Monthly Archives: May 2012
Yesterday, the Atlantic 10 Conference announced that Butler University would join the conference on July 1, 2012–one year earlier than anticipated. Gaining Butler a year ahead of schedule grants the Atlantic 10 Conference the benefit of competing with 16 member institutions during the 2012-13 school year, before Temple and Charlotte depart the conference. While this is definitely a perk for the conference, perhaps the biggest benefit the conference gains in Butler’s expedited admission is the chance to become a basketball powerhouse.
Although the Atlantic 10 Conference does not receive the same media recognition as BCS AQ conferences, in recent years, the Atlantic 10 has made its name as a conference which is consistently competitive in basketball. Thus, it is no surprise that in selecting new institution members during the course of conference realignment, that the Atlantic 10 has aligned itself with some of the best-performing basketball schools in recent years: Butler and VCU.
Much has been said about the roles that football and television contracts played and continue to play in conference realignment decisions. However, one cannot turn a blind eye to the power of a strong basketball program when it comes to attracting conferences. Although basketball does not have the monstrously large viewership numbers that football does, it does have a wide enough following to garner billion dollar contracts for the television rights to March Madness. On top of the television contract negotiation potential strong basketball programs present, there is also the fact that the greatest portion of the revenue distributed by the NCAA is distributed to conferences based upon their team’s March Madness performance. Given these factors, it is apparent why the Atlantic Ten Conference has based its stake in conference realignment not upon football prowess, but upon basketball.
As noted above, of the revenue distributed by the NCAA to conferences and member institutions, the greatest percentage goes towards something called the “Basketball Distribution Fund.” Conferences receive payouts from the fund based upon their member institution’s performance in the Division I Men’s Basketball Championship over a six-year rolling period. A basketball program earns one unit for each March Madness game they compete in, save for the National Championship game. For the most recent year in which data is available, 2010-11, the NCAA distributed $479 million to conferences and member institutions through the Basketball Distribution Fund. This amounted to 40.5 percent of all revenue distributed by the NCAA in 2010-11.
The follow chart shows the number of Basketball Distribution Fund units that the Atlantic 10 Conference has earned over the last three years. The chart depicts what the conference earned through its actual members’ performances in a given year, and also notes how many additional units that the conference could have earned if Butler and VCU were conference members in a particular year.
|2010||Units Earned||2011||Units Earned||2012||Units Earned|
|Butler||5 + NC||Butler||5 + NC||Xavier||3|
|2010 Total: 3||2011 Total: 6||2012 Total: 7|
|With Butler and VCU: 8 + NC||With Butler and VCU: 16 + NC||With Butler and VCU: 9|
When considering the chart above, the presence of Butler and VCU in the Atlantic 10 clearly generates additional revenue for the conference. In 2010, three Atlantic 10 schools participated in March Madness: Richmond, Temple and Xavier. These schools accumulated three units for the conference. Had Butler been an Atlantic 10 member in 2010, the conference would have nearly tripled its Basketball Distribution Fund units, while also receiving a payout for Butler’s National Championship game appearance. If Butler and VCU were Atlantic 10 Conference members in 2011, the conference would have earned an additional ten Basketball Distribution Fund units and again, received a payout for Butler’s National Championship game appearance. Similarly, in 2012, the Atlantic 10 Conference could have received an additional two Basketball Distribution Fund units had VCU been a member of the conference.
While the amount of revenue generated from basketball contracts and the Basketball Distribution Fund is meager compared to the amount of money football generates, not every conference can woo college football powerhouses to their stables through conference realignment. Thus, what the Atlantic 10 Conference has accomplished through conference realignment is noteworthy. Although it will lose a historically sound basketball program in 2014 when Temple leaves for the Big East, it has replaced that leaving member with two noteworthy programs. Additionally, the Atlantic 10 has attracted two members which in recent years, the general public nationally has been interested in watching. With young, charismatic coaches that also boast successful track records in Brad Stevens and Shaka Smart, Butler and VCU respectively have garnered Cinderella story followings across the country. One can expect the Atlantic 10 to capitalize upon this should either team have similarly successful March Madness runs in the future.
Overall, while the Atlantic 10’s conference realignment path was not driven by football, it appears that the conference has been successful in laying a new foundation for its future.
