The Bonfire of the Inanities

The TAMU migration to the SEC would be a great business case study in B-School.

It involves understanding of market differentiation (why is Texas more valuable than TAMU? Why is TAMU more valuable than TCU?), business strategy (how is the SEC different from the Big 12?), and game theory (how will TAMU compete with Texas and OU for elite recruits?). The more I look at it, the more convinced I am that they are risking not just their athletic programs but even their school's national stature.

1. After years of ignoring them, Texas found out how much its 3rd tier rights were actually worth. About $12 million per year, a huge eye opener for pretty much every athletic director in the country. Compare that with other schools- NU: $4 million for its lesser non-conference games on ppv, KU: similar figure for its non-conference basketball, and down to less than $1 million for schools like Baylor and Iowa State. If Texas' 3rd tier rights are that much more valuable, how valuable are its 1st and 2nd tier rights in a free market? i.e., if Texas were offering itself to another conference, how much value would it bring? Is there any reason to think there isn't a similar disparity in 1st and 2nd tier rights value, making Texas' 1st and 2nd tier rights (which we exchange for $20 million/year) worth something closer to $50 million/year?

In other words, Texas is giving a huge value to its conference, whether it's the SWC, Big 12, or PAC-16 -- in return for ... geographic convenience? Agreements on compliance? Brotherhood, unity and fraternity? When you look at it this way, Texas should be swinging a big stick. There is no conference that will give Texas full value for our rights, but it would be insane for us to give our rights to a conference, accept something like an even split, and also concede on every procedural issue to our disadvantage.

Now, TAMU's value is less, but not by a ridiculous amount. Due to ignorance and sloth, they have no real value placed on their 3rd tier rights, and are years away from realizing any value from them (developing an Ag network would require a couple of years of intense communications infrastructure upgrades in all of their venues). Therefore, they have just rolled up all their 1st and 2nd tier rights, which are probably worth about $30 - 40 million/year on a free market, and exchanged them for $20 million/year, a bunch of t-shirts, the right to chant "SEC" while beating Sunbelt teams, and a new revenue stream of RV pad rentals. They seem to be counting on rolling their 3rd tier rights (which have value…Ags love their history and their baseball) into a SEC network where the value and marketing impact would be diluted.

The big problem for the Ags financially is that they are going to have to pay a penalty this year for leaving that represents about 20% of their Athletics Department budget ($15 million) in order to obtain an annual increase in revenue that represents about a 3 – 4% increase, before taking into account greater travel expenses for every sport. It’s hard to make this out as a winner -- 6+ years to pay back the initial loss with little margin for increased expenditures (stadium renovations, coaching buyouts, bat guano eradication). Bohls has stated that Byrne is against the move, and it’s easy to see why. His AD budget will definitely be stretched in the near term and possibly in the long term.

2. TAMU is gambling that the SEC membership will boost their recruiting. Their problem has been that in the competition for elite recruits they have had to contest with not only UT and OU but more recently Texas Tech, Baylor, Oklahoma State, and TCU. Without shaking up the game, their only hope was to wait for one of those schools to slip or make a bad hire, and have a great coach in place at TAMU to supplant them. They have removed from the table one available choice that would help- the discarding of their crazy traditions (only male cheerleaders, para-military band uniforms, yelling at visitors for walking on the grass). The SEC has more prestige, and that will help. What will hurt is that the SEC is a tougher conference, and they are now less likely to make BCS bowls or finish in the Top 5 than before (let alone Top 25). If in 10 years, the Ags still haven't played in a BCS bowl, and Texas and OU have played in several, the SEC recruiting pitch to top recruits will only work for Bama, LSU, and Florida -- not for TAMU.

