What Is Entry to the Big Twelve Worth?

I’m biased.  I want BYU to get into the Big Twelve Conference.  Football only is fine with me (especially if it’s easier to get in on a football only basis).  I believe the BYU football program NEEDS this.  Why? As usual, follow the money.

During the last academic year, the Big Twelve Conference generated revenue of $267,755,283.  They distributed to their member schools $227,225,053, and generated a net surplus for the conference of approximately $9.8 Million.  The two newest schools received over $20 Million each, and the eight legacy schools received over $23 Million each.

My calculation is that if BYU gets into the Big Twelve, and nothing else changes, the present value of that golden invitation is approximately $250 Million.  Here’s the math: BYU receives less than $2 Million annually from the NCAA and conference affiliation.  Television is worth something around $3.5 Million.  If you assume that BYU enters the Big Twelve on a football only basis then the current NCAA and conference allocations should be largely, if not totally, unaffected.  The difference then between the current TV deal and what legacy teams received is approximately $20 Million per year.  At a discount rate of 7.5% the net present value of 40 years of $250 Million.

Why do the Texas politicians care so much about Houston getting into the Big Twelve Conference?  Similar math for Houston (except using the difference in their conference allocations) leads to a net present value for Houston of over $200 Million.

Won’t there be a large cost associated with entry into the conference?  Yes.  However, this also assumes that everything else remains the same.  No additional revenue from a new television deal.  No additional revenue from a conference championship game.  No additional BYU specific revenue from an excited fan base to be in a conference (donations, corporate sponsorships, additional increases in ticket costs, etc).  These additions to the pie will partially offset the cost of conference entry.  Any additional costs will reduce the net present value given above.

The Big Twelve isn’t going to just hand BYU an annual $20 Million annuity.  However, these numbers suggest there is sufficient room to make a deal.  Especially if the real value is in “exposure.”

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