With the current BCS contract set to expire at the end of the 2013 season, the landscape of college football is set to change in the coming months. In the last few weeks, the SEC and Big 12 announced that they will be creating their own bowl game, in which each conference’s champion will play, beginning in 2014. While it is unclear what this new bowl game means to the Fiesta Bowl (in which the Big 12 champion currently plays) and the Sugar Bowl (in which the SEC champion currently plays), it is possible that both of those bowls could continue to exist after 2014. Additionally, the bowl would likely be joining the Rose Bowl (played by the Big Ten and Pac-12 champions) and the Orange Bowl (played by the ACC champion).
Furthermore, it is expected that in coming months, BCS commissioners will vote to approve a four-team playoff system as a modification to the current BCS system. This four-team playoff will pit the number-one and number-four seeds and the number-two and the number-three seeds in two playoff games before contending for the National Championship game.
Given that beginning in 2014, the SEC and Big 12 champions will meet in a bowl game as will the Pac-12 and Big champions, while four teams compete for the opportunity to play in the National Championship game, should the Big East and ACC join forces to create their own bowl game?
There are two real reasons for the ACC and Big East to adopt their own bowl game: 1. To ensure that their teams have a national stage to play a bowl game on and 2. To earn revenue.
In considering whether creating a new bowl game is necessary for the ACC and Big East to ensure that their teams play a bowl game on a national stage, one factor to consider is the likelihood of either team’s conference playing in the four-team playoff. A brief overview of the teams ranked number-one through number-four since the founding of the BCS in 1998 provides some guidance as to the likelihood of ACC or Big East teams competing in the four-team playoff set to begin in 2014.
|1998-99||Tennessee||FSU||Kansas State||Ohio State|
|2005-06||USC||Texas||Penn State||Ohio State|
|2007-08||Ohio State||LSU||VA Tech||Oklahoma|
The only current Big East member to have been ranked in the top-four in the college football regular season standings since the founding of the BCS is Cincinnati. Granted, Miami and Virginia Tech were both ranked in the top-four several times during their Big East tenure, however, those teams both play in the ACC now. Thus, when looking at the entirety of teams ranked in the top-four during the BCS’ history, it would appear that the Big East needs a partnership with the ACC, much more than the ACC needs a partnership with the Big East.
However, the fact of the matter remains, that in the last three years, Cincinnati was the only school out of either conference to be ranked in the top-four at the end of the college football regular season. Thus, by creating their own bowl game, the conferences would ensure that their respective champions would be on a national stage during a bowl game after 2014.
Thus, the next question to address, is can the ACC and Big East draw a positive amount of revenue from a bowl game? This question, unfortunately, is not as easy to answer. The ACC and Big East in recent years have been known more so for the talented basketball teams they field than their football prowess. That is not to say, that each team does not have football teams which fans would travel to watch. However, could the conferences find enough fans to travel to a bowl game to ensure its profitability?
Perhaps UConn’s appearance in the Fiesta Bowl in Tempe, AZ is an indicator as to if, and how far, fans are willing to travel for bowl games in which their teams appear. UConn was required to sell 17,500 tickets for the event. Six days before the bowl game, it had only sold 4,600. Reports indicated that the school would incur the cost of the unsold tickets. Would Big East fans be more inclined to travel to bowls closer to home? If so, could such an endeavor be a revenue generator for the Big East and ACC?
While the ACC and Big East could benefit from joining forces to create a new bowl game, they should only do so if it is held at a location in close proximity to the bulk of each conference’s largest fan base. Additionally, the conferences should only enter into a bowl agreement after surveys are completed determining each conference’s fan base’s commitment to paying for and attending the bowl game. If the interest is not strong and definite, then each conference would be better off attempting to compete for one of four-team playoff seeds.
Today, the Big 12 and SEC announced that they have entered into a five-year contract which will allow champion of each conference to play each other in a New Year’s Day bowl game beginning in 2014. The contract is tailored to fit in with the new four-team playoff model, in that if the respective Big 12 and SEC champions are set to play in that game, different schools from each conference will play in the Big 12 and SEC match-up.
