S w W12343 THE UNIVERSITY OF TEXAS CONFERENC.docx

S w
W12343
THE UNIVERSITY OF TEXAS: CONFERENCE
REALIGNMENT FOR
COLLEGE ATHLETICS1
Steve Swanson, Ram Mudambi and Aubrey Kent wrote this case
solely to provide material for class discussion. The authors do
not
intend to illustrate either effective or ineffective handling of a
managerial situation. The authors may have disguised certain
names
and other identifying information to protect confidentiality.
Richard Ivey School of Business Foundation prohibits any form
of reproduction, storage or transmission without its written
permission. Reproduction of this material is not covered under
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or request permission to reproduce materials, contact Ivey
Publishing, Richard Ivey School of Business Foundation, The
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of Western Ontario, London, Ontario, Canada, N6A 3K7; phone
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Copyright © 2012, Richard Ivey School of Business Foundation

Version: 2012-11-15
In the summer of 2010, the landscape of college athletics in the
United States faced the potential for
groundbreaking change. Rumours of conference realignment
were suggesting a significant shift away
from traditional conference membership and structure. With re-
negotiations for a multi-year television
contract looming, Pacific-10 Conference (Pac-10) commissioner
Larry Scott announced plans for
expansion; the organization was intent on entering discussions
from a position of growth and strength.
Scott and the Pac-10 were hoping to pursue membership in the
Big 12 Conference (Big 12). The
institutions that belonged to the Big 12 were geographically
convenient in relation to the Pac-10, and also
represented sound acquisitions that could parlay into a lucrative
television agreement.
In early June 2010, reports surfaced suggesting an aggressive
Pac-10 plan that could involve a defection
of half of the Big 12 to join a 16-team “super conference.”2 The
first card was played by the University of
Colorado when it announced on June 10, 2010, that it would be
leaving the Big 12 and joining the Pac-10.
The next day, the University of Nebraska also announced its
decision to leave the Big 12 and join another
conference. 3 The dissolution of one of the country’s most
prominent athletic conferences seemed to be
gathering momentum.4
After June 12, 2010, Big 12 commissioner Dan Beebe increased
his efforts to keep the remaining
architecture of the conference intact. In this critical period, the

formation of key alliances was pivotal in
determining the fate of the Big 12. Institutions and conferences
considered factors such as resources,
exposure, fit and tradition — all of which indicated the
University of Texas (Texas) as a dominant player
in the overall scenario. It became increasingly apparent that the
decision made by Texas would carry the
most significant ramifications. Would Texas also opt to leave
the faltering Big 12 and bring about a
1 This case has been written on the basis of published sources
only. Consequently, the interpretation and perspectives
presented in this case are not necessarily those of The
University of Texas or any of its employees.
2 Chip Brown, “Exclusive: Pac-10 set to invite six from Big
12,” texas.rivals.com, June 3, 2010,
http://texas.rivals.com/content.asp?CID=1090747, accessed
November 7, 2012.
3 “How it all happened: A Big 12 realignment timeline,”
dallasnews.com, June 16, 2010,
www.dallasnews.com/sports/college-sports/headlines/20100615-
How-it-all-happened-A-443.ece, accessed April 5, 2012.
4 David Ubben, “Kansas, Baylor campaigning for status quo,”
espn.com, June 8, 2010,
http://espn.go.com/blog/big12/post/_/id/13160/kansas-baylor-
campaigning-for-status-quo, accessed November 7, 2012. Do
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This document is authorized for educator review use only by
Eric Schulz, Utah State University until February 2016.
Copying or posting is an infringement of copyright.
[email protected] or 617.783.7860
Page 2 9B12M104
paradigm shift in college athletics? Or would it elect to stay and
explore its options within the recently
transformed landscape of the remaining membership?
ORGANIZATIONS AND STRATEGIES
Universities
In the context of U.S. intercollegiate athletics, the concept of
the firm or team was represented by the
university. While there was no official organizational form for a
university, most schools had a board of
trustees responsible for major decisions and the selection and
evaluation of the university president. The
president served as chief executive officer (CEO) of the
university with managers from various
departments (such as budgeting and finance, student services
and athletics, aside from the main academic
branches) under his or her direction. The athletic director
normally reported directly to the president and

oversaw the coaching staffs of all intercollegiate sports
programs; the largest of these in terms of size and
complexity was the university football program (see Exhibit 1).
Conferences
An intercollegiate athletic conference served as an alliance
between firms/universities. Similar to
alliances in the corporate setting, conferences were a means for
universities to achieve joint strategic
goals and leverage collective resources while reducing risk and
retaining their individual identities and
control. Only in rare cases (e.g., University of Notre Dame), did
a single university have the negotiation
power to acquire multimillion-dollar television revenues on its
own. Conferences, however, could
leverage for lucrative broadcasting agreements due to the
pooled resources of the collectivity. Upon the
receipt of such monies, the conference members jointly decided
how to divide the income between
universities. Therefore, a university’s choice of conference
affiliation ultimately determined the amount
of broadcasting revenue it would receive.
THE COLLEGE ATHLETICS STRUCTURE
The governing body of major college athletics in the United
States was the National Collegiate Athletic
Association (NCAA). An initial driver in the formation of the
NCAA was the rough nature of college
football. In 1905, President Theodore Roosevelt invited leaders
in college athletics to the White House
and encouraged reform within the sport to ensure the safety of
the players.5 As a consequence, the

