What does college football realignment mean for schools like Georgia State? - PART ONE
Media Monday's Vol. 6
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Written by King Williams
Edited by Alicia Bruce
What does college football realignment mean for schools like Georgia State?
This installment of Media Monday’s is dedicated to college football and television rights fees. Whether or not you watch the games, the impact of college football on the greater American collegiate system may be undergoing a fundamental shift. For schools such as Georgia State, Kennesaw State, and even Georgia Southern, this latest round of conference realignment could see a reckoning on two decades of spending related to collegiate athletics—in particular football.
For this episode, I suggest listening to my podcast episode with Ben Moore of 247 Sports.
Available now on SoundCloud, on Apple Podcasts, on Spotify, and here on Substack!
1. So what happened?
In July, a bombshell story from The Houston Chronicle broke stating that two founding members of The Big 12 Conference, the University of Texas, and the University of Oklahoma would not be renewing their grants of media rights following expiration in 2025. The schools formally announced that they would not be remaining members of the conference they helped found in 1996. In addition to leaving The Big 12, Texas and Oklahoma would be joining the rival Southeastern Conference (SEC), currently the most prominent college football and overall athletic conference for the last 15 years.
The announcement of Oklahoma and Texas to the SEC means that there will be a reshuffling of athletic, academic, and financial realities for several dozen universities, much of which has happened already within the last 90 days.
2. What does that mean?
For The Big 12 and the smaller conferences, those big spenders for the new, super-sized SEC could lead to much smaller (if any) spending with the other conferences. For universities who depend on the revenue of football, this could lead to shuddering of other athletic programs, halting on funding for school-wide projects, potential lawsuits from coaching staffs, and revenues used to fund non-athletic activities.
Conference realignment
Currently, a reshuffling of universities is already happening as The Big 12 has formally accepted four other universities from the rival American Athletic Conference (The AAC). Those universities: the University of Houston; Brigham Young University (BYU); the University of Central Florida (UCF); and the University of Cincinnati, are additions to provide stability for the conference. Stability coming at the expense of poaching other schools from other conferences. Despite this poaching, the effort may not be enough to offset the long-term revenue, or brand notoriety of Texas and Oklahoma departing for the SEC.
3. Back up, what are conferences?
Collegiate conferences are important because they are social signifiers, research funding cartels, academic groupings, land stewards, and a coalition of semi-professional athletic groups. The first college football game was played on November 6th, 1869 between two members of the Ivy League, Rutgers University (now in the Big Ten), and the College of New Jersey (now named Princeton).
The first conference and the first official conference
While the Ivy League is arguably the first collegiate conference, it wasn’t officially ‘the Ivy League’ until 1954, coinciding with the formation of the NCAA, and initially, that formation was built around basketball. It was actually the formation of the first official big-time college football conference, the Intercollegiate Conference of Faculty (now known as The Big Ten) in 1895. Yes, technically Triangular Football League in 1885 is the first. In fact, the Michigan Intercollegiate Athletic Association (MIAA), founded in 1888 can make that argument, as it is still operating, albeit on the Division III level.
Who gets to decide who’s in a conference?
College conferences are essentially regional athletic and academic cartels. Historically conferences in the US have been formed by three factors: academics, athletics, or both. In the pre-Ivy League era, those colleges, known colloquially as the Nine Colonial Colleges existed as an ‘ivy league’ for almost 200 years before the rise of national college football. Since then, dozens of other collegiate athletic associations have come, gone, and merged. But the few that remain, the Ivies, the Seven Sisters, and the sports schools (the SEC, Big Ten, PAC12, ACC) are the most colloquial associations people have about college conferences.
With these associations comes notoriety and over the last 40 years of college athletics, money. Of these sports schools, a way they’ve been able to generate so much money is by operating as mini-athletic leagues, leagues that often operate in a cartel-like fashion to keep smaller schools from competition in key prized tournaments (see: Big Ten vs NCAA Tournament), television contracts, and college football bowl games. These conferences are known as the ‘Power 5’ schools (the SEC, Big Ten, PAC12, ACC) versus the ‘Group of 5’ schools (AAC, Sunbelt, MAC, Conference USA, and Mountain West). To be in the Power 5 is just about money as it is status, to be in the Group of 5 is about having to constantly prove ‘worth’, often on unfair terms of competition, Power 5 biases, and television providers wanting marquee names despite actual athletic prowess.
