Posted on: June 13, 2010 8:02 pm

Letter to Senator Orrin Hatch

Senator Hatch:

The changing landscape of division I-A football and the impact it will have on college campuses across America is of great concern. It will have both direct and indirect impact on various stakeholders both positively and negatively. You do not need me to state the highly political shakedowns that is happening with the intent of protecting home institutions. This is a situation that you and your colleagues should monitor and provide guidance without the use of threats.

The supposed Armageddon of four super conferences in college athletics is not the worst thing that can happen to college athletics. True it will create a bigger gap between the haves and have-nots. There are billions of dollars that are in play and the money will only increase in the future. In fact the revenue gap between college football conferences and professional leagues television deals is dwindling fast. At the conclusion of this round of TV deals the BCS conferences payout (collectively) will be higher than Major League Baseball who is in the middle of a 7 year 3 billion dollars deal. The money that is being handed out is mind blowing and most of it is not being taxed.

Some of the opponents of super conferences in congress has voiced concern and mused about looking into the tax exempt/anti-trust status of college athletics. That is commendable and should be looked at in depth. I am certain that the conclusion of any research in the matter would be that taking away the Anti-trust protection/tax-exemption status is the worst thing that can happen to college athletics.

Membership into the NCAA is voluntary. 95% of NCAA annual budget of $700 million dollars is generated through the men's basketball tournament. If congress takes away the anti-trust/tax exemption status there is nothing to prevent the BCS schools from departing the NCAA and forming their own athletic association. Right now Utah State has a chance to be on national TV by participating in March Madness and George Mason had the opportunity to make their run to the Final Four that gave them over a hundred million dollars of PR. Those type of events would not happen if the BCS schools departed the NCAA which would force CBS/Turner to opt out of the contract.

It is almost impossible to quantify the impact that would be felt in communities and campuses both large and small. If the NCAA was to disappear what happens then? That is the BILLION dollar question. Taking away the anti-trust/tax exemptions that college athletics currently are permitted takes away the carrot for the BCS schools to play along with the NCAA revenue sharing system.

Although many people are saying that Super conference will lead to a playoff in football it does not make business sense. I read recently that Jim Delaney stated in a congressional hearing that a playoff system would be hundreds of millions of dollars. I don't debate that, but the problem is that a playoff system would need to sanctioned and operated through the NCAA. Take a look college basketball and how the NCAA use the subsidy (Men's Basketball tournament) it does not make business sense for the BCS schools to go in a playoff and giveaway the money. The current system where they keep over 80% of the money through bowls is better for the schools.

Congress take away tax exemptions, and these schools might decide to takeaway the $700 subsidy that they provide.


Posted on: May 21, 2010 9:16 pm

A New Professional Football League

There is great appetite in Ameica for football. It is not shocking that more sports fans tuned in to the NFL draft over playoff games in hockey/basketball a couple weeks ago. Everyone knows that the NFL is the number 1 sports league in America. The billions of dollars that TV rights are worth has capture the eyes of business people who want to grow their wealth. Even college football has started to see the green as well with ACC, Big Ten, and SEC all having TV contracts that gurantee them over a BILLION dollars each with payouts ranging from ($150-300 million a year).

With that type of money in play college athletics is no longer simply "scholar athletes" playing kids games. As a society we lost our moral compass on the matter a long time ago. Once universities starting handing out scholarships for intercollegiate athletics, scholarships are a form of compensation to entice students to enroll and participate in athletics at the schools behest, the university was admitting that these particular students bring unique value to the school. The same notion applys to academic scholarship, the university grant them to students because there is a positive outcome for the university be it more diversity (culturally, socio-economically) or a prized mind/talent. Basic economic principles state what the university is doing is a form of bartering. They are trading something of value (subsidized education) for something else of value (athlete's particpation and marketing rights).

The fact that the public refuse to acknowledge that scholarships are a form of compensation, with a binding contract for the student athlete, it is taken for granted that student athletes will not see a great change to current benefits regardless of how much more the colleges cash in. It sounds sacrilegious, but outside of college athletics can you think of any other multi-billion dollar industry that workforce receive no monetary compensation. Without competition, college athletics has been able to strong-arm athletes. If given a choice would some of the star high school/ college athletes choose to pursue a professional career instead of going to college?

Without a doubt the answer is yes! The first question athletes will ask is will the NFL scout them, the answer to that question is yes. Eric Swann, never attended college (he went Semi-Pro out of high school) and he was the 6th overall selection in the 1991 draft. If NFL teams found Swann 20 years ago there is no reason why they would not find players now. Every year players outside of Division I-A football are selected in the draft. The teams will search high and low for the talent. In fact teams would look favorably on players playing in a professional league and having a little money in their pocket before getting into the league.

