Big Ten changes could have seismic effect
Big Ten commissioner Jim Delany, left, held court with the media last week during the league meetings in Chicago. Delany said little, but everyone in college sports is hanging on his every word because of the power that he holds to affect so many futures.
Since going on the air in 2008, the Big Ten Network has increased revenues by nearly 200 percent.
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The Big Ten Conference is exploring expansion plans that could generate millions more in revenue for its members and upend the college football landscape.
Three years after launching its one-of-a-kind TV network, the Big Ten is eager to tap into a wider audience, which would bring additional subscription fees and advertising revenue.
In that model -- unique in college sports -- the Big Ten owns the majority of the Big Ten Network, produces its own content, broadcasts hundreds of football and basketball games annually and gives its schools more control over their brand.
And it allows the conference to rake in millions in revenue that had previously gone to unaffiliated TV networks.
It has developed into a winning game plan for the 11-member Big Ten Conference.
Most college athletic programs run deficits that drain university funds, but the Big Ten has created a system in which most members make enough money to cover their athletic costs and return money to the academic side of the university.
At stake: Millions in TV deals, bowl payouts, ticket revenue and academic partnerships.
Expansion could have lasting effects in Western Pennsylvania, where the University of Pittsburgh is considered a candidate for Big Ten expansion. It also could cause a seismic shift that will alter college athletics as they exist today.
Perhaps more than any other school that has been mentioned as a candidate for Big Ten expansion, Pitt is most similar to Big Ten schools. Geographically, it lies between two current conference schools. Academically, it is a large, public research university, like most of the 11 institutions. Athletically, it boasts competitive football and basketball programs that capture eyes of sports fans outside of Western Pennsylvania.
Jake Crouthamel, athletic director at Syracuse from 1978 to 2005, said he fully expects Pitt to join the Big Ten if it is invited.
"They're going to jump," he said. "It's about money. The whole thing's about money."
Pitt officials declined comment for this story, instead releasing a statement that read, "There has been much speculation about possible change to the conference landscape. At this juncture, we feel it would be counterproductive, and inappropriate, to comment."
Crouthamel said he understands the school's tight-lipped approach to potential Big Ten expansion. He said he has tried, unsuccessfully, to contact Pitt athletic director Steve Pederson, a longtime friend, to gauge his thoughts about the issue. It makes sense that Pederson would be quiet, Crouthamel said, because "he's one of the athletic directors in the room hoping and praying they're not the ones excluded [from Big Ten expansion]."
Pitt basketball coach Jamie Dixon has spoken out against a potential Pitt move to the Big Ten.
"I can't see how any team would improve where they're at by movement," Dixon said in December when the Big Ten first announced plans to explore expansion. "Every situation, you have to look at why you're doing it to improve yourselves. And I can't see how moving from the best conference in college basketball history would be a good thing for anybody."
Dixon said the football team is in a good position in the Big East because of the conference's postseason bowl tie-ins.
Pitt football coach Dave Wannstedt said recently he has had "zero" talks about Big Ten expansion and said he had no comment on the subject, referring questions to the Pitt administration.
Crouthamel, who helped found the Big East Conference, said rejecting the Big Ten would not be a wise decision. He said if Pitt, or any Big East school, turns down an offer from the Big Ten, it risks being left behind in what might soon become an extinct athletic conference. Crouthamel said Big Ten expansion could have a "trickle-down" effect that will force conferences to poach schools from other conferences in an athletics arms race. He does not expect the Big East to survive.
If Pitt decides to leave, it would have to give the Big East notice 27 months in advance and pay the conference $5 million, a "loyalty clause" the conference added after three teams defected to join the Atlantic Coast Conference in 2005.
Rumors of Pitt joining the Big Ten are more than twice as old as the Big East Conference itself.
When the University of Chicago, a founding member of the Big Ten, left the conference in 1946, Pitt was one of a handful of schools rumored to replace the Maroons, according to a Post-Gazette article published at the time. Michigan State joined the conference several years later.
When Penn State joined the conference in 1990, Illinois president Stanley Ikenberry tried to persuade other university leaders to invite Pitt, Syracuse and Rutgers as well, according to a highly placed administrator at one of the Big Ten schools.
Ikenberry was unavailable for comment, an Illinois spokesman said.
But chancellors and presidents rejected the other three schools because -- unlike Penn State -- Pitt, Syracuse and Rutgers were not considered academic peers to the other Big Ten schools when comparing research income, graduate programs, endowment, libraries and museums, the source said.
