Thursday, January 21, 2016

Texas Realignment Options - Part 5

Recently, Oklahoma President David Boren has demanded that the Big 12 Conference do three things - add 2 schools, a championship game, and a conference television network - or else OU will start considering its "long-term" options. The first isn't ideal, the second is now possible without expanding, and the third might not even be possible. Essentially, Boren is firing shots at Texas, threatening to leave if OU doesn't get its way…again. However, if OU leaves the conference, it will be testing the Big 12's "Grant of TV Rights" that Boren demanded be implemented in 2011. Nobody knows how difficult it will be to get around the Grant of Rights, but finding homes for the rest of the league members would certainly help the outlook. This piece is part of a series of realignment options for Texas, and how it will affect the current outlook of the Big 12, as well as the rest of the Power 5 conferences.

Part 5 -- Go Independent


1. Texas goes Independent in Football, joins the ACC in others

Ever since Texas and ESPN created Longhorn Network, rumors have spread that Texas was preparing to one day go Independent; there is even a clause in the contract mentioning this exact scenario. So what if this actually happened, and what would it take to make it happen? It all comes down to money: is it possible for Texas to make more money as an Independent than to be in one of the four remaining power conferences?

First of all, Texas would be following a model similar to Notre Dame. Currently, Notre Dame is a full member of the ACC in all sports except for football, where the Irish is an Independent. In exchange, ND plays 5 ACC opponents every season. Texas would follow the same model, but I project only 4 games vs ACC teams each season. The ACC is a perennial top 3 basketball conference (along with the Big Ten and Big 12), and would provide exposure for Texas along the entire eastern shoreline, from Boston down to Miami. Texas would certainly be an outlier, but this is the only major conference that would take Texas in with this type of deal.

For football, Texas could schedule any teams it wants. A long-term contract would certainly be signed with Oklahoma, while playing Arkansas and Texas A&M again every season would be the next priorities. Texas Tech and Houston are not priorities from a rivalry standpoint, but they are important to play annually so that all Power 4 schools in Texas face Texas every season. The other permanent games on the docket could be chosen from Notre Dame, BYU (also an independent, with a history of playing Texas), and Oklahoma St (the latter on the basis of keeping a Big 12 South rivalry alive). Ultimately, playing Notre Dame could be off the table since that program has 3 permanent rivalries to go along with a plethora of others and 5 ACC games. At worst, BYU and Notre Dame could rotate in with Army, Navy, and Air Force as national brands that Texas could face. For the four ACC games, my suggestion would be 1 from each division each season. That would allow Texas to play teams from the same regions each season. For the remaining 2 games, other Texas schools such as UNT, Rice, Baylor, TCU, SMU, UTSA, UTEP, and Texas State could lock down one spot, while the last could be saved for games versus Pac-16, Big Ten, or even other SEC schools. The idea is to schedule the big rivalries and brands, while also traveling around the nation.

Whether all this can happen or not is contingent on how much money Texas can make. LHN guarantees an average of $15M per year (or 70% of the profits after ESPN recovers its initial investment) for 3rd-tier TV rights, essentially any game not picked by ESPN and FOX can be shown on LHN. Currently, LHN tries to get 2 football games per season. The contract says ESPN and LHN gets first bid for 1st- and 2nd-tier TV rights if Texas leaves the Big 12, so Texas would be looking to sell 4-5 games a year. Using Notre Dame as a model, the Irish gets at least $15M per year to show 7 home football games on NBC, with other sports earning a pro-rated pay in ESPN's TV deal with the ACC.

One option is for Texas to keep LHN and bid out the rights to the 4-5 remaining home games each year. Texas should have no trouble commanding $10-12M for a package of 5 games. Ideally, these would be on a main network like FOX, ABC, CBS, or NBC, but ESPN could force them all on LHN. If the latter happened, LHN would need to be carried everywhere ESPN is (on basic cable) to make it work, as Texas would risk a lack of exposure compared to being on network TV each week. Also, LHN would need to find ways to bring in more revenues. One way would be to carry games for conferences in the Group of 5, such as the American, Mountain West, MAC, C-USA, and Sun Belt. If LHN offered at least one game from each of those conferences every week, it would have not only more inventory to offer TV providers, but would make LHN a national network that could bring in more money. The only issue with offering programming from these conferences is that LHN is a network for Texas and needs to carry Texas games first. Scheduling could become very tricky for both LHN and the entire athletic program. Another thing I should mention is what happens if LHN coverage doesn't pick up. LHN is only commanding 2 cents per home from networks outside the state of Texas. If the coverage and pay don't increase, Texas could be earning 70% of not very much. That would be a huge blow, and would make it not worth it. For this plan to work, Texas is going to need more guarantees from ESPN.

The second option is to turn LHN into the ACC Network. Since ESPN owns both Texas' and the ACC's 3rd-tier rights, this would be one of the easier mergers. Texas would still need to bid its 4-5 home games out, but if LHN/ACC Network bought them it wouldn't be as bad. Since the ACC currently covers more markets than any other conference, the ACCN should be able to earn more money than any other conference network, and become a national network at that. So even if ACCN/ESPN won the bid for Texas' 5 other home games, Texas would be playing on national TV each and every week. As an Independent, that is very important. The downside to this is that all Texas games would no longer be able to be broadcast on live TV; instead, probably half of them would move to the digital network (ie- an online form).

Either way, Texas would easily bring in $25M per year from football and 3rd-tier rights. There is no way to tell what ND is currently making from the ACC, but my estimate is at least $7.5M. If Texas could pull $10M-$15M from that deal (based on the ACC renegotiating the terms of the contract with ESPN), $35M-$40M would be the total payout of this move.

2. The SEC

Refer to Part 4 for the in-depth logic behind Oklahoma and Kansas joining the SEC.

