Conference Realignment

College sports are changing rapidly.  From the soon to be instituted college football playoff to the potential changes the Ed O’Bannon lawsuit forces on schools, we are clearly in a time of change.  The subject of today’s post is another example of these changes, as our focus is on conference realignment.  The cynic, who in this case would be correct, would say that the realignment activity of the past few years has been driven by money.  It has been the quest for new television markets (Rutgers to the Big Ten) and powerful brands (Nebraska, also to the Big Ten) that has led some conferences to grow, and for many teams to make moves.

The topic of realignment is top of mind today because it is the first day of the American Athletic Conference.  This new AAC is largely comprised of refugees from the Big East and Conference USA.  Today’s analysis looks at how the shuffling across conferences has increased the overall brand equity of each league.  For this analysis we use the results of our previous college basketball brand equity analysis.  The one significant change is that for this analysis we do not separate out the conference effects when computing team-level brand equity.  Each league’s rank is then the sum of its teams. We perform the analysis for both 2012 and 2014.

The analysis yields some expected and surprising results.  The Big Ten leads the way both in 2012 and 2014, with the ACC following behind in both years.  However, while the Big Ten has a large lead in cumulative brand equity in 2012, the gap is almost negligible in 2014 (In terms of percentages the brand equity of the ACC basketball programs was 81.7% of the Big Ten’s in 2012, but with the changes scheduled to occur, the ACC will have 97.2% of the Big Ten’s equity in 2014).

Of course, the most interesting part of the table concerns the new Big East (Catholic 7) and the new American Athletic Conference.   The Big East drops from being the 3rd ranked conference to being the 6th best conference in 2014.  However, it should be noted that this drop is primarily due to the reduction in the league size. In terms of average equity the remaining Big East schools still have the 3rd highest average score.

For the new American Athletic Conference the story is not very hopeful.  The new American Athletic Conference is projected to rank 9th behind the power 5 conferences, the Big East, the Mountain West and the Atlantic Ten.  This was a somewhat surprising finding given that the American Athletic Conference will still contain schools like Cincinnati, Memphis, and UCONN.  But the numbers suggest that Dayton, UNLV and New Mexico have sufficient fan equity to move their leagues past the American Athletic Conference.

The other big story is the positions of the PAC 12 and the Big Twelve.  In 2012, the Big Twelve had a 22% advantage in terms of brand equity, but we forecast that in 2014 it will trail the PAC 12 by 7%.  These types of changes are important as there is a bit of a game that occurs within conferences.  Schools in weaker conferences are likely to have a greater incentive to jump to stronger leagues because they fear being left in a dying league without great options.  The Big Twelve has recently lost Colorado, Texas A&M and Missouri.  If Texas were to leave, the conference would likely disintegrate.

We would also like to make a couple of notes regarding some assumptions implicit in the model.  Our use of revenue premium based brand equity as of 2012 means that each school’s brand equity can be viewed as partially a product of their affiliation in that year.  This is important if a league’s value is more than just the sum of its teams.  For example, the Big Ten pursued Rutgers largely to secure entry into the NY television market.  The logic behind this move would seem to be an assumption that competition with Big Ten teams will improve Rutgers’ attractiveness within the market.  Our analyses do not (as of now) include this type of potential synergy.  The new ACC has at least partially adopted a television based strategy as the members are widely distributed across the nation.  The hope has to be that this cross country coverage creates synergies that simultaneously create interest in the teams and the league.  However, given the current lack of brand equity and the aggressiveness of stronger leagues to form lucrative television networks, this will be a tough haul.

The Perils of Realignment and a Final Look at the “Fairness” of the BCS System: Would TCU fans rather play for “Major Bowls” or be an average Big Twelve Team?

As the 2013-2014 college football season approaches, we would like to reflect back on one of our favorite sources of college football controversy: The BCS system.  And while we have every confidence that the extension to a 4 game playoff will ALSO provide an annual source of controversy (How can two of the four teams be from the same conference?  How can they leave out the second place SEC team? Etc…) we wanted to say goodbye to the BCS by taking a look at how fair it was.  One way to look at the fairness of the system is to look at how likely it has been for different “types” of teams to qualify for, and be selected to play in one of the BCS bowls.  The other purpose of this post is related to the topic of conference realignment.  The past few years have seen a number of schools jump at opportunities to join more financially lucrative conferences.  While the financial benefits of switching to a major conference (or switching from a major conference to the SEC or the Big Ten) are obvious, these moves have a potential downside in that teams moving up the financial ladder may often become less competitive on the field.