Someday the LHN will be part of every cable package. During the April - June period, it will have great productions about the history of the Red River Rivalry, the Royal era, replays of Texas BCS wins, check ins with NFL Longhorns, etc. The average Texan will watch that (instead of tennis on the other channels) and come to believe that the 1990's dominant defensive player in the state of Texas was Stony Clark. He will come to believe that Texas beat the Ags 90% (not 67%) of the time. There may also be a SEC station. That station will focus on the major SEC schools, and not TAMU. In this arena, the SEC brand is a bb gun for the Ags compared to the LHN's A-10 cannon. If Texas and OU continue to snatch up the top recruits, TAMU will be mired in a mediocrity prison with no chance of parole.

3. The best conferences are collections of schools with aligned goals and missions. For example, the Big 10 is a collection of research universities that also enjoy sports. The SEC is a collection of schools committed to football excellence at the expense of all else. Vandy is an exception, and Florida has managed to excel academically (mainly because it does not have to sell its soul to get the players needed to compete nationally). This is what TAMU has joined. TAMU is a tier 1 research university...for now. Give them a few decades of SEC competition - deans pressured to change grades, university presidents forced to spend a disproportionate amount of time and resources on sports, alums donating to sports instead of colleges, pressure to accept marginal students - and we'll see how that works out. How often do you think the president of Louisiana State University attends road games? The president of Cal-Berkeley? The primary strength of Texas A&M was it's identity with the state of Texas. And that just went out the door...

4. I think the geography aspect will wear on the Ags if they don't have success. With Colorado, Nebraska, and potentially Mizzou out of the league and the addition of TCU, the Big 12 is developing a really convenient travel set up for being able to hit all the road and home games. I live in Arlington. I make almost all the games in Austin, have OU in Dallas, could theoretically go to Waco if I wanted to, and now have TCU. It doesn't take much more adventurism to trek to OSU or TT. Conversely, we can see lots of visitors at our games in Austin. Austin, Oklahoma City, and Fort Worth all have major airports with lots of hotels. This conference is really set up for a great fan experience. If we have another championship game, at least half (probably more) of the time it will be played in Arlington or Houston...again, major airports and lots of hotels.

TAMU is trading that for a new conference where its closes rival, Baton Rouge, is as close as OU is right now. In future water cooler discussions, while other alums are discussing trips to Eskimo Joes, Joe T. Garcia’s, and Scholz Beer Garden, Ags will be met with glazed over eyes as they try to explain how great the trip to Fayetteville was.

Again, it won’t matter if the Ags do win big. But there's a much higher percentage that they don't, and it will feel like spending prom night at the Younglife Afterparty.

5. This decision was made from emotion, not logic, and carries extremely high risk. In the SWC and Big 12, TAMU’s competition for elite status in this state has come from Austin. Its chief rival was a school that they had many ties to, and was unlikely to act out by buying players. Even the Ags’ biggest gripe (the LHN) was over an issue the Ags were well positioned to contest as a conference mate. Now, the Ags are leaving and exercise no leverage over Texas. They will be in a conference where rivals pay street agents, buy players, oversign and willingly trade NCAA penalties for victories. If the Ags respond in kind in an attempt to compete, several hostile programs in this state (as well as OU) will be happy to turn them in to the NCAA as well as friendly media outlets.

Any good case study report of a poor decision has to address why it was made. The reason here is that TAMU is (and has always been) a dysfunctional organization. They won a MNC with Coach Homer Norton in 1939. After WWII, he was forced by Houston boosters to take on the Rice OC ("T" formation advocate) Harry Stiteler as his OC, and then was replaced by him. Later, Bear Bryant was sought and hired by boosters, not the Athletics Director. Emory Bellard was undermined by Houston boosters for not listening to their man, OC Tom Wilson. Wilson was fired by Dallas booster Bum Bright, who hired Jackie Sherrill. Slocum was run by San Antonio boosters, who also hired Franchione (they were firing the AD also at the time). See a pattern? They have key decisions made by different booster groups on a rotating basis. Their formal university organization chart is a shell to conceal the actual power brokers. You may agree with some of the actual decisions, but the "process" is horrible. There is no long term accountability, and no means of correcting the processes.

This won't end well.

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