Author Archives: Alicia Jessop

Penn State’s NCAA Sanctions: The Effects On An Athletics Department

Yesterday, the NCAA levied what many consider to be unprecedented penalties upon Penn State.  Including within the NCAA’s sanctions, was the imposing of a $60 million fine to be paid by Penn State over the next five years.  This $60 million figure is clearly large, leading some to believe that while the NCAA did not impose the “death penalty” upon the football program, it nonetheless intended to decimate it. 

How though, will the $60 million fine actually impact the operations of Penn State’s football program and the Penn State athletics department?  In the grand scheme of Division I athletics, Penn State has posted impressive revenues in recent years.  For 2010-11, the most recent year for which Department of Education data is available, Penn State’s athletics department reported total revenues of $116,118,026.00.  The athletics department also reported expenses of $84,498,339.00.  While many athletics directors will note that the numbers reported to the Department of Education are not inclusive of every cost incurred by an athletics department, these figures at least give some idea as to the type of budget Penn State’s athletics department is operating under.

That being said, it is arguable that at least when considering the Department of Education data, having to shell out on average $12 million per year over the next five years to comply with the NCAA’s sanctions is not going to destroy Penn State athletics.  However, the story is not that simple.  One has to take into consideration the multitude of budgetary factors Penn State’s athletics department is likely now facing as a result of the NCAA sanctions.  Along with losing sponsors like State Farm and facing a possible credit downgrade by Moody’s, Penn State athletics likely now has to rework its budget to determine where the $60 million is going to come from. 

Frank Hardymon is the Associate Athletic Director – CFO at Georgia Tech.  While he can only explain the budget planning process engaged in at Georgia Tech, he notes, “I would guess our methods of planning and budgeting are similar to those utilized by other institutions.”  This planning begins the spring prior to the July 1 start of the fiscal year, when the upcoming year’s budget is completed.  “In our case, nearly every dollar which we project receiving is accounted for in the budget,” Hardymon noted. 

Likely, a similar circumstance exists at Penn State.  While the Department of Education arguably demonstrates that the athletics department is operating with a surplus, many athletics directors are quick to note that is not the case, as not every expense an athletics department incurs is reported to the Department of Education.  As such, Penn State is likely looking towards contingency provisions in its budget to gather the money by which to pay the $60 million fine.  “We build in as much contingency as we can every year; some years we may have close to $5,000,000.00 in contingency factors into the budget, other years that amount is quite a bit less,” Hardymon said.

It is unknown whether Penn State’s athletics department had any contingencies built into its budget.  If so, it is highly unlikely that the contingency amount would allow for the payment of a $60 million fine.  As such, Penn State will likely have to scrape from other areas of its budget to pay the imposed fine.  Areas in which Penn State could cut from its budget would likely be from recruiting expenses, travel costs and future coaching salaries.  However, the most likely area in which Penn State could draw from is facility improvements.  While the department will have to continue paying under the loan terms for already existing improvements, it is unlikely that the athletics department will undertake any new building during the time period in which the fine is being paid.  Hardymon noted, “We also maintain a detailed five-year income projection which we update frequently.  That analysis factors in projected facility improvements needed during those five years.” 

Overall, the financial sanction imposed upon Penn State by the NCAA is indeed a blow to the athletics department.  However, given Penn State’s apparent athletics revenue along with proper budgeting moving forward during the next five years, it is likely that the athletics department will be able to continue to function financially.

The BCS Presidential Oversight Committee Meeting: Questions Presidents Must Ask

Today, the BCS Presidential Oversight Committee is meeting in Washington, D.C.  At the meeting, FBS conference commissioners will present the new post-season model, which they endorsed last week, to 12 university presidents.  The BCS has acknowledged that the proposal involves a four-team seeded playoff.  Other reports indicate that the four teams would be selected by a committee and would face-off in already existing bowl games.  Additional reports indicate that the site of the national championship game would be determined by a bidding system.  While the commissioner’s proposed new post-season model marks clear differences from the current BCS system, university presidents should ask the following questions and require sufficient answers before signing off on the plan. 

