Texas A&M Leaving Big 12... | Page 2 | The Boneyard

Texas A&M Leaving Big 12...

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Some analysis of the business side of adding A&M. I was partially right. The SEC can not unilaterally amend the contract, they have to prove value, and it looks like CBS and ESPN are taking the position that the A&M doesn't add that much.

http://www.cnbc.com/id/44329182/Texas_A_M_s_Addition_To_SEC_Wouldn_t_Mean_Much_To_TV_Contracts

There's no way the SEC is staying at 13. They add one more and it gets pretty tough for the networks to argue that there is no value added.
 

nelsonmuntz

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There's no way the SEC is staying at 13. They add one more and it gets pretty tough for the networks to argue that there is no value added.

More teams mean that there has to be more incremental benefit. Each team has to be worth about $23 million for the SEC just to break even. That means the SEC would have to get an incremental $46 million per year from two additions. I think what the market is saying right now is the baseline for a BCS program is about $17-18 million per year, with a step up for the more attractive programs. There does not appear to be a multiplier effect of 1+1=3 with these TV deals, and the reverse may be true because long-term rivalries are lost. Maybe it is 1+1=1.5. A&M was worth about $20MM/year to the Big 12, and now the SEC has to fight to get that number added to its TV contract. I suspect some within the SEC are asking "what's the point?"

For the SEC to see just a 5% per team bump in revenue from an addition, each new team has to generate $35 million in incremental revenue, which seems out of the question right now. Why take the risk of an addition if it won't result in even a 5% bump per team?
 
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