The ACC’s New World Order

Earlier this year, Syracuse coach Jim Boeheim answered a question about how it felt to be a part of what might be the best basketball conference in history.  To which he replied, “We already were.”  Referring, of course, to the Big East in its former configuration.

Now this correspondent is an old-school ACC guy, so naturally I bristled a little.  As did many of us.

And the thought crossed my mind, “wait until he gets into the conference schedule for real…”

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Whither West Virginia

Last night, the Confidential unwittingly entered into a Twitter-battle with a West Virginia blogger.  The Confidential noted that West Virginia had become responsible for two things lately: bad expansion rumors and bad football.  One such twitterer came to the forefront, presumably seeking to take credit for being the blogger that was the source of those rumors.  Some day, the Confidential will appear on some “show” to discuss expansion, i.e. whether this blogger had sources providing rumors that, while not coming true, were rumors that could have been true, had something not happened.  Or something like that.

But a bigger question remains… what is the deal with West Virginia?  And is the West Virginia-Big XII marriage a happy one?

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The ACC & Texas

To the average pro-imperialism Big 10 fan, the ACC is ripe for colonization.  Indeed, there is a certain sense of “Well, the grant of rights is nice, but we’ll be back for Virginia, North Carolina, and a few other schools soon enough.”  Just take a look at the comments over at Frank the Tank.  The only issue for them is whether the Big 10 goes to 16 or 20 or 24.  Let’s assume, however, that the Big 10 was able to take Kansas and Virginia (as they predict) in the next round of expansion… do not be surprised to see Texas in the ACC.  Consider this…

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Johns Hopkins to the Big 10

ESPN is reporting, and it now seems all over the Internet, that Johns Hopkins will be joining the Big 10 as an associate member.  The Confidential had advocated for JHU to join, so this is a disappointment.  Props to the Big 10 for getting it done.  This is a win-win for both the B1G and JHU.

For 2015, the Big 10 lacrosse teams will be JHU, Maryland, Michigan, Ohio State, Penn State and Rutgers.  That is a reasonable conference membership.  Not the uber-conference that the ACC would have been with JHU, but good enough.  And it might be better for lacrosse as a whole for this relationship to move forward.

This leaves a dilemma for the ACC.  Where do they go for the 6th conference member?   Do they even need one?   Let us know what you think.

ACC Should Add Johns Hopkins for Lacrosse

The Blue Ribbon panel appointed by Johns Hopkins University to evaluate the pros and cons of joining a conference for lacrosse as an associate member has issued its report.  The report recommends pursuing a conference affiliation.  The Confidential believes that the ACC should add Johns Hopkins as an associate member for lacrosse only.

First, the ACC needs a sixth team.  Duke, Syracuse, North Carolina, Notre Dame, Virginia, and it was going to be Maryland.  The loss of Maryland means the loss of the 6th program.

Second, in Johns Hopkins, the ACC gets a huge name in lacrosse, as well as solidifying the Maryland region.  The rivalries are there.

Third, this would be the premier conference in the history of… ever.  Imagine if Alabama, LSU, Florida, and Georgia left the SEC and joined a conference with Florida State and Miami.  Regional and dominant!   Or a basketball conference with Kentucky, Syracuse, Duke, North Carolina, Kansas, and Michigan State.  You get the picture.  If you are going six, go all the way.

Fourth, Johns Hopkins has a TV deal with ESPNU that it wants to keep.  The ACC’s rights are owned by–wait for it–ESPN.  This part of it works.  How would Johns Hopkins mesh with the Big Ten Network?  Not as easily.

Fifth, Notre Dame set the precedent here with a partial membership.  Not really breaking any new ground.  And other conferences have allowed members for just one sport under similar arrangements.

Finally, the Big 10 wants them too.  Perhaps.  Maybe.  Why be in a conference with Rutgers lacrosse, when you can be in a conference with 5 of the biggest names in, well, ever.  Johns Hopkins looks a lot more like Duke and Syracuse and Notre Dame, than it does a boring flagship state university with 50,000 members.

So there it is.  Everything works for this.  We just need the ACC to beat the Big 10 to the punch.

 

 

Conference De-Alignment–Part II of II

We may be at a point where there is a several-year “cease fire” with respect to conference realignment.  The leading blog on conference realignment, Frank the Tank, certainly thinks that it plausible.  With all conferences other than the SEC signing Grant of Rights agreements, there is solidarity across the major conferences.  The cost of adding schools will simply be too great to justify a return on investment.  One question that must be posed, however, is whether we will see conference “de-alignment,” that is–a conference parting ways with a parasitic school.  It has happened only once in recent years–with the Big East and Temple.  Will it happen again?  With revenue such a central part of the conference alignment reality, the Confidential thinks it is inevitable.  Part I will discuss the conference landscape.  Part II will look at the targets for de-alignment.

