Realignment Megathread (All The Moves)

[isucy86]

I think this argument plays a lot better once this 20mil payment mandate kicks in because right now nothing of what you’re saying is happening.

All P4 conferences are making more money then they have ever made in history. Ratings have been going up. ISU just had a record setting season, ASU won its first outright conference title in 30 years and made its first playoff, SMU, Boise, and Indiana also had similar seasons. Colorado is relevant for the first time in decades.

In basketball BYU just landed the number 1 overall recruit, UConn is coming off back to back championships, and ISU has a shot at a 1 seed.

Women’s basketball (and in a very minor case gymnastics) has never had better ratings or awareness.

Again, I totally get looking down at the future and seeing huge issues but right now this idea that college athletics and athletes are doing anything but amazing is completely misplaced.

First, on-field results is an unrelated issue to the financial issues this thread is mainly dealing with.

The highlighted portion of your statement is half right and maybe your wording was intentionally deceptive. It is valid if one is looking backward and not toward the future. Which really matters in money matters.

The Big10 & SEC recent Conference TV deals plus their CFP money grab will result in their school's Athletic Department Revenues jumping $40M annually over the next half decade. Whereas, the Big12 & ACC are still operating under historical TV contracts and will only see their CFP revenue grow $5M(Big12) to $10M (ACC) annually with the new 12 team format.

For the Big10/SEC their go-forward revenue will cover the $20Mish athlete benefit cost plus the Big10/SEC Athletic Departments will have an additional $20M of new money. While the Big12 & ACC will need to find new revenue sources or cut costs to pay for at least half of the $20M athlete benefit.

So there's a lot positive happening on the field in 2024, but with future financial realities will it continue? IMO we'll find out over the next few years.

 

[cyputz]

Iowa State AD: expense amount, change from FY22.

• Student-athlete student aid: $10.24 million, 4.08%
• Coaching salaries, benefits and bonuses: $19.69 million, 2.51%

How did 10.24$M -> 4.08%
Yet 19.69$M -> 2.51%
Percentage switched?

 

[FinalFourCy]

, I don’t view PE as a boogeyman. It’s actually extremely helpful for startups and provides both resources to scale the business and expertise for strategic decisions. Think like Shark Tank at a larger level.

However, I’m really, really hesitant about PE investing the world of college athletics. Setting aside the fact that universities, and by extension their athletic departments, aren’t businesses and their missions aren’t really to increase profits for shareholders.

Even if you do view college athletics as a business, it very much is not a startup. It is a mature business that’s been around for 100+ years. So schools/conferences would only pursue PE for survival. It wouldn’t be used for R&D or product expansion or other things to help grow. Yielding control for survival usually doesn’t end well.

It also isn’t a competitive advantage. If PE proved to be a boom for the Big 12, there’s nothing stopping the SEC or B10 from seeking outside funding too. They would definitely be valued higher than the B12 which would only increase the revenue disparity.

So I am very wary about outside funding here.

As you said, it’s very beneficial for scaling and strategic decisions.

That’s applicable here.

Are you suggesting needing to show a profit would be a bad thing? One of the biggest catalysts to getting to this point is the lack of needing to be profitable, leading to uncapped spending and an arms race, with any shortfall being passed on to students, general university (taxpayer), and fans

College athletics as an actual business is a startup (It would have been taken over by something like PE long ago if otherwise). It absolutely has product development benefits from PE. And growth- the networks are defacto doing this by creating P2 and making the sport more national.

As the boomer generation decreases, investment will be needed to maintain of grow the sport. That could be fan experience enhancement at the school level, or at the national level

Your last comment is assuming the end goal isn’t aggregating top 48 or top 64. It also assumes the Big 12 and ACC schools have any other option. Borrowing only makes sense if there is change on the other side that we just need to get to.

 

[2speedy1]

Their PAC12 2023 payout was $33M down $3M from the prior year.

The current projected number for the new PAC is expected to be in the range of the existing MWC deal (less than $10M/yr.)

So $33M minus $8M = ~$25M/yr decrease due to relegation as I previously posted.

Got it?

First, the pac 12 payout TOTAL, was $33M, from ALL sources not just from TV, in 2023.

Then you compare that to the media only number for the new Pac at 10M. Which was only an estimate, could be more, could be less but is only an estimate.