precursor of the NCAA was formed as a rules-making body.6
The establishment of the NCAA offered an
economy of enforcement for member institutions.
Since its initial conception in 1906, the NCAA flourished into a
much larger entity. By the summer of
2010, the NCAA had more than 1,000 members and was
segmented into three divisions representing
differing levels of competition: D-I, D-II and D-III, with D-I
being the highest. Further segmentation
existed within these categories. D-I institutions that offered
football were classified as either Football
Bowl Subdivision (FBS) or Football Championship Subdivision
(FCS). FCS universities were eligible to
compete in the NCAA D-I Football Championship, which was a
true play-off format. Alternatively, FBS
5 “History,” NCAA.org, August 13, 2012,
www.ncaa.org/wps/wcm/connect/public/NCAA/About+the+NCA
A/History, accessed
November 7, 2012.
6 The NCAA was initially called the Intercollegiate Athletic
Association of the United States (IAAUS). Do
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institutions were eligible to compete in post-season bowl games
that could be financially lucrative. The
FBS was the only NCAA sport without a traditional tournament
format to determine a champion.
As the NCAA grew, the emergence of a hierarchical structure
with a more regionalized management
component was inevitable. Associations of various strengths and
forms existed between institutions
sharing similar characteristics and located in relatively close
geographical proximity. The establishment
of official conferences solidified these relationships by
standardizing rules and developing leagues for
competitive sport, with traditions and rivalries also
materializing over time. The collaboration of
conference affiliates minimized risk and offered a position of
strength moving forward. Membership in
conferences ultimately led to the ability for collective action in
the negotiation of financial matters such as
television contracts and post-season bowl arrangements.
Conferences could therefore wield much greater
leverage in negotiations with television stations than
universities acting alone.

The Bowl System
The college bowl system began with the establishment of the
Rose Bowl football game in the early 1900s.
The Rose Bowl represented an opportunity for teams from
distant regions of the country to compete
against each other after regular season competition had been
completed. The term “bowl” game
originated from Rose Bowl Stadium in Pasadena, California,
where the game was originally played, and
gradually evolved to refer to many different post-season college
football games. In the absence of a
traditional tournament format, the opportunity to go to a bowl
represented a culminating experience for
competing teams, as well as an opportunity for institutions to
garner additional revenues.
Conference Championship Games
In the interest of generating more revenue, conferences looked
to expand the number of games played by
their member schools. While the NCAA restricted this number
to 11 games per institution, a provision in
the NCAA by-laws made it possible to add one additional game
if a conference had 12 teams.
Conferences could then be divided into two groups with the
divisional winners allowed to meet for a
conference championship game, serving as a substantial revenue
boost for the individual conferences. In
1991, this financial incentive motivated the Southeastern
Conference (SEC) to be the first to exercise this
option. Adding the University of Arkansas and the University of
South Carolina to the SEC brought its

membership up to the necessary requirement of 12 teams. As the
only conference to have a conference
championship game, this served as a competitive advantage
when negotiating future contracts for
television revenue. After significant conference realignment in
1996, the Big 12 was the next to achieve
the distinction of having the 12 members and a conference
championship game.
Bowl Championship Series
As the bowl system became more established, long-term
agreements emerged between conferences and
bowl games, with winners of designated conferences receiving
invites from specific bowls; the first
example of this kind of agreement was the Rose Bowl having
standing invitations for the winners of the
Pac-10 and the Big Ten. While these arrangements generated
revenue both for the bowls and the
university participants, the complexity of the agreements often
pitted opponents against each other that
were not evenly matched. To address this issue, the 1992 Bowl
Coalition and the 1995 Bowl Alliance
moved closer to providing for the ability to match the top two
teams in the nation in the same bowl. In the Do
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absence of traditional tournament format, this system provided
more of a ‘true’ national champion while
still incorporating the established bowl system.
In 1998, the Bowl Alliance was reformed into the Bowl
Championship Series (BCS). In this new format,
there were four BCS bowl games and one national championship
game. The BCS became a significant
player in college athletics, both as a mechanism for determining
a football national champion and
(perhaps more so) as a source of post-season revenue.
Television and College Football
College football had been televised in the United States since
the late 1930s. By the early 1950s, with an
increasing number of Americans acquiring television sets, some
of the more prominent universities
negotiated individual contracts with broadcasters who aired
their games on regional networks; for

example, during the 1950 season the University of
Pennsylvania’s home games were televised by the
American Broadcasting Company (ABC) under an agreement
that paid the university $150,000.7 Wary of
the potential for live telecasts to reduce attendance at games,
the NCAA prohibited live telecasts for the
1951 football season. In 1952, the NCAA limited televised
games to one nationally broadcasted contest
per week and brokered a $1.14 million deal with the National
Broadcasting Company (NBC) for
exclusive rights.8
The NCAA remained in control of negotiating broadcasting
rights through the 1983 football season;
however, two years into a four-year television deal with two
major networks that totalled approximately
$263.5 million,9 the NCAA television plan was deemed in
violation of the Sherman Antitrust Act in the
NCAA v. Board of Regents of University of Oklahoma ruling.10
This decentralization of television
negotiating power gave individual institutions the ability to
negotiate their own broadcasting rights. While
Notre Dame was able to do this successfully, the general rule
became that conferences served as the
negotiators of broadcasting deals for college football programs.
As universities looked to pool their
resources and increase their bargaining power, fewer schools
elected to remain independent and the
potential for conference realignment increased.
Conference Revenue Sharing
University athletic programs received funds from a wide variety
of sources, including ticket sales,
conference distributions, broadcasting rights, sponsorships,