Part II: The Targets for De-Alignment

The Weakest Schools

Assume that, someday, conferences may have to look inward to increase revenue.  In other words, that going from 14 to 12 schools is a better way to increase revenue per school than going from 14 to 16 schools.  Who are the schools in each conference that would be most nervous?

Let’s start with our own backyard–the ACC.  One has to think Wake Forest is the easy target here.  Being the 4th school in a state in one conference may work for the Pac-12 with USC, UCLA, Cal, and Stanford, but Wake Forest is a far cry from any of those schools.  The bottom line is that Wake Forest contributes very little to the ACC in terms of finances, away-game attendance, football success, or basketball success.  Look at it this way–if the ACC dissolved, where would Wake Forest go?

The next most vulnerable conference is the Big XII.  Here, one has to look to Iowa State.  While they add the Iowa “market,” that market is not particularly lucrative.  While Iowa State may be better at football than Kansas, Kansas is a basketball blue blood.  There is really no comparison here.  Iowa State just has not performed on the field well enough to make anyone think that they do anything other than “take.”

The Pac-12 is a strong conference, but it is not quite as strong as the Big 10 and SEC.  Here, Washington State wins going away.  When is the last time that Wazzou was relevant academically or athletically?

The SEC gets tougher.  Vanderbilt used to be a football punching bag, but they have outstanding academics and good basketball.  Kentucky football struggles, but they are a basketball elite.  If the SEC had to lose one school, it would probably be Mississippi State–the second school in a low-revenue state.

The B1G is easy.  Purdue.  See Part I.  Purdue basketball is good, but they are second fiddle in Indiana across-the-board.

The Implementation

While it is not tough to come up with the weakest school in most conferences, it gets a lot harder to find a second-weakest school.  And given that odd-numbered schools do not work for conferences, next to tradition, that might be the most important thing favoring the status quo.

In our ACC, who else does not carry its own weight?  Boston College has been dreadful recently, but adds the Boston market.  Moreover, they have been to more conference title game appearances than Miami.

But what about swapping schools?  It certainly does get more compelling when discussing an outsider school that increases value.  Who has more value to the Big 10–Purdue or Georgia Tech?  From 1909 to 2009, the easy answer was Purdue.  In the era of conference networks?  Not so sure.  And if UNLV were to improve its football product and academics, one could see it catching up with and passing Washington State.  Adding UNLV alone might not generate increased revenue, but swapping it for Washington State might.

Who has more value to the SEC and an SEC Network—Mississippi State or North Carolina State?  Frankly, the SEC doing that–allowing the ACC to then get rid of Wake Forest, could benefit both conferences.

Your response will be… the conferences would never ever do that.  Tradition is far too important. 

The Confidential’s response is… huh?  Tradition did not stop the end of Texas-Texas A&M, Kansas-Missouri, or Pitt-WVU.  It did not stop Nebraska from leaving Oklahoma, or Maryland from leaving the ACC.  It did not stop founding members of the Big East in Syracuse and Boston College from choosing the ACC.  And if this was all orchestrated by ESPN and/or Fox, then the concern about tradition is even more illusory.  AND if conference networks start wielding more power, isn’t it more likely that financial issues will become paramount.  What if TV revenue starts decreasing someday?  These “business decisions” may go from “leaving for greener pastures” to “getting rid of the weeds.”

Frankly, an argument could be made that the Conferences–all armed with networks someday–could benefit by deliberately re-organize the landscape for the mutual benefit of all.  Suppose ESPN sat down with the SEC and ACC and said this… we cannot get maximum value for the SEC in North Carolina and Virginia.  We cannot create an ACC Network unless there are a few more states.  We suggest this… “NC State and Virginia Tech to the SEC (adding two markets) and Vanderbilt and Mississippi State to the ACC (adding two markets to the footprint and being a somewhat offsetting academic arrangement).  Doing this will allow us to bundle the SEC and ACC Network across the entire region from Texas to Maine.”  And that is with just two conferences working together.

Is this any worse than a system where Iowa State and Wake Forest have no options outside of their current conference?  Not saying this is likely, who knows where TV revenue is taking the college sports landscape.  Just remember a few things.  Princeton has as many football championships as Alabama and Texas, combined.  And 50 years ago, the Sweet Sixteen in basketball included NYU, St. Joseph’s, Bowling Green, Loyola of Chicago, Oklahoma City, and San Francisco.

