Does is really make financial sense for Notre Dame to stay independent?

Submitted by ncampbell on December 13th, 2009 at 3:34 PM

The general consensus on this board (it seems) is that because of its NBC contract and sweetheart BCS deal Notre Dame has no financial incentive to join the Big Ten. I wondered about this conventional wisdom so I took a look...

Through 2010, Notre Dame's NBC contract is worth $9 million a year.
http://sports.espn.go.com/ncf/news/story?id=3452161
(I couldn't figure out how to link stuff properly, apologies)
They renewed their deal with NBC through 2015 but I couldn't find the financials.

The Big Ten has a 10 year $1 billion dollar with ABC/ESPN and a 25 year deal with News Corp. which is projected to be worth $2.8 billion (The payout with News Corp. is based on an equity distribution so the money per year depends on profitability). The ABC deal is escalating so on average each school will be paid $9 million a year over the life of the deal (through 2016 i believe but last years payout was probably closer to $8 million). The Big Ten Network will pay out an average of $10.18 million per year per school over the life of the deal though last year the distribution was $6 million per school.
So, last year each Big Ten school received $14 million and Notre Dame received $9 million.
http://www.sportsbusinessjournal.com/article/58254
This doesnt take into account basketball rights deals but we'll call them as wash as the Big Ten's deal with CBS is for merely $2 million a year.

Anyway, Big Ten schools on television rights contracts alone make significantly more per year than Notre Dame. This doesn't even take into account the equity schools have in the Big Ten Network. It has been estimated that the network is worth $1 billion and could be worth $2 billion in three years.
http://collegefootball.rivals.com/content.asp?CID=974181
Since the Big Ten owns 51% of the network that translates to each school having $45 million in equity in the network at these values. $90 million per school in three years. I am not sure how it would work out if we "let" Notre Dame, or any other school for the matter, join the Big Ten because we would be letting them have a free $45 million worth of equity in the Big Ten Network. Of course Notre Dame would add to the value of the BTN so let me just say I have no idea how the negotiations would work out merely that negotiations would be tricky.
I might be missing something but it seems to me that if television money were the sole factor driving Notre Dame's decision making metric its a pretty easy decision.

Bowl money. Notre Dame does have a sweetheart deal with the BCS getting an easy ticket to a game and getting to keep the entire payout. Forgive me some assumptions as I really don't want to do all the research this would require.
The BCS will pay out $17 million per school this year (projected), I am going to make the assumption that the BCS has had this same payout since 1998, i know its not true but we can kid ourselves that it is indexed to inflation and regardless, I think the overarching point will remain the same. The Big Ten bowl payouts are $4.3 million this year per school (including non-BCS). If you strip out BCS bowls the Big Ten makes $2.68 million per bowl.
http://en.wikipedia.org/wiki/List_of_college_bowl_games#1999.E2.80.9320…
http://en.wikipedia.org/wiki/Bowl_Championship_Series
Notre Dame has made 8 bowls in the last 12 years (life of the BCS), 3 of them BCS bowls. If we make the assumption that they were paid $17 million for each of those 3 BCS games and a $2.68 million (same as the Big Ten non-BCS bowls) for the other 5 bowl games they played thats a total payout of $64.4 million over 12 years or $5.36 million per year. I would index these payouts to a crude inflation number but whats the point, I don't think bowl payouts mimic the CPI and again, the overarching point remains the same.
Basically, over the life of the BCS Notre Dame has made $1 million more per year than any given Big Ten school. That doesn't even come close to closing the $5 million per year television gap. Plus Notre Dame would get to smooth out its revenue curve.
Other relevant info:
http://blogs.orlandosentinel.com/sports_college/2009/07/how-much-revenu…
Notre Dame would rank 5th in Big Ten athletic department revenue.

As Brian says (paraphrased), conclusion based on incomplete evidence: Notre Dame not wanting to be a member of the Big Ten is not a business decision, they would make much more money and have a great equity stake in the BTN to boot.

What do you guys think? Any other angles i missed?

Comments

bwlag

December 13th, 2009 at 3:40 PM ^

I can't think of any way to quantify this, but I don't know what kind of hit ND would take in alumni contributions if they were to join the Big Ten. It's also hard to say whether it would be mitigated over the long term. But make no mistake, there would be a financial pricetag in terms of alumni donations if ND joined a football conference, and it would probably be pretty substantial.

befuggled

December 13th, 2009 at 6:59 PM ^

If they join a conference. I could see a temporary drop in atheletic contributions, but I would be surprised if it lasted more than a couple of years--especially if they go to a BCS bowl or two.

