NCAA Conference Realignment: Bargaining and Power in the Big 12
After months of speculation and some action regarding the conference realignment in the D-I FBS* landscape, things have finally settled down for now. Texas A&M will officially be leaving for the SEC. ACC is set to gain Pittsburgh and Syracuse from the Big East. Of course, some of these actions seem obvious when looking from a game theory point of view. For example, the ACC has to expand given that the SEC has expanded and set on future expansion. If one expands and the other doesn’t then they lose conference strength relative to the other, which means a less lucrative future television deal. But also for the ACC, if they don’t expand they lose strength given that future SEC expansions could poach members from the ACC. But let be clear that when I talk about conference strength I am not exclusively talking about football strength, otherwise the SEC would still be considered the best no matter how the ACC acts. Rather market size, geographic reach, and other factors go into determining conference strength. There are reasons why the Pac-12 and Big Ten have the more lucrative current television deals, despite the SEC being the better football conference. For them expansion is not currently necessary; their payoff matrix is different. However with that said, I would like to look more specifically at the Big 12.
Despite it being a relatively strong conference, with a backbone based off the huge Texas market and relative football success, they have been rather volatile. Over the past two years they have lost three members: Colorado to the Pac-12, Nebraska to the Big Ten, and Texas A&M to the SEC. So why is it despite looking previous looking like a strong conference, they have become unstable and could face future extinction. Of course these teams could be moving solely based on conference quality. But any conference with University of Texas and the University of Oklahoma as its backbone couldn’t claim to be a weak conference. So other factors may be at play here. To me that such reason is the University of Texas.
Unlike the other major conferences, the Big 12 utilizes uneven revenue sharing of their Tier I and Tier II television deals. That means teams that have more television appearances made more money. Of course UT was the major benefactor of such a system. Essentially they were using their influence and playing the Ultimatum Game. UT being a major “brand” had all the options they essentially was the center node. However when the Big Ten opened to possibility to expansion, Nebraska gained an option and took it and the same with Colorado. After last year’s defections, the remaining 10 members stayed. Again with UT feeling the remaining teams had no other options, UT further pushed its influence and wanted a greater division of the revenue. They created the Longhorn Network. A network in partnership with ESPN that had Tier III rights (games that were not broadcasted by Tier I & II television deals). UT would receive all the revenue, as well broadcast high school football games, a major gain for UT as it would give UT greater recruiting power and thus future success. Essentially pushing Texas A&M to seek other options.
Given that Texas A&M left for the SEC and SEC has stated they will expand past 13 members, providing an alternative option for other Big 12 schools, specifically Missouri. With other schools having a strong outside option and even one more school leaving could jeopardize the future of the Big 12; one would expect UT to concede due to the Nash Bargaining Solution. As expected despite UT’s “power status” they recently, together with the other schools of course, agreed to equally distributive television revenues. Of course this may only be a bandage to future problems, but how UT chooses to play the Ultimatum Game in the future could decide the fate of the Big 12.
Notes: *FBS is the Football Bowl Subdivision where bowl games are played instead of a playoff system. The BCS system currently in place decides the national championship as well as provides other lucrative bowl games. The BCS 6 conferences are: SEC, Big 12, Big Ten, Pac-12, Big East, ACC. These conferences are generally considered the strongest football wise and therefore gain the most money. College football is a lucrative business and so it’s a major determinant of conference alignment.
http://espn.go.com/college-sports/story/_/id/7054421/big-12-set-share-national-regional-tv-money