The Edmond Sun

December 12, 2012

Big XII needs to go big

Mickey Hepner
Special to The Sun

EDMOND — As an economist and a sports fan, I find the soap opera of college athletics to be fascinating. There are decisions with multi-billion dollar implications, personal feuds, innovative business models, and the tradition of one of America’s most popular entertainment products. All these factors combine to provide one of the most intriguing examples of revolutionary industry change playing out before our eyes.

As with any revolutionary change, there are many who totally misunderstand the forces at work (like the Florida sportswriter who recently argued that Florida State University should rejoin the Big East Conference so the Seminoles could play Central Florida and South Florida more regularly). But the business strategies needed here are straightforward and not all that different than what has happened in other industries. So, from an economist’s perspective, here is what I would try to do if I was the Big XII Commissioner.

First, the Big XII conference and its member universities should admit that they are in trouble. Yes, the conference had another successful year and agreed to a new $2.5 billion television deal. Yes, the conference members agreed to a 13-year “grant of rights” agreement, whereby member schools who leave the conference agree to forfeit any new media money to the conference’s remaining members. However, the conference has been undeniably weakened with the defection of four quality institutions in recent years. Perhaps the biggest threat though, is the belief that the Big XII is not as attractive for coaches or athletes as the Big Ten or SEC. If that perception persists then the power and success of the Big XII will slowly emaciate over time.

Second, the Big XII must expand but only with a high-quality addition. Expanding by adding lesser schools would only perpetuate the notion that the Big XII is declining. The best (and perhaps only) option potentially available is Florida State university. Currently, FSU’s boosters are unhappy with the financial arrangements of the ACC — arrangements that place the Seminoles at a competitive disadvantage to the Florida Gators. By moving to the Big XII the Seminoles would be better able to compete financially. Of course, the Florida State administration may not want to move but they would be better off financially. From the Big XII perception, adding Florida State would mean adding one of the nation’s premier programs over the past 30 years, and a program in a state near large media markets.

If the Seminoles are unwilling to switch then there are few options left for the Big XII. In such case, staying at their current alignment might be best. But if the Big XII can land the Seminoles, then it should quickly turn its attention to other ACC schools. With Florida State out of the ACC, the ACC suddenly looks even less attractive to its members. Thus, after landing the Seminoles the Big XII should immediately offer the University of Miami, Georgia Tech, Clemson, North Carolina State and Virginia Tech. Landing all five would bring the Big XII up to 16 members, and would clearly cement the conference as a superconference going forward.

However, this outcome isn’t likely. If Florida State leaves for the Big XII, then other conferences would become empowered to expand too. The Big Ten has made no secret of its interest in further expansion of at least two more schools. Their prospects would include schools like Virginia, North Carolina, Georgia Tech and even new ACC member Notre Dame. Two of those four would likely get invites. The SEC has not been shy about expanding either. Logical additions for them include both NC State and Virginia Tech (large, new markets). As a result, the Big XII gets the leftovers — Miami, Clemson, Virginia and Georgia Tech (assuming the Big Ten gets North Carolina and Notre Dame). The Big XII could then offer Duke to make 16. Plus, the Big XII could always keep Louisville and Cincinnati as backups.

In short, economics indicates that the Big XII’s options are expand to 16 or stick with 10. Expansion would clearly cement the Big XII as an academic and athletic superconference, thereby cementing its future as well. Sticking with 10 schools though, is the safest option in the short-term, but runs the risk of the conference forever being perceived as a notch below the best.

That’s the choice facing Big XII leaders: Go big, or stay put; be visionary, or be static; be great, or risk being marginalized. It’s a decision that leaders of all organizations must make in trying times. And that’s what makes this process so fascinating.

MICKEY HEPNER is the dean of the College of Business Administration at the University of Central Oklahoma. Hepner serves on the Executive Committee of the Board of Directors for The Oklahoma Academy.