In making this announcement, the Big 12 and SEC have kept themselves ahead of the game when it comes to the reorganization of the college football playoff structure resulting from the expiration of the BCS’ current deal. This should come as no surprise to college football fans, as SEC commissioner Mike Slive has been at the forefront of proposing captivating alternatives to the current BCS system. It was Slive who first suggested the four-team playoff system, which will likely be adopted as the new BCS alternative. Today, Slive has once again protected the football notoriety of his conference, and the Big 12 has done the same, by ensuring that one team from each conference is present in a major, New Year’s Day bowl game.
The possibilities for this match-up are nearly endless, and quite fascinating. When considering the conference realignment landscape that took Big 12 programs Missouri and Texas A&M to the SEC, this proposal raises the possibility that those two teams could someday face off against former rivals on national television on New Year’s Day. For fans mourning the end of the Texas-Texas A&M rivalry, this agreement presents the opportunity for the rivalry to flourish on a large-scale stage. Understandably, that would require both teams to become the champion of their football-competitive conference–but, at least it’s a possibility.
Questions remain about how the bowl will be orchestrated. For instance, it is unknown whether it will be held in a set location annually, like the Pac-12 and Big Ten’s Rose Bowl, or if it will travel to a new location each year. Given that SEC and Big 12 fans travel more than fans from other conferences, it may be worth each conference’s time to investigate the possibility of rotating the bowl game throughout various sites. This would open up the possibility of attending the game to more of the fans who are diehard supporters of SEC and Big 12 football. Additionally, it would raise the possibility of introducing each conference’s respective teams to new markets.
In the future, issues that will need to be addressed as a result of this bowl marriage relate to the bowls that each conference is currently aligned with. For instance, the Big 12 champion plays in the Fiesta Bowl each year. Will that continue? Is it possible that the agreement will result in the Fiesta Bowl being one of the sites that the bowl rotates through? Furthermore, what will happen to the current Big 12 No. 2-SEC No. 4 or 5 matchup, better known as the Cotton Bowl? Like the possibility just noted about the Fiesta Bowl, could this new bowl also rotate through the Cotton Bowl location? What will become of the SEC champion hosting Sugar Bowl?
My hunch is that the bowls will not agree to a game which rotates amongst them. Such would not be lucrative to the bowls. Thus, what the Big 12 and SEC have done with this move, is to strip the respective bowls of their power and transfer it to themselves. In doing so, they’ve opened up a bidding war of sorts, where the bowls will be expected to woo them with options. If none is suitable to the conferences, my guess is that they will launch a new bowl which will rotate throughout Big 12 and SEC locations.
Overall, this is a great move by the Big 12 and SEC. It is so, because it is a move that keeps them on top of the bowl shuffling/college football playoff landscape.
Last week, the ACC and ESPN reached an agreement which extended the network’s television contract with the conference for 15 years. News of the agreement caused many to speculate that FSU would leave the ACC for the Big 12, under the assumption that the amount of money the school would earn under the ACC’s extended media contract was not sufficient and that FSU would be able to earn more under the Big 12’s yet-to-be-negotiated media contract.
However, in a memorandum released today, FSU president Eric Barron all but squashed any rumors of FSU leaving the ACC for the Big 12.
In the memorandum, Barron provided four reasons why alumni believe FSU should consider joining the Big 12: the Big 12 is more football-oriented than the ACC, the Big 12 would give FSU greater football competition, the ACC provides advantages to North Carolina schools, and FSU would earn more media revenue under the Big 12’s media contract.
In response, Barron nearly doubled the reasons why FSU should not join the Big 12, providing seven explanations. These explanations included his notations that the ACC is an equal share media revenue conference while the Big 12 is not, any additional money FSU would receive under a more lucrative Big 12 media rights deal would in turn be spent by FSU on further travel to play Big 12 schools, ticket revenue would decline as Big 12 fans would be less inclined to travel to FSU games, the sellout FSU-Miami rivalry would be lost, FSU would have to pay $20-$25 million to leave the ACC and the Big 12 is an “academically weaker” conference.
While many FSU fans may be disappointed in Barron’s response, his reaction is perhaps the most level-headed of any made during the past 18 months in which conference realignment has changed the collegiate athletics landscape. Barron’s response provided analysis of three of the key factors driving conference realignment: media contract revenues, travel and academics. However, it appears that for once, the lure of media contract revenues did not outweigh the costs posed by travel and academics resulting from conference realignment.