student fees, royalties, concessions and
private contributions; of these, the three most important revenue
streams for major college athletics were
ticket sales, private contributions and conference distributions.
While ticket sales often produced the most
direct income for BCS schools, the income received from
conference distributions was either nearly as
much or even greater.11
7 Keith Dunnavant, The fifty-year seduction: How television
manipulated college football, from the birth of the modern
NCAA
to the creation of the BCS, Thomas Dunne Books, New York,
2004, p. 5;
All currencies in US$ unless otherwise stated.
8 Gary T. Brown, “The Electronic Free Ticket,” The NCAA
News, November 22, 1999,
http://fs.ncaa.org/Docs/NCAANewsArchive/1999/19991122/acti
ve/3624n30.html, accessed April 5, 2012.
9 Arthur A. Fleisher III, Brian L. Goff and Robert D. Tollison,
The National Collegiate Athletic Association: A study in cartel
behavior, University of Chicago Press, Chicago, 1992, p. 55.
10 NCAA v. Board of Regents, 468 U.S. 85 (1984).
11 “NCAA college athletics department finances database,”
USA Today, www.usatoday.com/sports/college/ncaa-
finances.htm, accessed November 3, 2010. Do
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The conferences themselves also had various revenue streams.
The primary revenue sources for the BCS
conferences were television agreements and the overall
broadcasting rights for their intellectual
properties. While commonly referred to as television deals, the
broadcasting rights purchased by media
companies included modes of delivery beyond television. Along
with satellite radio, forms of online
streaming had also become significant components in
conference broadcasting deals. Additionally,
conferences also received income from the ticket sales and
sponsorship surrounding their championship
events.
A conference chose to divide its revenue according to a
collective decision reached by its members. This
process varied across conferences and was often a source of
contention for universities that received less
than other institutions in the same conference. The Big Ten
chose to eliminate this issue by equally

distributing revenue among its members. Conversely, the Pac-10
and the Big 12 elected to have revenue-
sharing formulas that rewarded some universities more than
others (see Exhibit 2). Since 1986, the Pac-10
had used a formula in which teams that participated in televised
football games received 55 per cent of the
revenue for that game, with the other conference schools
splitting the remaining 45 per cent.12 Under this
type of formula, a competitive advantage existed for those
schools in larger media markets; for example,
under this structure, the University of Southern California
(USC) and the University of California, Los
Angeles (UCLA) both benefitted from the media bias toward
televising teams from the expansive Los
Angeles market.13 While inequality existed with television
distributions, other major sources of revenue
for the Pac-10 — such as bowl revenue and NCAA basketball
tournament proceeds — were split evenly
among members.14
The Big 12 also divided its television revenues unequally, while
distributing other income evenly among
members. Under this model, 50 per cent of television revenue
was allotted equally, while the remainder
was distributed based on the number of television appearances
in both football and basketball.15 From this
pool, funds were then “distributed on the basis of units earned
by each Member Institution for television
appearances.”16 Therefore, teams that appeared on television
more often earned the most money —
similar to the units issued for NCAA basketball tournament
appearances.17 While some Big 12
universities expressed frustration with this system, the Big 12
by-laws stipulated that a supermajority of
nine votes was necessary to overturn any conference revenue
distribution policy.18 Therefore, as long as at

least four universities profited from such a by-law, there was
unlikely to be any change in the distribution
method. As former Big 12 commissioner Kevin Weiberg
communicated upon his departure from the
position, this could eventually prove to be a divisive issue,
affecting the future of the conference.19
12 Scott Reid, “Pac-10 to discuss realignment Friday,” The
Orange County Register, July 29, 2010,
www.ocregister.com/articles/discuss-259857-friday-pac.html,
accessed April 5, 2012.
13 Jon Solomon, “Auburn, Oregon far apart in revenues for
football programs,” AL.com, January 9, 2011,
www.al.com/sports/index.ssf/2011/01/auburn_oregon_far_apart
_in_rev.html, accessed April 5, 2012.
14 Jon Wilner, “Pac-10 football: Conference revenue and per-
school distribution figures,” MercuryNews.com, August 12,
2010,
http://blogs.mercurynews.com/collegesports/2010/08/12/pac-10-
football-conference-revenue-and-per-school-
distribution-figures/, accessed April 5, 2012.
15 Tim Griffin, “How the Big 12 teams rank in revenue-sharing
funds,” ESPN.com, May 26, 2009,
http://espn.go.com/blog/big12/post/_/id/2094/how-the-big-12-
teams-rank-in-revenue-sharing-funds, accessed April 5, 2012.
16 “Bylaw 2.7.1.2 Appearance Fee Pool,” Big 12 Conference
Handbook 2009-10, http://grfx.cstv.com/photos/schools/
okla/genrel/auto_pdf/20100302_big12_handbook.pdf, accessed
April 5, 2012.
17 Tim Griffin, “How the Big 12 teams rank in revenue-sharing
funds,” ESPN.com, May 26, 2009, http://espn.go.com/blog/
big12/post/_/id/2094/how-the-big-12-teams-rank-in-revenue-
sharing-funds, accessed April 5, 2012.

18 Tim Griffin, “Despite criticism, Big 12 will keep current
revenue sharing model,” ESPN.com, May 23, 2008,
http://sports.espn.go.com/ncf/news/story?id=3409420, accessed
April 5, 2012.
19 Ibid. Do
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University Athletics, Presidents and Brand Management
The existence of high-revenue athletics within the educational
system was unique to the United States.
Throughout most of the world, there was a separation between
school and sport, with major sporting

enterprises operating as independent club-type organizations.
The question of how athletics fit within the
larger mission of the university was one of ongoing debate;
however, with the majority of the large
publicly funded state schools also having major athletic
programs, such an alignment usually stemmed
from the pursuits of education and service to the community.
For example, athletic department mission
statements often referred to athletics as a part of a broader
commitment to excellence in education, as well
as enhancing the sense of community within the university and
beyond.20
The level of importance a university placed on athletics was a
strategic decision made by top
management. While most American universities chose to
emphasize either academic or athletic
excellence, a few highly regarded schools sought to maintain
their elite academic reputations while also
participating at the highest level of intercollegiate athletics; for
example, Stanford University, Vanderbilt
University, Northwestern University and Duke University all
chose to be members of BCS conferences
while also being consistently ranked in the top 20 academic
institutions within the United States.21
Representation within the NCAA was historically comprised of
the athletic directors from each of the
member institutions; however, issues regarding academic
integrity and athletic department financial
responsibility led to university presidents taking control of the
NCAA governance structure in 1997. This
change in policy effectively dictated that presidents monitor
athletic budgets as closely as those of other
university departments. Since athletic departments operated
under institutional auspices anyway, the