To assess the “fairness” of the BCS system we created a model for the relationship between on-field success (as evidenced by the level of bowl game achieved in a season) and variables such as program expenditures, AQ (automatic qualifying conference membership) status, attendance and previous bowl participation.  For this analysis, we used an ordered logit model and defined 4 levels of post-season participation: no bowl game, minor bowl game, major bowl game, and national championship game.  An ordered logistic model is similar in spirit to a basic linear regression but it is designed to model the probability of categories of (ordered) outcomes.  The logic of each of the explanatory variables is as follows:  1. Expenditures are included to control for expected team quality level.  2. Attendance is used as a measure of the team’s fan base (an important factor since bowls prefer teams with large fan bases that are more likely to travel to the bowl site).  3. Previous bowl participation reflects the brand equity or television appeal of the team.  4. AQ status is included to capture the influence of the BCS structure on bowl participation.  Given the concerns expressed about limited access for non-AQs this term is directly related to the controversial nature of the BCS.

The model reveals that selection to play in a “major bowl” is more likely for teams that spend more, have higher attendance and have participated in more bowls in past seasons.  The most dramatic finding from the analysis is the significance and direction of the AQ term.  We find that when we control for the other team characteristics, that AQ conference membershipreduces teams’ post season opportunities. The model’s implications are best illustrated graphically.  The figure below shows the relationship between expenditures and major bowl participation for an artificial AQ and Non-AQ school.  The figures are for a school that has participated in 12 minor bowls, 4 major bowls, has won a single national championship and has average attendance of 60,000.  The vertical axis is the probability of a team being selected for a BCS bowl and the horizontal axis is the team’s football expenditures relative to the average expenditures of FBS teams.

For the Non-AQ school, the probability of achieving a major bowl is given for expenditure levels ranging from 50% to 150% of the overall FBS.  For the AQ schools, we plot the probabilities for expenditures ranging from 100% of the average to 250%. When expenditures are controlled for, the probability of playing in a major bowl is significantly greater for Non-AQ schools.  At a spending level equal to the overall FBS average, the model predicts the Non-AQ school has a 14.4% chance at a major bowl, versus just 5% for the AQ school. When a non-AQ spends 150% (think TCU) of the average the probability of a major bowl is about 27%.  For the AQ school this level of spending yields a probability of just 12%.

While the finding that Non AQ schools actually have preferred access to the BCS games is at first surprising, upon reflection it is a very intuitive result.  Consider the case of TCU.  Prior to moving the Big Twelve, TCU was the biggest spending non-AQ program and played in bowl games every year from 2005 to 2012.  This run included Rose and Fiesta Bowl appearances.  In the Horned Frogs’ first season in the Big Twelve they finished with a 7-6 overall record and a 4-5 conference record.  This change from being competitive for BCS bowls to being a middle of the pack team is interesting because TCU’s spending on its program was very high in comparison to Non-AQ schools but only moderate for AQ conference schools.  However, we should note that TCU had a number of issues in the 2012 season and that the Horned Frogs are one of the Big twelve favorites this year.  The Utah Utes experience in the PAC-12 has been similar.  In their final season in the Mountain West, Utah was 7-1 in conference and 10-3 overall.  Since moving to the PAC 12, Utah has had conference records of 4-5 and 3-6.

As we near the 2013-14 season if we had to bet we would guess that it is more likely that we see Boise State in a major bowl than Florida.  Boise State’s toughest opponents include Washington and Fresno State.  In contrast, Florida’s schedule features Georgia, South Carolina, LSU, Miami and Florida State; not to mention a possible SEC championship game against Alabama.  Northern Illinois is another likely non-AQ candidate for a major bowl.

Earlier this month we did a post about conference realignment that focused on how the Big East crack-up and various conference shifts by other schools impacted the quality of each basketball conference. The preceding analysis of the BCS system highlights another aspect of realignment: the consequences for fans versus the incentives of athletic programs.  The cases of TCU and Utah provide examples of non-AQ schools trading off wins for the financial rewards of joining an AQ conference.  The University of Missouri shows how finances can even work across the big 6 conferences.  Missouri football was a competitive Big Twelve program winning 10 or more games 3 times from 2007 to 2011 (and 8 wins the other two years).  In their first year in the SEC, the Tigers went 5-7 and ended their 7 year streak of playing in bowl games.  While the SEC does have a richer set of contracts in place, it also seems likely that Missouri will struggle to be competitive.  The question for fans and for athletic departments is the tradeoff between winning and revenue.  At this stage it doesn’t appear (with the possible exception of Boise State) that winning is viewed as anywhere near as important as money.