Wednesday, May 23, 2012

Clemson, the Big XII, Stocks, and Milhouse

Rumors about Clemson and the Big XII are swirling like Milhouse’s hair at Springfield Elementary.  And there are fantastic resources devoted to finding out the truth.  But that’s not us.

Here, our job is to look at all angles and figure out what is best for Clemson.  The university, sports departments, alumni, and its fans.

To answer this question, we need to answer a larger, more important question:

Is the ACC the right place for Clemson?

To analyze the ACC, let's treat it like a stock, which gives us three options: Buy, Hold, or Sell

Buy
Giving the ACC a “buy” rating means there is value in the ACC at or above the investment price.  This option means we solidify the base, search for other teams to strengthen the conference, and lead the way into the future.

Currently, Clemson has 1/12th of the shares in this conference (1/13th once you pay the house), which will pay approximately 17MM in annual dividends (TV contracts).  The problem with this model is that Clemson generates more than a 1/12th percentage to the bottom line.

Analyses of the TV contracts show nearly 80% of the revenues are football generated; meaning approximately 13.6MM of the 17MM in dividends is a result of football related income.

The issue: Clemson is consistently a top 2-3 product for the ACC in football revenues, generating over 20% of said revenue, which stems from viewers to attendees to product purchasing.

20% of the annual football revenue would be approximately 32.5MM, or nearly 2.5 times Clemson’s current payout.

So, to buy stock in the ACC means having the ability to “flip” the model to make it friendlier to those earning the revenue.  This is not the current MO of the ACC, but to buy stock in the ACC and lead it into the next phase of collegiate athletics, it would need to be.

Hold
To “hold” the ACC stock is to stand pat.  Not necessarily going “All in” with the ACC, but also not jumping at the new and trendy option the other guy is selling.

Clemson has been part of the ACC since its formation in 1953 and over the years, the ACC has been one of the most stable environments in all of college football.

Only one school has ever left the ACC: Carolina South while six have been added (UVA later in ’53 Tech in ’78 FSU in ’91 and VT & UM in ’04, & BC in ’05)

The ACC, while not the fan favorite of the Clemson base, has been our home for nearly 60 years and has helped to give us everything we’ve ever wanted: national stage and recognition, competitive sports, and increased academic standards.

Plus a few things we didn’t want: extra year of probation, following the NAACP ban on this state, and overt favoritism of the Triangle.

But what marriage doesn’t have disagreements.  To quote Josh Lucas from Life as We Know It: “If my wife and I would’ve fought like this, we’d still be married.”

To leave this behind is scary.  Quite scary.  And is not a decision that should be taken lightly.

Sell
Selling a stock says one of two things about you: you’re desperate (for cash or stability) or there is nothing further to be gained by owning the stock.

Generally speaking, Clemson is not in need of cash.  They have 17MM reasons not to leave.

However – stability is another issue.  The ACC is at a crucial moment in its existence.  An existence that is used to containing multiple show horses is slowly being relegated to a one-trick pony.

Does leaving the ACC for the Big XII provide stability?  Yes.  Is it long term?  Probable, but not certain.

Remember, this time last year the SEC and Pac-12 were on their way to 16 and the Big XII was to be disbanded.  What's to say something similar won't happen in the next 12 months.  It won't take long for people to begin getting sick of Texas the way they are UNC & Duke.

Also, there is an intrinsic, relational hurdle to overcome in leaving the ACC.  The majority of our memories have occurred as members of the ACC.  1 National Championship, 14 Conference Championships, 13 Bowl Wins, 29 straight wins over White Meat, and 56 straight losses in Chapel Hill.

Leaving the ACC means leaving the quiet comforts of home, saying goodbye to a century worth of rivalries, and losing footholds in key recruiting states.

But the promise of security and a seat at the big boy table is pretty enticing, but will the grass actually be greener, or just painted as such?

Summary
There is a serious amount of smoke on the horizon regarding conference realignment.  Enough to make the Clemson Board of Trustees hold an unscheduled meeting.  Enough to get other Clemson leaders talking.  Enough to begin drawing national attention.

As such, the leaders of Clemson University and its fans have a very serious decision to make.  The ACC has been a good, if not great home, for this University for nearly 60 years; however, there is not enough trust in the leadership and the current state of affairs to give the ACC a "buy" rating.  It is simply not a good investment.

This doesn't mean Clemson should leave, but at a minimum, it should be listening to all offers to determine what is in the best interest of the future of this school.  If that is the ACC, then let's move forward with some serious changes and reestablish ourselves as a dominant conference.

I for one hope the ACC goes the way of the Pac-12 and Big XII: hire new leadership, increase media savvy, be aggressive, and look out for the best interest of all its schools, not just the locals.

If the ACC is willing to commit itself to doing what is needed, then I would be willing to hop on the train.

However, if the ACC is unwilling to change, then it's time to rally the Seminoles, Jackets, Hokies, and Terps to head west.  Change is always better with friends.  And Clemson will need some to make this work.

And regardless of what happens, there should be no regret.  Only the promise of a better, more equitable future - wherever that may be.

8 comments:

  1. Your point is you have no point. You wasted my time talking in circles, Willy. Bottom line is we need to leave for the money and the BCS exposure it would bring. Wake up, dude.

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    1. Thanks for stopping by. I enjoy the discussion - and the fact that you read it.

      I think the point is there may not be a right answer to realignment - only a wrong one, which is to do nothing. My preference would be to swap out the leadership of the ACC, cast a new vision, and forge ahead. And if the ACC is unwilling to do that, then it's time to look elsewhere.

      I don't think we give enough credence to what we currently have in the ACC. Losing that is not fixed with money only.

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  2. I live in the Triangle and the problem is that the NC schools don't get it that there is a problem...therefore, I don't think its rational to expect change. They may be getting a clue that the recent expansion achieved nothing but not that there is a NC bias. With new leadership, relocation of conference HQ and revamped strategy, the acc would be a good home. None of that will happen. The status quo is the move the acc will make -that's the move Clemson can't afford to make.

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    1. Very well said. And I agree the chances of the ACC ever changing is slim to none. And I agree that Clemson can't afford to stand pat. Something must be done and now is the time to make that change.

      Thanks for stopping by and dropping a line.

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    2. Btw- nice take...I like the stock analogy. Keep it up!

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  3. Clemson needs to leave the ACC. By staying they will only be the Tallest Midget playing football in a basketball driven conference.

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    1. I think at the end of the day, you may be correct. Unfortunately.

      Thanks for stopping by!

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    2. Just checking in on my boy.............. lol

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