The National, 3/5/13: Wait, the National? What?

There has been... some discussion here recently which touched on the depth of the value of basketball, specifically KU's program, to the rest of the conference. I had made some off-the-cuff statements in comments without actual backing which I assumed to be generally true, but haven't been able to squirt the whipped cream on top of the sundae as it were. The original argument against which I was working, which I don't want to rehash too much because it was unpleasant and I'm not trying to start or extend a scuffle here, was that the Big 12 has a vested interest in maintaining KU as a power because money is an incentive; my position was that football is so in control of matters that basketball is effectively irrelevant. I'm not attempting to address the subject of whether the Big 12 is going to lean KU's way in basketball issues for the sake of money (again, unpleasant); this is only intended to be a discussion about the impact of basketball on the conference's checkbook.

Understand that as mere mortals, we can only discuss this issue based on what information we do have. We know that the Big 12's media contract is worth somewhere around the $25M mark per team, but we don't precisely know how that all breaks down as far as what the various media concerns think each individual component is worth. We can assume, rightfully, that the football portion of that value comes largely from Oklahoma and Texas, followed by K-State and Oklahoma State and maybe West Virginia and Texas Tech. We know this because we know who gets on television and because we're not stupid, but we can't really sort out just how much each team contributes without someone getting a look at actual valuation worksheets.

What we can do, however, is compare oranges to tangerines and figure out how much of that revenue is derived from football as opposed to basketball.

The "performance" revenues portion of this argument -- that is, the part which depends on how successful the teams in the league are in each sport -- is pretty cut-and-dried. The Big 12 earned four times as much money just on K-State's trip to the Fiesta Bowl two months ago than made on the conference's entire participation in the 2012 NCAA men's basketball tournament; in total, the Big 12 made almost eight times as much on bowl revenue than on tournament revenue. (Note that when I refer to tournament revenue here, I only refer to the amount of revenue which stems from being invited to the tournament and advancing; every school in Division I receives another portion of tournament revenue, regardless of whether they appear in the tournament or not, and therefore it doesn't matter whether you're talking about Kansas or Alcorn State.)

Obviously, on the performance revenue end, football is driving the boat. However, we all know perfectly well that football's also steering the media front. How much? Well, we now have some data to draw an appropriate answer. News reports are starting to surface regarding media contracts which make the overall disparity appear to be even worse than the 8:1 ratio evident with performance revenue. Those reports revolve around the television deal which the Big East -- by which I mean the seven Catholic basketball schools keeping the Big East name, not the existing soon-to-be-unnamed organization UConn and Cincinnati got stuck with -- is about to agree to with FOX. That deal is expected to amount to approximately $3M per year per team, which means anywhere from $21-30M depending on how many friends they coax into their new arrangement. Since the report which mentions this figure seems to assume Xavier and Butler are in, call it approximately $27M.

In other words, the entire new Big East, a league with no football, is worth just a smidgen more than an average Big 12 team, pushing the overall observable ratio between football and basketball media revenues to about 10:1, and in most conferences the bowl money to tournament money ratio is also about 10:1. (It's only 5:1 in the current Big East -- about $25M from this year's bowls compared to $5.5M from last year's tournament, but, uh, wouldn't you expect that? Of course.)

Bear in mind, too, that we're talking about a conference which will be garnering its value from owning presence in the New York-Philadelphia-Baltimore-Washington corridor plus the Milwaukee-Chicago corridor, and probably also Cincinnati and Indianapolis. If we were talking about 7-10 teams in the Dakotas, it wouldn't matter how successful they were historically; they wouldn't be getting paid $3M each, and this is something which impacts KU. If KU were in New York City, their basketball program would be worth more than $3M. They aren't.

It's not as though Kansas has a great deal of history and tradition to hold over these schools, either. Yes, they have won as many national championships as the entire new Big East combined, but the seven schools forming the core of the conference aren't exactly lacking fabric hanging from their ceilings. Georgetown, Villanova, and Marquette have all won NCAA titles recently enough that I actually remember them happening. Seton Hall's played in a final within the last generation. St John's hasn't really had that much success in the NCAA tournament, but they've won the NIT about a kabillion times, and a lot of those times were back when the NIT was the more prestigious tournament. Providence has had success. And if they add Xavier and Butler as expected? Yeah. The point here, obviously, is that this new Big East is going to be a serious basketball player. They're going to rack up tournament bids. They're going to be highly ranked. The networks know this.

Upshot: the entire new Big East has had as much success as Kansas and has a media footprint that makes KU's look like a dead roach on the bottom of your shoe. And when the networks came to call, they decided that this league, this basketball league where they do not play football except for those weirdos at Georgetown and Villanova who sort of pretend to... is worth just a little bit more than a single school in Kansas who also only sort of pretends to play football. Which do you think more likely, then? That this means KU basketball is a cash cow, or that it's worth $3M a year... or even less?

