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Kristi Dosh – Founder

Kristi Dosh

Founder

Kristi Dosh is ESPN’s sports business reporter. She reports on and analyzes everything from collective bargaining to endorsements to the finances of pro and collegiate athletics. Her reporting is featured on all ESPN platforms: ESPN.com, ESPN The Magazine, and ESPN radio and tv programming.

Prior to joining ESPN, Kristi was a practicing attorney and a sports business analyst for SportsMoney on Forbes.com, Comcast Sports Southeast, and The Pulse Network. She was also a frequent guest on national radio programming including The Tim Brando Show and multiple shows on Sirius/XM College Sports Nation.

Kristi founded BusinessofCollegeSports.com, where she wrote until joining ESPN. The site has become a nationally-recognized source for news and analysis of the business of college sports. Professors around the country use content from BusinessofCollegeSports.com to teach courses in law, sports administration and sports management programs.

Athletic Directors and administrators across the country have praised Kristi’s past analysis on BusinessofCollegeSports.com. David Pickle, NCAA Director of Digital Communications wrote this about Kristi’s work on BusinessofCollegeSports.com:

So much college athletics financial analysis these days is agenda-based, with writers too often seeking marginalize or even demonize those who have different perspectives. However, Kristi Dosh, who bills herself as the SportsBizMiss, approaches her subject matter in an open, analytical and reasonable manner. . . . As a practicing attorney, Dosh knows her way around resources and is skilled at accumulating and displaying information that generally informs rather than inflames. All the while, she keeps the reading experience eclectic and enjoyable.

Kristi no longer writes for BusinessofCollegeSports.com, but continues her coverage of the finances of collegiate athletic programs on the sports business page on ESPN.com.

Kristi’s first book, “Balancing Baseball: How Collective Bargaining Has Changed the Major Leagues” is due out in 2013 from McFarland & Company, Inc., Publishers. She has also previously authored an article in the University of Denver Sports & Entertainment Law Journal titled, “Can Money Still Win the Postseason in Major League Baseball?: a 10-year retrospective on revenue sharing and the luxury tax.” Her second book, due out in July 2013, is entitled “Saturday Millionaires: Why College Athletes Will Never Be Paid and Other Untold Truths about the Business of College Football.”

She is also a frequent guest lecturer in both undergraduate and graduate programs in sports management/administration. Kristi holds a Bachelor of Arts in Politics from Oglethorpe University and a Juris Doctor from the University of Florida, Levin College of Law.

Kristi is an attorney at Taylor English Duma LLP in Atlanta, Georgia. She is also a member of the Board of Directors of Vs. Cancer, a non-profit organization dedicated to saving kid’s lives by empowering athletes and communities to fund lifesaving childhood cancer efforts.

You can email Kristi here.

Follow Kristi on Twitter @SportsBizMiss!

Kristi is represented by Laura Bradford of Bradford Literary Agency for her book-length written work, and by Eric Winchel of RLR Associates for her work in tv, radio and other written work.

‘Old’ Big East TV Deal Reduced After Catholic 7 Bolt

By: James Maddox

Conference realignment has recently taken college athletics by storm and you can expect a completely different look for quite a few teams starting with the 2013-2014 season.

Early last week, ESPN’s Brett McMurphy broke the news that the conference formerly known as the Big East will have their new TV contract with ESPN reduced by approximately $4 million due to the ‘Catholic 7’ leaving and taking the conference name with them. The ‘old’ Big East initially inked a $130 million contract but it dropped to $126 million over 7 years after the news broke regarding the Catholic basketball schools. This is drastically less than the 9 year, $1.17 billion offer from ESPN that was rejected by the Big East nearly two years ago.

According to ESPN.com Sports Business Reporter Kristi Dosh, founder of BusinessofCollegeSports.com, the yet-to-be-named former Big East conference will earn approximately $20 million annually combined for football and basketball from 2014-2020. The conference is also currently in talks with to renew their CBS contract, that would entail a minimum of 14 men’s basketball games featuring Big East teams on the network per season at a rate of $2 million annually. CBS first broadcasted Big East games in 1981. (UPDATED 3/26/13, 2:19 p.m.: The former Big East has announced a deal has been reached with CBS for at least 12 games a year through 2019-2020.)

Looking at the table below you can see the conference formerly known as the Big East looks completely different from its establishment in 1979. The conference has struggled to survive as members have defected for new opportunities and lucrative TV deals. Before the ‘Catholic 7’ (non-football playing schools) departed, the conference struggled to retain members that had not even arrived yet. TCU was expected to join the Big East before signing with the Big 12; similarly, Boise State and San Diego State decided to stay with the Mountain West Conference after prior talks with the Big East. 

