C7 Announcement Rumor

[ChicosBailBonds]

If the Big East told MU in 2005 that they had to to take a smaller piece of the pie for 5 years(or however long it would have been), but they still would be doubling their revenues, I don't think we would have been that upset about it.

How did that marriage work out? What was one of the reasons we got out?  Inequity.





Can you imagine being Butler or Xavier and looking at the "product" that Seton Hall, DePaul, Providence has put on the court the last decade and think that those schools should be getting a bigger piece of the pie since they did so much to "enhance" the Big East brand.  I would be giggling in the room if I was them.  If I were the five "invitees", I would band together and cut a side deal and say all or none.  The C7 needs 5 quality schools and the next five on the list after the initial five are a step down.  Or at the very least, if I were Xavier or Butler, I would join hands and say we need a better deal or we're not coming in....they have leverage, too, especially if they are acting in concert with each other as a bloc instead of individually.

[Benny B]

They won't be nearly as good as those five.  


I have no doubt if the shoe was on the other foot our fans would be quite pissed off, and I would say rightly so.  You're inviting other schools to form a PARTNERSHIP.  Share the costs (pain) and the revenues (rewards) and the marriage will be much happier and get off on the right foot.

We'll just agree to disagree on this.

#1 - Chicos, you need to ban yourself from the phrase "apples and oranges."  You've probably been in SoCal so long you don't even know what an apple looks like anymore.

#2 - Let's say we go into business, and and we're going to share $4M in annual profits equally.  But I've already spent $10M getting the thing going, so would you rather pay me $5M now, or would you rather forgo one-half of your share of the profits ($1M) for five years?

[brewcity77]

I have no doubt if the shoe was on the other foot our fans would be quite pissed off, and I would say rightly so.  You're inviting other schools to form a PARTNERSHIP.  Share the costs (pain) and the revenues (rewards) and the marriage will be much happier and get off on the right foot.

Sure. If they want to pay a $20M entry fee each to get into the league, and thereby share the costs, I agree.

Otherwise, you're advocating them getting something for nothing.

And while I'm not a huge fan of St. Louis, Wichita State, Richmond, George Mason, and St. Joseph's, it's not like any of them couldn't fit into this league. There are other options if necessary.

[ChicosBailBonds]

#1 - Chicos, you need to ban yourself from the phrase "apples and oranges."  You've probably been in SoCal so long you don't even know what an apple looks like anymore.

#2 - Let's say we go into business, and and we're going to share $4M in annual profits equally.  But I've already spent $10M getting the thing going, so would you rather pay me $5M now, or would you rather forgo one-half of your share of the profits ($1M) for five years?

#1  I have an apple tree in my back yard, as well an orange tree.  Seriously.   I just sent a picture of my orange tree to my little sister the other day as she was battling a snowstorm.



#2  Your example is fine, but again...apples to oranges.   Let's say you are going to start a highly competitive basketball league with 7 Catholic schools in which 3 of them are really crappy and a 4th has run on hard times of late.  Let's say that league doesn't exist yet but has an opportunity for a $500 million television contract if it can convince 5 other schools of like minded perspective to join, but only if those 5 join (or at least the top 2...Xavier, Butler) will the money be there.  Those five free agent school are actually better than 4 of the 7 Catholic schools in terms of the product, their fan support, their ability to make the post season and are vital for this contract to happen.   However, those 5 schools have so-so revenue from television and stand to make more by joining this partnership so they're in a quandry but they find out that the 7 Catholic schools will make more...far more...than the five for some period of time which could be a number of years.  The inequity explanation is due to the "risk" and sunk costs associated with creating this new league.  Well, begs the question if the new league even exist without the other 5?  Does the $500 million contract exist without the other 5?  Seems to me, there is no league without the 5 schools anymore then there is a league with 7.  If I'm going to join your league of 7 and most of my schools are better than half of your 7, I need to be treated fairly. I know you need ME for that $500 million contract.  Without me, you don't get that $500 million.  To make it worse, I'm cutting a side deal with the other four invitees so you can't get ANY of us without taking all of us.  You want to go to the next rung of the ladder and get Detroit, Loyola, Duquesne, George Mason...see how that $500 million looks.  We have risks, too.  We have it made in our current conference...Nearly annual NCAA bids, treated like equals, we will have legal fees and expenses to pay also.  The risk isn't all on you guys.  Those "sunk" costs can be divided up....this league doesn't exist without us.  You need us.

I think you are missing the leverage that they have, especially if Fox is saying the league has to be 12 teams.  The likely five, or certainly the definite two or three (Xavier, Butler, Creighton) should form a bloc to make sure they are protected.  They would be foolish not to.  

See, at the end of the day, both parties need each other and that's the beauty of it.  We may have more prestige, the names, etc, but they have the missing quantity and quality needed to get the pot of gold everyone wants.

