Look, the ACC (and Big XII and Pac-12) are behind the SEC and B1G in revenue. What can be done about it? Here are my thoughts from my latest blog post [LINK]:

Rx: Here are 7 ways for the ACC to get more revenue to close the gap with the SEC and the B1G:

1. Get Notre Dame into the Orange Bowl vs. an ACC team. Last year was close. Notre Dame was ranked 8th, right behind Ohio State, but it was all for naught anyway: the Orange Bowl was a semi-final location. Had it been a year when it was not a semi-final and Notre Dame finished ahead of the highest-ranked non-playoff B1G or SEC team, the Irish would play in the Orange Bowl, and the ACC would get an extra $13.75 million for that year.

2. Get a Big Ten team into the Orange Bowl. This one is not as obvious, since the Orange Bowl payout remains the same. However, it would trigger a clause which gives the lucrative Citrus Bowl slot to the ACC. That bowl pays $4.25 million - more than a New Year's Six at-large bid!

3. Beat B1G and SEC teams head to head, and hope the Big XII and Pac-12 do the same. Why? Because the ACC needs (a) to continue getting at-large bids to New Years Six and Playoff bowls, and (b) for B1G and SEC teams to stop getting them. So far the ACC has gotten at least one such bid every year for the past three years... but so have the big two, so no ground was gained. By beating them in non-conference play, it pushes those teams down while boosting ACC teams. Win-win.

4. Play more neutral site games. Florida State is already on to this, playing in Orlando this season Atlanta the next, and trying to set up a third game in Jacksonville. Boston College and Georgia Tech have the game in Ireland, and Syracuse hosts Notre Dame in New Jersey - but since those are ACC home games I don't think they generate any extra TV money. For this to be extra money I believe it has to be a non-conference game which is not on an existing TV contract. Oh, yeah, for it to help close the gap, it can't be against an SEC or B1G team either (sorry, FSU). Possibilities: West Virginia (which Virginia Tech plays in Landover) or any other Big XII opponent, plus any of the G5 teams.

5. Either launch a profitable ACC cable network, or get paid not to launch one. Numerous reports indicate that ESPN is contracturally obligated to pay the ACC $2 ro $3 million per team per year if they don't launch an ACC cable network. That's a cost of $28 to $42 million per year for ESPN, with nothing at all in return. So even if ESPN thinks they might lose, say, $25 million per year on a cable network, it's in their best interest to do it anyway. Personally, I don't think it would be a money loser at all - although I have no idea if it would generate as much money as the SEC Network.

6. Charge more for ACC Championship Game tickets. Until recently demand for this game was so soft they almost had to give away tickets, but now it's starting to sell out. As demand [hopefully] continues to grow, the price should logically increase with it - which means more revenue for the conference.

7. Earn more basketball money relative to the SEC and Big Ten. The ACC did very well in the NCAA Tournament last year, which will pay dividends for years to come. It needs to keep that up. This will definitely help make up some ground against the SEC, which has been horrible in basketball; however, the Big Ten has been doing quite well. The only control the ACC has over this is when it plays a team from the SEC or B1G head-to-head. The ACC needs to win those games - in the regular season (for the RPI affect), but even more so in the tournament itself (for NCAA credits).

BOTTOM LINE: No one of these things will make up for a $9 to $13 million deficit every year by itself, but together they can really add up. What the ACC needs to do is keep hammering away at all of these things to gradually chisel away the deficit until the tier one TV rights can be renegotiated.
__________

YOU GOT ANY BETTER IDEAS? Let's hear them!

We shouldn't be chasing conference revenue. They dumped a lot of money into their conference and we didn't. If the payouts are the same, then we are killing them in economic profitability.

***Before a ton of people misquote that, I want to explicitly say that we are behind the SEC/B1G and that we should do everything in our power to improve our financial situation on both an individual level and on a conference level.***

(02-22-2016 12:35 PM)nzmorange Wrote:  We shouldn't be chasing conference revenue. They dumped a lot of money into their conference and we didn't. If the payouts are the same, then we are killing them in economic profitability.

***Before a ton of people misquote that, I want to explicitly say that we are behind the SEC/B1G and that we should do everything in our power to improve our financial situation on both an individual level and on a conference level.***

So they bought the stock before it skyrocketed but we didn't... and that's supposed to make us feel better than we still have that seed money in our pockets?

I don't disagree with any of those, but there are quite a few on there that come down to winning certain games, and that's not something that can be institutionalized.

It would be nice if the championship game could continue to grow in demand. Ideally, you would want cities to bid against each other for the rights to host it because it will be a big event that will be a guaranteed draw of people. I don't know if that's ever realistic though.

At some point, I'm afraid the only real game-changer financially that is at our disposal is extending the rights deal. Presumably, that would be part of a deal for a network, but it doesn't necessarily have to be. Remember, along with the SEC network deal, the SEC extended their deal to 2035. That can not be ignored...a big part of that chunk they are now getting is based on extending their deal...it simply has to be.

Remember what the 2010 ACC TV deal was providing before Syracuse and Pitt were added? $13M per school per year average. The addition of Syracuse and Pitt pushed the payment up to like $17M, and the partial addition of ND (and the GOR) have pushed it to $20M average.

No disrespect to anyone, but does anyone even remotely think that Syracuse+Pitt raised the value of the ACC 30%, or throwing in ND basketball, increased the value by 50%? So that they not only paid for their own shares, but that much of an increase for everyone else? That simply defies credulity.

