Is The Big 12 About To Make $1B, And How Much Will OSU Get?

The Big 12, if you have not heard, wants to expand. At first glance, this seems stupid, and in the long term it probably is. But the short-term money grab is so alluring that it’s likely going to be impossible to keep these 10 teams from grabbing two or four more schools possibly as soon as the 2017 football season.

Why?

As with most things in life, follow the dollars.

As Dennis Dodd of CBS first reported, the deal the Big 12 has with Fox and ESPN will expand as the Big 12 expands. Dollar for dollar. Presumably up to $1 billion ($250 million per team up to four teams) over the rest of the contract (which ends in 2024-25). That’s a lot of money.

… Expansion could earn the conference at least an additional $1 billion over the length of its remaining TV rights contract, CBS Sports has learned. If the league expands by four teams, provisions in its contracts with ESPN and Fox provide money for that benchmark. If the expansion is by two teams, the increase would be $500 million.

Those rightsholders are contractually bound to provide “pro rata” for any new Big 12 members. That is, any new members would be paid an equal share of the current Big 12 members — approximately $23 million per year.

Do you see what’s going on there? Oklahoma State received $30.4 million from the conference this year. Not all of that was TV money, but a lot of it was.  And ESPN and Fox are “contractually bound to provide ‘pro rata’ for any new Big 12 members.”

ANY. NEW. BIG. 12. MEMBERS. That means BYU and Memphis or Sam Houston and Stephen F. Austin. Any of them. ESPN and Fox just have to hand over the money.

That’s insane. Why in the world did ESPN and Fox agree to do this back in 2012?

Clay Travis, whom you may know from the Twitters or the internet for having some pretty fire takes, had a take on this, and I found it to be thoughtful and interesting. The Big 12 is probably going to expand, but in doing so it could pocket the money from ESPN and Fox, not give it to its new members and distribute it to the current 10 teams. ESPN and Fox don’t pay individual teams after all but conferences. Then conferences distribute the money. So the Big 12 could feasibly negotiate with two or four teams to pay them less than what ESPN and Fox have agreed to pay the Big 12 for those teams entering the conference.

Big 12's Bob Bowlsby on expansion mindset: "I would call it a sellers market – and we’re the sellers and there are a lot of eager buyers."

— Chuck Carlton (@ChuckCarltonDMN) July 20, 2016

This works for everyone. OSU, WVU and Baylor would have an incentive to bring on Memphis and Colorado State (or whoever) and those teams would still be making more than they are right now with their paltry conference deals (Conference USA only makes $3 million a year!) This is the unintended consequence of splitting the Power 5 conferences and the mid majors so severely.

Here’s Travis.

The Big 12 can allow all of the schools that want to get into the Big 5 conference club to line up and tell them how little money they need to receive in order to join the Big 12. That is, if a school is, for instance, only willing to take $5 million a year for the next ten years, it could allow $200 million it would be entitled to receive to return to the existing ten Big 12 conference schools to split among themselves.

Is the Big 12 actually going to do this? Travis makes the case that the reason it can do it is because the Big 12 doesn’t have a network.

It would be a bad look and not sustainable or beneficial in the long term, but it would also be a lot of money. Especially for Oklahoma State. I’m not positive a UConn or Cincinnati would agree to this because it would be hard to compete when you’re essentially being held down by the hand of the current 10 Big 12 teams, but they would also be bringing in a LOT more cash than they are right now.

More Travis.

If four new schools all agreed to take $5 million a year in TV money, that’s more than they earn now in smaller conferences, in theory the ten existing Big 12 schools could redistribute $800 million to each other over the next decade, or $8 million additional dollars per school.

So now you see why Big 12 expansion was revived. It’s not about the future. It’s not about strengthening the brand of the Big 12. The Big 12 is probably going to have a “run for the hills” moment in 2025 when this TV deal is up because of the slack in the current line in TV deals.

If that’s the case, why not grab the dough right now and figure out everything else later?