1.  Term of the Agreement

The first question presidents must ask, is how long of an agreement must they enter into if they approve the proposed plan?  The current BCS system has been in place since 1998.  While it was adopted to thwart previous criticism of the NCAA football post-season model, the current BCS system has attracted a large amount of criticism. 

Recognizing the amount of criticism that seems to befall any college football post-season model, university presidents should suggest that the term of this agreement be long enough to work any kinks out of the system, but not so long that changes cannot be made if it turns out to be an imperfect system.  In that regard, a five to six-year agreement would likely be the most beneficial term.

The elephant in the room when it comes to the length of the term, is arguably television contracts.  The expiration of the BCS’s current agreement coincides with the expiration of its television agreements.  Thus, there is the possibility that the BCS and conference commissioners believe that a lengthier agreement will benefit network negotiations.   Arguably, the longer that the BCS and conference commissioners can say that the new deal is in place, the more that networks will be willing to spend on deals. 

However, by shortening the term, the conferences and universities take away some of the negotiating power from the networks.  Shortening the term essentially requires networks to re-negotiate their television contracts at the end of the term.  Understandably, this opens up the possibility of conferences and universities obtaining more money from multiple television contracts.

2.  The Selection Committee

As noted above, it appears that conference commissioners propose that the teams that participate in the four-team playoff be selected by a committee.  This is arguably the least controversial proposal brought by the commissioners.  Most notably, a selection committee is used to seed the NCAA Men’s Basketball Tournament.  Although it is an imperfect method, it works.  Nonetheless, the presidents should question how the committee will be made up, and what safeguards will be in place to ensure that the nation’s top-four teams play in the playoff.

3.  Costs

The biggest issue university presidents should have with the proposed system, is its cost.  For all intensive purposes, under the proposed model, a team that makes the national championship game would be playing in two bowl games.  Playing in two bowl games understandably involves significant costs.

Before approving the proposed model, university presidents must rest assured that they understand the extent of these costs and who they will be borne by.  Under the current BCS model, teams playing in BCS bowl games are required to purchase a certain amount of tickets.  If they do not sell these tickets, they eat their cost.  This can cost a school hundreds of thousands of dollars.  Additionally, there are large travel costs associated with playing in bowl games.  Under the proposed model, these costs will now have to be borne twice.  This is because teams will have to travel to a bowl site to play in the playoff and then again to whichever city bid the highest to host the national championship game.

For contractual reasons, it is unlikely that the commissioners will sway away from hosting the playoff at a bowl site.  Thus, university presidents must request that the BCS or conferences pay some portion of their travel costs, in order to make this an economically feasible solution.

Overall, in presenting this proposal, the conference commissioners have answered many questions and addressed many of the criticisms of the current BCS model.  However, it is clear that issues remain that must be addressed before it is adopted as the new college football post-season model.

How the Arizona Wildcats Made the College World Series…and Money

It has been quite a season for the University of Arizona baseball team.  Winning the most games of any Wildcats baseball team for a single season since 1989, the Wildcats punched their ticket to Omaha, NE and the College World Series after beating St. John’s University in the NCAA Super Regional tournament.

While the Wildcats’ road back to Omaha is impressive, perhaps what is more interesting about the team’s season is the increase in revenue enjoyed by the the University of Arizona baseball program.  While the team’s on-field success drove interest in the program, the increase in revenue was largely generated by the team’s move from its previous on-campus home of 44-years, Jerry Kindall Field at Frank Sancet Stadium, to the off-campus location of Hi Corbett Field.

Given the history that the Wildcats created while playing at Jerry Kindall Field, along the field’s convenient on-campus location, there was some initial resistance from Wildcats baseball fans regarding the move.  However, University of Arizona Director of Athletics, Greg Byrne, knew that the move to the former Spring Training facility of the Cleveland Indians and Colorado Rockies would bring great things to the team and the Arizona athletics department.