Over the past 18 months, fans of college athletics have watched as teams have realigned themselves with conferences in far away lands, under the auspices of joining the ranks of more prestigious academic institutions, better competition, and ultimately, earning higher revenues. However, in his memorandum, Barron indirectly called out many of these institutions on their bluff: How can you promote academics and earn more revenue, when you are requiring your student-athletes to travel further distances and expending more money to meet a growing travel budget?
In recent months, I have been given great access into top Division-I athletic department’s budgets. Across the board, the highest expense any athletic department incurs is for travel. Athletic departments that compete in localized geographic areas already shell out millions of dollars per year to pay for travel. Imagine how much the amount spent on travel will increase when schools join conferences with geographic reaches across the nation? Will it double? Triple? Will the possibility of earning $2 million more per year under a media rights agreement balance the additional travel costs incurred by the athletic department, while also negating the time lost to study by student-athletes required to travel further distances for competition? Only time will tell.
Today, many may be chastising Barron for his memorandum and apparent disinterest in moving FSU to the Big 12. However, ten years from now, it will be interesting to see what FSU has gained (and likewise, what it may have lost) by remaining in the ACC.
One of the most popular posts in the history of BusinessofCollegeSports.com was Kristi Dosh’s post breaking down the television contracts in each AQ conference. She’s updated that post over on ESPN.com with the news of the ACC’s new deal.
Yesterday, BusinessofCollegeSports.com gave you an exclusive, in-depth look into Wisconsin’s athletic department revenues. Previously, BusinessofCollegeSports.com reported that per data obtained from the Department of Education, Wisconsin had the 9th highest expenses of all Division I schools. Randy Marnocha, Wisconsin’s Associate AD for Business Operations graciously provided BusinessofCollegeSports.com with in-depth information about Wisconsin’s expenses for 2010-11.
In 2010-11, Wisconsin had operating expenses of $80,855,012.00 and capital expenses of $3,010,174.00.
The chart below depicts the items making up Wisconsin’s $80,855,012.00 worth of operating expenses.
|Salaries & Fringes||$32,919,613.00|
The following account for the $28,519,000.00 Wisconsin spent on “operating expenses” last year: Business travel, team travel, recruiting travel, interview/relocation costs, advertising, concessions/catering resales, team meals/catering/housing, guarantees, equipment maitenance and repairs, building/grounds maintenance and repairs, membership dues (Big Ten Conference, etc.), officials, postage/freight, printing, prizes and awards, equipment rentals, space rentals, medical services, police services, professional services, subscriptions, athletic equipment, building and grounds supplies, medical supplies, office supplies, telephone service, and insurance/property tax.
With respect to debt services, the figure shown above includes the total paid off by Wisconsin on various capital projects. In particular, in 2010-11, Wisconsin paid off $6,723,150.00 on its football stadium, Camp Randall, and $2,571,736 on its basketball and hockey facility, the Kohl Center.
The financial aid amount reflected is composed of the following: Scholarships, tuition remissions, NCAA Opportunity Fund, NCAA Special Assistance and a continuing education fund. The largest expenditure in the financial aid section went toward scholarships, for which Wisconsin spent $9,595,562.00 in 2010-11. Notably, this amount was lower than that which Wisconsin expended on scholarships in 2009-10. In 2009-10, Wisconsin spent $9,389,828.00 on scholarships.
The following chart depicts Wisconsin’s 2010-11 post season revenues and expenses. The revenues and expenses are calculated for all of Wisconsin’s teams which participated in their respective 2010-11 post seasons. Those teams included: Football, men’s and women’s basketball, men’s and women’s hockey, men’s and women’s soccer, softball, men’s and women’s swimming, men’s and women’s tennis, volleyball and wrestling.
|Post Season Revenue||$2,579,248.00|
|Post Season Expenses||$3,738,568.00|
Notably, Wisconsin suffered a loss overall when it came to post season participation in 2010-11. It should be noted, however, that in 2010-11, Wisconsin received a bowl payout of$2,493,258.00 from the Big Ten Conference.