Then you fail to understand that the Pac 12 was decreasing in value leading up to USCLA leaving, then did fall farther after. That was part of the problem, for months and months they kept saying they were worth more than anyone was willing to offer. Then their Pac 12 network was losing money costing them Millions. Finally the schools lost confidence in their commish getting them anything close to what they believed they were worth and started to jump ship. Finally they had a rumored deal that didnt even hit the $25M number.

You are comparing apples to oranges.

Not sure what your point is here but the per school payout valuation for the PAC12 if they stuck together was nearly the same as the B12's through 2032 (mid-30s). But Fox/USC/B10 decided to pull the plug on the PAC instead.

NO, they THOUGHT They were worth as much or more than the B12, but as it played out they were wrong, as the best offer they ever had was $25M and that was later pulled off the table. Also part of this problem is many of these schools were spending like it was going out of style, and they had to get a big number because several of them are so far in debt.

Their management of the entire conference finances is pathetic, from what they were paying for a San Fran HQ, to what they were paying both the current and past Commish, to the amount they were losing on their conference network.


In the end like I said 2 to 10 schools losing 10-15M per year on a media deal is not really a drop in the bucket when you look at the overall money and picture. Especially when you look at a similar number of schools were elevated during a similar timeframe.

All of this sucks for CFB, All of this Sucks for OSU and WSU All of this sucks and no I dont like it either, but those schools left and settled the legal issues, and that is that. As even JP said there was not enough there to trigger some form of anti trust case, and trying to predict what will happen next month let alone years down the road is pointless. Because no one can.

 

[FriendlySpartan]

As you said, it’s very beneficial for scaling and strategic decisions.

That’s applicable here.

Are you suggesting needing to show a profit would be a bad thing? One of the biggest catalysts to getting to this point is the lack of needing to be profitable, leading to uncapped spending and an arms race, with any shortfall being passed on to students, general university (taxpayer), and fans

College athletics as an actual business is a startup (It would have been taken over by something like PE long ago if otherwise). It absolutely has product development benefits from PE. And growth- the networks are defacto doing this by creating P2 and making the sport more national.

As the boomer generation decreases, investment will be needed to maintain of grow the sport. That could be fan experience enhancement at the school level, or at the national level

Your last comment is assuming the end goal isn’t aggregating top 48 or top 64. It also assumes the Big 12 and ACC schools have any other option. Borrowing only makes sense if there is change on the other side that we just need to get to.

I legit just can’t get over how you think moving to a for profit model is a good thing.

I know we’re just going to agree to disagree on most of this particular topic (have agreed on plenty of other ones) but that is just something I’m stunned by

 

[FinalFourCy]

Having the PE option is also a great thing for ACC schools to “push” while they negotiate with ESPN as Feb 2025 deadline approaches

And a good threat for Big 12 and ACC to sit on when P2 overstep on CFP

 

[cykadelic2]

I was digging a bit into the CST and Smash proposals and found this quote from Greg Sankey:

LOL, spoken like a true ESPN puppet.

 

[2speedy1]

Iowa State AD: expense amount, change from FY22.

• Student-athlete student aid: $10.24 million, 4.08%
• Coaching salaries, benefits and bonuses: $19.69 million, 2.51%

How did 10.24$M -> 4.08%
Yet 19.69$M -> 2.51%
Percentage switched?

Because it is the change from the previous year percentage on that category, not the percentage of the total.

So:
$10.24M is a 4.08% increase year over year.
$19.69M is a 2.51% increase from the previous year.

 

[FinalFourCy]

I legit just can’t get over how you think moving to a for profit model is a good thing.

I know we’re just going to agree to disagree on most of this particular topic (have agreed on plenty of other ones) but that is just something I’m stunned by

You mean, how I think it’s BETTER than these athletic departments having uncapped spending and the issues that creates

We have a lot of history to know without outside intervention these schools won’t figure out how to rein themselves in. Some feel government intervention is plausible in getting the needed greater-good changes. I think Wall Street’s desire to make money, aka lower spending and aggregation of rights, is more likely

Wall Street already is deep into this, I mean, they’re large shareholders of Disney and Fox. Exploiting the fact these schools can never get enough money. Eventually the shareholders will need the networks to get more profit out of the deals.

 

[isucy86]

Iowa State AD: expense amount, change from FY22.

• Student-athlete student aid: $10.24 million, 4.08%
• Coaching salaries, benefits and bonuses: $19.69 million, 2.51%

How did 10.24$M -> 4.08%
Yet 19.69$M -> 2.51%
Percentage switched?

The % are not of the budget, but % change from the prior year.

So tuition went up 4.08%, while coaches salaries went up 2.51%.

