bing makes 2-4 acquisitions to cut that share to 5% or even match the 10% to make things even. In the world of business, it is then set in stone. The newly added businesses to Bing are Bings forever.
But in college sports with conferences, that isn't the case. Nothing is set in stone.
And there is also the standard valuation of the business product. The reason conferences get certain TV deals of late, as we know, is due to the timing of the contracts. For instance, the ACC got a huge bump and passed many conferences like the big 12 and Pac-10. but it wasn't that they were valued more, it was a matter of contract timing. So then the Pac-12 leapfrogged everyone else because their contract was up...the same Pac-12 that has none of the population rich eastern markets, the same Pac-12 that is 100% a western league that expanded east by adding Utah and Colorado in the mountain time zone.
Now the same standard scale will apply to all conferences in terms of their value.
What you are saying is that above is that the Big Ten NEEDS to add schools in order to improve their value...and that if the Big Ten does not, other conferences will permanently pass the Big Ten in terms of TV network VALUE. But the Big Ten's value in it's current form will grow with the fluctuations in the growth of the value of the sport. Meaning, the Big Ten will still improve in value as the sport improves in value. And it is an absolute lock that when the Big Ten contract is up for renewal with the networks, that if they do nothing, the industry trends will continue for the Big Ten as well.
We can look at the Pac-12 for data. The financial analysis of expansion for the Pac-12 said one thing...for about 20 years: for the Pac-12 to improve their per school payout BEYOND the natural growth for the industry, they needed to add Denver (via Colorado) and Texas. But the value of Texas was so great, such a game changer, that it enabled them to include 4 other schools that would get Texas to come (or course Oklahoma provided it's own value as well...but based on the decision to remain at 12 without Oklahoma, it would appear they weren't enough to tip the scale).
So for the Pac-12..and the Big Ten in the future...or any other BCS conference there is an easy way to look at it from a business perspective:
Think of the current BCS conferences as being made of gold. And 10 years ago silver was valued at $1. But 10 years later, the value of silver has changed to $10. So all the conferences are worth more as they are (as we've seen from TV contracts). Look at the Big East. They haven't done much. They are still the worst of the BCS conferences, yet they turned down a 1.4 billion deal, a hUGE improvement, despite not doing much of anything. They turned that down because in adding what they seem as a piece of gold to their portfolio, they could get more. but even without TCU, the Big East TV contract would have grown without TCU compared to their last contract.
Back to the Pac-12. That is a conference that in it's current form was made of 50% silver and 50% gold. Their value was set. And analysts feel that in adding Utah and Colorado, the Pac-12, despite it's huge payday, could have gotten more money per school had they remained at 10, as Colorado and Utah were more like adding a good piece of silver and a piece of bronze.
And then there is the Big Ten. They are comprised of 50% gold and 50% platinum, as dictated by their high revenue Tv contract even before Nebraska was added. Nebraska was the piece of platinum to improve the conference value...also adding the 1 item each conference needs to take advantage of a quick payday: a 12th member needed to have a championship game.
But even without Nebraska, the Big Ten value was continued to grow in relation to other conferences. It comes down to WHAT a conference adds to improve it's valuation to improve the "purity". Adding platinum schools helps, gold a benefit, silver a push in some cases.
so it's a long explanation, so you all have my apologies, but it's a simple as this:
A conference's value will not depreciate as long as the existing members maintain their current worth. And that isn't an on-the-field issue. Michigan can struggle for more years to come, and still be considered a top financial program. Ohio St. went through a huge scandal but is still considered one of, if not the most, valuable program in the country.
So when other conferences make a move, it certainly helps them. But for some conferences, the natural growth of the industry valuation of the conferences is a benefit enough for them. Think about it...if Rutgers were such a homerun of a financial improvement for the Big Ten, why did the ACC pass on them twice last week? If Missouri is such a homerun in growth of revenue per school, why did the big Ten pass on them this year and why did the SEC take such a passive role with them (and TAMU) when all the other conferences have had no problems just bringing in who they want without fear of legal issues (P16 last year, P16 this year, ACc this year, etc).
And I agree about the Big Ten leaving money out there. But from a business perspective, it's not always about the short term. Yes, the Big Ten passed on a championship game for many years...easy money. But in the long term, it might not have been about passing on that championship game money, but making sure that they were only adding pieces that would survive for decades to come without depreciating the value of the conference. So sure, maybe with rutgers, Missouri there is more money right away. But if adding those two schools were to slow the momentum of the revenue growth after the initial bump (like a company with a hot press release giving it's stock a price bump) onyl to have it drop to below where it was in relation to it's competitors a few years later (when the heat wears off), then perhaps it's not worth it.
And other than ACC schools like Maryland, etc, getting the aging Big Ten region into regions where more americans are moving to, perhaps from a business perspective, no move is a good move; maintaining the Big ten value in the conference value ratings might be more important for long term growth...since the big Ten will continue to be valued more just by being the Big Ten and offering what they offer now.
i don't think we disagree about much. I just think I am focusing on the long term sustainability in regards to the financial value of conferences and the natural improvement of value based on the industry trends.
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