Notre Dame and the ACC: A Logical Partnership

Today’s news that Notre Dame is leaving the Big East for the ACC surprised many.  Similar to its arrangement with the Big East, all of Notre Dame’s sports will compete in the ACC, save for its football program which will remain independent.  The one difference from its membership in the Big East, though, is that Notre Dame football will be able to compete in the ACC’s non-BCS bowl games.  Given that the Big East is the only conference of the six BCS AQ conferences that does not have a bowl set aside for its conference champions, this is a significant perk for Notre Dame.  This perk, along with Notre Dame’s financials depict why the school’s transition from the Big East to the ACC is a logical move.

After months of watching the conference realignment carousel turn, there is no question that finances drive schools from one conference to another.  There are several components to the finance issue at play when a school chooses to switch conferences.  First, is how much money the school can bring in from the respective conference.  Second, is how the respective school’s athletic department’s finances stack up against other athletic departments in the conference.

Notre Dame will undoubtedly reap more revenue from ACC membership than it does from its current Big East membership.  The timing of Notre Dame’s decision is arguably not coincidental:  Its current conference is in the midst of a 60-day exclusive TV rights negotiation process with ESPN.  The outcome of those negotiations will shape how lucrative of a new television deal the Big East obtains.  Given that Big East basketball powerhouses Syracuse and Pitt recently defected the conference for the ACC, the conference’s bargaining power has arguably decreased.  Take away Notre Dame on top of that, and the Big East’s bargaining power has dramatically shifted.  In contrast, Notre Dame is joining a conference which in May, negotiated a $3.6 billion year television rights contract through 2026-27.  Prior to Notre Dame’s addition, it was expected that ACC members would capture $17.1 million per year from the television contract.  The addition of Notre Dame, however, will likely increase that figure.  It is likely that the recent television contract contains a term allowing it to be modified upon the addition of a new conference member.  Given Notre Dame’s national popularity, this will likely drive the price of the contract up, and as such, put more money in each ACC school’s pocket.  The realization that it will earn more per year in television revenue as an ACC member than as a Big East member was likely a driving factor in Notre Dame’s decision to move conferences.

As noted above, an athletic department’s financial health is another factor schools take into consideration when moving conferences.  A school must be able to expend and bring in a similar amount of revenue as its competitors in order to remain competitive.  In terms of the ACC, Notre Dame is on similar footing to its competitors.  According to data submitted to the Department of Education, in 2010-11, Notre Dame had the sixth-highest net income of all Division I athletic departments.  That same year, the ACC school with the highest net income was Virginia, whose net income was just over $13 million less than Notre Dame’s.  The control of its budget puts Notre Dame on strong footing as it enters the ACC.

Similarly, Notre Dame’s spending is comparable to ACC members’ spending.  Per data submitted to the Department of Education, in 2010-11, Florida State’s athletic department spent the most of any ACC institution at $86,946,503.00.  While Notre Dame’s expenditures were more than $11 million less than that, the athletic department’s $75,360,209.00 worth of expenses were still sizable.  In fact, Florida State was the only ACC institution that out-spent Notre Dame in 2010-11.

Overall, entering the ACC is a victory for Notre Dame.  First and foremost, it achieved a coup by keeping its independent status in football.  Secondly, it gained access to greater TV revenues by partnering with a conference that is home to a more lucrative television rights deal.  Finally, Notre Dame will be on more equal financial footing with its ACC competitors than it was with other Big East members.