Pitt might again be left off the Big Ten's invite list -- not because of its academic profile but because of its location. The Big Ten is looking to grow -- in size and geographic footprint -- so that it becomes a more marketable conference to TV executives.
That could work against Pitt, said Andrew Zimbalist, a sports economist at Smith College in Massachusetts, because Penn State already brings the Big Ten to Pennsylvania.
"I'm not saying they wouldn't go for Pittsburgh," Zimbalist said. "There's just a smaller inducement to go into Pittsburgh as there would be New Jersey."
Put simply, money.
"You don't have to say 'factors,'" Zimbalist said. "It's just 'factor.'"
Each Big Ten school earned about $22 million from TV rights deals in 2008. Big East schools, by contrast, earned $4.5 million. Big 12 schools earned between $7 million and $12 million.
In addition to lucrative TV deals with ESPN/ABC and CBS, the Big Ten is the only conference with its own TV network, the Big Ten Network. (The conference owns 51 percent of the network; News Corp. owns the rest.) The Southeastern Conference launched the "SEC Network" in 2009, but it differs from the Big Ten Network because its games are syndicated on multiple TV stations instead of being housed on one network.
In three years since the network launched, Big Ten Network president Mark Silverman said the venture is doing better than even he had predicted.
The network's advertising revenues have increased from $14.9 million in 2008, its first full year of existence, to a predicted $43.1 million in 2011, according to SNL Kagan, a division of financial information firm SNL Financial that specializes in media and communications. The network also earns a lot of money from negotiated carriage fees it charges cable and satellite providers.
The network still has incredible earning potential.
"I think if the conference decides that expansion is in the best interest of the Big Ten, I would definitely think that would be a positive for us," Silverman said.
The Big Ten Network earns about 88 cents per subscriber in the eight states that are home to Big Ten universities through carriage fees, SNL Kagan senior analyst Derek Baine said. That figure plummets to 5 cents per subscriber outside the eight-state Big Ten region, meaning there is a lot of money to be made if the conference can expand to new territory.
That poses the biggest barrier to Pitt's Big Ten prospects. The school's inclusion might not add much money from new subscribers. Still, given the success of its football and basketball teams, Pitt could be an attractive draw for advertisers.
The Big Ten is also interested in the estimated $5 million a conference football championship could bring.
With 11 football teams, the Big Ten is one team too small to field a conference championship. The Pac-10 and the Big East are the only other BCS conferences without a title game. By adding at least one member, the Big Ten would be eligible to field a football championship game.
The Big Ten is attractive to many schools for the same reason the conference is looking to expand -- money.
In addition to incredible TV dollars, the Big Ten is home to some of the nation's largest sporting venues. More than half of the Big Ten's football stadiums have a larger seating capacity than the 66,000-seat Raymond James Stadium, home of the South Florida Bulls and the largest stadium to house a Big East school.
With larger stadiums, Big Ten schools have more ticket revenue.
In the 2008-09 academic year, the most recent data available, Big Ten schools averaged $38.1 million in football revenue. Pitt made $20.5, according to the U.S. Department of Education.
That same year, the Pitt athletic department reported $45.8 million in revenue, which was less than any Big Ten institution. Big Ten schools made an average of $77.4 million.
Those figures, including Pitt's, might include subsidies the athletic departments receive from university funds to cover operating expenses. In 2006, the most recent data available, Pitt reported an $8.2 million athletic deficit.
There are other benefits besides money. Conference members, plus founding Big Ten member the University of Chicago, compose the prestigious Council on Institutional Cooperation, a consortium of research universities that pools resources to enhance academic collaboration.
One Big Ten administrator estimated the CIC saves schools millions annually because of the group's purchasing power and sharing ability.
All 11 members belong to the Association of American Universities, an invitation-only organization of the nation's top 63 research institutions that offers funding for research projects and promotes policy initiatives for national and international issues. Pitt is also a member.
Academic concerns have prevented the Big Ten from expanding in the past, but those issues likely will not hinder Big Ten expansion anymore.
"The landscape has changed," the Big Ten university administrator said. "I don't think presidents care a great deal about academic standings. They're looking at the dollars."
Big Ten schools have recently invested millions earned from TV revenues into academic and athletic programs.
