Is The Longhorn Network Killing The Big 12?

Five years into the grand experiment, and the Longhorn Network is kind of a disaster. It’s losing money hand-over-fist: reportedly $48 million since its launch, with annual losses hovering in the millions. Subscriber fees are painfully low, and ESPN is locked into this thing for another 15 years. And according to Oklahoma State head coach Mike Gundy, the network threatens the very existence of the Big 12.

Gundy wants a conference-wide network, rather than one devoted to a specific program. He told CBS Sports the Big 12 can’t compete with the likes of the Big 10 or SEC thanks to the money rolling in from their networks:

“If we don’t eliminate the Longhorn Network and create our own network, they’re going to continue to have issues with this league.”

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“If Texas doesn’t [fold LHN] in X number of years, they’re going to be in the Pac-12 or SEC,” Gundy said. “If that’s what they want, keep riding this horse. If you don’t want that, you better make some changes or it’s going to happen whether you like it or not.”

Well, Gundy’s not quite right here on Texas’s future prospects—the Longhorns are already making out like bandits

As chronicled by SB Nation, ESPN’s 20-year deal with Texas pays the school a minimum annual royalty that averages about $15 million, increasing over the length of the contract—thus far it’s been about $12 million a year. By comparison, the SEC Network is turning a profit, and has more royalties to pay out—but those are distributed among each school equally.

So even without the 70 percent of revenue that will go to UT when (if) ESPN recoups its investment, the Longhorns are still making about twice as much each year from the Longhorn Network than any SEC program is from the SEC Network, even if the SEC Network is that much more successful overall. Texas has no incentive to wind down the Longhorn Network, or roll it into a Big 12 Network where it would have to share the royalties.

Gundy’s correct in that the rest of the Big 12 would benefit from the revenues of a wider Big 12 Network, something that’s not plausible as long as the conference’s biggest fish has its own deal. But for that to happen, Texas would need to forego cash for the greater good. And no successful program has ever gotten there via altruism.