There Is No Jerryworld Pot Of Gold

Submitted by Brian on April 23rd, 2012 at 9:02 AM

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Dave Brandon, Jerry Jones, and two weird old guys. Unless I've got that wrong.

A lot of people are pretty mad that Michigan's band is not going to Alabama. So many people are mad that there is a backlash against the mad people. The strength of the reaction is a combination of a number of things, amongst them the sudden reversal, how bush-league we look in comparison to Alabama, and the growing feeling that maybe this wasn't such a coup after all.

Remember back when this thing was scheduled and we were assured that the take from this was going to be epic? Back then, I thought it was a good idea because it seemed impossible for Michigan to schedule a real nonconference opponent in any other way. This came paired with rending of garments about that fact, how college football is broken, etc., but the fact remained that 2012 would be the first season in a long time in which two nonconference games would be against truly interesting opponents. It was the only way.

That assumption has steadily eroded as we find out more and more details and observe Big Ten scheduling trends in general. The conference announced a scheduling alliance with the Pac-12 that will force every league member to undertake regular home-and-home matchups against comparable opponents, no neutral site funny stuff (or at least not much). Michigan State jumped the gun on that agreement to schedule Oregon to a home-and-home. The year after that series finishes, the Spartans will take on Alabama in a home-and-home, in years when they also play Notre Dame. It can be done. Michigan just didn't do it.

As for our Alabama game, Michigan's announced take, $4.7 million, is so low it seems impossible it's correct. If that's all Michigan's getting from the game that's at best equivalent to playing a body-bag game at Michigan Stadium. Assuming random one-off opponent cost a million bucks, Michigan would match 4.7 million in gate receipts alone by charging an average of 52 bucks a ticket.

Michigan's 2011 budget shows $41.3 million for last year's eight-game home season in pure ticket costs minus guarantees, $8.7 million in PSDs, and $13 million in premium seating donations. Everything included, the average price paid for a seat at a Michigan game last year was about 72 dollars. Without all the donations, it was $49 last year; ticket prices increased by an average of $4.64 this year. $4.7 million is about 300k less than they'd get from a home game on ticket face value alone.

Add in Michigan's expenses for getting down to Dallas and the ancillary benefits of having a home game (parking and concessions seem to be around 300k per game and there would be some level of increased donations required to get a season ticket) and either $4.7 million is undershooting it by a lot or Dave Brandon sold a home game to Dallas for no financial benefit whatsoever. Meanwhile, tickets for Dallas start at $125. At that price Michigan could easily afford a home and home with a high-quality opponent.

Surely this can't be right. Dave Brandon didn't send Michigan down to Dallas for no reason whatsoever, right? My previous belief was that there was something we were missing in the numbers. But the sudden about-face about the band—and it was an about face given the contract and the conspicuous "Michigan band" sections on seating charts—suggests that the financial picture could be as grim as that: $400k is a significant chunk when you're already getting hosed backwards and forwards.

I finally took a close look at the contract. We are getting hosed backwards and forwards. Check it:

CSLP will … pay $4,700,000 to Michigan. The team acknowledges that the Team Guarantee constitutes the sole financial compensation for the Team for playing the Game, and that no other compensation will be due or owed to the Team under this Agreement in connection with the Game. … The parties acknowledge that the Team may be entitled to compensation from its conference related to broadcast of the game. CSLP … will … retain all other revenues from the game. CSLP and ESPN acknowledge and agree that (a) all rights to telecast of distribute the programs of the Games have been assigned by Michigan to the Big Ten (b) Michigan has no ability to grant to ESPN any rights for telecast or distribution of Games played pursuant to this agreement and c) as between Michigan and ESPN, ESPN is responsible for obtaining such rights from the Big Ten. Notwithstanding the forgoing, if ESPN has the broadcast rights [they can get a title sponsor, etc.]

The TV point is important: my Big Theory for why this makes sense is that the teams would get the TV rights to themselves because the game is outside of their conference footprints. That's not the case. The money Michigan gets from television will be split twelve ways—every extra dollar they make for playing a big time opponent also goes to OSU.

Michigan gets a couple hundred tickets, a couple suites, seating for the band, a field-level "party suite" and right to purchase 500 tickets near it, and 100 parking passes. Cheerleaders get in free. They get one "official retailer" in the stadium that CSLP takes a 22% of the gross of. So that's nothing. An addendum makes it clear that "hotel rooms, and other costs of transportation and lodging, shall be at the cost and expense of the individual institutions." Even the police escorts are at the respective teams' expense.

