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Is The New Texas/ESPN TV Network The Opening Shot In Round 2 Of Expansion?

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The University of Texas and ESPN recently announced a 20 year, $300 million dollar agreement to launch a TV Network dedicated solely to all things Longhorns.  It's a great deal for Texas, as all the money is guaranteed, but it just might be the end of the Big XII.  Nebraska and Colorado saw the writing on the wall and got out, and although Big XII Commissioner Dan Beebe made grandiose promises of a newer and richer TV contract to get the remaining conference members to stay, the money will be a pittance compared to what Texas will be hauling in.

Let's do some cipherin' after the jump to see how this all might play out.

Now, according to this article, Texas is guaranteed 82% of that $300 million, or $246 million.  Divide that over 20 years, that's just over 12 million per year that Texas receives.  Over the first five years of the deal, the money is split 50-50 between the athletic department and academics, but after that, well, let's just say that the debate team doesn't put 100,000 butts in seats, so you know where the money is going to go. 

Currently, the Big XII payout varies per school, and according to this article here, Texas gets the lion's share, over $10 million a season.  Add those numbers up with the new TV network, and that equals the Big Ten payout.  Those numbers are a year old, and were pre-expansion numbers,  but the bottom line is Texas is the clear revenue king in the conference.  If there is a new Big XII contract, Beebe (and the remaining Big XII schools, by the way) agreed to the disproportionate revenue split to keep Texas in the fold, so that will remain in place.  I assume that Commissioner Beebe was looking towards ESPN for a new TV contract for the conference, but with ESPN being the partner with Texas, I find it tough to see where he's going to get a better deal for his conference.  But even if he does, there's no way a new deal will get the Big XII anywhere close to the SEC and Big Ten in terms of money, not with the $300 million they're committing to Texas.  I just don't see it.

The SEC (which distributes revenue evenly, like the Big Ten) payout is just over $17 million per school and will increase as their new TV contract with ESPN takes hold. 

Big Ten schools received a $22 million payout in 2009, and with the expansion of the Big Ten Network and a conference championship game in 2011, that will increase as well.

Looking at the landscape from a pure money perspective, I can't see how a team like Texas A and M, for example, who was flirting with the SEC during the Nebraska expansion, can look at what Texas is getting (22 million), and what they're getting (9 million), and not look to double their money, as it were, by moving conferences.  Their fanbase wants them to go to the SEC, and economics might dictate another tectonic shift in the conferences.

I've also seen a couple columnists muse that the Texas Network might be the beginning of the end of conferences in general, as the big boys like Alabama, Florida, Ohio State, and USC might look to make their own deals and secure their own TV networks and go Independent.  Notre Dame essentially did it with their NBC TV contract, and BYU did it and started their own network, they argue. 

There's a couple of problems inherent in this whole thing.  For one, I can't see ESPN paying seven or eight individual schools $300 million apiece to start their own network.  The Big Ten has a great thing going with the BTN, and I can't see Ohio State or Penn State making more money going on their own.  Since Fox is half owner of the BTN, there's no way they're going to undercut their brand to go start up an Ohio State or Alabama Network, for example.  There's not enough guaranteed money to go around, and I think the schools in the Big Ten realize that there's more money to be made by promoting the conference brand than striking out on their own.  As for the SEC schools, replace ESPN with Fox and the Big Ten, and you have the same scenario.  ESPN won't weaken the SEC brand by promoting independence for marquee schools, because it hurts their bottom line overall.  The SEC more than anyone right now is benefitting from conference brand, and I don't see them doing anything to undercut that.

I will say that I think this is the death knell for the Big XII, but it will take two or three years to realize.  If Texas can find a way to make up for that $10 million they currently receive from the Big XII (or just come close), they're gone, and without Texas you have no conference.  Big XII suporters think they could add marquee brand names like Notre Dame, but with the revenue disaster that the Big XII currently has, combined with their instability, there's no way that I can see a school as established as Notre Dame go to a conference as untable as that.

If Texas goes Independent, we will be doing the same expansion song and dance again, and we will be looking at the Super-conference era in college football. 

And I don't know if that will be good or bad.