AAC commissioner eyeing Power Six label after his schools struck out with Big 12
Mike Aresco says his conference holds plenty of value on the national level
No, American Athletic Conference commissioner Mike Aresco says, he didn't celebrate after learning the Big 12 isn't expanding. But yes, he's very relieved it's over since 10 of the 12 AAC schools -- everyone but Navy and Tulsa -- bought a ticket for the Big 12 lottery that never paid out.
"Obviously, this was a colossal distraction for a long time and, now that it appears over, we have a real opportunity to pursue our goal to be viewed as a Power Six conference," Aresco said Tuesday. "Our schools have probably never been better known nationally, ironically, because of this process. When a Power Five conference looks to expand, they look at our conference."
Yet the Big 12 looked and still passed on the AAC. Aresco said he disputes the notion that AAC schools wouldn't add much value to a Power Five conference, while qualifying his remark by saying he doesn't know what motivated the Big 12's decision to pass.
Herein lies the issue for the AAC. Many of its schools spent a whole lot of money building up their programs for Power Five consideration without getting the payout in return. Given the way Division I athletic departments spend money, it's highly questionable whether these AAC schools' spending is sustainable at the current rate without more revenue.
In 2014-15, Houston gave $26 million to its athletic department, the seventh-highest subsidy in the nation, according to USA Today's most recent athletic revenue database. Subsidies accounted for 58 percent of Houston's athletic revenue; subsidies for public Big 12 schools ranged from zero to eight percent.
Houston's revenue from student fees shot up from $4.4 million in 2012 to $7.3 million three years later, creating difficult conversations among faculty. The Houston Chronicle obtained a memo in which the university chancellor, Renu Khator, expressed concerns about Houston's athletic finances if the school doesn't get into a Power Five conference.
"I worry about it too and unless we make it in the big 5, we will have to face the same dilemma," Khator wrote in a December 2014 email. "Because we are a competitive team, we have no choice currently but to keep becoming better so we could get into the big 5. If that does not happen, it will be difficult for us to sustain it too."
This is a familiar story across the AAC. Cincinnati spent $86 million to renovate its football stadium and has an $87 million renovation project for the basketball arena. University officials spent two years practically begging the Big 12 for an invitation and access to an extra $20 million-$25 million per year.
Subsidy rates are much higher for non-Power Five schools in Division I than those with much more TV money. That makes the AAC's next TV negotiation critical when its current deal with ESPN expires after 2018-19 (CBS Sports Network airs AAC football games through a sublicensing agreement with ESPN).
"We expect to have more TV revenue down the road," Aresco said. "I can't make any predictions, but we're a far more valuable conference. Some of those investments have been made by schools, stadiums have been built, and the question now is sustaining the programs. Without question, we do need more revenue, but you can succeed without spending like P5 schools."
So how? Will the AAC be the first conference to make a giant leap into the new media market by having a major package with an online entity such as Google, Twitter or Facebook?
"We're going to explore that," Aresco said. "I don't know if the online world will be sufficiently monetized yet. I think for us the question is whether it's developed fully in the next couple years to provide ancillary or primary coverage, but we're extremely happy with ESPN and we think we've added tremendous value to the league. Look at where we were three-and-a-half years ago. That's the only reason we don't have a TV deal with more revenue."
Does the AAC need to expand by adding more and/or better football programs -- hello, BYU -- to the next TV negotiation?
"I don't think so," Aresco said. "I think 12 [the AAC's current membership size] is a good number. I don't know what the future holds. I think the system needs some time now to settle down and stabilize again. But 12 is a very good number. We're happy with it. Numbers also create your own issues of governance and how you play each other. I think the quality of programs you have is far more important than just the overall size."
In Aresco's mind, the AAC's future hinges on being relevant nationally and selling a narrative. For instance, while most pundits believe Houston won't be in the College Football Playoff this season after losing to Navy and squeaking past Tulsa the past two weeks, Aresco won't rule it out.
"As I've said to you before, I will admit it's hard," Aresco said. "We haven't developed to a level yet where they look at a team with one loss that's a playoff contender. But when you look at what's above us this year, you could have a lot of shifting. Houston is still in the mix. We want to be viewed as a P6. We have to convince the public, and once we do that, there will be a critical mass where we can take advantage of it."
This year in football, the AAC is 6-12 vs. Power Five teams with wins over Oklahoma, Kansas, Purdue, NC State, Virginia and Syracuse. The records for other Group of Five conferences against Power Five teams: MAC 4-10, Mountain West 3-13, Sun Belt 1-12, Conference USA 1-18.
Aresco has long fumed at the "Power Five" and "Group of Five" labels attached to certain schools. The labels came largely for obvious reasons: The ACC, SEC, Big Ten, Big 12 and Pac-12 negotiated the bulk of the College Football Playoff terms and have their own bowl deals within the playoff's framework; those leagues typically draw the most eyeballs and thus get the best TV deals; and those conferences received autonomy from NCAA members to create some of their own rules for player benefits.
Because of the Big 12 expansion process, Aresco said the AAC delayed pushing out a strategic plan to sell the idea of the Power Six. In the next month, the AAC will aggressively push out goals for player welfare, new media initiatives and ways to generate more money, Aresco said.
Aresco didn't like how public the Big 12 expansion process became. He said if the AAC ever adds members, he would try to do so quietly. Aresco noted that Big 12 commissioner Bob Bowlsby called Monday and they had a "gracious" conversation about the Big 12's decision not to expand.
"He didn't have to call me and he did, just to let me know what happened," Aresco said. "He's been a friend for 30 years. It was a tough process. We're all glad it's over. I wanted to show respect and get through the process with dignity. The last thing I wanted to come off as was smug and self-satisfied with the situation. We've got a lot of work to do. There's a great amount of pressure on us to perform now."
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