presidents were ultimately responsible for the conduct of the
programs.22
With the amount of money and exposure surrounding D-I
college football, the oversight of athletics was a
major priority for university presidents. While the procurement
of revenue through television
broadcasting agreements was a significant source of direct
revenue to collegiate athletic programs,
television also provided other valuable indirect resources such
as exposure, image and brand
development. Television and alternate modes of delivery
allowed alumni and donors to follow their
favourite teams and also provided an avenue to champion other
university objectives through advertising
and promotion. Additionally, the development of rivalries and
traditions became even more valuable via
television as it offered continued shared experiences for
numerous stakeholders.
A few elite programs at the highest levels of collegiate athletics
channelled millions of dollars back into
university academic programs; however, the majority of
universities subsidized their athletic programs at
a substantial level. This demonstrated that even though financial
gain was a significant goal for
universities, there were multiple objectives at play with regard
to athletics; for example, while operating
during periods of global financial crisis, universities and their
leaders faced the difficult task of
maintaining status and reputation while still being fiscally
responsive to the economic environment. As a
case in point, in the summer of 2009, the University of
California-Berkeley faced a budget crisis that
resulted in an $813 million reduction to its annual budget.23 In
coordination with this effort, a committee

20 “Mission Statement for Athletics at Duke,” GoDuke.com,
www.goduke.com/ViewArticle.dbml?DB_O
EM_ID=4200&ATCLID=152723, accessed April 5, 2012.
21 “National University Rankings,” U.S. News,
http://colleges.usnews.rankingsandreviews.com/best-
colleges/rankings/national-universities, accessed April 5, 2012.
22 Knight Commission, “Keeping Faith with the Student-
Athlete: A New Model for Intercollegiate Athletics,” Report of
the
Knight Foundation Commission on Intercollegiate Athletics,
1991, http://knightcommission.org/images/pdfs/1991-
93_kcia_report.pdf, accessed April 5, 2012.
23 Kevin O’Leary, “California Crisis Hits Its Prized
Universities,” TIME, July 18, 2009,
www.time.com/time/nation/article/0,8599,1911455,00.html,
accessed April 5, 2012. Do
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on intercollegiate athletics was formed to determine ways in
which the level of financial support allocated
by the university could be reduced. While this internal
committee ultimately recommended a long-term
goal for athletic department self-sufficiency, the task force
acknowledged that the athletic program may
also have a significant impact on the $250 million received in
annual academic fundraising.24 In addition,
the committee noted that the athletic program “provided other
values to the campus — it added to campus
spirit and unity, provided free advertising for the campus,
helped in branding and provided a link and
outreach to alumni.”25 While the acquisition of resources such
as television revenue was highly
significant, the university brand was of the utmost importance
and was taken very seriously by
management.
TEXAS AND CONFERENCE AFFILIATION
The University of Texas’ team had been playing football games
since the late 1800s and had been one of
the most successful programs of its kind. Since the program’s
inception, it had been a member of three
different athletic conferences: the Texas Intercollegiate Athletic
Association (TIAA) from 1913 to 1915,
the Southwest Conference (SWC) from 1915 to 1996 and the
Big 12 from 1996 onwards. During the
teams membership in the SWC, the conference experienced

several financial setbacks. In the 1960s,
professional football entered the market and competed for
spectators and television revenue. By the
1980s, revenue was down throughout the conference and some
of the larger schools started to feel
constrained by the conference’s revenue-sharing plan. The
conference also experienced image problems
throughout the 1980s due to the majority of its members being
hit with NCAA sanctions related to
recruiting scandals. In 1990, University of Arkansas left the
SWC in pursuit of increased revenue and
joined the SEC. This departure was the first in almost 70 years
and signaled a more dynamic landscape on
the horizon.
The Big 12 Conference
While not a frequent occurrence, monumental changes to
conference structure had taken place prior to
2010. In 1994, the four largest Texas institutions — University
of Texas, Texas A&M University, Texas
Tech University and Baylor University — accepted invitations
to join the Big Eight.26 The Big 12
Conference was the result of this merger and in May 1996, the
SWC was disbanded. The formation of the
Big 12 was unique in that it was intended to maximize
collective negotiating prowess rather than to
merely unite universities with similar beliefs and locations.27
While negotiating television contracts later
became a primary function of all conferences, the Big 12 was
the first to establish itself primarily for that
purpose.28

