clock menu more-arrow no yes

Filed under:

Darren Rovell: Expansion Doesn't Always Equate to More Revenue

New, 6 comments

As I emphasized yesterday, the only way Larry Scott and the Pac-10 are going to expand is if they are certain that their efforts to include more schools in the conference will create more revenue. The idea that simply expanding for expansion's sake isn't necessarily going to equate to more revenue. Thus, simply adding Utah and Colorado, or even BYU wouldn't guarantee greater financial earnings for the conference. CNBC's Sports Business Reporter Darren Rovell pointed this out yesterday.

The Pac-10 is in the same boat. What would Texas Tech add that Texas couldn't? Is Oklahoma State worth as much as Oklahoma?

Conference championship or not, adding teams doesn't automatically increase revenue to a point where every team is worth having. That's the type of math that the conference commissioners have to consider.

TV revenues might double if a Pac-10 network succeeds, but if there are 16 teams involved, no one is doubling their money. Right now, TV revenue for the Pac-10 is around $100 million a year. Let's say a new network deal after the 2011-12 season and a new network of their own adds up to $200 million in TV revenue a year.

Assuming equal splits of all 16 teams, original Pac-10 teams would only be making $2.5 million more than what they have now. And don't forget the UCLA softball, and all its other non-generating sports, might have to travel to Texas now.

"It doesn't make sense to add teams that don't have incremental revenue opportunities," said former CBS Sports president Neal Pilson, now a TV consultant.

Of course, it would be preferable for the Pac-10, strictly from a financial standpoint, to add Oklahoma and Texas and abandon the rest of the Big XII South. The conference would likely generate the same amount of revenue, while also dividing it up among fewer teams. Rovell is correct in his assertion. However, that's in a perfect world.

With the situation at hand, the only way Larry Scott is going to be able to bring the Sooners and Longhorns into the fray would be by bringing in some of their Big XII constituents as well. That's the reason why Oklahoma State, Texas A&M, and Texas Tech, are even being considered in the first place. Granted, it would be ideal to just feature the Big XII's two marquee programs, but politics have and will prevent this situation from ever occurring. Rovell's correct, but there are too many factors that would prevent that situation from ever occurring.

In turn, the debate looks something more like this.

Option #1: Keep the Pac-10 as is. With a new T.V. deal, teams would only be forced to divide revenue amongst ten teams - one of the most obvious benefits.

Option #2: Add the Big XII South (either Baylor or Colorado) to the mix. Sixteen teams would produce more revenue as a result, but it also means that it would be divided amongst all the teams. Big question: would a new Pac-16 be capable of producing enough money to justify expansion? Everything considered, I think it just might.

What side of the fence do you lie on?