Conference Members

School

Entrance Year

Sports

Cincinnati

2013

All

Connecticut

2013

All

Houston

2013

All

Louisville1

2013

All

Memphis

2013

All

Rutgers2

2013

All

Southern Methodist

2013

All

South Florida

2013

All

Temple

2013

All

Central Florida

2013

All

East Carolina

2014

Football*

Tulane

2014

All

Navy

2015

Football

1 = Louisville has officially joined the Atlantic Coast Conference and will be a participating member starting in 2014

2 = Rutgers has officially joined the Big Ten Conference and will be a participating member starting in 2014

*(UPDATE: 3/26/13, 2:19 p.m.: ESPN’s Brett McMurphy is reporting that East Carolina will be admitted as a full member, and Tulsa will also be admitted as a full member.)

 

All of this plays a large role in the ‘old’ Big East’s recent TV contract. A clause in the contract with ESPN protects the network from any potential financial losses due to future defections, meaning the deal can be terminated if teams continue to leave. To strike a deal with the conference, ESPN had to match the offer set by NBC Sports Network. According to ESPN’s McMurphy, the contract divides the league into two groups: Group A (consisting of Connecticut, Cincinnati, Houston, and Temple) and Group B (all other members). The stipulations are as follows: 

-If two group A programs leave, the deal can be terminated

-If one group A program and one group B program leaves, the deal can be terminated

-If two group B programs leave, the deal can be renegotiated 

The fact that the deal was reduced by $4 million after the announced departure of the ‘Catholic 7’ shows that the reality of the situation is serious.

Accordingly, this all places an enormous amount of pressure on conference commissioner Mike Aresco, whom has taken the disastrous situation of Big East realignment with stride. “You can’t have any regrets. I knew it was going to be a challenge,” Aresco stated in a recent interview with CBS Sports. “The reality is that a lot of people felt that a break like this was inevitable. Our job was to navigate our remaining schools through these tough times.” 

Prior to this new deal, the former college basketball powerhouse known as the Big East locked in a 6 year, $200 million deal with ABC/ESPN and CBS ending this year. According to collegesportsinfo.com, this averaged an annual revenue of approximately $3.18 million for football schools and $1.56 million for non-football schools. It is quite evident as to why the ‘Catholic 7’ departed for greener pastures. It is also evident that the soon-to-be renamed Big East is not the force it once was. 

If Money Could Buy a Championship

The saying goes “you get what you give.” Can the same phrase be applied to sports though? In recent years, schools that have won championships are the ones who have invested more money into their programs. Our very own Kristi Dosh, ESPN’s sports business reporter and founder of BusinessofCollegeSports.com, has a piece on schools with the highest revenue that have made it into the tournament, but what about the schools who have the highest expenses?

If it were to come down to spending, who would win it all? Here’s a look at all 64 teams including their overall expenses for their basketball program. All 32 games are broken down by region. The information below is from the Office of Postsecondary Education of the U.S. Department of Education.

South

Kansas

$12,740,720

vs

Western Kentucky

$2,708,422

North Carolina

$7,157,618

vs

Villanova

$6,398,678

VCU

$3,803,913

vs

Akron

$1,967,989

Michigan

$5,933,437

vs

S. Dakota St.

$913,067

UCLA

$7,216,738

vs

Minnesota

$5,071,500

Florida

$8,474,783

vs

Northwestern St

$1,000,408

San Diego St.

$4,432,238

vs

Oklahoma

$6,813,149

Georgetown

$10,015,207

vs

Fla. Gulf Coast

$1,089,569

Winner of South: Kansas

 

West

Gonzaga

$6,138,269

vs

Southern U

$534,595

Pittsburgh

$7,344,213

vs

Wichita St

$4,644,724

Wisconsin

$6,839,111

vs

Ole Miss

$2,510,418

Kansas St

$4,347,318

vs

La Salle

$2,046,119

Arizona

$7,959,652

vs

Belmont

2,213,543

New Mexico

$4,448,245

vs

Harvard

$1,225,999

Notre Dame

$4,622,255

vs

Iowa St

$4,402,362

Ohio St

$5,956,288

vs

Iona

$1,691,344

Winner of West Arizona

East

Indiana

$9,264,091

vs

James Madison

$2,273,522

NC State

$5,444,127

vs

Temple

$4,080,845

UNLV

$3,760,187

vs

California

$6,406,523

Syracuse

$14,214,993

vs

Montana

$1,532,926

Butler

$3,924,026

vs

Bucknell

$1,860,056

Marquette

$9,941,583

vs

Davidson

$1,727,330

Illinois

$6,584,190

vs

Colorado

$4,490,779

Miami (Fla.)