 

[cykadelic2]

First, the pac 12 payout TOTAL, was $33M, from ALL sources not just from TV, in 2023.

Then you compare that to the media only number for the new Pac at 10M. Which was only an estimate, could be more, could be less but is only an estimate.

Then you fail to understand that the Pac 12 was decreasing in value leading up to USCLA leaving, then did fall farther after. That was part of the problem, for months and months they kept saying they were worth more than anyone was willing to offer. Then their Pac 12 network was losing money costing them Millions. Finally the schools lost confidence in their commish getting them anything close to what they believed they were worth and started to jump ship. Finally they had a rumored deal that didnt even hit the $25M number.

You are comparing apples to oranges.



NO, they THOUGHT They were worth as much or more than the B12, but as it played out they were wrong, as the best offer they ever had was $25M and that was later pulled off the table. Also part of this problem is many of these schools were spending like it was going out of style, and they had to get a big number because several of them are so far in debt.

Their management of the entire conference finances is pathetic, from what they were paying for a San Fran HQ, to what they were paying both the current and past Commish, to the amount they were losing on their conference network.


In the end like I said 2 to 10 schools losing 10-15M per year on a media deal is not really a drop in the bucket when you look at the overall money and picture. Especially when you look at a similar number of schools were elevated during a similar timeframe.

All of this sucks for CFB, All of this Sucks for OSU and WSU All of this sucks and no I dont like it either, but those schools left and settled the legal issues, and that is that. As even JP said there was not enough there to trigger some form of anti trust case, and trying to predict what will happen next month let alone years down the road is pointless. Because no one can.

Again, the projected PAC12 per school payout before USC/UCLA announced for the B10 was similar to what the B12 got in their new deal through 2032.

And given the total per school payout for the new PAC is expected to be no more than $10M/yr, I was comparing apples to apples.

 

[2speedy1]

Not sure what your point is here but the per school payout valuation for the PAC12 if they stuck together was nearly the same as the B12's through 2032 (mid-30s). But Fox/USC/B10 decided to pull the plug on the PAC instead.

You also have to look at the MWC pay and how much at least 4 schools look to increase, by being elevated to the new Pac12.

OSU and Wazzu look at losing. Lets go by your own numbers.
OSU and Wazzu look to lose $23M each. total $46M. (which is partially offset by the buyout settlement of former schools). They also maintain all rights and property from the old Pac.
at least 4 schools will be elevated from the $4M per year pay at the MWC contract rate.
$6M x 4 = $24M.
So those being elevated offset the loss of $46M reducing that to $22M, with the expectation they will elevate at least 2 to 4 more members, further offsetting that $22M further. If they add 4 More it would actually be a net increase in media payout.

At some point you have to look at the big picture. We are talking about something close to 80 schools getting a significant pay increase in the last realignment, and 2 taking less, let alone those that are being elevated to higher G5 status like the additions the the MWC.

 

[2speedy1]

Again, the projected PAC12 per school payout before USC/UCLA announced for the B10 was similar to what the B12 got in their new deal through 2032.

And given the total per school payout for the new PAC is expected to be no more than $10M/yr, I was comparing apples to apples.

PROJECTED is NOT ACTUAL!

 

[FinalFourCy]

I was digging a bit into the CST and Smash proposals and found this quote from Greg Sankey:

Well, of course.

Asking any conference HQ whether they want consolidation into one superconference conference is silly

It is like asking Kliavkoff if he wants schools to join the Big 12 and BIG

It’s whether any important schools in P2 feel otherwise, particularly if getting offered a **** ton of money to leave the SEC or BIG

Call me skeptical that if PE puts up the money to double SEC or BIG payouts, schools from the other wouldn’t be interested in leaving. UT, A&M, OU, UsC etc have already moved for less

A few P2s may even move if PE paid a new conference of top ACC and Big 12 schools enough

 

[cykadelic2]

PROJECTED is NOT ACTUAL!

No $hit Sherlock but given the PAC blew up, there are no ACTUALS.

 

[2speedy1]

No $hit Sherlock but given the PAC blew up, there are no ACTUALS.

But you are throwing numbers out there like they are. Everything you are saying is hypothetical at best, it would be good for you to at least admit that.

And like I said even JP admits what has happened has not been enough to trigger any kind of antitrust issues, and as you stated the B1G and SEC have consulted with antitrust lawyers, so I am sure they know what they can or cant do to prevent an antitrust issue, so I am sure they are smart enough to stay below that threshold.