24 Steve Berkowitz, Jodi Upton, Michael McCarthy and Jack
Gillum, “How student fees boost college sports amid rising
budgets,” USA Today, October 6, 2010,
www.usatoday.com/sports/college/2010-09-21-student-fees-
boost-college-
sports_N.htm, accessed April 5, 2012.
25 “Interim Report of the Berkeley Division of the Academic
Senate Task Force on Intercollegiate Athletics,” UC Berkeley
Academic Senate, June 12, 2010, http://academic-
senate.berkeley.edu/sites/default/files/issues/intercollegiate-
athletics/task_force_on_intercollegiate_athletics_interim_report
.pdf, accessed April 5, 2012.
26 The Big Eight Conference was composed of the following
universities: Oklahoma, Oklahoma State, Kansas, Kansas
State, Nebraska, Missouri, Iowa State and Colorado.
27 Blair Kerkhoff, “Big 12 problems trace to league’s roots,”
Big-12-problems-trace-to-league-5863.ece, accessed April
5, 2012.
28 Ibid. Do
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After joining the Big 12, University of Texas experienced
considerable success in athletics. Across all
sports, the university won by far the most conference
championships (55); by comparison, Texas A&M
held second place with 30 wins. While not as dominant as its
overall athletic department, the Texas
football program was highly successful. In its first 14 seasons
with the Big 12, Texas won five Southern
Division Championships, three Big 12 Championships and one
National Championship (2005). Three
different members of the Big 12 won three national football
titles, respectively.
CHANGING LANDSCAPE
In summer 2010, the potential wave of realignment was
arguably first rooted in the Big Ten. In December
2009, Big Ten commissioner Jim Delany announced plans to
explore options for expansion. There were
two main reasons for this initiative. The first was the potential
to expand the footprint of the conference’s
television broadcasting outlet, the Big Ten Network. By
bundling a new team into its package, the
conference could increase its market power and make an
additional $0.88 per month from each new

subscriber.29 Furthermore, adding another team put the Big Ten
at the 12-team mark, therefore making it
eligible to reap the financial benefits from a conference
championship game.
The Big Ten’s announcement signalled to the other major
conferences that some of their members could
be vulnerable to acquisition by another conference. From
Temple University athletic director Bill
Bradshaw’s perspective, the position of a conference should be
similar to that of a coach: “A coach will
try to recruit talented players who bring value to the team. For a
conference, it’s about getting schools that
are attractive and provide value for negotiating a better
television contract.”30 It was becoming clear that
the dynamic environment of college sports was poised for
another wave of change among conferences.
Shortly after the Big Ten’s announcement in late 2009, the Pac-
10 announced similar plans for expansion.
At the forefront of this decision was the Pac-10’s television
contract with Fox Sports Net, which was due
to expire after the 2011-2012 season. With the goal of gaining
as much leverage as possible to enter
television contract negotiations, the Pac-10 was aiming high;
however, these announcements created an
increased level of instability in neighbouring conferences due to
the potential for their members to be
attracted elsewhere.
Television as the Driver
As the first-movers in this scenario, the Big Ten and Pac-10
were both being driven by the incentive for
increased television revenue. Having its own network gave the

Big Ten a competitive advantage with
regard to football revenue and revenue distribution. This
enabled the conference to distribute the most
revenue to its members of any major conference; for example,
in 2009-10, the Big Ten distributed $21
million to each of its member institutions while the Big 12’s
average distribution for the same year was
$11.6 million per member and the Pac-10’s $10 million.
The prestige of the Big Ten was clearly a factor in these events.
Despite the Big Ten’s lucrative equal
revenue-sharing model, Jim Delany still seemed intent on
expanding. The transparency of collegiate
athletics meant that the Big Ten’s position in the NCAA was
evident to other conferences, which made it
easier to form alliances with prospective members.
29 Mark Schlabach, “Expansion 101: What’s at stake?”
ESPN.com, June 9, 2010,
http://sports.espn.go.com/ncf/columns/story?columnist=schlaba
ch_mark&id=5268212, accessed April 5, 2012.
30 Bill Bradshaw, personal communication, November 10, 2011.
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The Pac-10 faced a different set of circumstances as it had a
major television contract approaching its end
date. In light of recent lucrative television deals secured by
both the SEC and the Atlantic Coast
Conference (ACC), the Pac-10 wanted to aggressively ensure
the best possible market value for its brand
in its next contract. In looking to the Big 12, Pac-10
commissioner Larry Scott saw not only legitimate
universities with athletic programs that would enhance their
membership, but also valuable television
markets; however, the University of Texas was the focal point
of all expansion efforts. Texas represented
the complete package: academic excellence, tradition, television
market power, closer geographical
proximity than many other institutions and unparalleled athletic
resources.
Texas-sized Resources
The state of Texas had long been known for its abundant
resources — particularly in land and oil. As the
largest university in the state, the University of Texas was

similarly endowed. Student enrollment was
approximately 50,000 students, the largest among the Big 12
schools.31 Comparatively, this level of
enrollment would rank a distant second in the Pac-10 behind
Arizona State’s enrollment of approximately
68,000, and would be relatively equal to the largest Big Ten
schools.
The university athletic departments and football programs
provided significant revenue. During the 2008-
2009 academic year, the athletic department at Texas reported
over $138 million in total revenue (see
Exhibit 3).32 Within the Big 12, the next highest-earning
program was Oklahoma at around $81 million in
total revenue. Within the Pac-10, the leading athletic
department for the same year (USC) garnered
approximately $80 million.
Revenue exclusively from football was similarly impressive at
Texas (see Exhibit 4). During the 2008-
2009 season, the Texas football team brought in over $87
million — more than $30 million ahead of the
second highest-earning team, Nebraska. To put this in
perspective, this meant that neither the combined
football revenues from the top two earning universities in the
Pac-10 nor the pooled sums from the
bottom four universities in that conference came close to
matching Texas’ football revenue.
In an effort to take a broader perspective on the value of college
football programs, Forbes Magazine
ranked teams based on a variety of factors that viewed each
team as its own brand (see Exhibit 5).33 By
this method, it was estimated that the value of the Texas
football team was $119 million (the highest-
ranking, according to Forbes), with estimated profits of $59

