Keeping Up with the Slives: How Television Money Factors into Competitiveness

By Chad Peltier on January 22, 2013 at 5:00p
12 Comments

Big Ten schools have long received the largest shares of conference and NCAA revenue per school than any conference in the country. 

If this were a battle of hair styles, I think Delany has it in the bagThe power brokers: Delany and Slive

Big Ten schools take in an average of $1 million to $4 million per year more than schools from the Southeastern Conference, totaling to around $23 to $25 million. 

This is largely due to the money-printing Big Ten Network, along with a good crop of automatic bowl bids (when Big Ten teams are able to fill all of them). 

While the SEC might be the dominant conference in college football for now, at least the Big Ten could claim to be the richest conference.

However, that is due to change shortly, as the SEC begins to renegotiate its TV contracts because of the additions of Missouri and Texas A&M.

Individual SEC schools are set to receive an additional 50% increase in revenue – potentially up to $34 million – from long-term network rights with ESPN and CBS. 

But why do we care? 

You don't see us chanting, "B1G, B1G, B1G!" every chance we get, do you? Big Ten school fans have long considered themselves above conference rooting interests, except for those situations that directly impact the well-being of Ohio State, for instance. 

Further, why does conference television revenue have to be a zero-sum game? If you're like me, you will watch pretty much any and every college sports game televised; more access and wider TV rights can mean absolute gains for each conference member school without concern for inter-conference politics. 

Well, USA Today doesn't see it that way, at least: 

The additional revenue will further separate the SEC schools from others in terms of overall revenue and expense, including the compensation paid to football coaches. In turn, this seems likely to increase the pressure on other schools to keep up.

Steve Berkowitz at USA Today is keying in on a sometimes underappreciated truth in college sports – those with the most money often win the most.

B1G might be a cooler looking signShould we start rooting for the conference?

Obviously it is not a 1-to-1 translation of dollar bills to digits in the "W" column, but schools may gain many indirect advantages by raising their bottom lines.

School athletic departments' sources of revenue vary, but generally come from football ticket sales, conference TV contracts, private donors, NCAA money and bowl winnings, and school athletic department subsidies. 

For the best football schools, football ticket sales can ensure the entire athletic department's financial viability – the biggest and best college football teams can often pay for every other non-revenue sport.

However, athletic departments with small football programs and that belong to poorer conferences often must rely upon subsidies from the university at large, taking money from students who might or might not care about the sports they pay for.

As Johnny recently wrote in his analysis of student fees (I promise we will spare you from a series on college athletic finances), Ohio State has one of the few athletic departments that does not need to draw from university coffers. 

Not relying upon university subsidies and staying in the black allow schools like Ohio State to use extra money for things that directly and indirectly contribute to making their athletic programs more successful – like hiring the best head and assistant coaches.

From USA Today:

  • During the 2012 football season, the SEC had four of the eight highest-paid head coaches, four of the six highest-paid assistants and five of the 15 highest-paid assistant-coaching staffs.
  • In terms of overall revenue and expense, the SEC had nine of the 19 highest-revenue athletics programs in 2010-11, the most recent year for which national figures are available (and Texas A&M, which was not yet in the SEC was 15th). It also had nine of the 20 highest-spending programs.

Not only can these programs spend more on elite coaches and upgrade their facilities, but they may also hire a recruiting coordinator who is not a full-time head or assistant coach due to recent changes in NCAA recruiting rules

All of these factors – differences between conference television contracts, athletic department subsidies, and recruiting coordinators – increase disparities between the "haves" and "have-nots" in college sports.

This is one reason why conference expansion is beneficial for member schools. If you're able to ignore the cultural fit arguments about Rutgers and Maryland, it's easy to see Delany's motive in conference expansion. While we may not care about Indiana-Maryland games, increased conference revenue will at least give athletic departments the capability to be more self-sufficient. 

