Realignment-Mania, Who Let the Genie Out?

Phil Miller’s  recent posts (Death Throws and More Death Throws) covered Texas A&M’s likely move to the SEC and the possible implications for the Big 12 and for the “other” school to go in to the SEC with A&M.  Rumors abound about Oklahoma and other Big 12 members along with the likes of Florida State moving other places.  Now, whispers have surfaced of an SEC conversation, at least off-the-record, with UNC-Chapel Hill.

What’s at the root of these kinds of moves and rumors?  Of course, there are the tired “greed” editorials.  Others might point to the Texas’ insistence on the Longhorn Network, or push back to the setup of the Big Ten Network, or further to the Notre Dame TV contract, or the initial expansion of the SEC.

The well-spring flows from the 1984 Supreme Court Decision in OU and Georgia v. the NCAA, where the Court struck down the NCAA restrictions on televised college football games.  That decision unchained college football games from their one or two games on TV per weekend dungeon and permitted revenues to flow to conferences and schools based on their attractiveness. Up to that date, basketball had driven new conferences and alignments such as the Big East or the Metro.

The flood from that event started with small springs — first expanded coverage of teams and conferences on the networks and ESPN.  In 1991 Notre Dame signed the deal with NBC to televise their home games.  The same year Arkansas and South Carolina joined the SEC, contributing the merger of the SWC and Big 8 in 1996.   Football started trumping basketball as the main hinge for schools to align even for conferences like the ACC.  The Big East, one of the basketball entrepreneurs, reformed with football as a major driver.

Of course, a major element of these reformulations are the dynamics of joint ventures such as conferences.  Typically, joint ventures, especially cartelized ventures of competitors, are more stable with greater similarity among members.  Big differences in revenues or cost structures creates frictions — the typical big-market, small-market issues regarding revenue sharing and so on.  The TV restrictions restrained the frictions.  Without the restrictions, the big-time revenue producers tend to gravitate toward each other.  The same influences exist in pro sports but there aren’t any viable alternative leagues to join, so the bigs and smalls coexist.

All of this makes for interesting theater and strategy.  With talk and rumors of places like UNC, the pressure builds for institutions like Florida State.  How does the ACC look for FSU if UNC leaves or vice versa? The Baylors and Kansas State’s of the world have had a great gig going, hitching rides on big revenue members of their conferences, even though their characteristics (other than geography) make them more like many Mountain West members.

Finally, there maybe an interesting tradeoff between revenue and competitive relevance.  As I mentioned in a post in 2010, Notre Dame’s continued football independence and  contract with NBC may have provided abundant revenue, but it also diminished their competitive standing once the mega-conferences formed and negotiated their own contracts.  With a very high quality SEC or Big Ten matchup on TV each week, who really cares about the ND-Air Force game other than Notre Dame or Air Force alumni?  Recruits pick up on this in a heartbeat.  Texas, with its desire to launch the Longhorn Network, may have put themselves in a similar position.  Stay as king of a diminished conference with your dedicated network and associated revenues or opt for a conference where you stay relevant competitively.


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Author: Brian Goff

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