million. Runner-up in total value was the
University of Notre Dame at $108 million. The next Big 12
team on the list was Nebraska with a team
value of $93 million. USC was the only Pac-10 school to make
Forbes’ top 20 and was valued at $68
million.34
As another means of demonstrating the resources at the disposal
of the Texas athletic program, a
landmark sponsorship partnership with the Branded Retail
Energy Program of Dallas, Texas was
announced in July 2010. While not impossible to imitate, this
unique arrangement was the first of its kind.
31 “National University Rankings,” U.S. News,
http://colleges.usnews.rankingsandreviews.com/best-
colleges/university-of-
texas-3658, accessed November 3, 2012.
32 “The Equity in Athletics Data Cutting Tool,” U.S.
Department of Education, http://ope.ed.gov/athletics/, accessed
November 3, 2010.
33 Adam Rittenberg, “Penn State is Big Ten’s Most Valuable
Team,” ESPN.com, December 23, 2009,
http://espn.go.com/blog/bigten/post/_/
id/8496/penn-state-is-big-tens-most-valuable-team, accessed
April 5, 2012.
34 Peter J. Swartz, “College Football’s Most Valuable Teams,”
Forbes.com, December 22, 2009,
www.forbes.com/2009/12/22/most-vaulable-college-football-
teams-business-sports-college-football.html, accessed April 5,
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Texas Longhorns Energy (TLE) aimed to provide renewable
energy to alumni and fans in deregulated
regions of Texas, with each customer account generating funds
for sustainability initiatives for Texas
athletics.35
JUNE 2010
When Delany, commissioner of the Big Ten, first announced the
conference’s move towards expansion,
the plan covered a time frame between 12 and 18 months. When
Larry Scott of Pac-10 made a similar
announcement soon after, Delany reacted and revealed the
potential for an expedited timeline. While both
officials wished to signal an appeal to potential members

currently in other conferences, such signals did
not come without a cost. For Delany, the initial timeline needed
to be adjusted. For Scott, the
aggressiveness of the Pac-10 seemed to have provoked the Big
Ten to act in a more expeditious fashion.
On June 1, 2010, at the start of the Big 12 summer meetings,
Texas athletic director DeLoss Dodds
alluded to changes by saying that Texas needed to be ready to
respond if something were to happen to the
conference membership.36 While the most widespread
speculation was that all four of the Texas schools
would move together to the Pac-10, some parties were
considering other scenarios, such as Texas A&M
considering a move to the SEC. As A&M athletic director Bill
Byrne stated, “We knew that any time the
moment seemed right to them [Texas], they would either go
independent or look for another
conference.”37 However, Byrne understood that each institution
naturally sought to protect its business
interests: “Remember what the job of an athletic director is. We
are all very mercenary. We are all out
there to protect our own institutions, so everybody has their
own interests in mind.”38 With regard to
considering alternatives, Byrne elaborated by saying, “It would
be imprudent of us not to look at all the
types of contingencies that are out there.”39
On June 3, 2010, the University of Texas’ football website
broke the story that the Pac-10 was prepared to
offer invitations to as many as six schools from the Big 12
conference. An outcome of the Big 12
meetings was to establish a deadline for a binding commitment
from member institutions. On June 5,
2010, University of Nebraska and University of Missouri were
given a two-week deadline to officially

indicate their intentions to leave or remain in the Big 12.
Also on June 5, during the Pac-10 summer meetings, Larry Scott
officially gave authorization for the
conference to actively pursue expansion. On the same day, he
flew from Pac-10 headquarters to
Oklahoma City to meet with officials from University of
Oklahoma and Oklahoma State University.40
The following day, Scott headed back to Texas, making stops at
Texas A&M, Texas Tech and, finally,
University of Texas. This flurry of activity seemed to indicate
that the players would soon be putting their
cards on the table.
35 “Texas Athletics commits to landmark sponsorship to
establish Texas Longhorns Energy,” TexasSports.com, July 26,
2010, www.texassports.com/genrel/072610aaa.html, accessed
April 5, 2012.
36 “How it all happened: A Big 12 realignment timeline,”
How-it-all-happened-A-443.ece, accessed April 5, 2012.
37 Bill Byrne, personal communication, November 3, 2011.
38 David Ubben, “A&M’s Byrne: ADs are ‘mercenary’,”
http://espn.go.com/blog/ncfnation/post/_/
id/22731/ams-byrne-ads-are-mercenary, accessed April 5, 2012.
39 Ibid.
40 John Canzano, “Larry Scott borrowing Pat Kilkenny’s jet,”
The Oregonian, June 13, 2010,
www.oregonlive.com/sports/oregonian/john_canzano/index.ssf/2
010/06/as_larry_scott_delivers_pac-10.html, accessed April
5, 2012. Do

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The End of the Big 12?
On June 10, 2010, the Pac-10 announced that Colorado had
agreed to join the conference. On the same
day, reports surfaced that Texas A&M was considering
membership in the SEC. Similarly, on June 11,
Nebraska officially announced that it would be joining the Big
Ten. In his comments on the move,
Nebraska athletic director Tom Osborne indicated that a major
factor in the decision was the knowledge
of multiple teams considering options to leave. Osborne stated

that it was disconcerting to learn that some
of the schools asking Nebraska to stay in the Big 12 were at the
same time in discussions with more than
one alternate conference.41 It was apparent that Nebraska’s
aversion to risk had helped propel its decision
to change affiliation. Nebraska had also become increasingly
disenchanted with the Texas-centric
mentality of the Big 12. In the end, it opted for the more
balanced power distribution of the Big Ten. On
the same day that Nebraska heads east, Missouri affirmed its
commitment to staying in the Big 12;
however, multiple sources also indicated that Texas, Texas
Tech, Oklahoma and Oklahoma State were all
making final arrangements to join the Pac-10 and leave the Big
12 destined for relegation. The rumours of
teams leaving the Big 12 seemed to be coming to fruition.
Fighting Chance: Opposition Forms
As things were looking increasingly grim for the Big 12, an
undisclosed group of influential athletic
officials came together to try to save the conference from
dismantling,42 including “athletic directors,
business leaders and television executives [who] all played a
part in the league’s 11th-hour attempt to
save itself from destruction.”43 A wide variety of interests
fueled the mobilization of such a group. Some
were concerned about the overall stability of college athletics.
Others disliked the idea of a 16-team super
conference and the competitive power that the Pac-10 could
gain with such a membership. In the wake of
Colorado and Nebraska leaving, Big 12 commissioner Dan
Beebe orchestrated an intense weekend of
phone calls, planning sessions and television revenue analyses
and forecasts. On Sunday, June 13, 2010,