$5,795,451

vs

Pacific

$1,836,357

Winner of East Syarcuse

Midwest

Louisville

$15,119,088

vs

North Carolina A&T

$223,483

Colorado St

$3,638,042

vs

Missouri

$6,112,025

Oklahoma St

$13,745,832

vs

Oregon

$5,897,791

Saint Louis

$3,101,169

vs

New Mexico St

$2,534,542

Memphis

$7,515,987

vs

Saint Marys

$2,533,902

Michigan St

$9,837,886

vs

Valparaiso

$1,781,911

Creighton

$4,404,350

vs

Cincinnati

$5,995,336

Duke

$15,901,099

vs

Albany (N.Y)

$1,384,377

Winner of Midwest Duke

Before one makes an argument about Kentucky (the reigning champs, whose total expenses came to $15,119,088, about $300,000 less than Louisville), unfortunately money doesn’t buy a new recruiting class or guarantee a win.

Duke for example beats out Louisville by $411,145; and Louisville is the number one seed in the tournament.

If the Final Four were to come down to the biggest spenders of each region it would be Kansas, Arizona, Syracuse and Duke.

Taking a look at the winners of each region, could there be a connection between spending more and winning a national championship?

As you will see in this years bracket the winner would be Duke. Interestingly enough, Duke has the most National Championships compared to the other three remaining schools.

Final Four

# of Championships
Kansas

$12,740,720

3 (’52, ’88, ’08)
Arizona

$7,959,652

1 (’97)
Syracuse

$14,214,993

1 (’03)
Duke

$15,901,099

4 (’91, ’92, ’01, ’10)

What makes up a team’s expenses is a multitude of disbursements that can include athletes room and board, equipment, and travel expenses, but a big part of team spending is used to pay the head coach.

Without quality coaching a team won’t even make it as far as The Big Dance, and the better the coach, the more a school is willing to spend to keep them. How much of the overall expenses are paid to the coaches? The information is from USA Today and the Arizona Star.

Head Coach School Pay Other Pay Total Pay %  Used for Coach Salary
Bill Self (Kansas) 3.4 million $258,000 3.7 million 29.13%
Sean Miller (Arizona) 1.1 million 1.1 million 2.2 million 27.50%
Jim Boeheim (Syracuse) 1.5 million N/A 1.5 million 10.70%
Mike Krzyewski (Duke) 4.7 million N/A 4.7 million 29.30%

The coaches whose teams that have made it to our predicted Final Four aren’t doing too bad for themselves. Coach Boeheim of Syracuse might want to look into asking for more money though, since he’s the only coach who isn’t getting paid at least a quarter of what is being spent.

Louisville, who was just short of Duke in expenditures, was the highest not only in revenue, but also net revenue. Just trailing slightly behind Louisville is Syracuse and Duke. As mentioned earlier, Louisville is the number one seed in the tournament, and is also favored to win by many.

All in all, could money be a beneficial factor in winning a championship? Only the next few weeks will tell.

Follow Mackenzie on Twitter: @KenzieThirkill 

Editor’s Note: Creighton’s expenses were incorrectly listed as $404,350 in the original post. The error has been resolved.

How to Curb Spending in College Athletics

Nearly a year ago, this article asked, how much is too much when it comes to spending on college football?  Assuming the answer is whatever they’re spending now, the next question is how to reform it.  I have a thought.  What if there was a cap on the amount of money universities could spend on college athletics?  Think about it.  University presidents and other observers are constantly decrying the “arms race” that exists today, yet nothing is done.  The reason: presidents know (or suspect) their counterparts are going to keep on spending and gaining a competitive advantage, and no president is going to risk crippling their athletic programs and alienating the alumni base.

But what if there was an NCAA rule which capped the amount of money you could spend each year?  Or perhaps a luxury tax imposed on those who spend over the cap?

A policy like this would allow presidents to put athletics spending on a more sustainable path, without the risk that competitors are going to exploit it and surge past their teams on the field.  It would help address the concerns faculty and other constituents have about spending at the expense of academics, including the public relations problem of increased athletic spending at a time of shrinking state appropriations and rising tuition for students.  Capping spending also means more schools would have the opportunity to compete for championships.  This is a big one.  Our country’s most popular sport by far, the NFL, has a hard salary cap to help provide all its teams with a realistic shot at taking home the trophy.  Even Major League Baseball, which doesn’t have a salary cap, has a luxury tax that teams must pay if they go over the spending threshold.