[ChicosBailBonds]

Sure. If they want to pay a $20M entry fee each to get into the league, and thereby share the costs, I agree.

Otherwise, you're advocating them getting something for nothing.

And while I'm not a huge fan of St. Louis, Wichita State, Richmond, George Mason, and St. Joseph's, it's not like any of them couldn't fit into this league. There are other options if necessary.

$20 Million...what is that number tied to?  You said earlier $100 million, not sure where that number came from but say it's real, then $100 million divided equally by 12 schools is $8.33 million.

That next tier you just announced dropped the $500 million package down to $300million.  That's why the "FIVE", or the definite three "Xavier, Butler, Creighton" carry a lot more leverage than folks think.  Not complete leverage, but a lot.  Without them, that $500 million drops in value fast.

[LloydMooresLegs]

Very jealous of the orange tree. 

[brewcity77]

Rutgers and Maryland will have to take partial shares for a number of years before earning full B1G money. How is that any different than this? They take partial shares until we're all on equal ground, then we go forward as equals. This isn't something new, it's just how this process works.

[Silkk the Shaka]

More likely, they paid attention in b-school when the concept of "sunk costs" were discussed.

Or they weren't paying attention in their advanced corporate finance classes when the concept of incremental cash flows when deciding between two or more alternatives was discussed. Good job trying to sound smart though.

[raul]

Since the conference is just being formed all the schools should split the money evenly. Rutgers and maryland are entering a conference that was formed many years ago.

[🏀]

Very jealous of the orange tree. 

+1.

[brewcity77]

Since the conference is just being formed all the schools should split the money evenly. Rutgers and maryland are entering a conference that was formed many years ago.

The investments aren't equal. If you form a new corporation the people that will get the most shares are those that invest the most. This is no different. Until costs are recouped, it makes all the sense in the world that the C7 get a bigger share.

[LAZER]

How did that marriage work out? What was one of the reasons we got out?  Inequity.


Can you imagine being Butler or Xavier and looking at the "product" that Seton Hall, DePaul, Providence has put on the court the last decade and think that those schools should be getting a bigger piece of the pie since they did so much to "enhance" the Big East brand.  I would be giggling in the room if I was them.  If I were the five "invitees", I would band together and cut a side deal and say all or none.  The C7 needs 5 quality schools and the next five on the list after the initial five are a step down.  Or at the very least, if I were Xavier or Butler, I would join hands and say we need a better deal or we're not coming in....they have leverage, too, especially if they are acting in concert with each other as a bloc instead of individually.

First, these "marriages" are entirely different and in the end it still ended up working great for MU.  Second, the other 5 have no leverage, everyone knows how much their A10 contract is worth and how much they stand to gain from attaching themselves to the C7. All it takes is for the C7 to put some feelers out to St Joe's, VCU, Richmond, etc. and the 5 mentioned schools would come running back to the table.

[keefe]

I'm disappointed that Gonzaga isn't rumored to be part of the 12. I was hopeful that the new TV contract in addition to the revenue from their NCAA tournament success would offset the costs associated with their location. Oh well.

Zags will join if they deem it in their best interest.

[honkytonk]

Since the conference is just being formed all the schools should split the money evenly. Rutgers and maryland are entering a conference that was formed many years ago.

Rutgers isnt getting a full share immediately. However, Maryland is. Apparently, every team is always so anxious to join a new conference that they forget that its possible to negotiate for a full share right away. Maryland did it and it worked out well for them.

[brewcity77]

Zags will join if they deem it in their best interest.

If Gonzaga were still in the mix, there'd at least be rumors. No smoke = no fire. Gonzaga's not coming.

[Dr. Blackheart]

Rutgers isnt getting a full share immediately. However, Maryland is. Apparently, every team is always so anxious to join a new conference that they forget that its possible to negotiate for a full share right away. Maryland did it and it worked out well for them.

And their exit fees weren't equal either: $50million for Maryland, $10million for RU. Again, equal share partnerships include both revenue and cost considerations (like Maryland's lawsuit which the B1G wants to knock down for future expansion targets). Also note that Maryland has the potential to bring other revenue to the B1G via their alumni network: namely Under Armour...which a school like Northwestern just switched to.

Also, the term "sunken costs" came up.  Sunken costs are past costs like MU's entrance fee to get in the BE originally.  Sunken costs should not be considered when making new investments was the point which is true because they were in the past. However, I was not taking about sunken costs but about a term called prospective costs...costs you have to make or give up in the future.  

Simply put, MU needs $5mm per year for 10 years+ to make this a better investment from their current choices...the A10 schools need one year at $2.5mm...or six months at $3.1.  Again, please tell me why MU is being greedy by taking almost all the risk for Dayton and why it is unfair for Dayton to be in the black on the deal six years before MU?