Things change.

Conference De-Alignment–Part I of II

We may be at a point where there is a several-year “cease fire” with respect to conference realignment.  The leading blog on conference realignment, Frank the Tank, certainly thinks that it plausible.  With all conferences other than the SEC signing Grant of Rights agreements, there is solidarity across the major conferences.  The cost of adding schools will simply be too great to justify a return on investment.  One question that must be posed, however, is whether we will see conference “de-alignment,” that is–a conference parting ways with a parasitic school.  It has happened only once in recent years–with the Big East and Temple.  Will it happen again?  With revenue such a central part of the conference alignment reality, the Confidential thinks it is inevitable.  Part I will discuss the conference landscape.  Part II will look at the targets for de-alignment.

Part I: The Conference Landscape

First, we need to revisit what has transpired in the past few years.  We have had numerous schools switching allegiance, ostensibly to secure their financial future.  The commentariat over in Big 10 country will tell you that the Big 10 is looking at per school distributions of $40M in the next several years.  Whether that is accurate is anybody’s guess.  But what IS clear is that nobody was talking TV revenue when considering expansion before Frank the Tank clarified just how important than criteria was.  And, while the Big 10 ended up taking Nebraska, they also took Rutgers and Maryland because of the impact on television dollars.  With Big 10 schools currently making $25M a year, it was plausible that these schools could still increase the per-school distributions.

Second, as the TV revenue increases, the value a new school needs to add in order to justify expansion also increases.  See discussion of Texas and the Grant of Rights.  At some point, further expansion may be blocked simply because there are no longer any schools that can cause an increase.  As an example, if we assume that the Big 10 will get to a point where it is distributing $40M in revenue to each of its 14 schools, that will mean overall revenue of $560M.  In order to justify going to 16 schools and not losing money in the process, the two new schools would have to each contribute $40M per year, right?  If the two new schools contributed $30M per year, that would mean a net TV revenue of $620M, or per school distributions of $38.75M.  That does not make sense.  To be sure, the Big 10 appears to be using phased in distribution of TV revenue to help balance that out.  For a school desperate to get to the Big 10 due to concern about a present conference, like Nebraska or Rutgers, that works out.  But the Big 10 is gambling that all added schools will ultimately at least pay for themselves.  Otherwise, they will drag down the per-school revenue distributions once they are entitled to that equal share.

Of course, the ultimate goal is to add members that will actually increase the per-school distributions using an equal share distribution philosophy.  And here is where the math gets crazy.  To actually cause an increased distribution such that all 16 schools could see a 10% increase–i.e. get to $44M apiece–the two new schools in a $40M/year per school distribution model would actually have to contribute $72M per year.  That would increase the TV revenue to the $704M necessary to get to $44M per 16 schools.  The question that begs is what schools can add $72M per year?  Texas?  Notre Dame?  Florida?

This does not just apply to the Big 10.  Take the Big XII at 10 teams.  With $24M in distributions annually, to get to 12 teams and not lose money requires that each of those teams add at least $24M.  The Big XII currently does not see any schools out there that are available and can do that.  Otherwise, they would make the move, right?  And the Big XII being at 10 teams means that a jump to 12 teams would add a lucrative conference championship game, perhaps more than $1M per team.  So it can take a school that simply can earn at par with the rest of the schools and generate a revenue increase for the rest.

Maybe it is an over-simplification, but it appears that the more success a conference has financially, the harder it will be to justify adding new schools.  The odds of these schools contributing enough goes down.  It is just easier to find value-adding schools when making $25M per school than it is when you are at $40M per school.

Third, as it becomes harder to find schools that add value, the inevitable result will be that conferences begin to look inward to those schools that are not contributing to the current distribution.  Take the Big 10.  Will there ever be a point in the future of the Big 10 where Purdue will be contributing to the Big 10 more than it receives?  If the Big 10 is at a $40M per year payout per school some day, will that be despite Purdue or because of it?  With Indiana already contributing the “Indiana market,” a compelling argument will be made that a school like Purdue is taking more than it receives and always will.  At $40M per year, that subsidy from Ohio State and Michigan will be even greater.  Stated otherwise, if Purdue decided to leave to the Big 10, would the per-school payouts actually increase?  Somewhere between perhaps and probably.

Will there be a point where the only way a lucrative conference can increase its per-school payouts will be to jettison those schools that are taking significantly more than they are receiving?  Given what we have seen in the past few years, one can only suspect that the resentment of revenue-parasitic schools will increase.  Tradition will delay the discussion until the numbers are meaningful and significant, but the discussion is inevitable.  As TV revenue grows, the Confidential thinks that we may see de-alignment in the future–conferences getting rid of schools that underperform financially.

