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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

Who’s Making Money in the Mountain West?

After writing about the football finances of the SECBig Ten, ACCPac-10, Big 12, Big East, Conference USA  and the Mid-American Conference, it’s time to take a look at the Mountain West.

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.

Before we look at football revenue in the Mountain West, let’s take another look at the averages for the six AQ conferences:

Football Revenue:

SEC ($49.9m)

Big Ten ($40.6m)

Big 12 ($35.4m)

Pac-10 ($24.6m)

ACC ($20.9m)

Big East ($18.8m)

Conference USA came in at roughly half of the lowest AQ conference (the Big East) at $9.3 million and the average Mid-American school brought in just over half the revenue of an average Conference USA school at $5.5 million. The Mountain West finishes as the most successful non-AQ conference in terms of football revenue at an average of $11.3 million.

Here’s each school’s revenue from football with the exception of the Air Force Academy, which does not have to report its numbers:

  Football Revenue
TCU $20,609,361.00
BYU $15,763,650.00
Univ of Utah $14,690,174.00
San Diego State $10,884,119.00
Univ of Wyoming $9,145,222.00
Colorado State $7,288,328.00
Univ New Mexico $7,018,389.00
UNLV $5,526,816.00
USAF Academy  N/A

If you remove TCU, Utah and BYU from the equation, as will be the case over the next two years, the average in the Mountain West falls to $8.0 million. This would still be good enough for second place behind Conference USA for the non-AQ conference bringing in the most revenue from football. If you add in members joining the Mountain West over the next two years (Boise State, Fresno State, Nevada and Hawaii), the average rises to $10.6 million. As a side note, Hawaii is only joining the Mountain West for football.

Here’s a look at what each school in the Mountain West is spending on football:

  Football Expenses
TCU $20,609,361.00
BYU $10,312,232.00
Univ of Utah $9,896,863.00
San Diego State $9,584,060.00
Colorado State $7,288,328.00
Univ New Mexico $7,018,389.00
UNLV $6,878,327.00
Univ of Wyoming $6,428,503.00
USAF Academy N/A

The Mountain West again edges out Conference USA and tops the list of non-AQ conferences for expenditures on football at an average of $9.8 million. As you can see, however, the three schools spending the most are the ones who will be moving into AQ conferences in the next couple of years. Without them, the conference only averages $7.4 million. Add in the new teams joining the conference and the averages moves up to $8.7, which is the same as Conference USA’s average currently.

Here’s how the AQ conferences stacked up in terms of expenses on football:

SEC ($20m)

Big Ten ($17.9m)

Pac-10 ($16.2m)

Big 12 ($15.8)

ACC ($14.8m)

Big East ($14.6)

As you can see, the gap between AQs and non-AQs is not nearly as large when it comes to money spent on football as it is on money made on football. Although the income level for non-AQ conferences could be putting a ceiling on football expenses, the real difference is the money left over for other sports. Typically, football and men’s basketball are the only two sports who can generate revenue to support the other sports. Check out my previous post on the stark difference between AQs and non-AQs when it comes to how “other sports” are financially supported.

Predictably, football profits aren’t nearly as large in the Mountain West as in AQ conferences:

  Football Profit
BYU $5,451,418.00
Univ of Utah $4,793,311.00
Univ of Wyoming $2,716,719.00
San Diego State $1,300,059.00
Colorado State $0.00
Univ New Mexico $0.00
TCU $0.00
UNLV -$1,351,511.00
USAF Academy N/A

These numbers are still good enough for best average in the non-AQs at $1.6 million over Conference USA’s $504,000. To give you some perspective, profit-leaders in the SEC, Big Ten and Big 12 all come in over $50 million.

As I illustrated in the piece on how other sports are financially supported, in the non-AQs it takes student fees, government subsidies and direct institutional support in order for the athletic department to break even or turn a profit. As you can see, only a couple of schools in the Mountain West show a profit in their athletic department:

  Athletic Dept Profit
BYU $5,549,214.00
Colorado State $798,197.00
Univ New Mexico $0.00
San Diego State $0.00
TCU $0.00
UNLV $0.00
Univ of Utah $0.00
Univ of Wyoming $0.00
USAF Academy N/A
 
When looking at profits, keep in mind that these figures include more than just profits from the operation of sports, it also includes student fees, alumni contributions, direct institutional support and state funds.
 
I showed you how the conference picture changes when BYU, Utah and TCU leave in the next two years. So, how do Utah and TCU fit into their new conferences?
 
TCU would generate the third-most revenue in the Big East based on these 2009-2010 numbers, behind West Virginia and Pitt. They would lead the conference in football expenses with Rutgers and Pitt being $1 million and $3 million behind, respectively. Looking at the way they run their athletic department, they will be a solid fit for the Big East from day one.
 
Utah, however, it moving into a conference where they will begin near the bottom financially. Based on these 2009-2010 numbers, they would come in second-to-last in the Pac-10/12 for football revenue ahead of only Washington State. The same is true for their expenditures on football. They would again finish ahead of Washington State and also Stanford for football profits, but finish the day with no profit in the athletic department. Currently only half of the Pac-10 shows a profit in the athletic department, so Utah is not alone.
 
I’m interested to hear what you take from all these numbers. Are you viewing them in a vacuum or are you comparing them to what we saw in the AQs?

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 Mountain West 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. 

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.

Thanks to my research assistant Ben Perreira for helping compile the data.

Around the Web

Here are some interesting stories about business in college sports floating around the web to start your weekend:

  • The BCS has delayed their decision regarding the Fiesta Bowl’s status. I still say odds are at least 50-50 the Fiesta Bowl is out and the Cotton Bowl takes its place at Jerry’s World.
  • Utah’s Attorney General says he’ll file an antitrust suit against the BCS in the coming months. Check back on this site next week for my thoughts on why an antitrust suit won’t bring a playoff to college football.
  • Boise State’s AD speaks out against the BCS and urges university presidents to educate themselves on the money they’re losing.
  • Iowa State is going to make a BIG statement with their new video board. Does anyone else think it makes the poor stadium look small?
  • Kansas State is installing new turf which can lower surface temperatures on the field by 18 percent. I’m betting Florida and LSU would never consider such a thing – they like to watch their opponents suffocate from the humidity!