Big Ten payouts to hit $25.7 million per school

Submitted by UMgradMSUdad on May 6th, 2013 at 3:01 PM

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.

http://www.stltoday.com/sports/college/illini/big-ten-payouts-to-hit-million/article_4eef1c1a-5a79-5b79-899b-3dbf2a99c871.html

Comments

LSAClassOf2000

May 6th, 2013 at 3:35 PM ^

"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.

Mr. Rager

May 6th, 2013 at 3:48 PM ^

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.)

canzior

May 6th, 2013 at 4:08 PM ^

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.

Zone Left

May 6th, 2013 at 4:54 PM ^

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.

WolvinLA2

May 6th, 2013 at 5:56 PM ^

Most of those sports just wouldn't exist at the club level. Good luck maintaining Canham Natatorium with club funds, same thing with the tennis complex or Wilpon. Those sports would just stop existing. We'd never have Michigan swimmers in the Olympics, or any other sport for that matter.

Zone Left

May 6th, 2013 at 6:11 PM ^

I know, but does maintaining those teams through student funds fulfill the university's mission? In my view, Michigan and the other high earners are different, but I'd be pissed if I was a student at EMU paying for the sports teams with my tuition dollars. You can't pull the line about sports helping EMU bring in more money either. A look at their financials shows football costs more than EMU's total alumni donation pool.

My point is that I'm fine if those sports don't exist if they aren't self-sufficient. I'd prefer fees go to Canham directly for 24 hour access for the whole student body to use or towards a D-1 weight room usable by all students. To me, that better fits a university's mission.

WolvinLA2

May 6th, 2013 at 6:44 PM ^

But then Michigan would have like 10 other teams to play in all those other sports.

The reality is, there are lots of things colleges spend money on that many of th students don't benefit from. Intercollegiate athletics are a big thing that attracts students to schools.

Zone Left

May 6th, 2013 at 7:12 PM ^

I totally agree lots of kids come to Michigan in part (or all) because of the football team. I doubt that's true at most places. More interesting is the D-III model in which a critical percentage of students attend to participate in athletics. There, cutting football, even if it loses money, could actually render a school insolvent. I know a Michigan D-III board member who swears this is true for the whole MIAA.

My view is that a state school should be doing self-sustaining things, things that directly meet its mission, and some things that enhance the stature of the school such that student as a whole benefit. Michigan football, even if it was unprofitable, would probably meet the last item. I doubt many other sports teams benefit students enough to make the disproportionate expenditure worthwhile.

I don't understand why an EMU IM all-star swim team couldn't carpool to Detroit and face the Wayne State all-star IM team. To me, that's a better use of resources for the school as a whole and more students could have a chance at swimming for the Hurons.

WolvinLA2

May 6th, 2013 at 7:57 PM ^

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.  

Hannibal.

May 6th, 2013 at 3:56 PM ^

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. 

sambora114

May 6th, 2013 at 4:25 PM ^

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

cutter

May 6th, 2013 at 5:36 PM ^

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.

 

 

 

 

 

Blarvey

May 6th, 2013 at 5:46 PM ^

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).

cutter

May 6th, 2013 at 7:12 PM ^

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.

cutter

May 7th, 2013 at 6:07 AM ^

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.