Years back, the buyer of calves liked to see a bag on the steer calves because it helped the feedlot to know when they were ready to be processed. Note: I said years back.I do none of it these days, but when I did, bulls, rams, and bucks that didn't have the making for being a show animal, got the band. If they showed promise of being a show animal, I cut the bottom off and then scraped the cord to minimize bleeding. Where I cut the bottom, depended on where it started to taper down. Sometime a 1/3rd, sometime a 1/4th. You want to cut enough so it drains completely.
I never liked splitting the sack, because sometimes it didn't drain well. Opening and cleaning out an infected scrotum, was never my favorite ranch job.
The more scrotum you can leave on a show animal the better, because the more that fills out with fat, the easier it is to catch the judges eye that your animal is finished out nicely.