But why should the University of Texas be prevented from or penalized for spending as much on its athletic programs as its leadership and alumni please?  This is America after all!  Read its leaderships’ comments on this issue here.  They’re going to spend as much as they can and don’t see a problem with it.  But there is a problem.  Texas, Ohio State and others aren’t operating independently.  They are voluntary members of a conference and an association, with other institutions, upon which they depend for competition as well as the revenue they love to spend.  And the large majority of these institutions can’t and shouldn’t keep up.  Texas President William Powers said you don’t tell Albert Pujols he can’t hit in the 9th inning because it’s unfair to the other team; but that isn’t the analogy that applies here.  More on point would be the Angels can’t stack their lineup with nine Albert Pujolses without paying a hefty luxury tax.  In the NFL, you don’t get a backfield with three Adrian Petersons because you literally won’t be able to field a team and stay under the hard salary cap.  In leagues of athletic teams, rules are crafted to foster competition for the betterment of the league over and above the betterment of individual members.  A spending cap is precisely this type of rule.

An issue that would need to be resolved simultaneously with something like a spending cap or luxury tax is the Division I membership, which simply has too many schools which cannot compete at the highest levels.  I would not advocate for a system which tried to bring Texas football and Louisiana-Monroe football to a similar place in the financial “middle.”  In 2010 for example, Texas spent $25M on football; Louisiana-Monroe spent just under $3M.  They are both playing for the same championship.  That’s a joke and needs to be rectified with a split into more divisions.  But certainly you could do something with the top 50 or 60 (financial) football schools.  Michigan, Miami and Nebraska each spent $18M on football in 2010.  You think those schools are operating on the cheap?  Is there any need for those guys to spend more money?  Of course not, except for the fact Texas is outspending them by nearly 40%.

Whether it’s a hard spending cap or a luxury tax, there are controls that should and could be put into place to control spending in college athletics.  However, they will only happen if the presidents collectively decide it’s something they want to do.  Otherwise Mr. Powers and company at Texas will continue circling the Monopoly board, collecting properties, and charging obscene rent to the rest of the college athletics world.

Follow Daniel on Twitter: @DanielHare.

Connecticut Follows California’s Lead With Proposed Student-Athlete Scholarship Bill

Last year, I wrote about California’s groundbreaking Student-Athlete Bill of Rights.  The legislation, which becomes effective during the 2013-14 school year, requires California universities receiving at least $10 million annually from the sale of athletics-based media rights to, among other things, continue providing scholarships to athletes who (1) suffer incapacitating injuries, or (2) have exhausted their athletics eligibility prior to graduating.  Universities covered by the law are only required to provide scholarships to athletes that fall into the second category if they are a member of a team that has a graduation success rate of less than 60%.

Now, Connecticut may soon be joining California in passing similar legislation.  A bill introduced by Connecticut State Senator Martin Looney requires public Connecticut universities receiving at least $5 million in media rights revenue to provide academic scholarships to athletes (1) whose athletic scholarships are not renewed due to incapacitating injury or illness resulting from participation in the school athletic program, or (2) who have exhausted their athletic eligibility, but are still in good academic standing and pursuing a degree.

While the Connecticut bill and the California law are similar, there are a few key differences.  For starters, the California bill covers all California universities, public or private.  The Connecticut bill only covers public universities.

Second, the California law covers universities that receive $10 million from the sale of athletics-based media rights.  As currently drafted, the Connecticut bill does not contain the same limiting language.  It takes into account revenue earned from the sale of all media rights when determining which universities would be covered by the bill.  While I doubt this lack of limiting language ever expands the bill to cover any university besides UConn (let’s face it, Central Connecticut State isn’t receiving $5 million in annual media rights revenue, athletics-based or otherwise, anytime soon)*, it is something that the Connecticut legislature could tweak on the bill’s journey through the legislative process.

Lastly, the California law only requires universities to continue providing scholarships to athletes who have exhausted their athletic eligibility prior to graduation if their team has a graduation success rate of less than 60%.  This severely limits this portion of the California law.  Based on recent NCAA data, only basketball and/or football players at Cal, USC, and UCLA would be able to take advantage of the California scholarship continuation provision.  This leaves out athletes on revenue producing teams such as Stanford’s football team.  The Connecticut bill, however, allows any scholarship athlete (in good academic standing) who has exhausted his or her athletic eligibility prior to graduation to continue receiving a scholarship.

The Connecticut bill still has a few hurdles to pass before it becomes law.  But, if it does pass, it could be the beginning of a movement of similar laws being passed in other states.