Before moving on, there's another important factor to bear in mind here. Even TCU's basketball program has some value. It's not much, but it exists. Because of that, when I say what I'm about to say, we have to start subtracting.

Clearly, the media value of Kansas basketball to the Big 12 has to be less than $3M a year. If the new Big East schools are collectively worth that much per school, given the media markets they inhabit and their following in those markets, then KU's media value must be less. Probably to the tune of no more than $2M a year, tops. After subtracting the marginal value of replacing KU with "pretty much anyone" (because, again, even TCU's gotta be worth at least $300K, right?) KU basketball's actual media value to the Big 12 is probably in the neighborhood of $1.7M. Last year, by advancing to the final, they added an additional...

...really, brace yourselves, you're going to be sickened...

...they added an additional $1.5M in revenue to the Big 12. For KU reaching the final of the NCAA men's basketball tournament, that's all the conference got; the conference got more than that, individually, for all but two of the nine bowl games it played in this season, and the two others were close enough to really not matter given the comparison. What I'm getting at here, to club this deceased mustang, is that Iowa State brought in $62,500 less for losing the Liberty Bowl than Kansas brought in for almost winning the NCAA men's basketball title. (Wouldn't have mattered if KU had beaten Kentucky, by the way; you don't get an extra unit for winning the championship game.)

So between performance and media, we can reasonably estimate that KU basketball's ultimate value comes out to about $3.2M in a great year, never mind a year where they go out and get punked by Punxsutawney Tech in the first or second round.

Now, we have to shift back to football. I joked above that KU's football program is effectively worthless, but then I turned around and pointed out that TCU's basketball program isn't. Obviously, KU football has some value, but how much? That's a vaguely unanswerable question without having access to a lot of data I don't have. We have to try and come up with a reasonable estimate.

What we can assume is this: even if we grant the average Big 12 basketball team is worth $3M a year to the media, which I think is obviously too high, we still have to assume the average Big 12 football team is worth about $22M a year. Reports vary, but from what I've seen the football programs at Oklahoma and Texas are each, themselves, considered to be worth about $50M to the networks. (Texas is actually worth a lot more, but the LHN money doesn't factor in here since they don't share it.) That brings the average for the other eight schools down to $15M. Compared to the rest of the schools in the league, I guess I would estimate that KU, based on football alone, is probably worth about $8M, but there's an important catch. Some portion of that value is predicated on biennial home dates with OU and Texas; their value if they were playing in the Mountain West or something would almost certainly be far lower. This is an important factor that people generally fail to consider when discussing this issue, by the way. Put Notre Dame in the Sun Belt and the value of their television contract plummets for obvious reasons. Put Cincinnati in the Big 12 and their value to the Big 12 would be higher than their current value to the soon-to-be something-other-than Big East. This should be readily apparent; Notre Dame's football games against Michigan and Michigan State and Stanford and Navy and USC are obviously bigger draws than games against Troy and North Texas would be; Cincinnati playing K-State and Oklahoma State would be more compelling than the awesome games they're looking forward to with SMU and Tulane. Not rocket science.

There's an obvious disconnect in the numbers now if you've been paying attention. If KU basketball is worth $2-3M (ignoring marginal value) and KU football's only worth $8M, then how can KU athletics be worth $25M to the networks? That's easy -- it's not. It's worth $10-11M. The Big 12 gets big money because of Oklahoma and Texas football, with some help from other nationally-relevant programs including our own. The new Big East's pending contract makes it all pretty clear. If you aren't contributing revenue via the gridiron to a conference whose revenues are clearly dependent on football, you're on welfare. Every team in the Big 12 other than OU and Texas is worth less than the conference's $25M average. Some are less of a drain than the others. If they weren't, they'd be prime expansion targets for other conferences.

Ultimately, what's all this mean? Man, I don't know how to break it to you guys, but it means we could replace Kansas with Boise State and barely notice the financial hit, given that Boise's worth $4M a year playing in the MWC and their value would increase as members of the Big 12. Even if we give Boise a well-deserved nod for getting their basketball program moving violently in the right direction, it still shows how meaningless basketball has become to the calculations.

Disclaimer: Note I am neither suggesting we go grab Boise, nor that we kick KU to the curb. That's so far from the point of this piece it's not even funny, and it would also be a terribly flawed assumption once all factors are taken into account. Just for starters, there are other costs associated with Boise joining the league -- travel, f'rinstance -- and money be damned, having KU basketball in the conference is good for the conference's prestige. I'm just illustrating the current financial power of football and the relative impotence of basketball when it comes to a conference doing what it thinks it needs to do.