Big Ten payouts to hit $25.7 million per school
From the St. Louis Dispatch:
Big Ten schools can expect a record $25.7 million payout from the conference this year, including $7.6 million from the Big Ten Network, according to figures obtained from the University of Illinois.
"If the amount from the BTN is accurate, schools will have collected $42.5 million from the venture over six years. Athletic departments have benefited as the network’s revenue increased 57 percent from its first year on the air through the end of 2012."
As I recall, around 2008, the average payout per school (from sources aside from the then fledgling BTN) was something in the neighborhood of $18 or $19 million from ESPN/ABC and others. The BTN was profitable in its second year of operation and is largely responsible for what about to about a 30% bump in revenue per school over the last four years or so (mental math warning).
None of that might have happened - not like this anyway - if ESPN hadn't tried to lowball the conference on contract renewal about nine years ago (link to old Chicago Tribune story). Now, they are talking about revenue per school in the neighborhood of $40 million once the ESPN contract is renegotiated too, per a Pete Thamel SI.com article from last fall.
Record breaking revenues.
O'Bannon lawsuit.
Kids getting paid under the table.
How long until the NCAA makes it official and allows athletes in revenue generating sports to receive not only scholarships, but money as well?
If you assume Michigan makes $100M in revenues from its football team (conservative given this BTN data) - paying each of the 85 scholarship employees $50K per year is a $4.3M expense, or just 4.3% of revenues.
Even if you include the "cost" of the scholarship, the room and board as another $50K per year (financial engineering at its best), you're still talking less than 10% of net revenues associated with the primary labor of your "firm". Pay out coaches $10M in sum, and you've still got $80M+ to spend on all other expenses before you start losing money.
(Please note this is just my OPINION and it's primarily based on the accounting / finance aspect. Note my views have nothing to do with the morality of it all, or any of the qualitative aspects. It's clearly reached a point where these kids can get money in addition to a scholarship, room, board, and a stipend.)
to agree with you, especially as a Michigan fan. Being one of the "haves" it's easy to feel that way. But because only 20-25 NCAA athletic departments turned a profit last year, (some notables who didn't include FSU who borrowed money from the school to balance the budget and UVA, and we've heard about Maryland's troubles causing their transition) that could essentially create 20 or so teams that are able to pay, well, and and 95 teams that cannot.
Capitalism - it's a wondeful thing.
Heck, I'd bet good money a few more southern schools become "profitable" enough to start paying those kids officially, too.
I have an issue with the idea that there are only a few profitable athletic departments. Every department in the power conferences is essentially two departments, one for-profit business composed of men's football, men's basketball, and sometimes one other sport that donates 100% of its profits to a non-profit athletic department that runs all of the other sports. In the power conferences, I'd guess almost 100% of the for-profit segments are profitable or very close to it.
Personally, I'd like to see a lot of lower tier schools deemphasize athletics to the point where almost all the sports teams are at the club level. Right now, big time football and basketball programs are essentially divorced from the rest of campus life and the school in general. Deempasizing sports would allow more participation at lower cost through clubs and by playing local universities instead of travelling to the far reaches of the Big 10.
Regarding your last paragraph, the biggest reason is money. The carpooling to Detroit isn't the hard part, it's the cost for the pool to practice in and to hold meets, for the time keeping technology during the meets, for the people working the meets, etc.
Club sports are very expensive, which is why they aren't very prevelant in many sports. Some sports are typically played by higher income kids (lacrosse, hockey, rugby, tennis) and they often have club options, but if all non-revenue sports went that route at all schools, most of them just wouldn't exist.
Wouldn't that depend on the salary cap?
Alright now where does this money go? If schools aren't using a lot of it for assisstant coaches they're idiots.
http://businessofcollegesports.com/2012/03/21/highest-net-income-amongst-athletics-departments/
Not 100% of ADs in the BCS schools are profitable. Lots of this revenue goes to supports nonrevenue sports
While all animals are equal, we all know that some are really more equal.
/ReadAnimalsAsSports
Only $25 Million? That's at least a few billion short. Wasn't expanding to 12 teams supposed to make trillions and trillions and trillions of dollars?
That's the way that it was sold to us, at least.
He's in trouble
God I've been wondering this since January 4th, 2009. A few hours after I made a black out bet on the Eagles and a few minutes before I ate a Lux Bar Cafe brunch.
Weeks, how does your wife taste?