Beebe made his final appeals to Texas, Texas A&M and
Oklahoma to stay with the Big 12.
Politics at Work
As the result of a five-day public-notice law, a meeting with the
higher education committee of the Texas
State House of Representatives had been scheduled for June 16,
2010, following a meeting, of the Texas
and Texas Tech boards of regents to discuss whether or not their
respective institutions should remain in
the Big 12. While some forecasted that the boards of the two
schools would make decisions on their
athletic future at that time, government officials had different
ideas. State Representative Dan Branch, the
chair of the higher education committee, had requested that top
executives from the involved Texas
schools, the commissioners of the conferences and a number of
economists testify before the committee.
Branch warned that, “to make a final decision before [June 16]
would not be wise.”44 The state legislators
wanted to know how the potential moves might affect other
universities within the state.
41 John Henderson, “Big 12 hangs on desperately, waiting for
Texas’ decision,” Denver Post, June 12, 2010,
www.denverpost.com/sports/ci_15280375, accessed November
7, 2012.
42 Andy Katz, “Source: Influential group saved Big 12,”
http://sports.espn.go.com/ncaa/news/story?id=5286816,
43 Dan Wetzel, “How the Big 12 was saved,” rivals.com, June

14, 2010,
http://rivals.yahoo.com/ncaa/football/news?slug=dw-
big12save061410, accessed April 5, 2012.
44 Andy Staples, “Conference realignment to get political in
Texas this week,” SI.com, June 13, 2010,
http://sportsillustrated.cnn.com/2010/writers/andy_staples/06/13
/expansion.sunday/index.html, accessed April 5, 2012. Do
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This nature of the government intervention with respect to
conference realignment was not unprecedented
in Texas. Before the transition of SWC schools to the Big 12
(which was newly created at the time),

Governor Ann Richards was instrumental in making sure that
her alma mater, Baylor, was included in the
move. Similarly, when Arkansas left the SWC for the SEC,
government influence assisted in keeping
Texas and Texas A&M from considering similar exits. In the
words of Texas A&M athletic director Bill
Byrne, “Nothing surprises me when it comes to politics in
Texas.”45
TEXAS HOLDS THE CARDS
In the final days before a verdict, all of the involved parties
were positioning to fall in the ‘in-group’ when
the dust settled. While Texas obviously wanted to position itself
in the best situation possible, the amount
of risk involved was far less than it was for the other schools
involved. All of the major players knew that
Texas was wanted by every conference. With television profits
and revenue sharing at the heart of the
matter, Texas would bring that conference increased exposure
and leverage in television negotiations,
which would equate to greater future revenue and relevance.
Association and tradition also tied many of the pivotal schools
to Texas. Regardless of Texas’ muscle that
it often flexed against teams in the Big 12, preserving an
association with Texas by playing in the same
conference was a critical factor. Part of the core product that
the other schools provided to their customers
was the experience of their teams competing with Texas; for
example, while considering a departure from
the Big 12, Texas A&M athletic director Bill Byrne indicated
that traditional rivalry games served as the
biggest barriers to leaving the conference.46 In a revealing
interview with Texas Tech head football coach

Tommy Tuberville, he said, “You can listen to A&M, and
Oklahoma and all those folks, [but] whatever
Texas says is what we’re [all] going to do.”47
A CRUCIAL DECISION
Texas had been a dominant player in the Big 12 since its
inception; however, with the departure of
Colorado and Nebraska, it appeared as though the Big 12 could
be headed toward irrelevance. Texas’
strategic objectives were to be a part of a viable conference,
maximize its financial position and protect
the interests of valuable stakeholders. Conference affiliation
was at the forefront of meeting these
objectives. Texas had to decide: should it move to the Pac-10
and potentially become a prominent
member of the nation’s first super conference? Or should the
team stay in the Big 12 in the interest of the
financial rewards and overall stability of the league?
45 Brent Zwerneman, “Conference realignment may separate
Texas, A&M,” Chron, June 3, 2010, www.chron.com/
sports/longhorns/article/Conference-realignment-may-separate-
Texas-A-M-1703740.php, accessed April 5, 2012.
46 Bill Byrne, personal communication, November 3, 2011.
47 Tommy Tuberville, radio interview with Tommy Tuberville,
rivalsradio.com, June 29, 2010, http://vmedia.rivals.com/
images/RivalsRadio/assigned/Tuberville062910RivalsRa.wma,
accessed April 5, 2012. Do
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Exhibit 1
TYPICAL ORGANIZATIONAL CHART FOR UNIVERSITY
FOOTBALL PROGRAM

Source: Created by case authors.
Offensive
Coordinator
Running Back
Coach
Offensive Line
Coach
Quarterback
Coach
Tight End Coach
Wide Receiver
Coach
Team Physician
Board of
Trustees
Athletic
Director
Head
Football Coach
President

Recruiting
Coordinator
Video
Coordinator
Special Teams
Coach
Graduate
Assistant
Coaches
Director of
Football
Operations
Director of Player
Development
Strength &
Conditioning
Coach
Athletic Trainers
Defensive
Coordinator
Defensive End
Coach
Linebacker
Coach

Defensive Line
Coach
Defensive Back
Coach
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Exhibit 2

2008-2009 REVENUE SHARING DISTRIBUTIONS (IN
MILLIONS)
Big 12
Oklahoma 12.2
Texas 11.8
Kansas 11.5
Missouri 10.4
Texas A&M 10.2
Oklahoma State 10.0
Colorado 9.8
Nebraska 9.7
Texas Tech 9.2
Baylor 9.1
Iowa State 8.9
Kansas State 8.4
Average: 10.1
Source: Lee Barfknecht, “Nebraska drops to eighth in Big 12
revenue,” Omaha.com, June 13, 2010,
http://omaha.com/article/20100613/BIGRED/706139829/0,
Source: Jon Wilner, “Pac-10 football: Conference revenue and
per-school distribution figures,”
MercuryNews.com, August 12, 2010,
http://blogs.mercurynews.com/collegesports/2010/08/12/pac-10-
football-conference-revenue-and-per-school-distribution-
figures/, accessed April 5, 2012.