“When we did this, our thought was that there was a community connection with Hi Corbett.  It was a dramatic facility improvement for our team, as we have a great clubhouse, locker room and training facilities.  We felt that if we could re-engage Tucson with our baseball program, it would have a tremendous impact for us this year and many years to come,” Byrne said.

Byrne’s intuition about the success that moving to Hi Corbett Field could bring the baseball program was correct.  The athletics department invested $350,000.00 to update the field’s clubhouse and provide it with University of Arizona paint and banners.  After those measures, Hi Corbett was open for business and fears that fans may not attend games at an off-campus location were quickly quashed.

For starters, ticket revenue for the baseball team this season was five-times that of what it was last year.  In 2011, Arizona baseball brought in $69,000.00 worth of ticket revenue.  This season, the baseball team brought in just shy of $350,000.00 in ticket revenue, which does not include revenue for tickets sold during the NCAA Regional tournament or NCAA Super Regional tournament.  Arizona baseball games were a hit with fans this season, as the team has brought in an average home attendance of 2,460.  Last season, the average attendance for games was just over 1,000.  The popularity of watching the Arizona baseball team play at Hi Corbett Field is further demonstrated by the fact that during one weekend series against Arizona rival ASU, the baseball team was able to bring in ticket revenues of $98,500.00.  The ticket revenue that Arizona baseball was able to generate during one weekend series was nearly $30,000.00 more than it generated all last season.

Along with obtaining revenue from ticket sales, Arizona’s athletic department also receives revenues from concession sales at the baseball games.  One luxury the athletics department has found in its move to Hi Corbett, is the ability to sell beer at baseball games.  This year, $360,000.00 worth of concessions, including beer, were sold at Arizona baseball games.  Of that gross number, the Arizona athletics department received $160,000.00 from Hi Corbett’s concessionaire.  Although beer sales accounted for a significant portion of the concession gross receipts, Byrne is quick to note that he does not believe beer sales are driving ticket sales.  “The nice thing, is that for our NCAA Regional game, we had 5,400 people at the game and we didn’t sell beer.  They came to support Arizona baseball; not for the amenity of beer,” said Byrne.

Arizona’s move to Hi Corbett has also presented the school’s athletic department with another way to generate revenue:  Hosting NCAA postseason baseball games.  For the first time in 20 years, the Wildcats hosted the NCAA Regional baseball tournament.  Additionally, Arizona hosted its first-ever NCAA Super Regional baseball tournament.  To host these tournaments, the athletics department placed bids with the NCAA.  The starting bid for the NCAA Regional tournament was $35,000.00, while the bid for the NCAA Super Regional is $50,000.00.  Byrne noted that the Arizona athletics department exceeded the bid amount for the NCAA Super Regional tournament.  Although Arizona spent money to bring these tournaments to Tucson, it gets to keep ticket sales revenue exceeding  the bid amount.  Additionally, the athletics department gets to keep all concession revenues from the tournaments.  On the first day of the NCAA Regional tournament, $24,000.00 worth of concessions were sold.

For the first time since 2004, the Arizona Wildcats baseball team took the field in Omaha to compete for the College World Series.  While the team’s success is much to celebrate, the financial turn-around of the program that was sparked by the team’s play and move to Hi Corbett is another cause for celebration.  Last year, the baseball team lost revenues of $816,000.00.  This year, Byrne expects the team’s net loss in revenues to be closer to $650,000.00.  In the next five years, Byrne expects the teams net losses to be under $500,000.00.  Although these numbers still represent net losses, in the grand scheme of things, it is a major win for the University of Arizona baseball program.

The Big East’s Lawsuit Against TCU

Today in the United States District Court for the District of Columbia, the Big East filed a lawsuit against TCU.  The lawsuit alleges a cause of action for breach of contract based upon TCU’s decision to not join the Big East, as it agreed to in 2010, and rather, move to the Big 12 by way of the Mountain West Conference.

