Monday, November 19, 2012

Money v. Math in College Athletics

The Big Ten Conference currently has 13 schools in it; in 2014, it will have 14. So, why doesn't it change its name to the Big Fourteen Conference? It's the math - not the real math, but the economic math. The Big Ten is the oldest Division I college athletic conference, and it is one of the profitable. Moving from the ACC to the Big Ten in 2014 is predicted to double the University of Maryland's annual league revenue to nearly $25 million. Meanwhile, by expanding its network further into the northeast, the conference could earn more than $200 million in additional revenue (see here). Changing the name of the league to reflect the actual number of teams comprising it would result in a loss of "good will," which (simply put) is the difference between the value of a firm's assets and the firm's market value. A well-recognized and -respected brand name has value in and of itself, which means that voluntarily changing a well-recognized and -respected name is costly.

The bottom line (literally, in this instance) is that the label "Big Ten" is worth more to the universities that comprise it than the accuracy of their addition. They are counting dollars, not member schools.

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