With that, being so adamant that you know there will be some kind of government intervention is ridiculous. Could it happen, maybe. Will it happen, who knows. Is it likely, in a meaningful way, in the near future, probably not.

 

[isucy86]

I struggle to understand how private equity would benefit the conferences. But obviously Yormark and powers to be at some Big12/ACC schools believe it can be a game changer.

Peak Around the Corner did a podcast today on the subject of PE. I only caught about 20 minutes, but part of his discussion centered on the ability of PE entities to bring more sponsorship $ and relationships than the Big12 or ACC can bring on their own.

Info starts at 26:40 with Andrew Marchand's Athletic Article on Disney purchase of FUBO and ESPN's maneuvering to remain dominant in the subscription model of sport program delivery. And at about 34:00 he starts talking PE.

 

[Clonehomer]

I struggle to understand how private equity would benefit the conferences. But obviously Yormark and powers to be at some Big12/ACC schools believe it can be a game changer.

Peak Around the Corner did a podcast today on the subject of PE. I only caught about 20 minutes, but part of his discussion centered on the ability of PE entities to bring more sponsorship $ and relationships than the Big12 or ACC can bring on their own.

Info starts at 26:40 with Andrew Marchand's Athletic Article on Disney purchase of FUBO and ESPN's maneuvering to remain dominant in the subscription model of sport program delivery. And at about 34:00 he starts talking PE.

Problem I have with PE is that they are expecting further revenue growth to justify the investment. I just don’t see that much growth available. The fans are getting tapped out with the cost of tickets and donations constantly increasing over the past decade. TV revenue is looking close to its peak with the uncertainty of cable networks going forward.

Ultimately all of this money comes from the fans pockets, whether that’s from ticket sales or from increased TV package costs. How much more do they think fans will pay before the interest isn’t worth the cost?

 

[SolterraCyclone]

As you said, it’s very beneficial for scaling and strategic decisions.

That’s applicable here.

Are you suggesting needing to show a profit would be a bad thing? One of the biggest catalysts to getting to this point is the lack of needing to be profitable, leading to uncapped spending and an arms race, with any shortfall being passed on to students, general university (taxpayer), and fans

College athletics as an actual business is a startup (It would have been taken over by something like PE long ago if otherwise). It absolutely has product development benefits from PE. And growth- the networks are defacto doing this by creating P2 and making the sport more national.

As the boomer generation decreases, investment will be needed to maintain of grow the sport. That could be fan experience enhancement at the school level, or at the national level

Your last comment is assuming the end goal isn’t aggregating top 48 or top 64. It also assumes the Big 12 and ACC schools have any other option. Borrowing only makes sense if there is change on the other side that we just need to get to.

I’ll try to address your points one at a time starting with the second paragraph.

In general, showing a profit isn’t a bad thing, but not in a non-profit environment. The goal of the athletics department is for our teams to win games (and allow students to get an education ). Not to increase net income, or dividends or stock price. As a stakeholder in ISU athletics being a donor, I’m not going to be cheering if our EPS goes up like I would my Coca-Cola stock. I’ll be cheering if we win games.

Spending hasn’t been uncapped in college athletics. Each school has their annual revenue from TV rights, ticket sales, etc. and their expenses. And then they make a budget that (ideally) balances the two. Just like any other non-profit out there. You say a shortfall is being passed onto fans. There’s no shortfall. ISU needs to increase revenue to account for an “unexpected expense” of +$20M (or roughly 12% of annual budget) in labor costs. Any business, profit or non-profit, would need to increase prices to account for that.

The networks aren’t really achieving growth by consolidating into P2. What they’re actually doing is cutting costs by reducing the amount of investment in lower-level teams by moving profitable brands into better performing assets like the SEC and B10. They haven’t made the sport more national. They’ve actually regionalized it even more to the Southeast and the Midwest, two areas where its already achieved saturation. By and large, CFB has very little popularity in the NE and west coast, and most of the moves they’ve made haven’t addressed that. I’m actually bearish on the financial health of CFB despite what the talking heads say (but that’s my opinion and won’t get into it here.)

Investment in the sport hasn’t gone towards improving the fan experience and won’t. It will go towards compensation of the athletes and coaches. Arguably, the fan experience has gotten worse with the amount and length of commercial breaks from the networks who need the ad revenue to justify that level of investment.