SEC
West - Arkansas, Kansas, LSU, Mississippi, Mississippi St, Missouri, Oklahoma, Texas A&M
East - Alabama, Auburn, Florida, Georgia, Kentucky, South Carolina, Tennessee, Vanderbilt

3. The Big Ten

Refer to Part 4 for the in-depth logic behind the Big Ten choosing West Virginia and Kansas St.

Big Ten
West - Illinois, Iowa, Kansas St, Minnesota, Nebraska, Northwestern, Purdue, Wisconsin
East - Indiana, Maryland, Michigan, Michigan St, Ohio St, Penn St, Rutgers, West Virginia

4. The Pac-12

Refer to Part 4 for the in-depth logic behind the Pac-12 becoming the Pac-16

Pac-16
Northwest - Oregon, Oregon St, Washington, Washington St
Pacific - Cal, Southern Cal, Stanford, UCLA
Mountain - Arizona, Arizona St, Colorado, Utah
Central - Houston, Iowa St, Oklahoma St, Texas Tech

5. The ACC

The ACC gets a win by adding Texas for non-football sports, but now has a few more options to choose from. First, which two teams will be added to get to 16 football members? The options are TCU, Baylor, Cincinnati, Memphis, and UConn. Since ACC schools are now guaranteed to play Texas every 4 years, there is no need to add two small, private schools that are located on a geographic island, no matter how much brand power they have. If Texas keeps LHN to itself, then the added footprint would be nice for a separate ACCN. Cincinnati and Memphis, meanwhile, offer new markets in Ohio, Tennessee, Arkansas, and Mississippi. An ACC network would also gain a big footprint by adding these schools. The difference is thinking long-term. Once TV moves more to the digital medium, networks will be largely funded by subscribers. Cincinnati and Memphis combine for over 60,000 students compared to 26,000 for TCU and Baylor.

Not to be left out is UConn. With the largest basketball pedigree of the bunch, UConn would fit in well with the ACC culture. The football program is lacking though, but that could change. UConn represents an entire state and has 30,000 students. That is 10,000 more than Memphis, which represents a single city. Ultimately, I leave UConn out since the northeast is covered by Boston College and Syracuse, while the southeastern region of the United States is prime recruiting turf. Cincinnati and Memphis are the schools the ACC gladly accepts.

Since ACC schools would have two programs to play outside of conference, I think Notre Dame is allowed to bump down to only 4 ACC games per season. That means each ACC program would play Texas and Notre Dame once every 4 seasons. If the ACC wanted, it could allow BYU to join the conference on similar grounds. The only issues are that BYU doesn't play sports or travel on Sundays and that they are in the Mountain Time Zone. Still, BYU has quality football and basketball programs and would fit in with the large brands of Texas and Notre Dame. If a 4th school could be found for this model, each ACC program would play one of the 4 schools each season in football. Perhaps TCU and/or Baylor go Independent and try to build up their brands. However, 20-21 schools is a little much for basketball scheduling and there aren't any available schools that meet the criteria, so Notre Dame, Texas, and possibly BYU are enough.

ACC
West - Cincinnati, Louisville, Memphis, Pittsburgh
North - Boston College, Syracuse, Virginia, Virginia Tech
East - Duke, North Carolina, North Carolina St, Wake Forest
South - Clemson, Florida St, Georgia Tech, Miami

What could a Texas schedule look like?

Permanent Rivalry Games - 5 - Played every season.
1. Oklahoma (at Cotton Bowl Stadium)
2. Arkansas (home in odd years)
3. Texas A&M (home in even years)
4. Texas Tech (home in odd years)
5. Houston (home in even years)
Rotating ACC Games - 4 - Played every 4 seasons.
6. Memphis (odd) or Louisville (odd) or Cincinnati (even) or Pittsburgh (even)
7. Boston College (even) or Syracuse (even) or Virginia (odd) or Virginia Tech (odd)
8. North Carolina (odd) or North Carolina St (odd) or Wake Forest (even) or Duke (even)
9. Florida St (even) or Miami (even) or Georgia Tech (odd) or Clemson (odd)
Remaining Games - 3
10. Rotating Texas Group of 5 opponent: Baylor, Rice, SMU, TCU, Texas St, UNT, UTEP, or UTSA (home)
11. Rotating national brand: BYU, Notre Dame, Army, Air Force, or Navy
12. Rotating Pac-16, Big Ten, or SEC school

Overview

This would cause problems on multiple fronts. First, Baylor and TCU fail to find a new home in the Power 5. The two could get together with the best brands left, including Boise St and possibly BYU, to create a new conference, or could float as Independents. Neither is as desirable as joining one of the top 4 conferences, and the pay reflects that. I would expect these two schools to sue the other former Big 12 schools for the Grant of Rights and exit fees.

For Texas, the pay seems like it could be there. The freedom of scheduling would be welcomed, as would the return of local rivalries. Sure, annual games versus OSU, Baylor, and TCU would be missed, but it would be impossible to keep them all and be affiliated with the ACC. Ideally, Texas would be able to play those 3, Notre Dame, and BYU each season, but there just isn't room for that. While LHN and Independence have long seemed to be linked together, Texas may have to give LHN up to be able to afford being an "Indy."

One final thing to mention is this, with the move to only 4 conferences and there still only being 4 playoff spots, would Independents stand a chance of getting in? The Power 4 could demand that each of their champions get in, which would make a move to Independence a bad one. A provision could be included that the final spot be the best team of Texas, Notre Dame, and the ACC Champion, which would make this move be in Texas' favor. Or, due to potential antitrust litigation from the Group of 5, the playoff could remain the "4 best teams," to allow Independents and champions of smaller conferences access to the playoff. Whatever it may be, Texas needs to know before it makes a move.

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