4. The New Big 12
Within the last nine years, several prominent members have departed the conference for better financial (Nebraska), geographic (Colorado), brand (Missouri), or all three (Texas A&M). And the schools The Big 12 added, West Virginia and Texas Christian University (TCU), has been good for football but has done nothing to grow the finances, brand, or geographic footprint of the conference. Now with the departure of two of the biggest brands ever in college football, an 8-team Big XII would’ve never been feasible. This expansion of The Big 12 has focused a lot on stable regional markets and emerging fanbases.
Houston
The Big XII had to add some new members to get to the minimum of 12 members needed for a conference + conference championship game. Eight members were never enough. Houston is the fourth-largest city in the US, one of the most diverse, one of the youngest in the US, and will replace Chicago as the nation’s 3rd largest city by 2040. Houston was a former member of the now-defunct Southwest Conference, which was dissolved in part by schools like Texas and Oklahoma who left in 1996 to form the Big XII, a pairing of Oklahoma, Oklahoma State, Texas, and Texas A&M with members of The Big Eight Conference, a conference realignment that left out fellow Texas schools Houston, SMU, Rice, and TCU.
UCF
While UCF, located in Orlando, Florida, is the largest public university in the country and contains the largest alumni base in the country, UCF being in Orlando is a unique opportunity to carve out a niche in providing the only opportunities for in-person football games as the NFL has no team in that city. UCF from a financial opportunity could be an economic driver like other college sports teams in second and third-tier cities that do not have a substantial professional sports presence. It’s why the SEC and Big Ten works so well. The local markets have developed decades of fans within the state and alumni who often move to the regional anchor metros—Atlanta for the SEC and ACC, Dallas for the Big XII, Chicago for the Big Ten, New York City for the Big East. UCF also is one of the most diverse schools in the country, with one of the largest bases of Latinx alumni in the country.
UCF exists in a relatively untapped local market (Orlando) for tier-2 college football in a state dominated by tier-1 powerhouses, the University of Florida, Florida State, and Miami. Add in the gulf in professional sports teams, the Orlando Magic exists but hasn’t been relevant in years. Furthermore, the new Orlando FC MLS team is still too new to judge how the team will be in attendance, revenue, and local buy-in.
BYU
While BYU contains one alumni base that includes the support of the Mormon Church + the tens of thousands of alumni of the school, Utah itself is not enough of a state to generate interest from a pure market perspective, the viewership, attendance, and national notoriety have made them a perennial candidate for expansion. What’s held them back in the past from being accepted has been the overt religious connections to The Church of Latter-Day Saints and the schools’ political leanings. In addition to the travel required to play sports in Utah. The media footprint of BYU is the most connected to a religious movement, with that comes a broader, global appeal of the team and college football as a whole.
Cincinnati
Cincinnati was always in the shadow of basketball giant Kentucky (SEC) and football giant Ohio State (Big Ten), while also offering consistent fan support + success in both sports. Cincinnati for the last decade has been a perennial candidate for upgraded conference affiliation in addition to being currently, the #2 college football team in the country. The addition of these four schools provides stability but won’t replace the loss of Texas and Oklahoma.
5. How did we get to colleges making so much money?
A 1984 Supreme Court decision, NCAA v. Board of Regents of the University of Oklahoma. That 7-2 decision allowed for college conferences to peruse television deals outside of the NCAA. Prior to that, all television deals were handled by the NCAA. Since that decision, collegiate conferences have been able to make their own autonomous financial decisions, but not their overall governance (this will come back to haunt the NCAA).
Securing the bag: current money vs future money
The move by Texas and Oklahoma to the SEC is about money, long money. Neither ESPN nor Fox decided to an early extension of the Big 12’s media rights this spring. This signal of not renewing rights could’ve been a sign that both media companies knew of the impending exit or that spending more money for an extension wasn’t worth it long-term. Both companies Fox and Disney, the parent company of ESPN are aware of chord cutting plus the growth of streaming. Both companies would rather spend their money on core brands with dedicated fanbases and wide audiences. Audiences who will still be in attractive markets, pay for cable, watch broadcast or streaming.
Current Money
The Big 12 annually makes over $400 million per year in negotiated media revenues primarily driven by college football. In the case of the 10-member (yes, it’s weird) Big 12 conference, this amounts to over $37 million per year, per school, with the remaining going back to the conference governing body. The Big 12 is actually third in distributed revenues per school above both the PAC-12 and east coast-based ACC. The biggest driver in this value is primarily from the tier-1, blue-chip college football brands of Texas and Oklahoma. Sans Texas and Oklahoma, it could be argued as being tier-2 (Kansas) or tier-3 brands the rest of the schools in the conference. Texas generates the television revenues, the sponsorships, while Oklahoma brings in the marquee regular-season games, premiere end-of-the-year bowl games, and consistent college football playoff appearances.