The only thing that could possibly redeem this is if the Michigan got the revenue from the uber-expensive tickets, but the contract makes it clear they don't:

CSLP shall also provide a minimum of 25,000 tickets for Michgian to re-sell to its fans as specified on the stadium map as an addendum to this document.

Michigan got no more money than they would for an average regular season game and is charging their fans 60% more (at a minimum!) to attend it. There is no way to read the contract other than this: Dave Brandon got ripped off.

So when Dave Ablauf tells AnnArbor.com that they're treating Dallas like "any other road game," it's because they have to. This supposed financial windfall simply does not exist. At best it's a break-even proposition even without the band. They will probably make more against Air Force the next week. Michigan gets a "bowl game experience" in an NFL stadium without its band at "neutral site" Michigan is twice as far away from as Alabama. Meanwhile, Mark Hollis gets Alabama at home. Michigan got owned by Mark "people u is" Hollis.

You can consider the future created, yo.

BONUS: I hope this came from Brandon.

MT @sbell021 Game announced 2 months before Hoke hire. RT @schadjoe Brandon asked Hoke if he'd like to play Alabama and Hoke said "Why not?"

Comments

uncleFred

April 23rd, 2012 at 3:18 PM ^

From the comments in the extensive interviews of our commits (found here and elsewhere), it seems clear that the factors that move the athletes to commit are not the result of spending on flash at the stadium. 

In no particular order, our commits routinely refer to the folowing:

1) Academics. 

2) The coaches (Brandon gets well deserved credit here)

3) The tradition of Michigan football

4) Facilities - It's my conjecture they are not referring to scoreboards, lux boxes, or even (other than increasing the number of seats) stadium upgrades.

5) The level of fan support and the enthusiasm of the students.

We can attribute the improvement in our recruiting success to Hoke and his coaches, their commitment to their athletes and their love of MIchigan.

bjk

April 23rd, 2012 at 7:36 PM ^

despite the SEC homerism. I had to look to check, and yes, there is a chart of total revenues that is the sum of expenses and profits charted above::

Football Revenue
Penn State Univ. $70,208,584.00
Ohio State Univ. $63,750,000.00
Univ. of Michigan $63,189,417.00
Univ. of Iowa $45,854,764.00
Michigan State Univ. $44,462,659.00
Univ. of Wisconsin $38,662,971.00
Univ. of Minnesota $32,322,688.00
Univ. of Illinois $25,301,783.00
Northwestern Univ. $22,704,959.00
Indiana Univ. $21,783,185.00
Purdue Univ. $18,118,898.00

All this aside, it seems to me that M has been successful for 130 years without the clown suits, Arbie's ads on the hockey uniforms, and $4.00 water. I understand the clown suits better after reading this:

In the past year, U-M has . . . drastically restructured its athletics marketing arm to include more than a dozen marketing professionals, up from three at the start of 2010.

A hammer looking for a nail?

As for not bringing the band:

"Brandon says the game will create a lot of buzz around Michigan football at the start of a crucial season." -- It has done this.

“One of the driving forces behind everything we’re doing is to enhance the experience of our student athletes,” -- not so sure not bringing the band does this.

tenjamin

April 23rd, 2012 at 1:19 PM ^

Maybe Michigan could have gotten more money, but this article is a bit ridiculous.

Every fan would much rather watch them play Alabama. Every team member (not to mention prospects) would love to play for a good team that plays National Champions in pro stadiums. Any network with football coverage will be showing extended highlights of this game, and if Michigan wins the coverage increase will be exponential throughout the season.

How much will you see on ESPN of Michagan's Air Force game the next week? The best case scenario is a one minute recap of Denard shredding a mediocre team. The only way they get any attention is with a terrible, early-season upset (*note* Can't happen with Bama).

Most importantly, I'm glad I'll be able to watch Michigan play a real football game their first week. I will sleep soundly knowing they are getting paid over $4 million to play a regular-season game outside of the Big House.

I cannot wait to see this site turn a 180 come BCS time, when the crown jewel of its strength of schedule argument is Bama's "Home" game against Michigan.