*And with the rapid deterioration of the Big East, and its decreasing value to TV networks, UConn might not even be receiving $5 million in annual media rights revenue in the future.

University of Tennessee Finances in Perspective

ESPN sports business reporter Kristi Dosh (who also happens to be BusinessofCollegeSports.com’s founder) had a piece yesterday giving some perspective to University of Tennessee’s financial situation. One of the points she makes is that Tennessee’s outstanding debt on athletic facilities isn’t out of line with the rest of the SEC.

Here’s a look at outstanding facilities debt at each SEC school and the annual debt service (payments) for the 2010-2011 school year (the most recent available). All information is from NCAA financial disclosures. Vanderbilt’s information is not available via public records requests.

2010-2011 SEC Athletics Debt

School Outstanding Athletics Debt Athletics Annual Debt Service
Alabama $207.2 million $13.3 million
Louisiana State $202.0 million $13.5 million
Tennessee $188.1 million $7.7 million
Georgia $120.8 million $7.9 million
South Carolina $112.9 million $3.5 million
Auburn $106.1 million $10.1 million
Florida $80.8 million $5.8 million
Arkansas $64.1 million $7.3 million
Texas A&M $45.8 million $6.6 million
Mississippi $41.8 million $4.6 million
Missouri $26.8 million $3.1 million
Mississippi State $24.8 million $2.3 million
Kentucky $18.7 million $2.7 million

As Dosh points out in her article, this isn’t a true apples to apples comparison. For example, she notes Kentucky carries no debt on Rupp Arena, because it’s owned by the city. Check out her piece for more information.

Documents obtained from University of Tennessee show its football season ticket base has dropped by approximately 10,000 people since 2009. However, net revenue (profit) from football remains above average amongst other SEC members:

Football Net Revenue 2010-2011

Georgia $52.9 million
Arkansas $47.1 million
Alabama $46.5 million
Florida $43.2 million
Auburn $40.2 million
Tennessee $37.5 million
South Carolina $35.4 million
LSU $31.7 million
Texas A&M* $30.0 million
Kentucky $20.3 million
Mississippi $10.8 million
Mississippi State $10.8 million
Missouri* $9.7 million

*Texas A&M and Missouri were not yet members of the SEC in 2010-2011

The real issue, as noted in Dosh’s article, is the limited reserves Tennessee athletics currently has on hand: $1.95 million. That is one area not in line with other SEC schools, as AD Dave Hart notes in Dosh’s piece.

Mountain West Stable, For Now

The Mountain West appears to have won a large victory with the recent additions (or not losses if that’s how you choose to look at it) of Boise State and San Diego State.  That may in fact be the case.  However, there is also the possibility that in its quest for stabilization and increased stature, the Mountain West endangered itself by giving away crucial member equality in order to re-acquire Boise State.

Reports indicate the Mountain West has or will (among other things): 1) re-negotiate its television contract with CBS Sports Network which will allow teams on national television (i.e. Boise State) to make more money through bonuses, 2) sell Boise State’s home games in a separate package, and 3) allocate half of BCS (and future equivalent) bowl game revenue to the participating team (i.e. Boise State) before splitting it among the remaining conference members.

From the quotes of Big East commissioner Mike Aresco, it sounds as if Boise State wanted to stay in the Big East if it would match the Mountain West’s offer.  Smartly, Mr. Aresco and the remaining Big East schools’ (bonus points if you can name them) presidents said thanks, but no thanks.  In a time when it must feel like everything is crashing down around them, the Big East brass found a line they wouldn’t cross.  Good for them. Let’s face it, Boise State to the Big East wasn’t exactly the perfect mix of chocolate and peanut butter.  So for the Big East to grant unprecedented perks to a school 2,600 miles removed from the conference office didn’t make a whole lot of sense.  Navy Athletic Director Chet Gladchuck even went public with his disdain for the proposed deal, saying:

“What Boise State wanted was outrageous and unprecedented. It was not palatable to any of the other Big East institutions,” Gladchuk said. “In the final analysis, Boise wasn’t worth it. There is zero television interest in Boise along the Eastern seaboard. What it tells me is the Mountain West was desperate. Clearly, the Mountain West was willing to make whatever concessions necessary to keep Boise in the fold.”

But surely it made sense for the Mountain West to do whatever was necessary to bring Boise State back under its tent, right?  Maybe, maybe not.  The money grab that is conference realignment also has an undercurrent of trying to create and/or maintain stability and long-term viability.  As mentioned earlier, the Mountain West seems to have stabilized at 12 members.  But when gross member inequality is part of a league’s structure, there can be problems.