Though the lion's share of its Big Ten Network money went to athletics, Wisconsin used a portion of its cut to fund a scholarship program for low-income students, and the school used other Big Ten Network funds to aid its campus libraries.
Like Wisconsin, Michigan devotes a portion of its media rights revenue for non-athletic financial aid. But most of it goes into the athletic department's general fund, which the school tapped to pay for a $20 million renovation to Michigan's basketball arena and a $23.2 million basketball player development center.
Penn State puts its Big Ten Network funds in its athletic budget, which is used for new construction, facility maintenance and other operational needs. A portion of the funds are used for institutional programming on the network.
In many cases, the Big Ten Network has allowed athletic departments to pull themselves out of debt, causing less strain on a school's general funds and freeing academic resources for academic endeavors.
Most experts say the possibility of Big Ten expansion is more like a probability. The questions that remain are: How large does the conference grow? What schools will the conference choose? And when will it happen?
Big Ten commissioner Jim Delany declined an interview request for this story. He has talked to reporters about potential expansion, but would not reveal which schools he was considering or when he would consider inviting them.
Last week, Delany told a group of reporters the Big Ten was not married to its 12- to 18-month time frame of exploration, saying it could be stretched in either direction.
Zimbalist and Silverman urged caution -- Silverman because any change will affect the conference for decades to come and Zimbalist because any rash decision could have the opposite of the intended effect. If the Big Ten adds too many schools, or the wrong schools, it could detract from that $22 million TV payout conference members currently receive.
To protect against that, Wisconsin athletic director Barry Alvarez told The Associated Press that new schools should not immediately earn the same amount of money as current members.
"You just don't jump into the league and get a full share of what everyone else in this league has established over time," Alvarez said. "I think someone has to buy their way into the league."
The conference has options. It could add one school, becoming a 12-team conference, or it could grow to as many as 16 schools.
John Feinstein, a best-selling sports author and an analyst for National Public Radio, The Washington Post, Sporting News and Golf Digest, believes the Big Ten will make overtures to Notre Dame and Texas, two of the nation's richest athletic programs. If either joins, the Big Ten will likely be content with expansion, Feinstein said. But he expects both schools to reject an invitation. Notre Dame turned down a chance to join the Big Ten in the late 1990s, and school officials have reiterated their desire to remain independent in football.
Then, Feinstein said, he expects the Big Ten to explore expanding to 14 or 16 schools. Crouthamel said he, too, expects a large expansion.
Delany recently shot down a news report that the conference had offered invitations to Nebraska, Missouri, Notre Dame and Rutgers, though the Associated Press recently reported Missouri officials would listen to a Big Ten offer.
In addition to Pitt, several Big East schools have been rumored targets for Big Ten expansion, including Syracuse, Rutgers and Connecticut. Maryland and Boston College of the ACC and Kentucky of the SEC have had their names involved in speculation, too.
Speaking to reporters during a meeting of Big Ten coaches and athletic directors, Delaney gave a strong indication the Big Ten would look to the south for expansion -- particularly the Sun Belt, which stretches from southern California to Florida.
"Our schools have benefited by healthy economies, by strong job markets, by growth," Delany said. "In the last 20 or 30 years, there's been a clear shift in movement to the Sun Belt. The rates of growth in the Sun Belt are four times the rates in the East or the Midwest."
Many, like Crouthamel, believe Big Ten expansion could lead to major changes in college athletics where rival conferences could expand to keep pace with the Big Ten. Crouthamel believes the Big East, and schools like Pitt and West Virginia, will be vulnerable if other conferences, such as the ACC and the SEC, expand.
West Virginia athletic spokesman Michael Fragale said athletic director Ed Pastilong will not comment on Big Ten expansion since "everything is pure speculation." But Fragale provided a statement from Pastilong, which read, "West Virginia University is 100 percent committed to the Big East Conference. WVU is very proud of its part in the formation of the Big East football conference, and our No. 1 goal as we move forward is this conference."
With little talk of its own, the Big Ten has generated a lot of buzz in a handful of months. Newspaper articles and radio segments are devoted to the topic almost daily as schools and conferences posture while the future of college athletics is decided.
Crouthamel described the process as "devastating." He worked for more than a decade to build and maintain the Big East and once helped save it from ACC expansion. Now all he can do is watch from afar as one of his life's works is threatened by the Big Ten.
"Sportsmanship, in this exercise, is gone," he said. "It's all about money."
First Published May 23, 2010 12:00 am