TorontoBlue

April 23rd, 2012 at 1:24 PM ^

Brian - you have had a bee in your bonnet over this game ever since it came to be.  You continue to give jabs at every opportunity about what a poor place Dallas is to be a tourist, and now this.  I'm going to the game - and I am glad it was scheduled.  Throw all the rocks you want to Brian - it's not going to get "unscheduled" and there are lots of positives about it for the players, for the fans, and for future recruiting.  Let it be. . . .

GO BLUE!

chitownblue2

April 23rd, 2012 at 2:34 PM ^

I'm not that interested in the band stuff, but there is something to point out, re: the finances.

In a home-and-home, Michigan would give up 100% of 1 home games's gate over the two year period.

In this setup, we get, say, 75% of a home-games gate and still get the home gate the next year. In other words - we're making appreciably more money this way than if we did a home and home.

This isn't intended to be an argument for this being the best way to play Alabama, merely an argument that your portrayal of the finances is vastly incorrect.

chitownblue2

April 23rd, 2012 at 5:50 PM ^

I don't THINK TV stations buy specific games, nor does Michigan get paid for specific games they play - I think the Disney conglomerate purchases the rights to broadcast the B10 OOC games, and give the conference a check for those games. Similarly, if we played @ Alabama, CBS has a similar relationship - they've paid CBS pays the SEC for their home OOC games, and that money gets distributed. In other words - it's almost exactly what's happening in this game - the conferences are splitting the take on this game, then each institution gets its cut of the share. So instead of the B10 getting to share the revenue from entire game, then not getting a cent of another, I think it's getting to share 1/2 the revenue from one game. This strikes me as coming out ahead - the TV deal will get the conference 1/2 the normal money this year, and a full share next year, whereas with a home and home, it would get us a full share one year, and not a penny the other.

This is a complete guess.

coastal blue

April 23rd, 2012 at 7:48 PM ^

That all sounds reasonable to me. 

Just to clarify, if Michigan were to go to Alabama to play, they would receive no TV money if the game were televised on CBS? 

Also, do match-ups play into contracts? Would the Big Ten receive more money in a year where, say Michigan played LSU at home and Ohio State played USC at home if the games were televised on ABC/ESPN than say if they played San Diego State and Tulsa?

ClearEyesFullHart

April 23rd, 2012 at 3:02 PM ^

I just heard that Michigan was going to play Alabama. Get this-in Jerryworld. And the financials work out where it'll be the same as a home game against baby seal u! Pretty cool eh?

That my friends is the forest. These are the increasingly tired and petty trees. Enjoy your manufactured outrage fellas.

lexus larry

April 23rd, 2012 at 3:13 PM ^

Will the M CLUB SUPPORTS YOU banner be there?  And what will be played while running under that?  And who will be playing whatever that may be?

Remember, this is a "home" game.  Meaning home unis, meaning our band is expected to be there, our team rushing onto the field hears "Hail to the Victors."

Defending Brandon on this and taking potshots at Brian or the mgocommunity is unnecessary.

lexus larry

April 23rd, 2012 at 4:14 PM ^

Don't read this as snark.  Why does it all have to be about the money?  And if it IS all about the money, and this is a good/great deal, then why did the home ticket package average price go up for the 6 home game slate?  (I understand that the revenue stream is upset with 6 home games vs. 7-8, but that's not the only thing being debated.  And the AD was plenty in the black last year, so was there a "need" to increase ticket prices with the home schedule we have?)

See comment/reply below on "home" game.  Just figured since we were abandoning a home game off the 2012 schedule, we were going to be the "home" team.

chitownblue2

April 23rd, 2012 at 5:51 PM ^

It doesn't have to be about the money. I understand the arguments why it's bad. I was merely trying to point out that Brian's take on the money is factually incorrect. That doesn't make this a good decision on Brandon's part (that's an argument I'm staying out of).

Hannibal.

April 23rd, 2012 at 3:25 PM ^

The flawed counter-argument here seems to be underestimating how much more revenue you get out of a home game with Alabama than a tomato can.  Since Jerry is charging $125 per ticket, it's not unreasonable to say that you could get that at Michigan stadium if you decided to break the game off from the rest of the ticket package.  The face value on the tickets doesn't come close to equalling the actual economic value of those tickets, or what the fans are truly willing to pay for them on an individual basis.  I'd bet that most people don't buy season ticket packages at full face value with a huge seat license and parking pass on top to see Eastern Michigan and Appalachian State.  They pay those big bucks to see the good  games.  The street value of individual tickets is miles different from the face value.  The street value is probably more representative of how much you can charge a season ticket holder before he says "screw it -- I'll skip a game or two, and I'll buy tickets for the MSU game on the street."  Sure, there are some people who buy season tickets so that they can sit next to their buddies every year, but I think that most people in the stadium wouldn't be too troubled getting their tickets on the street if they had to. 