Example:  When the Big 12 was formed in the mid-90s, its structure was similar to how the Mountain West is currently proceeding.  Most notably, it did not share bowl and television revenue monies equally among the members.  Rather, the participating teams were first entitled to a larger share.  This obviously funneled most of the revenue toward the traditionally successful programs, and smaller amounts to everyone else. (Berry Tramel of The Oklahoman wrote about this structure in 2010.) As time passed the Big 12 and its membership experienced the difficulties of operating a conference successfully when there’s a sense that a few schools are driving the bus and collecting the checks, and the rest are just passengers along for the ride.  Ultimately, that and other issues led to the departure of 1/3rd of the Big 12’s schools (Nebraska, Colorado, Missouri, Texas A&M), and a near collapse of the conference entirely.

Whether the Big 12 leadership decided the original structure was a mistake, or that times had changed and therefore the structure needed to change with it, the powers that be agreed to a more (though not completely) equal distribution of revenue in the summer of 2011.  It also put a stake in the ground on stability by having each member grant its television rights to the conference for a long period of time (initially six years, but recently extended to 13), essentially removing the largest incentive to other conferences who may wish to come poaching in the future (the importance of this “grant of rights” was well articulated by Mat Winter in a BusinessofCollegeSports.com post last month).  I have not read or heard anything along the lines of Boise State or the other Mountain West schools making similar commitments.

So while the Big 12 (barely) escaped the inequality trap and the Big East has avoided it for now, the Mountain West may have fallen right in it.  Sure, Utah State and San Jose State are excited to be new members in a league which just got considerably stronger.  And the other Mountain West schools no doubt see the tremendous value Boise State brings to all of them.  But give those non-Boise State presidents and athletic directors a few years of conference meetings looking over financials, and watching the revenue flow into the conference and out to Boise State.  Give them a few years of conference meetings observing how decisions are made.

The camaraderie that exists today may not continue very long.  And without a grant-of-rights or similar level of commitment, Boise State is for all intents and purposes a perpetual free agent, available to accept the next best conference offer that comes along.  The Mountain West’s current and future members no doubt wanted to make decisions which ensured stability over the long-term.  And while the league certainly got immediately stronger with the addition of Boise State, it may be that the deal they made guarantees the long-term will be anything but stable.

Follow Daniel on Twitter: @DanielHare

Impact of Social Media on Ticket Sales

By: James Maddox

Social media is becoming increasingly more important for sports fans around the world. It can be as easy as ‘liking’ a page on Facebook and instantly gaining access to news updates, exclusive photos, and creative video content. It’s becoming more apparent, however, that fans are not the only one’s reaping the benefits of social media. Many teams and universities in general are seeing increases in ticket sales, donations from donors, and increases in overall revenue. Does social media deserve some of the credit for these increases?

The benefits of social media are enormous when capitalized in an effective and efficient manner. It’s ultimately a free tool that allows you to connect and engage with fans and followers by sharing news, posting video content, and hosting contests. Some schools, however, take it a step further and use their social media platforms to promote events and ultimately drive ticket sales.

For example, if you take a quick visit to the Facebook page of the University of Tennessee athletics, you will see a picture promoting an upcoming game for the women’s basketball team with a web link on the bottom of the page: UTtix.com. That picture alone had over 200 likes and 20 shares. Thus, the university was able to direct a portion of their 250,000 followers to their ticketing website, allowing fans to not only purchase tickets for that women’s basketball game, but any other sport that they may be interested in.

While visiting the website, fans may find that they are interested in season tickets for the upcoming football season, an excellent source of revenue for any athletics program. By simply posting a photo through social media, the University of Tennessee may have been able to lock in a future football season ticket holder, all for the beautiful price of ‘free’.

Athletics programs across the country are doing the same thing the University of Tennessee is doing across several different platforms. For example, the Louisville Cardinals athletic program is using Pinterest among several different platforms to push ticket sales. There is a board on the UofL page titled ‘Promotions’ in which ads for upcoming games are posted and includes ticket prices, links to other social media pages, and links to the ticketing website.

Additionally, the University of Texas uses Twitter to push ticket sales to fans through several techniques. They recently ran a contest for the best fan photo with the winner receiving tickets to the Texas vs. UCLA men’s basketball game. Another tweet lets followers know that tickets are going fast but still available for the volleyball team that is competing in the NCAA Austin Regional this upcoming weekend.

Whether it’s Tennessee on Facebook, Louisville on Pinterest, or Texas on Twitter, it becomes quite clear that some schools are using social media the right way.