I still can't believe we didn't throw up on the owner of LuxBar / Gibson's
You still owe Lack money for bottle service
Maryland is looking at making around $32M in FY 2014/5. See http://tracking.si.com/2013/03/16/maryland-big-ten-travel-subsidy/
Maryland is also projected to add $100M to $150M to the Big Ten's coffers due to the additional geographic reach the conference will be getting. See http://sportsillustrated.cnn.com/2012/writers/pete_thamel/11/19/maryland-big-ten-realignment/index.html
By 2017, Maryland and the other Big Ten schools are looking at conference distributions of around $43M once the new television negotiations are completed. See http://sportsillustrated.cnn.com/2012/writers/pete_thamel/11/19/maryland-big-ten-realignment/index.html
To summarize from all these sources, here's what Maryland and the other Big Ten schools will be looking at in the upcoming fiscal years:
FY 2013 - $25.7M
FY 2014 - $32M (due to new football playoff setup plus additional television revenue)
FY 2015 - $33M
FY 2016 - $34M
FY 2017 - $43M (new television deal)
FY 2018 - $44M
FY 2019 - $45M
When discussing these numbers, always keep in mind that conference distributions include revenue from television and net bowl revenue and playoff/conference championship money and the NCAA men's basketball tournament and some other miscellaneous sources.
These numbers are approximate and may not be uniform for all the schools. Nebraska was taking less money initially as it was buying equity and it looks Maryland isgetting more up front than usual given their financial duress and travel expenses. No real information on Rutgers.
But the numbers certainly reflect what Michigan should be looking at in future years. Is it trillions of dollars? No. But if you go back to the pre-Big Ten Network days about five years ago when conference distributions were in the $10M range, it's a real sea change in how much money B1G schools are going to be receiving.
It'll be interesting to see what happens in the near terms. The larger athletic programs seem to be getting fed up with the NCAA's leadership and its "one set of rules fits all" approach that doesn't seem to work in an environment where there are big and small programs with markedly different needs. Then you add the O'Bannon suit and you're laying the groundwork for a scenario whereby the major college athletic programs secede from the NCAA and put together their own governing body which will manage the post-season and negotiate one large scale media deal vs. a handful of deals for each of the separate conferences.
Does this include pooled bowl revenue? If so, that probably took a hit from not having OSU and PSU in bowl games which probably would have been another 1mm/school (assuming the B1G still had 2 teams in the BCS).
The $25.7M total does include pooled bowl revenue. Per the FY 2013 Michigan Athletic Department Budget published in June 2012, the conference distribution amount was expected to be $25.183M. See http://www.regents.umich.edu/meetings/06-12/2012-06-X-19.pdf
That $25.183M was broken down in this document as follows:
Television (Football & Basketball) - $18.718M
NCAA based basketball distributions - $3.345M
Football Bowl Games - $2.344M
Other - $0.776M
So it would appear that the Big Ten's conference distribution was a little over $500K per school more than in the UM budget document. The article says that $19.0M would be coming from television, so that means the actual money from television was a little under $300K more than in the budget.
The NCAA based basketball distrubitions may have been more than expected given the Big Ten's success in the tourney. We'll know more details next month when the Athletic Department releases its FY 2014 budget.
IRT bowl games, what happens for the Big Ten is that all the teams pool their bowl revenue, then the confernce apportions a share of it back to the teams participating as a budget against expenses for the trip. What's left is then divided up between all the teams in the conference, including those who didn't go to bowl games.
As far as bowls are concerned, the Big Ten partcipated in seven last year. I think the only one that normally had a B1G team but didn't was the Little Caesar's in Detroit. But that bowl doesn't pay out too much, so it wasn't a big loss. Besides, given the way the confernce splits the money, not having major expenses in a bowl game might actually have caused the overall payout per school to be higher than expected.
The big loss for bowl revenue wasn't a vacant Pizza Pizza Bowl, it was one BCS bowl instead of two, like we almost always have. That's probably a difference of about a million per school.
Conferences with two BCS bowl participants get a revenue cap for the second participant of $4.5M. See this article from 2010: http://www.sportsbusinessdaily.com/Journal/Issues/2010/01/20100125/This-Weeks-News/The-BCS-Big-Split.aspx
That $4.5M figure is prior to bowl expenses and unsold tickets that schools have to repay. A round number for that cost is probably about $2.0M give or take (I've seen higher figures quoted--see http://www.al.com/sports/index.ssf/2011/03/auburn_reports_losing_more_tha.html).
So let's say that the 12 schools in the Big Ten would have split the net bowl income of approx. $2.5M from the second BCS bowl appearance. That would have been a little over $208K per each of the 12 school in the Big Ten.
One point that people need to be mindful of regarding bowls is that while the payouts sound impressive, the contracts with them usually indicated that teams have to stay in the locale for a certain time, use certain hotels, etc. Then, of course, there's the cost involved with absorbing unsold tickets as well.
That's why we might see more conferences do what the SEC and Big XII have done by essentially creating and running their own bowl without the middlemen siphoning their cut of the overall money.