Future Money
Current estimates for an 8-member Big 12 conference could’ve been $14-18 million a year. But the conference would likely lose more value by having eight members who wouldn’t be marquee enough in football to justify the price. With an added problem of not having an annual conference championship game at the end of the season due to lack of sufficient membership* (typically it’s 12 members needed for a conference championship, but there was a concession made just for the Big 12 to keep the conference from imploding in 2016). While early estimates for a new 16-team SEC including Texas and Oklahoma would be between $60-$80 million, per year, per school.
For a Power 5 School, the money is there
This doesn’t include opening weekend games that can fetch in the millions, such as the Chick-Fil-A Kickoff. The Kickoff is an annual two-day event held in Atlanta, featuring one ACC-SEC matchup, and one ACC or SEC team versus another marquee member. And the payouts for an individual school can be massive, for the upcoming September 3rd, 2022 game between the University of Georgia (UGA) and PAC-12 powerhouse Oregon, will put $4.5 million in the pockets of UGA alone. Ditto for Oregon. For perspective, that is the future yearly payout for a single school in the SunBelt, in a contract that was just agreed to this year. This doesn’t include the non-College Football Playoff end-of-the-year bowl games, or NCAA tournament winnings.
The addition of the newest four members to The Big 12 in 2023 and potentially more could bring revenue up to $22-26 million per school with a new multi-year/multi-platform deal with either Fox Sports or ESPN. It’s not the current $37-44 million per school, but it’s enough to be stable.
6. What does college football have to do with my cable bill?
If you have a cable bill it’s likely that you have paid for ESPN, Fox sports, or both. ESPN correctly identified in the early 1990s that college football was undervalued as a marketplace. ESPN’s 1990s growth centered on major league baseball, NBA basketball, and college sports. College sports was particularly beneficial as you often could acquire hours of content for one yearly flat fee, a fee that could be distributed via a cable bundle that until a decade ago was one of the most profitable business models ever.
A) The cable bundle was too good a business for colleges and ESPN/Fox until it wasn’t
The cable bundle was a near monopoly, as often driven by local telecommunications providers. These telcos operated almost like a local cartel, where accessibility to a broad array of information and entertainment forced customers to prices set on their terms. The cable bundle reached peak households around 2009-11, this time seeing sports, especially college sports being cash cows. So much so that at one point in time ESPN accounted for 57% of all company operating revenue at Disney, the parent company. And being in the business of football, college or pro is even better.
This period saw the national rise of competing sports property Fox Sports who’s growth from 1990s NFL football led way to the Fox Sports channel. This combination of ESPN and Fox exists as a near duopoly of the American sports market. This duopoly currently owns varying tiered rights, bowl games, and split ownership of distribution for the current college football playoff. Even before that, of the (formerly) 5 major conferences ESPN and Fox had exclusive rights for varying college football conferences.
B) College football is GOLD
Fox owns the majority rights to both the Big Ten and PAC-12, in addition, to splitting rights* with ESPN on The Big 12. While ESPN owns the majority rights for both the ACC and The SEC. Additionally, The Big Ten has an exclusive cable television/streaming network partnership with Fox. ESPN has the same as the SEC and ACC. ESPN also has an exclusive cable/streaming network with just the University of Texas called The Longhorn Network. Which pays the school an additional $15 million-a-year to play all of the other sports of Texas.
C) Texas and Oklahoma saw the writing on the wall, they got out early
Texas and Oklahoma have seen the writing on the wall for some time. Oklahoma has been rumored to leave for the SEC for well over a decade. While Texas has considered moving to the PAC 12 alongside Oklahoma within the last decade as well. The reason mainly is that in the long-term, while the big 12 deal is good, there is just an overall lack of growth with being such a Texas/mid-western conference.
Because the conference did not move quickly enough to add at least 12 members, there was a lingering that it would be more vulnerable long-term to the scenario that exists today. The Big 12 also has made some mistakes by not inviting other members out of general snobbery. During the last round of conference realignment, other schools which have grown and prominent instability could’ve gone to The Big 12 as well. The Big 12 could’ve added both Cincinnati and Louisville, providing stability. As well as Memphis, Houston, or SMU, to the fray, but they didn’t. The conferences didn’t see the forest (a connected series of mid-market to major-market middle American conference members.)
7. The money is in media rights
As a result, the other remaining nine football subdivision (FBS) conferences not named the SEC could be in a precarious position in the future regarding revenues from athletics.
