(08-02-2019 02:23 PM)Stugray2 Wrote: I've rethought how this is likely to play out after evaluating the exit fees and the LHN payouts. Texas has $109.2M coming from the LHN for the final 6 years of 2025-31, or $18.2M per year average. Even a $20M gap to the SEC or B1G is not sufficient, especially when you consider that the B12 would withhold $30-60M in payouts for an exit fee. Texas would be be under water with such a move for at least 7 years, or until 2032. There is also the uncertainty of the LHN buyouts, who pays who and how much. The ACC seems overly complicated as well, since their ESPN deal is all tiers (similar in that respect to the American), so their is no easy way to incorporate Texas. The Pac-12 is probably the easiest to work, but such a move doesn't work logistically for Texas.
So I now think the odds are closer to 85% that Texas stays put in 2025.
Oklahoma doesn't have the LHN, and the financial numbers say that even paying $50M to exit the B12 that they would be ahead in 6 years moving to the SEC and perhaps as few as 4 or 5 years moving to the B1G (the SEC likely will be even or ahead of the B1G with it's next bump, but then the B1G will likely shoot up again in 2023), and then of course just rolling in extra money after that. So I think the pull is just too much for OU to stay.
That is where the other 15% comes from for Texas. They will certainly be in discussion with Oklahoma about coordinating their actions, be it keeping the Red River rivalry going as non-conference foes in the future, or moving together as a package to the B1G or SEC. This is the one scenario where Texas might be willing to forgo the end of the LHN and be underwater a bit for a few years to preserve the Oklahoma relationship. Conversely I put the odds at 5% that Texas can convince Oklahoma to stay put.
So I revise my vote to say Texas stays put, with the non-trivial chance they may move with Oklahoma to a conference.
I revise my odds of TCU moving down to 1-2%, Kansas also at about 1-2%, everyone else essentially 0% chance.
15% OU and UT leave together, 80% OU leaves alone, 5% both stay.
B12 replacements: 20% nobody (includes 5% chance nobody leaves), 55% BYU, 35% somebody else
// adds up to 110% because B12 may decide to go beyond 10 to make up for losing OU or both OU and UT
The calculations on the pay bumps is probably a bit optimistic if you think the Big 10 is going to shoot up after 6 years and with the numbers that they have. I'm thinking they will get a about a 5% bump when the new FOX contract comes up. The SEC's lowest lauded estimation is for 250 million per year from CBS but with the contract immediately ending the present one. That puts the SEC at about 56 million per school payout plus the tailing escalators. The Big 10 is at 54 presently and no valuations on the Big 10N have been released in 2 years. The last time they were released there was a substantial decline in value of 170 million which equaled payouts to the schools (the year prior to the new FOX contract) of around 11 million to the 11 oldest members at that time and reduced payouts to the other 3 plus Delany's big bonus.
I say that to highlight that none of us can be sure of what our T3 networks will be pulling in. Clearly last year the SECN was flat.
Texas made 38.7 million plus around 15 million more for the LHN last year so they were at 53.7 million. Whether the SEC is at 56 and the Big 10 at 54 plus escalators at the time of the its new contract I think your estimation of the LHN is off base as a deterrent to their movement.
Here's why. If they leave the Big 12 at the end of the GOR by giving a two year notice in 2022 they will effectively leave for the last year's TV revenue which the Big 12 would withhold. There would be no penalty for the GOR which has to be resigned in 2024. If I'm off a year on the GOR it still doesn't change anything, just bump it back a year.
I think it's safe to assume that their payouts would be in the low 40's at that time.
So the obstacle for Texas is their contract on the LHN which expires in 2031. That's where one has to consider how such things are handled. It's not the big problem that you would assume.
For instance if they joined the SEC ESPN would renegotiate the value added to the SEC by their inclusion. That's been estimated before as being between 2.5 million per school in payouts to 3.5 million. Let's just assume the lower amount. So if they joined the SEC for the 2025 season each SEC school would get a 1 million dollar bump in pay with the difference of 1.5 per school going to buy out the remaining 6 year of the LHN. ESPN could choose to match that amount to pay it off in 3 years and to secure that property in a conference to which they hold majority rights.
Should FOX determine that their value in the Big 10 would be 3.5 to 4.5 million per school (which is different because the SEC already has a bump via A&M for the market value in Texas) then a similar situation could happen. Even if there was a penalty for voiding the ESPN contract early the Big 10 schools could opt for the 1 million in increase and defray the 3 million to cover the last 6 years of the LHN contract value to Texas, and to pay any penalty they might have incurred by leaving ESPN early.
What is not recoverable is that last year's TV revenue from the Big 12 but boosters prorated over 6 years could easily cover that as well.
In past moves boosters have raised the money lost for departure fees for several schools and conferences sometimes loan a portion which is withheld in earnings for future years.
Either way if Texas moves the schools who will receive a bump in their new conference home need only take a small bump until the LHN is covered and then they realize on the 7th year of the Horns membership in their conference the full bump from their joining.
Oklahoma would realize an immediate bump by moving and with donors covering their last year's TV revenue they have no obstacle to making the move.