After seeing how some of the elite programs in the country are using social media to drive ticket sales, it begs the follow question: does it work? Are universities seeing increases in athletics revenue, primarily in ticket and donor revenue, due to social media? Social media is a very small factor in the grand scheme of revenue for college athletics, especially when you look at factors such as the wealthy donors in Austin, Texas, and the new KFC Yum Center! generating revenue for the Louisville Cardinals.

However, it’s hard to say that social media hasn’t positively impacted athletics programs across the country. Though in the past it may have been more relevant and useful to call individual donors to gauge interest in purchasing or renewing season ticket packages, programs can now use social media platforms to get the job done. They can reach out to more fans and donors at the same time by tweeting the deadline for ticket renewal on Twitter or posting the link to the website in which you can purchase season tickets on Facebook.

Many programs send out emails regarding ticket packages, season tickets, and upcoming promotions. However, you have to wonder how many of those emails get overlooked or aren’t even given the opportunity because they fall into the spam folder. Social media fixes this problem.

The University of Michigan is a prime example of a program that is dominating social media in college athletics and the results of their social media campaigns confirm this. Every year the Wolverines athletic department holds a social media-only ticket presale for the football team during a two-week period in July. According to Paciolan, the team generated approximately $75,000 in 2011 and was looking to do even better in 2012. With no signs of social media slowing down they did just that by nearly doubling their number in 2011 and raking in over $140,000.

Despite a near 100% increase the number is not so significant considering the athletics department revenue and even football-only revenue is well into the tens of millions. However the impact goes beyond the financials of this successful campaign. The landscape of social media in sports and ticket sales dramatically shifts with drives like this. The idea of making season tickets literally a ‘Like’ away makes it easier for potential buyers and opens up marketing possibilities for the University of Michigan athletic department as well as programs across the country.

Coaches Getting Bought Out On Their Way Out

By: James Maddox

It can be costly these days to hire a coach that will lead a program to great success. It’s unfortunate, however, when it doesn’t play out that way and the head coach is getting kicked out of the door when expectations aren’t met. In these cases schools are forced to buyout the contracts of their former coaches, causing big paydays for said coaches.

An article recently published on ESPN.com by sports business writer and BusinessofCollegeSports.com founder Kristi Dosh shows the financial implications some programs are facing over the next few years.

The biggest is centered around former SEC powerhouse Auburn’s recent firing of coach Gene Chizik, who’s 4 year head coaching tenure included 3 bowl wins, one of those being a national championship, and more recently a dismal 3-9 record in 2012. Chizik received a lump sum of $7.5 million, approximately $2.4 million more than the reported $5.1 million buyout Auburn paid for previous head coach Tommy Tuberville.

Not only does Auburn have to pay the $7.5 million for Chizik’s buyout, but it is also planning to buyout Chizik’s staff for approximately $3 million, pay a $500,000 salary to new coach Gus Malzahn, and pay for the $700,000 buyout to Arkansas State for Malzahn’s departure. The buyout is considered a loan for Malzahn and will be repayed through his contract according to the letter of agreement released by Auburn.

Although the Auburn Tigers have paid the biggest coaching buyout of the year so far, it seems as if another program was financially hit worse by their own buyout. Dosh points out that former Southern Mississippi coach Ellis Johnson is due $2.1 million from his buyout. While that amount doesn’t ring close to that of Gene Chizik’s, it is still considered a high number for a school in a non-automatic-qualifying BCS conference. To put things in perspective, the $2.1 million is equal to over 10% of the schools athletic department revenue generated last year.

The craziness of the coaching carousel doesn’t stop at Auburn and Southern Miss. The former buyouts of coaches from Tennessee, Cal, and Kentucky are well into the millions. In fact, in just the past month the total amount programs have had to place toward buyouts of previous coaches has toppled $31 million collectively.

New Arkansas head coach Bret Bielema will be facing an even bigger payday than that of Chizik or any of the previously listed coaches if he is let go during the next 3 years. If so, he is expected to receive $12.8 million from Arkansas in a buyout. One of the biggest payouts in recent years belongs to Charlie Weis, who has received nearly $9 million so far. Although he was let go in 2009, he will continue to receive annual payments well into December 2015 with the amount expected to near $19 million by then.

Grants of Television Rights, Not Increased Exit Fees, Are The Solution To Realignment Frenzy

A number of Division I conferences have recently increased the fees a member school must pay when it withdraws from the conference.  These fees are commonly referred to as exit fees.  The ACC is one of the conferences that recently increased its exit fees.  And its exit fee provision has been receiving a lot of attention lately because of Maryland’s departure to the Big Ten.