B1G TV Revenue, Popsicles, and Trophies

Big 10 fans were scrambling around yesterday applauding the announcement that the conference would be distributing $25.7 this year.  It is unclear why the St. Louis Dispatch was issuing the report.  After all, the Big 10 did not want Missouri.  But it is what it is.

However, before Big 10 fans start looking for a popsicle to suck, it should be noted that the TV revenue contribution to each school decreased.  ESPN reported this regarding the Big 10 distributions:

The league’s fiscal year doesn’t end until June 30, but according to the St. Louis Post-Dispatch’s Stu Durando, conference payouts to member schools should reach another record high this year. Figures provided by Illinois show that Big Ten distributions are expected to be $25.7 million per school, including $7.6 million from the Big Ten Network.

Last year, schools got $24.6 million from the league, including $8.1 million from BTN. In 2011, the number was $22.6 million per school and $7.9 million from BTN. The Big Ten continues to distribute more revenue to its member schools than any other conference, which explains why Maryland was eager to dump decades of tradition in the ACC to jump on board.

People scoffed at the Big Ten Network when it first began, but Durando writes that the venture will have resulted in $42.5 million per full league member over the past six years. The figure has decreased this year for the first time, but that’s likely due to an increased slice of the pie given to Nebraska, which does not receive a full share of league revenue until 2017.

So there you go.  Stu Durando calls it a “record” distribution, even though the to-school distribution is expected to be lower than either 2012 or 2011.  Oh wait, there is an excuse.  The lower distribution is because Nebraska is being given a larger slice of the pie.  And Nebraska will not even get a full share until 2017!  So apparently Nebraska’s mere increase in share caused a decrease in payouts per school.

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4-22-13: An ACC Holiday

The ACC’s obituary was written many months ago.  The Big 10–fresh off a harvest of Maryland and Rutgers–would be descending on the ACC and taking enough teams to get to 16, 18, 20, 0r 22.  The issues were merely who and how many.  Meanwhile, the only other issue was whether the ACC’s carcass would be feasted on by the Big XII and SEC at the same time, or whether these conferences would be waiting for the Big 10 to “choose” first.  Well… and it is great to say… you couldn’t have been more wrong.  Instead, as reported here and elsewhere yesterday, the ACC schools have decided to sign a grant of rights.  Much like a grant of rights solidified the Big XII, this grant of rights also solidifies the ACC.

So what are the winners and losers with this announcement:

THE WINNERS:

The ACC schools.  The ACC is a conference of elite academic institutions.  The Big 10 and Pac 12 are also conferences with elite academic institutions.  Had the ACC broken up, it would be meant the dissolving of a fine partnership over athletics.  There is something neat about having Boston College, Miami, Syracuse, and Duke all joined together in a conference.  Add in Notre Dame and Wake Forest, and that is a nice collection of private institutions not seen in any other major conference.  Meanwhile, Virginia, North Carolina, Georgia Tech, Virginia Tech, and Pitt are excellent academic institutions on the public side.  And Florida State, Clemson, Louisville, and North Carolina State continue to improve.  The latter are, well, pretty good at football too.  But the real win is that these schools adhered to the idea that the potential value of this conference should not be squandered in the hope of more money immediately.  For once, someone left money on the table.

Syracuse, Wake Forest, Pitt, Boston College, Virginia Tech, Duke, Miami, and Louisville.  In some scenarios, these schools would get left out of realignment.  They avoided this fate, at least for now.

ESPN.  ESPN was somewhere near the brink of potentially losing  control of the eastern seaboard.  Maryland and Rutgers were shuffling off to the midwest to be featured in the Big 10′s network jointly owned by Fox.  If the Big 10 captured a few more, or several more, ACC schools… only the SEC could take on ACC schools–maybe 2?–to keep them under ESPN control.  Maybe the SEC could have landed North Carolina and Duke.  Or maybe they would have been “stuck” with North Carolina State and Virginia Tech.  Good football schools, but schools overshadowed academically by their state flagship schools.  And any ACC schools heading to the Big XII would move away from full ESPN control to partial ESPN control.  Finally, if the Big 10 had gotten too big, ESPN would have had to pay dearly in 2015 to keep their rights.  Frankly, keeping the ACC might have been a cheaper option.

Frank the Tank.  The author of the best expansion blog on the Internet had been saying forever that the ACC was strong.  The Maryland departure, and the echoes from some less-responsible bloggers regarding future Big 10 targets, made even Frank the Tank question just how strong.  But at the end of the day, his belief in the ACC prevailed.