Grant of Rights
Oklahoma and Texas deciding to not renew their grants of media rights following expiration in 2025 will lead to a serious decrease in revenue to the overall conference. While this move was value destruction for The Big 12, it’s a value-creating opportunity for the SEC. A grant of (media) rights is the binding legal agreement between an individual college/university (ex: The University of Texas) within a larger coalition of schools known as a ‘conference’ (ex: The Big 12). Within this legally binding agreement, each individual school pledges the school’s participation in leveraging their collective bargaining for academic and/or financial support. In this case, the support is money, and the vehicle is through collegiate athletics.
Media Rights
These athletic events, especially football and (men’s) basketball are valuable to universities via the fees the conferences charge for the media rights to air these games. A conference's media rights can be licensed for a number of years (sometimes for decades), on a number of platforms (broadcast/cable), and to multiple parties (Fox/ESPN/CBS). In return, the conference (ex: The Big 12), will negotiate on behalf of (usually*) all of the universities with third-party businesses looking to do business. These media rights provide local, regional, and national exposure, exposure which translates to bigger licensing agreements, ticket sales, stadium renovations, and recruiting advantages. The greater the exposure on television, the greater likelihood a school gets more money.
Streaming media rights
The reason why The Big 12 didn’t add the midwestern schools last time was due to snobbery and then-perceived media market value. The Big 12 could’ve added Memphis, Cincinnati, Louisville, West Virginia, but the media markets were never going to be anything close to what an Atlanta, Tampa, or Orlando media market would’ve been. The Big 12 passed on fellow Texas schools Rice, SMU, and Houston because the conference was already there, but more importantly, the other schools, especially Texas keeping Houston out, saw the schools as lesser. Now the conference needs these schools to just survive as a conference.
In the streaming era, the region doesn’t matter, brands and dedicated audiences do.
The Big 12 members then (especially Texas) could use the academic profiles as a reason for not accepting. In the case of Rice, they went to the lack of football success.
This next round of conference realignment has been a building off of the need for regional markets, television viewership, and brand, with the intent of building up a streaming product. A product that will eventually have to be a replacement for the cable bundle.
A network which was the result of the University’s own venturing out with Fox who also had an idea with doing the same for the University of Oklahoma around the same time per a recent interview with former ESPN President, John Skipper. The peak penetration of the cable bundle in US households was also met coinciding with three important factors:
The rise in broadband internet
The rise of the iPhone and internet connective mobile devices
The rise in YouTube and social media
ESPN reached peak household penetration in 2010-11 with over 100 million homes in the US paying over $5 dollars per month, regardless if they ever watched the program. ESPN at one point was 40% of the company’s total revenue. A few short years later, ESPN is now at 80 million US subs and declining fast. Which has been in correlation with the decline in the cable bundle. ESPN, Fox Sports, et al were fine to spend billions of long-term dollars on college sports programming, they were (correctly) seen as a vehicle of consistency. What ESPN decided was right, what they didn’t anticipate was people leaving cable. While cable has declined, sports viewership, in particular football, has remained relatively stable.
That stability must now translate into being both for television and now streaming services. This puts added pressure on ESPN + to be a long-term supplement to the cable bundle as well as competing streaming services Fox Nation, and CBS Sports.
More audio backstory
I would recommend listening to former ESPN President, John Skipper, the man who wrote the checks to these conferences for years, talk about it on former ESPN host, Dan Le Batard’s podcast:
The Dan Le Batard Show with Stugotz - Hour 2: A New Look SEC on Spotify and Apple Podcasts (7/27/21)
The Dan Le Batard Show with Stugotz - Postgame show with John Skipper Spotify and Apple Podcasts (7/29/21)
The future of collegiate media rights is a set up against the NCAA
Over the next decade, college sports are going to be reshaped by those who still are willing to pay for the cable bundle + streaming service. Despite what prognosticators indicate the future isn’t just streaming it’s streaming plus cable. The business model for streaming services currently does not make it profitable and surprise despite the success of companies like Netflix which is still running $20 billion in debt, or Spotify which will never make money actually being only music service.
ESPN+ Is going to be the deciding factor and what conferences are going to be successful going for it. Yes, it is likely the new media rights deals that will be taking place over the next decade will be much larger and for a longer period of time. But those deals will also likely include the inclusion of streaming rights. And for the SEC who’s been the most aggressive at both building partnerships and revenue, replacing the NCAA altogether could be a viable option. Provided that the other major conferences by along and so do the cable providers.