Last paragraph. PE is not a loan. Borrowing money to survive to an extremely unlikely outcome off a 48- or 64-team centralized league is one thing. Once PE is in, they are on the board of directors and you yield some control of the product and decision-making. That doesn’t just go away when you pay back their initial investment. And their sway in future decisions won’t be to help ISU or B12 athletics, it will be to maximize short-term profits.

 

[FinalFourCy]

I’ll try to address your points one at a time starting with the second paragraph.

In general, showing a profit isn’t a bad thing, but not in a non-profit environment. The goal of the athletics department is for our teams to win games (and allow students to get an education ). Not to increase net income, or dividends or stock price. As a stakeholder in ISU athletics being a donor, I’m not going to be cheering if our EPS goes up like I would my Coca-Cola stock. I’ll be cheering if we win games.

Spending hasn’t been uncapped in college athletics. Each school has their annual revenue from TV rights, ticket sales, etc. and their expenses. And then they make a budget that (ideally) balances the two. Just like any other non-profit out there. You say a shortfall is being passed onto fans. There’s no shortfall. ISU needs to increase revenue to account for an “unexpected expense” of +$20M (or roughly 12% of annual budget) in labor costs. Any business, profit or non-profit, would need to increase prices to account for that.

The networks aren’t really achieving growth by consolidating into P2. What they’re actually doing is cutting costs by reducing the amount of investment in lower-level teams by moving profitable brands into better performing assets like the SEC and B10. They haven’t made the sport more national. They’ve actually regionalized it even more to the Southeast and the Midwest, two areas where its already achieved saturation. By and large, CFB has very little popularity in the NE and west coast, and most of the moves they’ve made haven’t addressed that. I’m actually bearish on the financial health of CFB despite what the talking heads say (but that’s my opinion and won’t get into it here.)

Investment in the sport hasn’t gone towards improving the fan experience and won’t. It will go towards compensation of the athletes and coaches. Arguably, the fan experience has gotten worse with the amount and length of commercial breaks from the networks who need the ad revenue to justify that level of investment.

Last paragraph. PE is not a loan. Borrowing money to survive to an extremely unlikely outcome off a 48- or 64-team centralized league is one thing. Once PE is in, they are on the board of directors and you yield control of the product and decision-making. That doesn’t just go away when you pay back their initial investment. And their sway in future decisions won’t be to help ISU or B12 athletics, it will be to maximize short-term profits.

Sigh, where to begin…

It’s absolutely uncapped spending.

That’s how revenue can balloon to $115 million at the low end of P5 budgets, a huge increase in just 15 years, and still find itself in peril , with sports potentially on the chopping block. Or at other schools getting bailed out by taxpayers

Like you said, these departments are non/profit. They don’t have to worry about showing an increase in profit to shareholders. They just need to make enough to not worry about falling behind desired peers.

That’s why they can easily do a fixed for floating deal with investors. Likely at an indexed value. And if the investor also owned the other 64 schools, they make a lot via lowering that indexed value

Put another way, if investors takes everything made above $80 million from all P5 schools (after a transition period, naturally), why would we as fans care? We’re non-profit after all.

It would put downward pressure on the arms race. Obviously athletic directors, coaches, and general contractors wouldn’t like it because they’ve benefited from uncapped, wasteful spending.

Of course PE is not a loan, that’s the point. Some have mentioned borrowing instead. That is far inferior to getting the revenue certainty via giving up upside to an investor. When you’re a non-profit that doesn’t need to show profit, you much prefer to take on investors than debt. Particularly since with borrowing you don’t know if the financials are changing for the better in the future

You’re wrong on there not being a push to enhance fan experience. And it’s being done to increase (maintain) revenue. Think of it this way, Iowa St isn’t building CyTown to enhance fan experience. They’re trying to enhance fan experience due to the revenue implications. The NFL is already doing similar stadium development and enhancement projects, and getting it done by utilizing PE


No, networks are getting growth. Check the ratings. Small regional conferences were limiting college football. Realignment in combination with CFP expansion has made it more national. Surely you understand that, right?

You and your PE boogeyman. you’re conflating things. Any investment in college athletics is private equity. It doesn’t necessarily mean it’s the PE arm of a financial firm.

All these concerns you have about yielding control and short-term benefit seeking moves- JFC, that’s college athletics industry for decades. You have to let go of this myth that college athletics is the idyllic amateurism of last century. It’s already everything you fear.

In my experience, investors are fairly hands off in the type of deal they’d likely strike with schools or conferences. Typically it’s mostly the investor taking on risk in exchange for upside (a potential big payday later). There are known terms going in, and that’s the extent of their control.