BusinessofCollegeSports.com would like to extend a gracious “thank you” to Randy Marnocha for his assistance with this series and his generosity with his time.
Recently, BusinessofCollegeSports.com wrote that per data obtained via the Department of Education, Wisconsin’s athletic department had revenues of $93,594,766.00 and expenses of $92,939,345.00 in 2010-11. Comparing these numbers to those that other athletic departments submitted to the Department of Education demonstrated that in 2010-11, Wisconsin had the 9th highest expenses and the 12th highest revenues of all Division I athletic departments.
Given the idiosyncracies of the Department of Education data for athletic departments, BusinessofCollegeSports.com followed up with Wisconsin’s athletic department to delve deeper into their budget. Randy Marnocha, Wisconsin’s Associate AD for Business Operations graciously opened up the athletic department budget to BusinessofCollegeSports.com. What follows is an exclusive, in-depth look into Wisconsin’s revenues and expenses.
Today, Wisconsin’s revenues will be examined. Tomorrow, BusinessofCollegeSports.com will post Wisconsin’s athletic department expenses for 2010-11.
The chart below depicts the revenues that Wisconsin reported to both the NCAA and the Department of Education. As BusinessofCollegeSports.com has previously explained, there are differences in these two reports which account for the different revenues that a school reports to each. For instance, Wisconsin does not report utilities to the Department of Education, while that number is reported to the NCAA.
|Revenue||Revenue Reported to the NCAA||Revenue Reported to the DOE|
|Big Ten Media (Campus)||$2,772,546.00||$2,772,546.00|
|Coaches Camps & Clinics||$1,707,848.00||$1,707,848.00|
|UWF Gifts in Kind||$332,597.00||$332,597.00|
|UWF Special Account||$1,119,638.00||$1,119,638.00|
|UWF Other Expenses||$286,925.00||$286,925.00|
As depicted above, the largest source of Wisconsin’s athletic department revenue came from operating revenue. The following items make-up Wisconsin’s operating revenue: Ticket sales, revenue received from the Big Ten Conference, gifts in kind, concessions and catering, media revenue, events, post season revenue and “other” (which will be described below). Below is a snapshot of how much each of these revenue streams contributed to Wisconsin’s overall operating revenue.
|Revenue Stream||Amount Generated|
The chart below depicts the amount that Wisconsin teams were able to generate through ticket revenue. Unsurprisingly, football leads the way. Perhaps, the most interesting thing to note in this chart, is the great disparity between men’s sports and women’s sports ticket sales.
In 2010-11, Wisconsin received $19,664,188.00 in revenue from the Big Ten Conference. The chart below depicts the amount of revenue Wisconsin received from the Big Ten Conference.
|Big Ten Media||$13,903,475.00|
|NCAA Broad Based||$3,286,099.00|
|Big Ten MBK Tournament||$385,574.00|
The “NCAA Broad Based” payout noted above includes payments made by the conference for the NCAA basketball fund distribution (teams earn one unit for each NCAA March Madness game they play in, except for the National Championship; conferences distribute the money derived from these units), sports sponsorship and grants in aid, and any supplemental distributions, if approved. Additionally, negative numbers are shown for football tickets and basketball tickets. This is because Big Ten Conference members pay into a ticket pool. If a school makes over a certain amount in ticket revenue, they pay into the pool. Schools falling below the ticket revenue amount receive a payout from the Big Ten Conference.
Next, is a chart depicting the revenue generated by Wisconsin’s advertising ventures.
Wisconsin has an advertising contract with Learfield/BSP. According to Marnocha, “They do most of the signage around the facilities, radio spots, television spots, etc. They sell the rights to advertise in our media guides and programs. They sell the advertising for the big, LED signage that we have in the stadium.” With respect to the adidas and Coca-Cola amounts, Marnocha notes, “These amounts are part of adidas and Coca-Cola’s contracts with us and they give us a certain amount of money to advertise their products.” CR Chairbacks refers to Camp Randall Chairbacks, sold for the football stadium.