The ACC actually increased its exit fees twice in the span of a year.  The ACC first upped the fees from around $12-14 million to $20 million in September 2011 when it announced it would add Syracuse and Pittsburgh.  The fees were then upped again this September after the conference added Notre Dame (in all sports except football and hockeyl).

The ACC’s current exit fee calls for a withdrawing member to pay an amount equal to three times the conference’s total operating budget at the time of withdrawal.  Based on the ACC’s 2012-13 operating budget, this equates to an exit fee of more than $52 million.  It is this amount that the ACC is seeking in its lawsuit against Maryland for the school’s move to the Big Ten.

When the ACC and other conferences increase their exit fees, the general thinking is that it further discourages members from leaving the conference.  But, because of how courts analyze the legality of these exit fee provisions, increasing the amount of the fee can actually increase the chances of the exit fee provision being deemed unenforceable.  So, instead of discouraging schools from leaving, it can actually embolden them to do so.

In legal terms, conference exit fees are known as liquidated damages.  Liquidated damages provisions are commonly added to contracts.  They set the amount a party to the contract must pay in the event it breaches the contract.  Liquidated damages provisions are useful because they theoretically save the parties the time and expense of litigating the amount of damages caused by the breach.

But, the amount of liquidated damages specified in a contract cannot be randomly selected.  Courts will generally only enforce liquidated damages provisions if (1) the anticipated damages in the event of a breach are difficult to ascertain at the time of contracting, and (2) the amount of liquidated damages is a reasonable estimate of the actual damages that would likely be caused by a breach.  If a liquidated damages provision does not meet this test it is deemed a penalty and is unenforceable.

Assuming that the ACC’s liquidated damages provision fulfills the first element of the test, it is questionable whether it would meet the second element.  The requirement to pay three times the conference’s operating budget does not appear to be related in any way to the actual amount of damages the ACC would suffer if a member withdraws.  It just seems like an easy way to ensure that the exit fee continues to grow without having to continually vote on it.  This makes it look like a penalty.

And the actual number that results from this provision, $52 million, is not a reasonable estimate of the ACC’s actual damages.  For example, Maryland’s departure will not result in the ACC’s tv deal being reduced by $52 million.  A good argument can be made that the ACC actually suffered no damage when Maryland left.  Maryland’s departure allowed the conference to add Louisville.  And the general consensus is that the ACC is now stronger athletically as a result (at least in the two sports that matter for tv revenue purposes, football and men’s basketball).

This is consistent with recent realignment history.  Over the past two years the Big 12 lost Nebraska, Colorado, Texas A&M, and Missouri.  Yet, after adding TCU and West Virginina, the Big 12 signed the most lucrative tv deal in the conference’s history this year. (The one exception to the no damage upon withdrawal argument would be the Big East.  The defections in that conference have definitely hurt the value of its tv rights).

When a liquidated damages provision is determined to be invalid, the party attempting to enforce the provision is allowed to instead seek its actual damages from the breaching party.  But, as discussed above, conferences often suffer minimal damage when a member withdraws, either because the member added little value to the conference or because the conference quickly replaces it with a new member of equal value (at least in tv executives’ eyes).

As a result, exit fees often leave conferences in a tough position.  They have to be high enough to discourage a member from leaving the conference.  But, if they are too high they could be declared an invalid penalty.  And, if the exit fees are invalid, the conference would then have to prove its actual damages, which are usually much less than the amount of the exit fee.  As a result, exit fee disputes have always settled without a court deciding the validity of the liquidated damages provision.  Recent examples include the Big 12 settling with Nebraska, Colorado, Texas A&M, and Missouri for less than the mandated amount of exit fees.

So, what is the solution to the problems with exit fees?  Grants of television broadcast rights.  In these agreements, all of the conference members grant their television broadcast rights to their athletic contests to the conference for a certain period of time.  If a member leaves the conference during that time, the conference retains the member’s television rights.  Because the value of a school to a conference is the television revenue it can help generate, a grant of rights agreement makes the members essentially worthless to another conference that is looking for new members.

While grant of rights agreements do have potential issues (sovereign immunity issues being the biggest), they are not subject to a subjective test like liquidated damages provisions.  Thus, they are much more likely to hold up in court as valid contracts.

Currently, only the members of the Big Ten, the Pac-12, and the Big 12 have executed grant of rights agreements.  Other conferences that want to ensure stable membership would be wise to insist on their members signing similar agreements.  (Yes, even the mighty SEC should have its members sign grants of rights).  If the ACC had one in place, Maryland likely would not be joining the Big Ten.