When viewed through the lens of conference revenue and athletic department finances, the conference wars, particularly the Big Ten-SEC rivalry, make sense: schools compete for money and expansion targets, with the losers at a competitive disadvantage both on the field and in the accounting books. 

Ohio State is a "have" rather than a "have-not" in this story – because new NCAA policies won't do much to level the playing field

12 Comments

Comments

mr.green's picture

And the B1G will renegotiate after the SEC and will make more. That's how it goes. 
It's good to be in either of these conferences. 

WildBear Buckeye's picture

True, B1G will renegotiate with ESPN, but it's pretty much entirely up to the B1G to make BTN print even more money than it's printing right now.

Brutus Greyshield's picture

This article looks at it backwards. It's not that more revenue leads to more spending on coaches. It's that more spending on coaches leads to more revenue. The SEC has figured this out. Gene Smith needs to sell it to the rest of the B1G.

It takes money to make money. 

Chad Peltier's picture

Or it's a cycle and they both affect each other. Not a simple dynamic. 

Brutus Greyshield's picture

For sure, but it seems like the SEC has been ahead of the curve and that at least the most recent rounds of revenue increases have followed the spending. I think Alabama's annual athletic department revenue has doubled since it hired Saban.

Brutus Greyshield's picture

These two paragraphs below are from thebusinessofcollegesports.com and they get at what I'm trying to say about the SEC's rise. The conference revenue has doubled since 04-05. It hasn't always been at the king of the hill in wins and revenue, but its member schools started spending and both followed. The Big Ten was being outspent by the SEC even when it was out earning the SEC. 
"What’s even more impressive about the SEC’s revenue numbers is how far they have climbed since 2004-2005.  Since 2004-2005 the conference as a whole has almost doubled their revenue, skyrocketing from approximately $600 million to over $1 billion.  Over that time the average SEC school’s revenue has jumped from approximately $55 million to a little over $91 million, which is a robust 71% increase."
"Once again amongst the notables is Alabama who doubled their revenue from $62 million to $124 million, no doubt due to recent success on the football field with the hiring of Nick Saban and 2 National Championships in the past 3 years.  Also among the big movers was Mississippi State who back in 2004-2005 had a very paltry (by SEC standards) revenue of $26 million.  In 2010-2011 the Bulldogs took the SEC crown for highest percentage climb in revenue since 2004-2005 with a 131% increase up to $59 million, but that still leaves them at less than half of Alabama and Florida are earning."

popeurban's picture

@Chad I get that we have had the most money, but why aren't B1G schools spending it (any insights)?  Even OSU was not a top spender on coaching staffs until UFM arrived.  And we could/should still spend more IMHO.
Our chant should be SPEND! SPEND! SPEND!
 

Brutus Greyshield's picture

I know it's a cliche, but I don't see how schools can afford NOT to spend. I think it has to do with a misconception about how funds are generated (e.g. see the USA Today article from a  couple days ago whining about Athletic Dept spending). Yeah, NCCA football is a business. It makes money.

CC's picture

If so we cannot complain about ticket prices etc.

pjtobin's picture

You get what you pay for. Point blank. To get the best you have to spend a lot. In any trade. I charge more than the next guy. But I am worth it. Ppl know that and I keep working. Tosu keeps it rolling in. And can buy any coach we need. I love tosu. 

Bury me in my away jersey, with my buckeye blanket. A diehard who died young. Rip dad. 

Trig Lazer's picture

This is a topic I'm passionate about.
Revenue does NOT translate into winning, simply look at how The Big Ten has been doing in bowl games.
Big Ten schools indeed are recipients of large sums of cash due to the conference being a cash cow. If I were commissioner here's what I would do.....I would set benchmarks as to how that money is going to be spent by member schools. The hiring of competent assistant coaches and upgrade of facilities would be mandatory when I'm giving you literally millions of dollars. Instead of padding the salary of coaches like Ferentz that aren't getting it done.

Brutus Greyshield's picture

Yeah, the SEC has tiered payouts based on how well a team performs. I'd like that.