No professional football league will be able to compete against the NFL. The UFL is taking NFL rejects and intend to classify itself as a minor league organization. There are a lot of wealthy people who back it but it is hard to believe that the success of the UFL could be much greater than the AFL in its heyday which had a national tv deal but still was not profitable.

A Young Adult League (18-23) that competes with colleges for high school athletes could bring new competition to the market and in time it could grow into a multi-million dollar enterprise. Possible sources of revenue: gate receipts, sponsorship/marketing, player termination of contract (players sign a 5 year contract which can be voided by the player or NFL team paying a fee), tv/media broadcasting, digital rights.

My vision:
Single Entity Ownership
Initially 12 teams (competition can force growth just AFL/NFL) 
14 game season (Sept. to Jan. > 4 team playoffs)
Budget $3 million for player salaries (60 players, minimum salary of $35,000, max $100,000 - 50 minimum and 10 max)
$0.5 million for subsidized education ($7800 per player a year)

I pitched the idea in email to Mark Cuban (no response), but I classify this as multi-million dollar brainstorming.

Category: NCAAF
Posted on: May 11, 2010 7:39 am

Factors facing Texas

Early reports are that four schools have received "Golden Tickets" from the Big Ten in Norte Dame, Missouri, Nebraska, and Rutgers. Three of those schools are certain to accept membership after lobbying publicly for inclusion; leaving Norte Dame weighing whether to stay independent in football or join the Big Ten. While there will be countless people going back and forth talking about Norte Dame as the 15th Big Ten team, even if Norte Dame say no initially there is a way they still might feel forced to the table once the other shoe drop.

As currently constructed the Big 12 have 6/7 schools that does the heavy lifting for the others. Losing two of the bread winners will be devastating to the Big 12. Nebraska rely on its national profile, Missouri as the second largest state in the conference bring different but tangible benefits to the conference as well. Texas does a majority of the heavy lifting in Big 12, but there is no way to replace asset like those. True it is two less hands in the pot, but the secondary games by the conference is going to be worth less. A Big 12/Pac 10 partnership does not fix the issue, because even if a mega deal was to happen Texas still have to split a portion of it with teams that it feels does not feel deserve it.

By taking two Big 12 teams, the Big 10 has forced the Longhorns to consider searching for a new home. Intent on keeping their stranglehold over college football, there are some factors that Texas has to consider before acting.

- Do we have the wiggle room politically to do whatever we want or is our hand going to be forced?

- Playing the low profile teams of the the Big 12 is beneficial to the record book and increase chances of BCS Bowl games, but being a big fish in a little pond will not work in the long term if the program is to grow revenue.

- Could we even attempt to move without Texas A&M

- Moving with Texas A&M would increase the dollars from new tv contract, and it helps locally if there is some type of cable network.

- Moving without Texas A&M would invite a new power conference to the recruiting grounds.

- The Red River Game is too lucrative for all parties involved and it will continue regardless of conference setup. Does the Sooners being in a different conference hurt the Longhorns interest?

- Would it be possible to bring the Sooners in a move without including OK state. Would a weak Oklahoma help Texas?

- Can we be successful as an independent? < Of all the options facing Texas this is the one that nobody talks about, it could be viable depending on how they schedule. >

After looking at the landscape it is easy to see that it is the Longhorns best interest to leave the Big 12 if they are able to convince Texas A&M to join them. The advantages over conference mates that the Longhorns currently have will disappear if the school move to the ultra-competitive SEC, the heavy hitters in the SEC would have no problem matching Texas check for check in spending or athlete for athlete on the field. Without a doubt that will bring in the most new money, but balancing that against the major drawbacks of potentially more loses and recruiting battles in Texas and forgoing it for a safer future might be best.

If determine to leave the Big 12 that leaves them with two options look west in the Pac-10 or shock the world and head east to the ACC. I realize it is kind of shocking to mention the ACC but the ACC should be considered as promising for the Longhorms as the PAC 10. No there is LA market in the ACC, but the ACC has 4 private schools which mean small fan bases little threat (Miami is able to overcome this by the sheer volume of players within 20 miles).

Austin is smack dab in the middle of the country and it is just as far away from Seattle as it is from Boston.
ACC schools (closer) (1 school over 2000 miles away, everyone else 1500 miles or less) <1 time zone away>
PAC 10 schools (4 schools over 2000 miles away, 2 schools over 1700 miles away) < 2 time zones away>

The ACC generates more revenue per team. Per team the numbers is over $4 million more to ACC teams than Pac 10.

Currently at 12 teams, the ACC is not looking to expand but depending on the response from overtures from the SEC there might be a deflection or two (Maryland going to the Big Ten is possible, it makes a lot of sense for Maryland, but I think it is doubtful). Texas and A&M might seem like a pipe dream for the ACC, but if you look at Texas options other than joining the SEC there is not one that is not comparative to joining the ACC.

The next 18 months will be interesting.

Category: NCAAF
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