JRsec
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RE: The SEC's next move
(01-05-2014 05:58 PM)lumberpack4 Wrote: (01-05-2014 04:48 PM)JRsec Wrote: The SEC's next two selections (whenever that occurs) will not be based solely on market. It will be based on who adds the most value. If necessary a 52 million dollar buyout plus ameliorated GOR value could be easily covered. Let's say that the incoming team added 2 million a year to the value of the other member schools in the SEC. It would only be necessary for the existing teams to agree to take half of that value for 10 years and to let the rest ride on the buyouts. That's $140 million over ten years to cover the cost of admission for an ACC or Big 12 school. So forget the the cost and the GOR angle. If the next move is one that has to last for a great while to come, and I believe it will be, then the cost will not be as important as the long term value of the addition.
The Big 10 and SEC will both be taking that into consideration when the moves are made, whether before next August 15th or 10 years from now.
So the great fallacy of the current realignment speculation is that anyone is off the table due to the GOR's. In the above manner of compensation that I described the amount of available money to an ACC team could be as high as 90 million by either the Big 10 or SEC if they followed the formula of only giving existing members half of the value added by the move over a protracted period of time (like a decade). Considering the current value of both the Big 12 and ACC teams are around the 20 milliion mark give or take a couple of million, then 90 million would account for 4 and a half years of the GOR at full value. If teams decide to move by August of next year, and give two years notice, then a move by 2017 would require a two decade payback instead of 1. But remember, everyone, including the moving teams, would be making more than they are presently, and that is if the GOR isn't arbitrated down to some extent which is also a viable possibility.
In the SEC for instance if a team by 2017 is projected to earn 35 million per year in payout then, obviously since all members receive equal shares from the get go, it would be profitable for either a Big 12 or ACC school to move, have the existing membership forgo half of their added value, pay their former conferences in full, and for the entering teams to make full value immediately for their decision. If the entering teams agree to forgo half of their entering increase, along with the defrayed amount by existing members, the duration of the payback would be cut in half or by more.
Given that contingency and the likelihood that the ACC survives just fine, then the SEC could afford to go after Texas or Oklahoma, Texas and Florida State, or Oklahoma and Florida State, or anyone else that adds great content value, national following, or new markets. I throw out those pairings to illustrate that anything might be possible.
The only encumbrance to realignment remains the target's willingness to move. And, that movement can only be enticed by so much money, whether that money comes through sports, academics, or by some other means.
I doubt very much that Mike Slive or Jim Delany are worried or concerned about who might or might not be available. They will only be concerned with maximizing value and maintaining harmony within their existing membership.
So please when you are speculating keep this in mind. Most of the realignment speculators operate with many "internet made up rules" which in reality can either be gotten around, or simply don't apply.
And by the way I'm not saying that Florida State or Texas want to come to the SEC, or that the SEC is out to get them, or anything of the kind. I'm simply using two Kings of the sport as an example of why anything could happen and the amount of buyout is not as major of a consequence as everyone makes it out to be. JR
I think the value of television money is greatly overated in the five major conferences. The prospect of adding an extra $10 million in TV revenue sounds great until you have to weigh that against still being $30-$50 million behind conference leaders. This is the Maryland fallacy, they might pick up $5-$10 million a year after all is said and done over the ACC TV package, but in the ACC the top revenue generating schools ND, FSU, UNC, Louisville, UVa, etc., averaged only about $85 million a year (average) the second tier - NC State, VT, Clemson, Syracuse, etc., are averaging $70 million. Maryland is down in the $60's with a large subsidy.
In the ACC, Maryland is running at 70% of the leaders in the ACC. In the B10, even with a net increase of $10 million to 70 milliion a year and no more subusidy, the leaders are averaging $115 million a year, meaning UM will be running at 60% of the leaders of the SEC.
Now Texas can compete financially in any conference. I'm not sure FSU can generate top 3 income in the SEC, maybe they can. But as it is now, FSU makes the most in the ACC and have no real challengers. In the SEC, FSU will probably run behind Florida, Bama, LSU, TAMU. What they make in some extra TV money and more sell-outs in Doak may be given back when they start averaging at least 2 conferences losses a year and that's to be expected.
I don't see what the SEC actually gains by stacking themselves with two more football powers. The pressure and expectation to win a SEC division is already astronomical for Bama, LSU, Florida, and Georgia. If you then consider that TAMU, Mizzou, SC, UT and Auburn, it seems to me that if you added Texas and FSU, that sets up the league for a lot of pissed-off fans each year.
It seems to me that adding two basketball related schools that don't have the crazy football expectations might be best for the SEC. That would be Kansas and West Va. West Va, gets the SEC close to DC, Kansas adds a legitimate top 5 basketball program for the SEC.
Unless you go to PODs and allow two semi-finals before the Conference championship, I don't think you can keep 10 football crazy fan based happy.
If you look carefully at ACC basketball, this is beginning to happen. 30 years ago 7 schools played for the title, now it's up to 15.
LP, I threw out Texas and FSU merely to grab attention, and said so. There is a strong line of argumentation that the next two additions might be for academics, markets and basketball.
Your point is well taken about the trailing the leaders. FSU would be behind Auburn as well in terms of revenue generated. I do think that we will see 16 teams per if the rules governing divisions are changed and I believe the networks will push for this as well as the conferences. It provides a flexibility and format that will be too appealing to resist.
The other aspect about the GOR's is that essentially the networks govern any real penalty that might be incurred from a move through their valuation of the remaining product. If that product moves within a network's sphere of influence, and the network favors the move, the mitigating factor becomes present value (after the move is factored) to current contract value of the conference vacated. If the network sees to it that there is no monetary loss then the exit fee becomes the bulk of the damages. There are literally so many work arounds that can be constructed that for any school adding long term rewards a deal can be struck. The moves that will happen will be the ones that add significant content value to the networks and fulfill the conference's vision of itself at the same time. Therefore it could be for football, basketball, or whatever fulfills both the network's and the conference's visions. Unfortunately that might mean more basketball power to the ACC or football power to the SEC, or it could be that the networks choose to try to value both conferences by filling in for weaknesses. That we will have to wait and see.
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