Pac-10
USC 11.5
Oregon State 9.9
Oregon 9.3
California 8.9
UCLA 8.8
Washington 8.4
Arizona 8.2
Arizona State 7.9
Stanford 7.2
Washington State 6.7
Average: 8.7
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9B12M104
Exhibit 3
2008-2009 ATHLETIC DEPARTMENTS’ FINANCIAL
INFORMATION
Big 12 Total Revenue Total Expense Net Revenue
Texas 138,459,149 112,935,132 25,524,017
Oklahoma 81,487,835 81,404,992 82,843
Nebraska 74,881,383 62,804,071 12,077,312
Texas A & M 72,886,100 69,955,181 2,930,919
Oklahoma State 71,805,825 68,816,645 2,989,180
Kansas 70,614,953 65,848,760 4,766,193
Missouri 57,778,668 55,619,509 2,159,159
Colorado 49,859,693 48,207,325 1,652,368
Baylor 48,545,254 48,545,254 -
Kansas State 47,399,903 46,101,279 1,298,624
Texas Tech 46,632,263 42,256,045 4,376,218
Iowa State 45,813,189 45,768,049 45,140

Average: 67,180,351 62,355,187 4,825,164
Pac-10 Total Revenue Total Expense Net Revenue
USC 80,151,282 80,151,282 -
Stanford 74,695,254 74,695,254 -
California 73,354,967 73,354,967 -
UCLA 66,177,866 66,177,866 -
Washington 60,575,780 60,575,780 -
Oregon 60,283,512 60,212,724 70,788
Arizona State 53,297,963 53,297,963 -
Arizona 51,822,629 51,627,538 195,091
Oregon State 50,211,404 50,211,404 -
Washington State 38,293,754 35,867,856 2,425,898
Average: 60,886,441 60,617,263 269,178
Source: “The Equity in Athletics Data Cutting Tool,” U.S.
Department of Education,
http://ope.ed.gov/athletics/, accessed November 3, 2010. Do
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Exhibit 4
2008-2009 FOOTBALL PROGRAM FINANCIAL
INFORMATION
Big 12 Total Revenue Total Expense Net Revenue
Texas 87,583,986 22,569,086 65,014,900
Nebraska 55,226,605 17,938,606 37,287,999

Oklahoma 42,638,431 20,799,933 21,838,498
Texas A & M 38,358,422 16,067,511 22,290,911
Colorado 27,827,286 13,040,024 14,787,262
Oklahoma State 26,536,625 12,498,599 14,038,026
Missouri 24,141,873 15,681,323 8,460,550
Texas Tech 23,581,188 13,966,304 9,614,884
Kansas State 21,378,813 14,019,452 7,359,361
Iowa State 21,261,439 14,404,274 6,857,165
Kansas 17,676,175 13,338,908 4,337,267
Baylor 11,896,723 10,908,725 987,998
Average: 33,175,631 15,436,062 17,739,568
Pac-10 Total Revenue Total Expense Net Revenue
USC 35,203,483 21,370,573 13,832,910
Washington 34,177,030 18,531,946 15,645,084
Oregon State 30,874,059 12,529,608 18,344,451
Arizona State 29,857,334 17,211,218 12,646,116
California 27,747,396 19,122,925 8,624,471

UCLA 26,640,759 18,390,148 8,250,611
Oregon 24,789,755 15,864,420 8,925,335
Arizona 20,927,253 12,612,710 8,314,543
Stanford 14,178,256 13,512,233 666,023
Washington State 11,415,496 8,933,696 2,481,800
Average: 25,581,082 15,807,948 9,773,134
Source: “The Equity in Athletics Data Cutting Tool,” U.S.
Department of Education,
http://ope.ed.gov/athletics/, accessed November 3, 2010.
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Exhibit 5
MOST VALUABLE TEAMS IN COLLEGE FOOTBALL
Rank School
Value
(millions)
Profit
(millions)
Metro
Population Conference
1 Texas 119 59 1,652,602 Big 12
2 Notre Dame 108 38 316,865 Independent
3 Penn State 99 50 144,779 Big Ten
4 Nebraska 93 49 295,486 Big 12
5 Alabama 92 38 206,765 SEC
6 Florida 88 41 258,555 SEC
7 LSU 86 39 774,327 SEC
8 Ohio State 85 36 1,773,120 Big Ten
9 Georgia 84 45 189,264 SEC
10 Oklahoma 83 40 239,760 Big 12
11 Michigan 81 34 347,376 Big Ten

12 South Carolina 80 37 728,063 SEC
13 Tennessee 78 29 691,152 SEC
14 Auburn 70 30 133,010 SEC
15 USC 68 33 9,862,049 Pac-10
16 Michigan State 57 28 454,035 Big Ten
Source: Peter J. Swartz, “College Football’s Most Valuable
Teams,” Forbes.com, December 22, 2009,
www.forbes.com/2009/12/22/most-vaulable-college-football-
teams-business-sports-college-football.html,
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