With respect to the post season, the chart below highlights Wisconsin’s overall post season revenues. This amount is for all Wisconsin teams that participated in the post season in 2010-11. Those teams included: Football, men’s and women’s basketball, men’s and women’s hockey, men’s and women’s soccer, softball, men’s and women’s swimming, men’s and women’s tennis, volleyball and wrestling.
|Post Season Revenue||$2,579,248.00|
As for catering and concessions, the following chart breaks down how much revenue was generated through catering, events and at specific team’s games:
|Concessions and Catering||Amount|
The next chart depicts the revenue that Wisconsin receives from the Big Ten’s media contracts. One thing to note, is that a significant portion of the amount of money Wisconsin receives from the Big Ten Network is returned to the Wisconsin campus and not used by the athletic department. Additionally, according to Marnocha, each Big Ten Conference school receives the same Big Ten Network payout each year.
|Big Ten Media Revenue||Amount|
|Big Ten Network||$7,894,078.00|
|Athletic Department Portion from BTN||$5,193,765.00|
|Campus Portion from BTN||$2,772,546.00|
The portion of “other” revenue depicted in Wisconsin’s operating revenues is composed of the following:
Visit BusinessofColllegeSports.com tomorrow to get an inside look into Wisconsin’s athletic department expenses.
Over the last 24 months, conference realignment has reshaped the landscape of collegiate athletics. The constant flux of teams switching conferences, along with conferences working to amass the greatest number of member institutions leads one to question whether superconferences are all they’re cracked up to be.
The apparent victim in the most recent round of conference realignment is the WAC. Reports indicate that WAC members Utah State and San Jose State are set to leave the conference for the Mountain West Conference in 2013. Additionally, UT-San Antonio, which was set to join the WAC this season is expected to break with those intentions and join Conference USA. With Utah State and San Jose State leaving for the Mountain West and UT-San Antonio not joining the conference, the WAC is left with only four football-playing schools.
In response to these reports, WAC interim commissioner Jeff Hurd asserted that the conference will remain viable and the conference is evaluating different options to address its defecting members. In considering options, should the WAC seek out numerous new members with the goal of becoming a super conference, or rather, should it rebrand itself as a conference focused on a specific sport?
Founded in 1962, the WAC initially was the conference of six members: Arizona, Arizona State, BYU, New Mexico, Utah and Wyoming. The creation of the wake resulted in the demise of Border and Skyline conferences. While Arizona and Arizona State experienced competitive success as WAC members, they eventually left the conference to join what would become the Pac-12. However, by 1980, the WAC had increased its membership by 50 percent, adding UTEP, Colorado State, San Diego State, Hawaii and Air Force. The expanse covered by the WAC was growing as the conference’s membership grew.
In 1996, the WAC achieved the ranks of superconference status when its membership totaled 16 schools. Along with its previous 9 members from 1980, the WAC added: Fresno State, Rice, TCU, SMU, San Jose State, UNLV and Tulsa. Started as a conference limited to a specific geographical region, the conference now had schools in four time zones and stretched across 3,900 miles.
While the saying “bigger is better” may be true for most things, it was not so for the WAC. With schools located across 3,900 miles, travel expenses skyrocketed for member institutions. Additionally, reports indicate that some members were concerned that the original academic and athletic focus of the conference was lost in expansion. The consequences of superconference expansion were felt in 1999, when three of the remaining four original members, along with three WAC newcomers left the conference to form the Mountain West Conference.
The lesson here, is an important one to the WAC (and other conferences, for that matter), when it comes to drafting plans to move forward as a conference under the current landscape of collegiate athletics. While in recent months, there have been vigilant efforts by conferences to organize coups of other conference’s members, superconference status does not always guarantee success.
Rather, conferences should be concerned first and foremost with drafting a long-term vision for their conference. Will the conference achieve success by fielding football teams, or will it find steadiness in focusing upon other sports? Would the conference be better suited if its members were located in one region of the country or would it be more financially responsible for the conference to be spread out across all corners of the nation? In seeking out members, is it important to the conference that institutions represent academic integrity and success?
Ultimately, when you look at the most successful conferences of past decade, there is a cohesiveness about them that the WAC was lacking. The “Big Six” are tied together by geography, success in either football or basketball and institutions that for the large part, promote academic excellence. In moving forward, any conference on the verge of death, should spend considerable time fleshing out what the conference’s new keystones will be before arbitrarily inviting institutions to become new members.