ACC Leadership.  Questioned by many, the ACC home office seems a lot more competent today than they did 8 months ago.

THE LOSERS:

The West Virginia Bloggers.  Look, West Virginia got kind of a raw deal by being passed over for, ultimately, Louisville.  Of course, when is the last time West Virginia won a national championship in hoops?  In any event, few schools in the ACC had serious animosity toward West Virginia.  Pitt, Syracuse, and Virginia Tech (and Maryland presumably) would have liked to see them in the ACC.  Not the other way around.  Fortunately, when that did not pan out, the Mountaineers ended up with a very soft landing in the Big XII.  The response?  Echoing the lack of class from the school’s athletic director (saying Navy was an upgrade over Syracuse in football), a few select bloggers made a name for themselves guaranteeing the destruction of the ACC.  Not just that it was a possibility.  No, these fools claimed that it was fact.  Imminent fact.  Well, folks, you are running out of time for that fact to come to fruition.  So, while your imaginary sources may still whisper in your ear from time-to-time, the fifteen minutes of fame is over.

Some of the Frank the Tank Commentariat.  Like something out of Willy Wonka, some of the commentariat over there acted like spoiled children.  Person A: “NO, I want Duke, North Carolina, Virginia, and Florida State.”  Person B: “NO, the Big 10 should take Georgia Tech, Boston College, Duke, North Carolina, Florida State, and Notre Dame.”   Person C: “You folks think small… the Big 10 should take everyone except Syracuse, BC, Wake Forest, and Louisville.  They should then take Texas, Florida, USC, and China.  Look at that market share!!!  We’ll be rich!”  And so on.  The Confidential understands that expansion is fun to talk about.  But the degree to which “money” became the only statistic that matters was beyond absurd.  Even if the Big 10 COULD make lots more money by adding in schools in great markets, there is more to this game than mere money.  When the blog first started taking off, people ignored money.  Now, money means too much.  Money is nice… but there is something to be said for athletic prowess.  At the end of the day, the SEC’s adds of Texas A&M and Missouri likely trump Rutgers and Maryland, on and off the field.  That book has many more chapters to write.  But let a few of them get written before declaring it a best seller.

UConn and Cincinnati.  A poached ACC was an inviting home.  A solid ACC?  Not a great sign.  Things can change though.

Expansion Fans.  While the aforementioned speculation got carried away by some, the speculation sure was fun.  This all started with the Big 10 looking for team #12.  It ended with a 10-team Big 12 and a 14-team Big 10.  Along the way, the Big East had teams in Idaho and California briefly.  And now there is something that we cannot call the AAC.  While the aftershocks of realignment will continue to ripple through the mid-major and minor conferences, the ACC’s Grant of Rights may just slow down expansion within the 5 power conferences.  If so, things may not be as tense for ACC fans, but they will also be slightly less interesting.

What do you think?  Any incorrect winners & losers?  Anyone omitted?  You tell us…

 

 

Update on ACC Revenue

CBS is reporting that the future addition of Notre Dame will have an immediate impact on revenue.  Even with just a 5-game football schedule and basketball games, Notre Dame will contribute in excess of $1M additional to the television revenue for each school.  While this is not “catching up to the Big 10″ money, the gap between the conferences is not as wide as reported.  This may be why there are lots of rumors regarding schools leaving, but few actually doing so.

That same article also reports as follows regarding an ACC Network:

The ACC is currently considering a 24-hour sports channel with ESPN, which is gathering information and will return to the league with an assessment. If ESPN makes an offer the ACC likes, plans for a channel might commence. The league is evaluating whether a channel makes the most business sense.

Look, who knows if an ACC Network would be successful?  What is clear, however, is that the Big 10 Network is successful. This is where things are headed.  If there is not going to be an ACC Network, then ACC teams might very well end up on the Big 10 Network, to ESPN’s loss.

Perhaps ESPN would benefit from some sort of joint network between the SEC and the ACC, where both channels are a package that is available from the Northeast down to Florida and West to Texas.  That’s a lot of territory to bundle the packages together.  The price could be determined by media market.  The SEC channel could be 90 cents a month in Texas, while the ACC channel could be 10 cents a month there.  But in North Carolina, it could be the inverse.  The extra revenue provided by the bundling would help get both channels more market saturation.

Then again, the Confidential is hardly a financial or television tycoon.  Perhaps ESPN is moving towards jai alai, as that will be the sport of the 22nd century.

What do you think?  ACC Network have ANY potential?