Last Updated on June 5, 2014
Author: Chadd Scott of ChuckOliver.net
I have long been a proponent of expansion for the ACC. I feel the league’s addition of Pittsburgh and Syracuse position it for long-term strength and growth while maintaining and building upon its on and off-field culture and excellence. I understand this opinion is not shared by most, perhaps even many, particularly those who view college sports only in the prism of present-day football success. I am willing to listen to these arguments when well-made.
The level of absurdity in opposition to ACC expansion reached a new high on February 6th with this tweet from the usually outstanding college football reporter Bryan Fischer of CBSSports.com:
If the ACC only gets $1-2 million per school, then expansion definitely wasn’t worth it.
Fischer’s figure comes from reporting done by the Sports Business Journal in an article you can read here. I’m not debating the figure, although my educated guess would be that spread is on the low side; what I take huge exception with is Fischer’s use of the word “only” in connection with that sum and his belief ACC expansion was a bust because of it.
Fischer has worked hard to build a reputation as a valued contributor to the national college football conversation and his ignorant choice of the word “only” followed by an equally ignorant opinion – and I like this guy – poisoned conversation on social media as fans picked up this opinion and parroted it widely.
Fact: in college athletics an additional $1-2 million per year for any school, especially any ACC school, is a princely sum. If this figure turns out to be accurate it will 100% validate ACC Commissioner John Swofford in his choice both to expand and who to invite. This figure stands as a game-changer for every athletic department in the ACC.
In all of college sports there are only 22 self-sustaining athletic departments. These athletic departments support themselves financially with no outside state funding, student fees (of which ACC schools are a major offender), or university subsidies. Of those 22 schools only one is an ACC member: Virginia Tech. The most current data available shows the Hokies clearing $968,000 in one fiscal year from athletics.
That should be all the evidence I need to present in making my case. That 11 out of 12 current ACC members either lose money or rely on handouts to run their athletic departments proves conclusively what a huge difference an extra $1-2 million per year to them would mean. For a complete look at the financial picture in the ACC follow this link for team-by-team football revenues, expenses, profits and athletic department profits. Athletic departments in the ACC exist on surprisingly narrow margins.
- Look at the fiscal year 2011-’12 budget for North Carolina, one of the most successful, popular and well-known athletic departments in the country. For this school year the Tar Heels expect to have a $200,001 net revenue from athletics – and that includes receiving more than $7,000,000 million in fees!
- In fiscal year 2008, Georgia Tech posted a $3.4 million operating loss in the athletic department. In fiscal year 2009 and 2010, respectively, the athletic department saw profits of $306,508 and $284,117 (source www.businessofcollegesports.com).
- From the Orlando Sentinel, “the administration at Florida State University formally approved on Friday an athletic department budget of slightly less than $55 million for the 2010-11 academic year…Florida State’s 2010-11 athletic department budget calls for total revenues of $44.3 million…To balance the budget, FSU will rely on a $10.7 million contribution from Seminole Boosters, Inc.”
- In the case of the Maryland Terrapins, it’s financial picture in athletics was so bleak theUniversity eliminated eight varsity sports this fall. For a detailed look at how grim the Terps’ financial picture is, read this report commissioned by the school’s president. Again, this revenue shortcoming exists despite almost $14 million in university or government support and student fees.
Do you think the Heels, Jackets, Noles or Terps view 1-2 million additional dollars per year as an “only” figure? If your boss gave you a raise that multiplied your take home pay by five times, would you say the raise was “only” quintupling your salary?
A report in the Washington Post regarding Maryland and linked above states, “According to the report, it will cost $11.6 million to fund eight years of men’s and women’s swimming, $9.5 million to fund men’s track and acrobatics and tumbling, and $8 million to fund water polo and men’s tennis.” Eleven-point-six million dollars to fund eight years of men’s and women’s swimming means combined both programs cost roughly $1.45 million to fund annually. Hmm. That figure sounds familiar. Oh yea, it’s smack dab in the middle of the “only” amount Maryland stands to benefit from ACC expansion.
That is how this discussion needs to be framed. What does $1-2 million per year, per institution mean to the ACC schools? It means being able to fully fund three non-revenue sports. And perhaps here is where most college sports fans take a wrong turn. College athletics includes more than football and men’s basketball, the profitable sports. It also includes women’s basketball, baseball, softball, men’s and women’s tennis, track, soccer, volleyball, golf, swimming and diving, lacrosse, field hockey and a handful of other sports, all of which make no money and spend considerably. Football and men’s basketball pay for all the other sports which drag down the bottom line profitability for athletic departments.
Fans always think about money colleges bring in from TV rights deals for football and the NCAA men’s basketball tournament, but never consider the huge amount of money going out. And remember, the astronomical billion dollar figures reached in those deals with ESPN or CBS or Fox are contracted out over 10 or 20 years and must be split evenly among all conference member institutions. Those pie pieces become small in a hurry.
The reality in college athletics is university presidents and athletic directors hustling every day to find new revenue streams and pump-up those which already exist. As the competition for top student-athletes and coaches becomes more fierce, as the facilities arms race escalates, as the cost of winning increases, every dollar, let alone every million, is valuable. The university presidents know this and it was the university presidents who voted on Swofford’s plan for expansion, their vote – unanimously in favor.
Read my new book Saving Innovation and learn how to sustainably develop the big and small ideas which help businesses win.