ACC Football No Cash Cow
After writing about the football finances of the SEC and Big Ten, it’s the ACC’s turn. The numbers are drawn from schools’ reports to the U.S. Department of Education on the state of their athletic departments’ finances for July 1, 2009 to June 30, 2010. See the note at the end for more details on the data.
I don’t think the schools on top of the revenue list in the ACC will surprise anyone:
|Univ. of Miami||$24,631,029.00|
|Univ. of North Carolina||$22,077,550.00|
|North Carolina State||$22,018,738.00|
|Univ. of Virginia||$19,004,653.00|
|Florida State Univ.||$18,958,861.00|
|Univ. of Maryland||$11,540,368.00|
|Wake Forest University||$10,227,922.00|
I also don’t think you’ll be surprised to hear that the average revenue in the ACC ($21m) is less than half that of the SEC ($50m) and only slightly better than half that of the Big Ten ($41m).
One thing to note, however, is that revenue in the ACC should spike in 2011 under a new television contract with ESPN. The ACC currently averages $66.9 million per year under a contract that ran through the 2010 season. Under the new ESPN contract, the ACC will average $155 million. To put this in perspective, although a huge increase for the ACC, it still falls short of the $205 million the SEC averages per year from its television contracts with CBS and ESPN.
In terms of expenses, Boston College and Miami top the list, perhaps because they are the northern-most and southern-most in the conference, which could lead to higher travel costs:
|Univ. of Miami||$17,863,218.00|
|Florida State Univ.||$16,345,376.00|
|Univ. of Virginia||$15,927,675.00|
|Univ. of North Carolina||$14,788,287.00|
|Wake Forest University||$12,517,505.00|
|North Carolina State||$10,408,938.00|
|Univ. of Maryland||$9,863,748.00|
The average spent on football in the ACC isn’t as far behind the SEC and Big Ten as their revenue. ACC teams spent an average of nearly $15 million on football, while SEC teams averaged just shy of $20 million and Big Ten averaged $23 million.
However, when it comes to football profits, the ACC is once again dwarfed by the SEC and Big Ten. The average profit from football in the ACC was $6 million, far behind the Big Ten ($23m) and SEC ($30m).
The two top revenue producers in the ACC, Virginia Tech and Clemson, also managed to turn the largest profits from football:
|North Carolina State||$11,609,800.00|
|Univ. of North Carolina||$7,289,263.00|
|Univ. of Miami||$6,767,811.00|
|Univ. of Virginia||$3,076,978.00|
|Florida State Univ.||$2,613,485.00|
|Univ. of Maryland||$1,676,620.00|
|Wake Forest University||-$2,289,583.00|
Perhaps the most impressive athletic department in the ACC is the one who lost money in football, yet managed to still turn a profit in their athletic department: Wake Forest. Football is the cash cow of most athletic programs, but Wake Forest made almost a million dollars in their athletic department, even with having to cover over $2 million in losses in the football program. Here are athletic department profits for all of the ACC schools:
|Athletic Dept Profit|
|Univ. of Virginia||$10,971,219.00|
|Univ. of Miami||$5,247,495.00|
|North Carolina State||$3,155,910.00|
|Wake Forest University||$888,960.00|
|Univ. of North Carolina||$238,644.00|
|Univ. of Maryland||$223,424.00|
|Florida State Univ.||$0.00|
How does Wake Forest turn a profit in the athletics department despite football being a drain on the department? Basketball. Wake Forest turns a profit of nearly $5 million on men’s basketball. They also have over $16 million listed as non-sport specific revenue, which could be anything from student activity fees to direct institutional support (i.e., money from the school’s general funds). It could also include conference distributions, broadcasting revenue or donations not attributed to a single sport. The amount being shown by Wake Forest is about average for what is shown by other schools in the conferences I’ve covered.
One school in the conference, however, shows nearly $49 million in non-sport specific revenue: University of Virginia. The only other school I’ve covered so far that shows such a large unallocated revenue number is the University of Alabama. While Alabama did not return repeated calls for comment, Virginia did reply with the following breakdown of their unallocated revenue:
Student Fees $12,160,103
Royalties, Ads, Sponsorships $6,627,911
Conference Distributions/Post Season $1,831,625
Virginia and Alabama are also the only two schools out of the SEC, Big Ten or ACC to turn a larger profit in the athletic department than their football program profit.
