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Nebraska Settles with the Big XII for $9.255 Million

The University of Nebraska-Lincoln and the Big XII Conference announced today that $9,255,000 will be withheld from Nebraska's share of Big XII revenue distributions to settle Nebraska's departure from the conference.  $1.255 million of 2009-10 revenue distributions still to be paid will be retained by the conference, and $8 million of 2010-11 revenues will be withheld.  Nebraska had expected to receive $10 million to $14 million for this season.

These revenues come from conference television contracts, bowl games, and championship events such as the NCAA basketball tournament.  Because of this, Nebraska's athletic department is expected to only break even for these two seasons, wiping out an expected $7 million surplus for this year. To offset these revenue losses, chancellor Harvey Perlman will waive the athletic department's $2.5 million contribution to the academic side of the University for this year.

If Nebraska and another Big XII school both qualify for BCS bowl berths, the amount the University owes will be reduced by an additional $500,000.  If the Huskers are the only conference team to earn a BCS bowl bid, then Nebraska's settlement figure will not change.

In comparison, Colorado will only pay $6.863 million as their settlement fee.  The Buffaloes will also depart the Big XII after this season.

Nebraska won't immediately share in the Big Ten's higher revenue numbers.  The Huskers will need to vest themselves into an ownership share of the Big Ten Network.  During this transition period, Nebraska will only receive revenue comparable to what they would have received from the Big XII conference.  Eventually, Nebraska's revenue stake will jump up to the $20-$25 million range...but not for several years.

Frankly, this agreement seems to throw water on the argument that Nebraska made this move for television revenue. Down the line, most certainly Nebraska will earn more in the Big Ten...but not initially.  In fact, Nebraska may earn less than some of their former Big XII partners, who will only be splitting up the pot 10 ways, not to mention the $16 million that Nebraska and Colorado will be paying.  The payoff for the University will be down the line in terms of both athletic revenue as well as conference stability.

Now that the exit fees have gone from a rumored $35-$40 million to a mere $16 million, one wonders how that affects the revenues that the remaining ten members of the Big XII will have.  Of the biggest concern is what happens with cash-strapped Texas A&M athletic department will do. The Aggies threatened to change their mind in July if Dan Beebe and company couldn't follow through with their promise of $20 million a year.

That, in a nutshell, is why Nebraska bolted for the Big Ten when it had the chance.  The money might be the same for now, but stability in this environment is a good thing.  The Big Ten is still thinking further expansion.  The Pac-10/12 also is likely looking at further expansion, and the SEC isn't about to be passed up in terms of conference size. Meanwhile, the ten "proud members" of the Big XII each are watching and waiting. Some like Texas and Texas A&M already are halfway out the door.  Others, like Iowa State, Baylor, Kansas State, and Kansas, are cowering in fear in the corner with their heads buried under a pillow.  (Meanwhile, Missouri is in another corner, whispering and pleading into a cell phone for the Big Ten to reconsider...)  Nebraska is paying the price now, but can sit back with a bowl of popcorn and watch the carnage.

Add in the academic benefits, and it's worth it to Nebraska to settle. Nebraska very well could have won their case, throwing the words of Dan Beebe back at him in court. Problem is that you never know how a judge or jury will respond, and Nebraska still could have found themselves owing the full $20 million that the Big XII originally demanded.