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Location

Part 7

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As the old real estate mantra goes when describing the most valuable properties, it comes down to location, location, location.   However, no single aspect is analyzed so poorly as location.   Sometimes it is in regards to only one game, instead of all, sometimes it is under the guise that someone brings “a market” and other times it is because recruiting will explode if you play in that state.

Yes, all of those are possible, but not with every possible outcome.  Playing North Texas doesn’t have the same cache as playing Texas, and the same holds true for other properties.   Just because you are located somewhere doesn’t mean you add a lot of value where you are located.   What matters most, is brand, then location.   Northwestern doesn’t have a lot of football love just because they play in Chicago.  Nebraska has a large football brand based nothing off location and everything to do with historic success.

Brand and Culture we already discussed, but the point here is do not confuse location with brand.  A school does not have value just because it is located in a specific market.  Notre Dame’s location has little impact on their overall value.

However, location is important for two aspects.   The first is the relative distance between the member institutions.  Travel costs for all of the conferences outpaced revenue in expansion and most schools in the Power Five have seen their travel budgets increase by a significant amount.

nmex2Since 2009, while the Power Five have seen a significant increase in revenues due to the addition of teams and new media deals, they have actually seen a 17% decrease in yearly profits. This factors out to be about $1 million less in profit per Power Five team per year after gaining nearly $1.2 billion in revenue as a group.

One of the largest factors for this change has been increased travel to the new member institutions.  An easy example of this is West Virginia and Missouri.  Both schools have seen their travel budgets balloon as their conference competition was less accessible.  There were five Big 12 conference foes within the same radius of the closest SEC East divisional foe for Missouri now.   In addition, all of the SEC and Big 12 schools also saw their travel budgets increase in order to take trips to Columbia and Morgantown.  That adds up.

The second benefit has to do with regions.  The reason the Big 12 was formed in the first place is because the SEC had gained a large share of the TV markets and the Big Eight needed to keep pace.   The common thinking at the time was that geographic footprint would be beneficial in future media deals and the Big 12 actually had plans in place to expand to 14 teams back in the 90s, but didn’t move forward for a variety of reasons.

When the television deals started to play out around 2010 range, geographic footprint wasn’t the primary factor in valuation, it was audience.   Just because Georgia Tech is located in Atlanta doesn’t mean they “pull” that market.  As a matter a fact the audiences for their games rival schools in smaller markets.   This is why brand and culture are important, because people watch brands, not proximity.

That being said, you don’t want to layer your schools too closely.   Having another school in Texas has a lot less value for the Big 12 than it does for other conferences.  Outside of Texas the value of a school from a location stand point would increase the closer it is to member institutions.

In order for location to be a value to the Big 12 I am going to try and quantify it three ways:

  • Does it provide a new region?
  • What is its distance from the geographic center of the Big 12?
  • And what is its distance from West Virginia?

Region we touched on, but the final two are important to determine the relative cost of the additions.  If a school is far away from the geographic center of the Big 12, which sits somewhere around the Ozarks, but close to West Virginia, there will be less travel cost than if the school is far away from both.  The Big 12 has made a commitment to its direction with the addition of West Virginia.   Ignoring that decision makes little sense.

Taking them both into consideration here is a heat map of the regions within the US with the greatest potential for expansion:

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It isn’t shocking to see that the greatest potential for new regions to develop for the Big 12 lie within the Mississippi and Ohio River Valleys.  West Virginia to Iowa to Texas form a triangle and both rivers fall right between them.

What is a little more shocking to see is how the decision to aim east with West Virginia has made western schools basically unapproachable, unlike in the past.  BYU and New Mexico were once considered possibilities for 13 and 14.  BYU, however, is now 1,250 miles away from the geographic center of the Big 12, which has moved considerably east in realignment.   Boise State, who some reporters toss around as a candidate, is even further.  Another interesting development is how little attention Florida gets within this map.   Outside the panhandle, most other parts of the state may be simply too far away to provide any benefit to the Big 12, no matter how new the region.   That isn’t to say that schools within Florida have no value to the Big 12, just that their location is unlikely to be the reason.

To quantify this for our analysis, a university will get one score for being within four tiers of the Big 12’s geographic center and a bonus score for what tier they reside around West Virginia.   These Tiers will be broken down into 250 mile increments.    Anything over 1,000 miles from either point will receive no points.

There are still a lot of schools within that area. A lot.

 

If you have any questions or would like some numbers discussed, contact The Number Monkey on Twitter @TheNumberMonkey or via email [email protected]

©2015 Number Monkey Media

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