Two other schools that stand out in terms of overall athletic department profit, or lack thereof in these cases, are Georgia Tech and Florida State. Both show a break-even situation in their athletic department according to the Department of Education reports. However, Georgia Tech tells me there is an error on their report. They had a profit of $138,659 according to their Associte Athletic Director and CFO, Frank Hardymon. So, I have used this figure for the profit chart above instead of the $0 you would find it you viewed the report.
Still, Georgia Tech shows a profit of over $9 million in football and nearly $6 million in men’s basketball, yet they barely turn a profit in the athletic department. Obviously, most schools depends on football and men’s basketball to fund their other programs, but schools making much smaller profits in football and basketball are still profiting in the athletic department overall. There are a number of variables from travel budgets to institutional support to the number of teams the department is supporting, but nonetheless it’s interesting to note that despite relative success financially in the football and basketball programs, Georgia Tech athletics is not showing a profit as a whole.
Another note from my conversation with Mr. Hardymon is that only about $4.3 million of their non-allocated revenue is from student activity fees. Compare that to University of Virginia’s at over $12 million and you can start to see where some of the difference between Virginia’s profits and others might be. He also noted that roughly 70% of money raised through fundraising is restricted, meaning it’s sport-specific and included under individual sport revenue. This is another factor that could cause the non-sport specific revenue number to vary from school to school, as some schools might see more unrestricted gifts to the athletic department.
The other school at the bottom of the pile in the ACC in terms of athletic department profits was Florida State. They only make $2.6 million on football and around $600,000 on men’s basketball on the way to breaking even in their athletic department. I spoke with their athletic department and learned that they fund a shortfall between revenue and expenses in the athletic department with money from the Seminole Boosters. Their office commented that they would not spend more than they knew they could cover with the booster money. The athletic department also pointed out that public univesities in the State of Florida do not receive any tax money for the athletic department. Thus, they stated no funds are being pulled to fund athletics that could otherwise fund academic programs.
So, how does the average athletic department profit in the ACC compare to the SEC and Big Ten? Again, the other conferences come out way ahead. The average in the ACC is $2.6 million while the average in the SEC is $8.2 million and Big Ten schools average $10.7 million. Larger stadiums and more lucrative television contracts in the SEC and Big Ten certainly account for some of that. I don’t think many of you will be surprised to find the SEC and Big Ten coming out ahead of the ACC.
NOTE: The data I have is from the U.S. Department of Education. Federal statute requires schools to report the financials for their athletic department (if they receive the Title IV funding, which all ACC schools do). The statute prescribes what should be included in each category on the report. For example, when we take a look at revenue the statute requires that it include gate receipts, broadcast revenues, appearance guarantees and options, concessions, and advertising. In terms of expenses, we’re looking at grants-in-aid, salaries, travel, equipment, and supplies.
It’s also important to note that this data is from July 1, 2009 to June 30, 2010, so we’re talking about the 2009 football season. Additionally, while these are the most complete numbers available for all ACC schools (a public records request wouldn’t get you financial information for the private schools), there is room for variance.
An official within an SEC athletic department provided me with the following qualifications to the data: ”For instance, some institutions may report debt service associated with their football stadium as direct football expenses, while others may show debt service as Other, Non-sport specific. The same goes for game day security, parking, cleanup, etc. which some may show as direct football expenses, while others may show as facilities costs – not directly attributed to football. I do believe total revenue and expense numbers are comparable, but when you break down the numbers into categories there is a lot of leeway for variances between institutions.”
Another variance that came to light in reviewing the SEC and Big Ten financials is that some schools do not attribute any of their broadcasting revenue to specific sports, but instead only include it in the Other, Non-Sport Specific category. This means the athletic department profit number is probably the most reliable in terms of direct comparison.
Nonetheless, this is the most complete data available if you want to compare all of the schools (public and private). Also, while the numbers may not allow for a perfect apples to apples comparison, they do reflect what each school chooses to show the federal government for purposes of proving their compliance with Title IX. Certainly interesting to view the numbers in that light.
This article offers the personal observations of Kristi Dosh, and does not represent the views of her law firm or its clients. Any information contained herein does not constitute legal advice. Consult your own attorney for legal advice on these matters.
Posted on February 24, 2011, in ACC, Conference Finance Series, Finance, Football and tagged ACC, Boston College, Clemson University, Duke, Florida State University, Georgia Tech, North Carolina State, UNC, University of Maryland, University of Miami, UVA, Virginia Tech, Wake Forest. Bookmark the permalink. 14 Comments.