The brief lawsuit filed by the Big East (the pleading is only six-pages long) notes that on November 29, 2010, the Big East and TCU entered into a membership expansion agreement, whereby TCU was invited to become a full-conference Big East member with all fourteen of its sports beginning on July 1, 2012.  According to the Big East, per the membership expansion agreement, the parties agreed that if TCU did not join the conference on July 1, 2012, the Big East would be damaged.  According to the pleadings, the parties could not specify the exact amount by which the Big East would be damaged if TCU did not join the conference.  However, in the membership expansion agreement, the parties apparently agreed that the Big East would be damaged by a reasonable estimate of $5 million if TCU did not join the conference on July 1, 2012.  Additionally, the Big East claims that in the membership expansion agreement, TCU agreed to pay the Big East this estimated damage amount of $5 million if it failed to join the conference by July 1, 2012.

In the complaint, the Big East alleges that on October 6, 2011, TCU “reneged” on the membership expansion agreement by announcing that it would instead join the Big 12 Conference on July 1, 2012.  Subsequent to this announcement, the Big East asked TCU to pay it the $5 million estimated damages amount per the membership expansion agreement.  According to the Big East’s lawsuit, “. . . TCU has refused to make that payment or acknowledge its obligation to do so.”  As such, the Big East alleges that TCU has breached the membership expansion agreement and the Big East is seeking monetary damages in the amount of $5 million, attorney’s fees, costs and other relief as the court deems appropriate.

It is to be seen whether the Big East’s lawsuit will stand up in court.  However, from the outset, there appears to be several issues with it.  First, TCU will likely argue that a claim is not ripe at this point.  In the legal world, a case must be “ripe” in order for a court to hear it, meaning that an actual controversy exists.  Here, it is arguable that this case is not ripe, as it was filed on June 11, 2012–which is before TCU was set to join the Big East and before it joined the Big 12.  Thus, albeit unlikely, TCU could still join the Big East, which would mean that it did not breach its contract with the Big East.  As such, TCU will likely argue that this lawsuit should be dismissed because it is not ripe.

The Big East has plausible arguments against the dismissal of the case for ripeness.  The Big East can argue that TCU’s actions, such as announcing its intention to join the Big 12 and its athletic director’s acknowledgement that TCU would have to pay the Big East a sum of money for not joining the conference, constitute an anticipatory breach of contract.  While the breach of contract technically has not occurred, since July 1, 2012 has not passed, the Big East can nonetheless assert that it believes TCU will fail to perform its part of the contract.  Under the legal theory of anticipatory breach, the Big East can terminate the contract and sue TCU for damages.  This would counteract TCU’s ripeness argument.

The other glaring issue with the Big East’s lawsuit is its calculation of damages.  In the lawsuit, the Big East first noted that both parties “. . . acknowledged and agreed that. . . damages would be difficult to determine if TCU did not follow through on its agreement to join the Big East on the Effective Date. . . ”  Damages based upon an event that may occur in the future which are “difficult to determine” are called “speculative damages.”  TCU will likely argue that the damages are speculative, because in contract cases like the one at hand here, speculative damages cannot be recovered by a plaintiff.  However, one exception to this rule exists.  That exception provides that plaintiffs can recover damages up to an amount that is reasonably likely to occur if the occurrence causing the speculative damages is reasonably likely to occur.  In this instance, because it appears that the parties agreed upon the $5 million damage amount in the agreement, it is arguable that the reason causing the speculative damages (i.e. TCU not joining the Big East) was reasonably likely to occur and that $5 million was the amount by which the Big East would be reasonably damaged.  Given this, it appears that the Big East can also successfully argue against a defense raised by TCU that the $5 million prayer for relief amounts to speculative damages.

