NMRUSEThis has been a strange few months.  We’ve gone from it looking like the Big 12 is at each other’s necks to them holding hands and singing campfire songs together.  Even the sports media world reflected on the Big 12 meetings last week as if they were doing an unexpected victory lap.    The narrative has changed so much, so fast, that I’m actually a bit suspicious of some of the messages we’ve been receiving.

NMCONFREVLet’s start off with the big news of the week, the Big 12 announced they are distributing $304M to its ten members and both West Virginia and TCU completely bought in as full members.  It may feel like it has been a while, since it is the fourth year, but keep in mind that both teams were making around $9 million prior to joining the Big 12, that’s only a 233% increase.  Additionally, the Big Ten announced its revenue this spring as well and Nebraska was still making 60% of the original Big Ten schools, or around $19 million.   In that regard, West Virginia and TCU’s “buy ins” look speedy by comparison.

The Big 12’s announcement rattled up a lot of the media because, over the month of May, most had forecasted the Big 12 would be making around $23 million.   This led to numerous articles stating the Big 12 was $9 million behind the SEC, was unstable, and disadvantaged.  As late as the beginning of last week the standard message was the Big 12 was the lowest earning conference of the Power Five.
NMTEAMCONREVHowever, with the Big 12’s announcement of $30.4M per school, with no schools having a buy-in left, that talking point is debunked.   In reality, the Big 12 is currently 7% lower than the SEC, the Power Five leader, in payouts this year.   That’s nearly a rounding error.   Considering that none of these contracts are lined up the same, involve games that are not always played every year, and they escalate on different terms you’ll never have two conferences pay out exactly the same in any given year.

That seven percent or $2.3 million, also doesn’t factor in the revenue each Big 12 school makes by selling what is called, “member controlled rights”.   All of the other Power Five conferences monetize all of their inventory.   The Big 12 leaves one football game, about five men’s basketball games, and a host of women’s basketball and Olympic sports for each school to do with what they want.  While this isn’t paid to the school from the conference, it is revenue from the same inventory the other conferences sell.   Not counting it exaggerates any difference.   And it does matter.   Even if a Big 12 school only makes $1-3 million from those rights, it makes everything even more in line with the Big Ten and SEC.   Additionally, the big three brands in the Big 12, Texas, Oklahoma, and Kansas, make more than $5 million on their rights, which eclipses the other conferences.   So, the story for the Big 12 will always be; some teams make more than the SEC and Big Ten and some make  a little less.  Considering the difference we’re talking about works out to be a tiny fraction of the total athletic revenue of most of these schools, it really isn’t that big of a deal.   Within the Big Ten you have Purdue who loses money on football and Michigan who made over $80 million.   Now that’s a difference that matters.

That being said, there is a difference in media value between the Big Ten, the SEC and the Big 12.  Contrary to most opinions, however, it isn’t because of a conference network.   The Big 12 has the most games per team on standard channels than any other power conference.    In essence, Fox Sports 1 is the Big 12’s network.  Where it is lagging behind, however, is their Tier One contract.

When everything was renegotiated to match both deals to 2024 the Tier One deal was mostly just extended, instead of revalued like the SEC did and the Big Ten is doing now.   Tier One games are big deals, they nearly generate as much money in one game as a school will make from three games in a conference network.   I’m making these numbers up for an example, but when everyone else is making $6 million per Tier One game and your old contract is only paying $4 million, well, it doesn’t take many games to start creating a real difference.

The Big 12 though has been slightly isolated in this due to the fact that it has ten members, instead of fourteen like the ACC, Big Ten, and SEC.  In this year’s $304 million payout, 45%, or $135 million of it came from non-media revenues.  Most of this is from the playoffs and the Sugar Bowl, but it also includes items like NCAA payments and bowl games. Of the $30.4 million each Big 12 team received, $13.5 of it came from this category.   The other conferences make about the same amount of money off this segment as well, but with 14 teams they only pay out $9.4 million per team.   That $4 million difference is very important, as we’ll see in a bit.

Either way, as it currently sits, the Big 12 is in a strong media position for the remainder of this contract, but it may be positioning to grow even stronger.

NMB12NETThis is the topic du jour that we can finally lay to rest.  To continue the metaphor, BHV’s presentation put the final nail in the coffin on the concept of a traditional conference network, like the SEC Network or the Pac 12 Network.   Not only is the industry starting to shift from watching games at home to watching it via mobile devices, but the cost required to even start a network is prohibitive.   In short, for what you have to give up it is too much of a risk.

Additionally, you need a lot of inventory to feed the network beast.   That’s a lot of inventory that the Big 12 just doesn’t have.  As one network executive said, “ten games does not make a network”, when referring to how many football games the Big 12 had unsold in its member controlled rights.  The Pac 12 gives up two games per school and the SEC and Big Ten teams give up three games per school on average.  The 39-45 games the SEC and Big Ten provide their networks is nearly the same as all of Big 12’s games.

At that volume the exposure generated from the networks isn’t even.   The biggest argument within the SEC as of late revolved around who was featured more and last year within the Big Ten, Wisconsin had five of its games on BTN while Michigan State only had one.  Considering the conferences are being branded more than the teams, this is providing headaches that are only mitigated by revenue at the moment.

All of these add up to the Big 12 having issues with the network, especially considering the only way to build one was to expand with teams that brought value with their inventory, not just brought inventory.  In order to provide as much inventory as the SEC and Big Ten, not only would the Big 12 have had to expand by four teams, but they’d also have to move games over from their current media deal, which reduces the amount they are paid.  In order to break even with their current contract they’d need to have a massive success right out of the gates, which is unlikely with the current state of the industry.

In the end any idea of a traditional network is dead, but the conference is watching for future streaming options.  The thought process being you need less of a market for apps than you do with a cable channel and a lot less overhead.   Several universities already sell their digital rights for around $10 a month.   A conference sponsored streaming app at $3 a month provides $180 million in revenue with five million users.  You could have less of a subscription and less users and still make more than the Big 12 was looking to gain off a traditional network.

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