 

Hannibal.

April 23rd, 2012 at 3:41 PM ^

Possibly.

I think that people can grudgingly accept the economics that are driving programs like Michigan to play tomato cans at home, and accept a higher price for a game against a program like Alabama that overcomes those economics.  And I think that one home game against Alabama could be made to generate $4.7MM more than one home game against a tomato can.  Easily. 

Hannibal.

April 23rd, 2012 at 4:03 PM ^

The game being broken off from the package and sold separately is what’s already happening, so I don’t see why people would be more pissed off if you just had the game at home.  You wouldn’t even have to charge $125 for a ticket to make it pay off, and the fans would probably be happier being able to drive to the game. 

Fans are pissed off about the band because we were sold a bill of goods about how lucrative this was going to be, and that this was supposed to be a “bowl-like” experience.  Instead, we get a $125 per ticket game that is less lucrative than what it would have been if that price were charged to fill Michigan Stadium. 

MGoShoe

April 23rd, 2012 at 10:57 PM ^

...the thread. Unless someone can find a source for this assertion by Brian:

Remember back when this thing was scheduled and we were assured that the take from this was going to be epic?

...this is nothing more than a manufactured controversy.

Brian did get this much correct: There is no Jerryworld pot of gold. What he got wrong: Assuming there ever was a Jerryworld pot of gold.

 

InterM

April 24th, 2012 at 2:08 PM ^

but he said something along those lines:

In a phone interview Friday afternoon, Brandon said the deal included a number of moving part involving interests representing both schools, both conferences, two television networks and Jones himself.

The deal also included negotiating a dollar amount that made it worth surrendering a home game in exchange for traveling to Dallas to face the Crimson Tide. Brandon declined to specify what number was given to ESPN when discussions reached the point of talking money, but said he wouldn't have done the deal unless it made financial sense.

"The numbers had to work," Brandon said. "We were not going to be penalized (for giving up the home opener) and that was something that was communicated to ESPN when they called."

This seems to contemplate a payout in excess of a home opener.

chitownblue2

April 24th, 2012 at 2:39 PM ^

If you move the frame of analysis from just this single year (in which we lose some money compared to playing a MACrifice), and move it to encompass this year AND the year we'd play a theoretical return game to get a home-and-home against a real opponent, this makes more money.

This was the most lucrative way to put a real opponent on the schedule.

M-Wolverine

April 23rd, 2012 at 4:25 PM ^

I don't see a lot of people saying "they're playing Alabama in Texas, I'm not even going to buy my season tickets".  But I could see people saying "what's the point of buying season tickets of the best game isn't even included?".  Now you could get around that by just increasing the cost of the overall season ticket package to cover the extra cost of a "premium game", but I can't see it being separated out.  Because to your prior point, we haven't hit that the point where people say individual tickets over season tickets, since the vast majority are the latter. But we could.

lexus larry

April 23rd, 2012 at 4:54 PM ^

Hasn't DB or Sailboat previously used the "but the home schedule is chock full of premium games, so the prices of the season ticket packages are going up?"

As noted here and elsewhere, instead of $390 plus PSD for 6 games of varying distinction, $490 or $500 (or $515) for 7 incl. Alabama would have achieved what $4.7M for each year (or whatever it would have worked out to) of a home-and-home would do.

I guess this is where the angry arguments about who exactly the AD's customer really is comes to the fore...players?  Ticket holders?  The other comment (not sure who posted) that DB pwned Hollis by getting this game in JerryWorld and garner a home tomato can game in 2013, for added "profits"...well, MSU season ticket holders get Bama in their house.  That's pretty nice, too...

wildbackdunesman

April 23rd, 2012 at 6:40 PM ^

This game helps keep Michigan's "Brand" elite so to speak and therefore it will pay dividends down the road.  Playing Eastern Michigan doesn't help us build our "Brand".

 

This "could" be a game that fans talk about for generations.  That TV Analysts reference back to throughout the year (hopefully as a win for us).  I think there are a lot of side benefits.