Overall, it is likely that a jury will find in favor of the Big East.  However, the question remains as to whether a jury will award the full $5 million in damages the Big East has requested.  This lawsuit should serve as guidance for other universities testing the conference realignment waters.  Universities seeking to move to a new conference should fully investigate their options, so they do no agree to join one conference only to join another and face the risk of a lawsuit later.

The 2012 Junior College World Series

Is it possible in this day and age to hear about an intercollegiate national championship without also hearing stories of improper recruiting, conference realignment and pay-for-play scandals?

Believe it or not, it is. 

For 55 years, the small western Colorado city of Grand Junction has played host to the Junior College World Series.  From the Friday before Memorial Day until the Saturday after, Grand Junction citizens devote their livelihood to supporting the baseball dreams of young men from across the country.

In 2012, those men represented junior colleges from nine states between South Carolina and Nevada as they competed to win the championship team trophy and the gold medals that are awarded to the members of the championship team.  Winning the JUCO World Series does not bring a school the chance to negotiate with a television network for a greater revenue distribution share.  Nor will it bring a large payout to the team’s school.  However, winning the JUCO World Series binds these young  to the others like them that have come before, that deeply loved baseball and experienced the strong sense of community Grand Junction, CO offers. 

The 2012 JUCO World Series kicked off on Friday, May 25 with a banquet attended by over 1,000 individuals at the Two Rivers Convention Center.  The banquet serves as the tournament’s first warm welcome to players and coaches.  While each team in its entirety attends the banquet, the bulk of the banquet’s attendance is made up by local Grand Junction residents and business owners who purchase tickets and tables to support JUCO.  The room is filled with well-dressed people, who gather around their neighbors with proud smiles on their faces for what their city has accomplished through the JUCO World Series. 

This year, banquet attendees received quite a treat, as the guest speaker was Don Meyer, who at the time he retired as an NCAA basketball coach, led the NCAA in all-time wins for men’s basketball head coaches.  Standing at the podium with a cane in his hand, Meyer served as an inspiration to the young men who would be taking the field the next day along with those present who have dreams of their own to fulfill.  A basketball coach for 38 years, one of Meyer’s legs was partially amputated in 2008 after he was in a car accident.  While recovering from the serious car accident in the hospital, doctors also diagnosed Meyer with inoperable liver and intestinal cancer.

Meyer’s response to recovering from a life-threatening accident and the terminal news of his cancer diagnosis, serves as an inspiration of how the love of something greater than one’s self can help one beat the odds against them, no matter how big the odds may be.  In Meyer’s case, what he loved more than himself was the opportunity to guide young men’s lives as a coach.  The depth to which this love found itself in Meyer’s heart is demonstrated by how Meyer responded to the amputation of his leg and being diagnosed with two forms of inoperable cancer.  At 4:30 a.m.  on the day that he was released from the hospital Meyer got in the car, headed to the gym and went back to work as a college basketball coach.

Don Meyer speaks to banquet attendees.

Leaving the Two Rivers Convention Center on Friday night, it’s safe to say that every young man believed that if he pushed himself just a little bit harder to overcome his personal obstacles, then his team could hoist the JUCO World Series championship trophy come June 2.

At 9 a.m. on May 26, the sun was shining in Grand Junction and the wind was blowing some 40 MPH.  However, a little (albeit strong) wind was not going to put a damper on the event that for 55 years, many Grand Junction residents have centered their Memorial Day weekends around.  Men who have served on the JUCO committee for decades arose early to prepare the field for the day’s games.  Many of these men would take days off of work throughout the following week to ensure that all ran smoothly with the tournament.  Perhaps its childhood dreams that drive these men’s desire to spend one week each summer practically living at a baseball stadium, devoting all of their time during that week to the operations of a baseball tournament.  However, more likely, it is their desire to serve their community and help young men achieve their own dreams that drives them out of bed before the sun rises to organize a baseball tournament.

