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Realignment Economics

2010 June 11
by Brian Goff

A few days back Phil provided a synopsis of the maneuvers behind the impending break-up of the Big 12 with Brad commenting yesterday on the first move in this play.   There are way too many angles, rumors, and possible permutations to analyze this whole process in the length of a typical TSE post, so I’ll just stick to a few observations that may or may not connect with each other.

  • Who Fits with Whom? Joint ventures like college sports conferences usually work best when revenues, costs, and quality more closely align between different members while each brings a complementary element (broader fan base).  Using a statistical procedure such as “Cluster Analysis” that assigns group membership, it would be interesting to see the associations falling out based on a few basic dimensions such as geography, revenue or home attendance figures, and endowment per student (as a proxy for quality) and then do a similar thing where some group memberships are predetermined (such as current Pac 10, Big 10, or SEC members).  In these Cluster studies, do Texas and A&M align similarly or does Texas match more closely with the Pac 10 and A&M with the SEC?
  • When Does State Politics Matter? Much has been made of Texas/A&M bringing along other schools.  I’m skeptical how much Texas and A&M are really interested.  This isn’t 1990 anymore.  If Texas and A&M move together, my guess is that all of the powerful Tech or Baylor alumni protests don’t get very far.
  • What’s Happening in the SEC? Very little has been written or mentioned about SEC moves, other than one official early on saying something about being “proactive” and  Texas A&M System Regent  Gene Stallings (the former A&M and Alabama coach) mentioning the SEC as a good fit for A&M.   One would think that the prospect of adding 20million+ people to the SEC TV market would be attractive to the conference.   Texas may covet the academic affiliation with places like Cal, Stanford, or UCLA, but the SEC would be hard to pass on from a fan interest standpoint.  LSU, ‘Bama, Florida, Georgia, Tennessee, Arkansas coming to Austin or College Station creates a lot more buzz than anybody in the PAC 10 other than USC.
  • Can You Get Too Much of a Good Thing? While a lot of talk focuses on 16 team conferences with 2 divisions, these monster conferences create problems for themselves.  Suppose the PAC 10 goes to 16 teams with two 8-team divisions along East-West lines playing 7 games within division and 2 with the other division each season (rotating the 2 non-divisional games every 2 years).  In this setup, Texas or USC play non-divisional teams only 2 times in 8 years, with each coming to non-divisional home stadiums only 1 time in 8 years.  Where’s the benefit in that?  Such infrequent play seems to diminish the whole idea of belonging to the same conference.  In this respect, 14 teams makes more sense but generates an imbalance in non-divisional scheduling.
  • Why Me? Luck, both good and bad, matters.   Institutions such as Washington State or Mississippi State reap huge rents from being in the right place at the right time some time in the past.  Outcomes are to some extent “path dependent.”  That’s not meant as a put down on these schools.  Instead, I’m highlighting the fact that very similar institutions may find themselves much less fortunate.  Kansas State and Oklahoma State are not much different than WSU (or Houston for that matter) but may (or may not) find themselves on the outs.  Southern Miss isn’t all that different from MSU but doesn’t get to reap the benefits of an SEC affiliation.
  • What is Notre Dame thinking? My colleague, Dennis Wilson, reported to me that Notre Dame receives around $16 per year on its football TV contract while each Big Ten school receives $22 million.  As I’ve written before, the mega-conference organizations in the 1990s cut the knees out from underneath ND’s seemingly dominant position from both TV and competitive aspects .  These new re-alignments would seem to reinforce these trends.
  • A Silver Lining for Iowa State? Schools like Iowa State (and maybe Baylor, Texas Tech, Oklahoma State, Kansas State) are likely to find themselves on the path toward Mountain West membership or something similar.  Yes, that’s a downer from a financial standpoint and who comes to town now and then.  However, the news is not all bad.  TCU or Utah provide evidence.  The opportunity to be highly competitive rather than struggling to win conference games offsets some (maybe not all) of the sting.
2 Responses
  1. DrBeeper permalink
    June 11, 2010

    Recruiting opportunities should play into the mix when discussing fit.

    In this regard, keeping UT and A&M in the same conference should help keep control of the Texas recruiting market. If both the Pac-10 (16?) and SEC both have teams in Texas, their respective recruiting opportunities within the state increase.

  2. Ken permalink
    June 12, 2010

    The thing I’ve always wondered is what’s stopping the Pac-10 from dropping Washington State and Oregon State. They already have Seattle and Portland without those two schools, and their academics don’t like the world on fire. Same thing with Iowa St or Baylor and the Big XII. These schools never belonged in the BCS in the first place. (Or did, 65 years ago.) Imagine if that Pac-10 cut OSU and WSU, they’d find themselves a much more managable 14 team conference, or maybe while they’re at it cut Oklahoma St and Tech as well. Why is there no movement to lose these schools in the first place.

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