Non-athletic contributions would presumably be little affected.

maizenblue92

December 13th, 2009 at 6:16 PM ^

The thing about the BCS bowls is they are Notre Dame. They think they are going to make one 7 out of 10 years. If they met there self set expectations (hahaha, funny joke) then the payout would be alot more since they don't have to split the payout.

Irish

December 13th, 2009 at 7:37 PM ^

There is probably much more to the deals that you don't have, like incentives for certain rating levels and such. ND doesn't release a lot being a private university finances included, just look at the way they handle coaching salaries.

Nice write up, well put together

Irish

December 13th, 2009 at 7:46 PM ^

I don't have the articles in front of me but ND was a selling-point (err buying-point?) for Comcast. There is whining about the 8 games a year that NBC had the rights to and they didn't even milk it for all they could, Pregame, Postgame shows, plus basketball and hockey, even baseball, ND fans complain about all they can't see. With this comcast deal VS. could be turned into the ND channel.

zlionsfan

December 13th, 2009 at 7:35 PM ^

By joining a football conference, they relinquish control over two-thirds of their schedule ... and if they kept their series with Southern Cal, Stanford, and Navy intact, they'd have no more than six home games every other year. I don't know how the Big Ten handles sharing of gate receipts, but I'd guess even if they don't pool any of that, missing one or two more home games a year would be a heavy price for a school that can fill the stadium they have.

There's another aspect to consider ... the Big Ten might accept Notre Dame as a football-only member, but I suspect they'd rather have a full member, and I don't know that Notre Dame would be any better off in non-revenue sports in the Big Ten than they are now in the Big East. Then again, from a financial perspective, it probably makes more sense in the non-revenue sports for them to be a Big Ten member ... they're only a few hours' drive from more than half the conference.

I think you can make the argument that Notre Dame would be better off in a 12-team conference than in a 16-team conference ... I think there is pressure on the selection committee not to take 8 members from a conference, and even if that pressure isn't much, it seems as though they'd be more visible as a bubble team in a smaller conference.

I would guess they wouldn't mind getting out of the Big East in women's basketball ... they could probably contend for the Big Ten most years rather than batting UConn year in and year out.

I suspect Irish makes a good point. On the surface, it doesn't appear that the current situation is of significant benefit to Notre Dame, and yet there seem to be no rumors at all, ever, out of South Bend about joining this or any football conference. (There are, however, many articles elsewhere about ND joining the Big East as a full member.)

psychomatt

December 13th, 2009 at 7:43 PM ^

Under the current BCS contracts, ND does not receive the same BCS money that AQ conferences receive for their 1st team (in 2008-2009, $17.8 million). Rather, in any year they do not play in a BCS bowl, ND receives a minimum guaranteed payment (in 2008-2009, $1.3 million) and, in any year they actually play in a BCS bowl, ND receives the same money that the AQ conferences receive for getting a 2nd team into a BCS bowl via an at large bid (in 2008-2009, $4.5 million).

http://www.bcsfootball.org/cfb/story/10297120

60blue

December 13th, 2009 at 11:19 PM ^

I think I remember from my (freaking sweet) History of the University of Michigan class in school that the biggest cost-hinderence for Notre Dame joining the BigTen is getting their university up to BigTen academic standards. This was at least 5-10 years ago but everything from research funding to library size was below BigTen standards and would be very expensive to bring up.

If this is way off mark, blame my professors as they kind of just grazed over the topic saying "Its all documented at the Bentley" so anyone with more time on their hands than I, feel free to start your search there

bluebyyou

December 14th, 2009 at 6:40 AM ^

ND academics is considered excellent - no. 20 on the US News list.

http://colleges.usnews.rankingsandreviews.com/best-colleges/national-un…

As for their library system and research dollars, I have no knowledge.

ND is also a relatively small university, with under 12,000 students, thus making ND, by a lot, the smallest school in the Big Ten if they were to join the conference. (2/3 the size of Northwestern, the current smallest school in the conference).

http://en.wikipedia.org/wiki/University_of_Notre_Dame