Walking into the tournament this year, past attendees quickly noticed the grand renovations to the Lincoln Park Stadium, where the tournament is held.  Since fans left the stands after the 2011 tournament, the Tower at Lincoln Park was constructed.  The tower is an eight-story tall building which houses concession stands, media booths and an open space conference room that can be used for entertaining and events during sporting events (on the opposite side of the baseball field there is a football field where Colorado Mesa University plays its games).  The construction of the tower is a further demonstration of the long-standing commitment of Grand Junction and its residents to the JUCO World Series, as it was funded and developed by Grand Junction residents Jamie Hamilton and Bruce Hill, along with the school district, Colorado Mesa University, JUCO and the NJCAA.

The Tower at Lincoln Park stands 80-feet tall.

A view from the Tower at Lincoln Park overlooking Colorado Mesa University’s football field.

While the most notable change this season was the finalization of the Tower at Lincoln Park construction, mention was made during the weekend of the breadth of development to the JUCO World Series that has occurred over the years.  On Sunday, May 27, a pre-game celebration was held honoring the 7th  year of the NJCAA and recognizing former NJCAA Executive Director, George Killian.  In the world of JUCO baseball, Killian is a celebrity of sorts.  Upon his arrival to any game or event, people quickly whisper to one another such things as, “That’s George.  You must meet George.”  At the pre-game celebration, an elderly Killian stood near home plate and recounted how in 1960, he came to Grand Junction to see if it would be fitting to host the JUCO World Series.  He noted that when he arrived to Grand Junction in 1960, all he saw before him was a cow pasture.  Yet, the city and the NJCAA forged a bond which has subsequently resulted in the two pairing to host the tournament over the last 55 years.  The measure of this was not lost on Killian, who as he stood below the new 80-foot state-of-the-art tower, noted, “What you see today, is truly a miracle.”

George Killian comments upon how far the JUCO World Series in Grand Junction, CO has come since 1960.

Perhaps some would call the success of the JUCO World Series over the last 55 years a miracle.  However, from an outsider’s perspective, it appears to be more so the expected outcome from an outpouring of love.  The men and women who call Grand Junction home undoubtedly love their city.  Additionally, it is clear that they recognize the good that comes out of one devoting his time to helping a community and others become better.  It is this mixture of love for a city and service to others that has allowed the JUCO World Series to successfully exist over the last 55 years while also making the dreams of young men and Grand Junction residents alike come true.

Why Basketball Is Driving Conference Realignment For The Atlantic 10 Conference

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
Richmond 1 Richmond 3 St. Bonaventure 1
Temple 1 Temple 2 St. Louis 2
Xavier 1 Xavier 1 Temple 1
Butler 5 + NC Butler 5 + NC Xavier 3
    VCU 5 VCU 2
  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.

Should the ACC and Big East Create Their Own Bowl Game?

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.

Year #1 #2 #3 #4
1998-99 Tennessee FSU  Kansas State Ohio State
1999-00 FSU VA Tech Nebraska Alabama
2000-01 Oklahoma FSU  Miami Washington
2001-02 Miami Nebraska Colorado Oregon
2002-03 Miami Ohio State Georgia USC
2003-04 Oklahoma LSU USC Michigan
2004-05 USC Oklahoma Auburn Texas
2005-06 USC Texas Penn State Ohio State
2006-07 Ohio State Florida Michigan LSU
2007-08 Ohio State LSU VA Tech Oklahoma
2008-09 Oklahoma Florida Texas Alabama
2009-10 Alabama Texas Cincinnati TCU
2010-11 Auburn Oregon TCU Stanford
2011-12 LSU Alabama Oklahoma State Stanford

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.

Ahead of the Game: The SEC and Big 12’s Bowl Deal

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.

Why FSU Isn’t Leaving the ACC for the Big 12

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.

Wisconsin’s Athletic Department Budget – Expenses

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.

Operating Expenses Amount
Salaries & Fringes $32,919,613.00
Operating Expenses $28,519,000.00
Debt Services $10,171,200.00
Financial Aid $5,506,631.00
Post Season $3,738,568.00

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
TOTAL ($1,159,320.00)

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.