This should be the analogy that B12 should be looking at;
You own a business, in this case it is a football conference. In the market you need to grow so you can get a bigger TV contract, a conference championship that is meaningful; add recruiting territory; gain new fans and merchandising opportunity and keep up with the competition from the other conference who have expanded and captured all of the favorable programs.
In most business you expand or fail. All of the other conferences have seen this and have expanded. All but the Big East and that amalgamation of basketball and football died a horrible death.
As with any company you buy or acquire another company so that you can use your assets to grow that potential. You support that new company with cash, promotion and manpower, you even lose money for the first few years. Eventually if you promote and run the new company correctly your investment pay dividends. The new business opens new markets stands on its own and makes money. It adds value.
Now you can buy or acquire an established company that already is making a profit, but it is harder to get them to agree and the price is much higher. You can buy a company that was once profitable, but has fallen on hard times and may or may not be able to be turned around; or you can buy a company that is new, but in a cutting edge business or market; some risk involved, but for a lower initial price, and longer investment time you can get in on the ground floor and grow it.
In the B12 case there are no established programs interested in sale or merger. So there is no hope of getting a P5 team to join. There are some older companies with history like UC, UCONN and Memphis which have some fan base already, have some success, especially in basketball, can deliver a fair fan base right off the bat, but are in areas of the country that are in decline, but may be capable of being turned around. There are a few start up programs like UCF and USF that have less history, but are in markets that are growing rather than shrinking; that have fan bases that have the potential to deliver a big market given the support of the B12 resources. Risky, because without success the programs have little in the way of established fan bases., but with the biggest upside in potential profit if successful.
The B12 (with the exception of Texas) is going to need to grow its revenue base. They need to invest in some new company. None of the options is going to bring any immediate value to the table. The B12 is going to have to invest money in some program. If they stand still their business model will become obsolete and they will lose market share to the other conferences and perhaps some of their top programs like OU. They could add a G5 program into the fold with a smaller graduated pay scale. They could invest in programs and like TCU, could eventually add substantial value to the conference. If somehow UCF and USF could be added and both were to have success within the conference the payoff to the conference would be huge. To recruiting, to TV revenue, to merchandising.
It would also protect the B12 school in the event that UT and OU jump to another conference in a few years. It would give the new schools a jump start with P5 recruiting and marketing rather than simply adding them from the AAC or MWC conference.
Just like judging any business you don't look at just the balance sheet for the last 12 months, you look at the last 5 years to get a historical perspective. You look at the goodwill, assets like untapped markets; synergies of product; cross marketing potential; intellectual property; underutilized assets; all measure of things.
You own a business, in this case it is a football conference. In the market you need to grow so you can get a bigger TV contract, a conference championship that is meaningful; add recruiting territory; gain new fans and merchandising opportunity and keep up with the competition from the other conference who have expanded and captured all of the favorable programs.
In most business you expand or fail. All of the other conferences have seen this and have expanded. All but the Big East and that amalgamation of basketball and football died a horrible death.
As with any company you buy or acquire another company so that you can use your assets to grow that potential. You support that new company with cash, promotion and manpower, you even lose money for the first few years. Eventually if you promote and run the new company correctly your investment pay dividends. The new business opens new markets stands on its own and makes money. It adds value.
Now you can buy or acquire an established company that already is making a profit, but it is harder to get them to agree and the price is much higher. You can buy a company that was once profitable, but has fallen on hard times and may or may not be able to be turned around; or you can buy a company that is new, but in a cutting edge business or market; some risk involved, but for a lower initial price, and longer investment time you can get in on the ground floor and grow it.
In the B12 case there are no established programs interested in sale or merger. So there is no hope of getting a P5 team to join. There are some older companies with history like UC, UCONN and Memphis which have some fan base already, have some success, especially in basketball, can deliver a fair fan base right off the bat, but are in areas of the country that are in decline, but may be capable of being turned around. There are a few start up programs like UCF and USF that have less history, but are in markets that are growing rather than shrinking; that have fan bases that have the potential to deliver a big market given the support of the B12 resources. Risky, because without success the programs have little in the way of established fan bases., but with the biggest upside in potential profit if successful.
The B12 (with the exception of Texas) is going to need to grow its revenue base. They need to invest in some new company. None of the options is going to bring any immediate value to the table. The B12 is going to have to invest money in some program. If they stand still their business model will become obsolete and they will lose market share to the other conferences and perhaps some of their top programs like OU. They could add a G5 program into the fold with a smaller graduated pay scale. They could invest in programs and like TCU, could eventually add substantial value to the conference. If somehow UCF and USF could be added and both were to have success within the conference the payoff to the conference would be huge. To recruiting, to TV revenue, to merchandising.
It would also protect the B12 school in the event that UT and OU jump to another conference in a few years. It would give the new schools a jump start with P5 recruiting and marketing rather than simply adding them from the AAC or MWC conference.
Just like judging any business you don't look at just the balance sheet for the last 12 months, you look at the last 5 years to get a historical perspective. You look at the goodwill, assets like untapped markets; synergies of product; cross marketing potential; intellectual property; underutilized assets; all measure of things.