[Silkk the Shaka]

And their exit fees weren't equal either: $50million for Maryland, $10million for RU. Again, equal share partnerships include both revenue and cost considerations (like Maryland's lawsuit which the B1G wants to knock down for future expansion targets). Also note that Maryland has the potential to bring other revenue to the B1G via their alumni network: namely Under Armour...which a school like Northwestern just switched to.

Also, the term "sunken costs" came up.  Sunken costs are past costs like MU's entrance fee to get in the BE originally.  Sunken costs should not be considered when making new investments was the point which is true because they were in the past. However, I was not taking about sunken costs but about a term called prospective costs...costs you have to make or give up in the future.  

Simply put, MU needs $5mm per year for 10 years+ to make this a better investment from their current choices...the A10 schools need one year at $2.5mm...or six months at $3.1.  Again, please tell me why MU is being greedy by taking almost all the risk for Dayton and why it is unfair for Dayton to be in the black on the deal six years before MU?

The good doctor hits the nail on the head. Anyone pointing to "sunk costs" trying to sound smart doesn't actually understand the meaning of the term. We're evaluating alternatives here, and staying in the Big East was one of them. When you analyze the new conference, you take into consideration cash flows you will not be receiving as a result of leaving the Big East plus all associated costs of starting the new league.

[brewcity77]

Also, so many seem to be saying that the XU and Butler administrations are smart enough to get equal terms. My guess is they're also smart enough to realize this opportunity is a golden egg. They will be making millions more per year with this move and when the egg hatches and they get to full golden goose status they'll really be raking it in. Maybe that takes 4-6 years, but I think they're smart enough to realize that great things are worth waiting for, especially if the waiting period is better than your school had ever dreamed of.

[keefe]

If Gonzaga were still in the mix, there'd at least be rumors. No smoke = no fire. Gonzaga's not coming.

Using the Old Literary Guild Landon beats FDR ruse? (ie I haven't read anything about Gonzaga on these fan-driven internet forums so they must not be coming!)

Zags are part of the mix. I am not sure where they are at in their thinking but they have a firm offer to join. Gonzaga will do what is best for Gonzaga. Unlike SLU, Creighton, Dayton, VCU, et al the Zags are routinely referred to as "America's Team." Check out Sports Center and they always call the Zags "America's Team." Solid Brand Equity, unlike the names being bandied about here. Zags are in the driver's seat on this, much like ND.

[🏀]

Using the Old Literary Guild Landon beats FDR ruse? (ie I haven't read anything about Gonzaga on these fan-driven internet forums so they must not be coming!)

the Zags are routinely referred to as "America's Team." Check out Sports Center and they always call the Zags "America's Team."

Never, ever heard this used for Gonzaga. Never. Ever.

Quit making crap up.

[foreverwarriors]

Never, ever heard this used for Gonzaga. Never. Ever.

Quit making crap up.

It's what keefe does best.

[LAZER]

Never, ever heard this used for Gonzaga. Never. Ever.

Quit making crap up.

Really??  They've been called this for a while now.

[TJ]

This thread has basically devolved into a Miller Lite commercial from the 90's.  I'm infinitely interested in this topic, but the last three pages have been nothing but "TASTES GREAT!"    "LESS FILLING!"    Repeat ad nauseum.

Everyone is loudly agreeing with each other that the situation should be made equitable for all parties.  Chicos, et al. thinks the conference should have the Invite 5 should pay up front for the privilege of joining, thereby joining in the up front costs equally.  Everyone else thinks the conference should use future revenue distribution for the purpose of compensating the members who covered the up front costs instead.  No one is arguing for permanent inequality in revenue distribution.  Can we simply agree that there are multiple ways to manage this and let the interested parties negotiate a fair agreement amongst themselves?

Sorry I forgot this was an internet message board for a moment.  Of course we can't do that.

[brewcity77]

Using the Old Literary Guild Landon beats FDR ruse? (ie I haven't read anything about Gonzaga on these fan-driven internet forums so they must not be coming!)

Not why I'm saying it, but not going to lose any sleep over you thinking Gonzaga is still in the mix. Hear me now, believe me later. They aren't coming.

[MarquetteDano]

This thread has basically devolved into a Miller Lite commercial from the 90's.  I'm infinitely interested in this topic, but the last three pages have been nothing but "TASTES GREAT!"    "LESS FILLING!"    Repeat ad nauseum.

Everyone is loudly agreeing with each other that the situation should be made equitable for all parties.  Chicos, et al. thinks the conference should have the Invite 5 should pay up front for the privilege of joining, thereby joining in the up front costs equally.  Everyone else thinks the conference should use future revenue distribution for the purpose of compensating the members who covered the up front costs instead.  No one is arguing for permanent inequality in revenue distribution.  Can we simply agree that there are multiple ways to manage this and let the interested parties negotiate a fair agreement amongst themselves?

Sorry I forgot this was an internet message board for a moment.  Of course we can't do that.

+1