No, the biggest reason for the increase is that the ACC extended their deal by FOUR YEARS. That's what ESPN was mostly paying for...locking up additional years. It's always, always in the best interest of the networks to lock of properties for as long as possible to keep them off the open market. How much of the ACC's $7m increase was based off that extension? My guess is that realistically, probably $4-5M per school. It's really hard to imagine that SU+Pitt would have done a lot more than just hold onto the average per team value.

So if the ACC picked up $4M per school for extending four years, how much of the SEC's contract is sweetened by extending their contract a full TEN YEARS? The SEC contract is great, and their payouts are great, but let's not forget there is a lot more behind it than a bunch of crazy SEC fans demanding their network. They got paid big time for extending their contract big time, it's now the longest current rights deal in sports.

The B1G contract will come up soon, and will probably run to somewhere in the early 30s I'm guessing. The SEC contract runs through 2035. Soon, the ACC will know what it's up against. I expect then that we'll see a new ACC-ESPN deal, probably including a network, extended out to 2036 or so. I don't think it would be totally crazy to see it be closer to the SEC TV payments than people might expect (although definitely behind). Because locking yourself up for an additional ten years is worth a lot. It just is.

Now...from now until that happens, everything the ACC does well on the field/court, works strongly to it's advantage, because it will be eventually be getting paid based on it's perceived value a decade+ from now. There's no question that the value of the ACC is better today, with FSU back and Clemson ascendant, than it was in say, 2010. If the ACC can keep building on that, particularly in football, it's certainly going to be easier to justify more money for that extension.

I really think the whole network thing is a bit of a red herring...it's more about the total new deal, including the extension, than the network itself. It's one of the reasons I've not been really anxious to get the network...I think each year that passes with ACC football being a better product probably makes that 10-year extension worth significantly more.

But eventually, that new deal will come, with a network or not. I'm not even sure that the BEST long term play isn't to hold tight another 8-9 years until the current deal is expiring. What they could get from all bidders on the open market will likely be much more than what this extension will eventually be for.

But I am not sure the conference or the member schools has the testicular fortitude to hold tight that long while the gap grows like crazy, and I'm not sure I blame anyone.

FYI: Here are the best numbers I was able to come up with in terms of conference football championship revenue:

The SEC makes approx. $15.3M/year from the SEC football championship game (75K tickets @ $204 avg).
The ACC makes approx. $4.6 M from the ACC football championship game (65K tickets @ $71 avg).

So if they ACC could someday charge the same as the SEC for tickets: even with the smaller venue, $204 avg X 65,000 seats = $13.3M/year - that would be an increase of $8.6M/year for the league. But the demand has to be there.

source of my numbers: http://accfootballrx.blogspot.com/2014/0...venue.html

Sum of just 4 of the 7 things:

$27.50M ND to OB (2X in 12 yrs)
$12.75M B1G to OB (3X in 12 yrs)
$336.0M to 504.0 for no ACCN ($2M X 14 teams X 12 yrs)
$103.2M higher ACCCG tix ($8.6M X 12 yrs)
=====
$479.45M over 12 years
divide that by 14 teams
$34.25M per team over 12 years, or $2.85M per team per year

compare that to the estimated gap of $10M/year X 12 years = $120M... unless I'm miscalculating something, the ACC has it in its power to catch up 1/3 of the gap with the SEC without factoring in basketball. So let's say they can make up 1/2 of the gap when you include hoops. Can ACC teams compete while remaining $5M/year behind?

(02-22-2016 01:03 PM)Hokie Mark Wrote:  

(02-22-2016 12:35 PM)nzmorange Wrote:  We shouldn't be chasing conference revenue. They dumped a lot of money into their conference and we didn't. If the payouts are the same, then we are killing them in economic profitability.

***Before a ton of people misquote that, I want to explicitly say that we are behind the SEC/B1G and that we should do everything in our power to improve our financial situation on both an individual level and on a conference level.***

So they bought the stock before it skyrocketed but we didn't... and that's supposed to make us feel better than we still have that seed money in our pockets?

No. The conference bought a perpetuity, and we individually bought perpetuities. You're ignoring one investment (school-bought ones with money that would otherwise be invested in the conference) and counting the other (conference-bought ones).

Of course the one with the investment being counted is going to look good. What do you expect?

(02-22-2016 02:22 PM)nzmorange Wrote:  

(02-22-2016 01:03 PM)Hokie Mark Wrote:  

(02-22-2016 12:35 PM)nzmorange Wrote:  We shouldn't be chasing conference revenue. They dumped a lot of money into their conference and we didn't. If the payouts are the same, then we are killing them in economic profitability.

***Before a ton of people misquote that, I want to explicitly say that we are behind the SEC/B1G and that we should do everything in our power to improve our financial situation on both an individual level and on a conference level.***

So they bought the stock before it skyrocketed but we didn't... and that's supposed to make us feel better than we still have that seed money in our pockets?

No. The conference bought a perpetuity, and we individually bought perpetuities. You're ignoring one investment (school-bought ones with money that would otherwise be invested in the conference) and counting the other (conference-bought ones).

Of course the one with the investment being counted is going to look good. What do you expect?

So what did the schools buy, and what return are they getting? I'm not following you at all...

(02-22-2016 02:38 PM)Hokie Mark Wrote:  

(02-22-2016 02:22 PM)nzmorange Wrote:  

(02-22-2016 01:03 PM)Hokie Mark Wrote:  

(02-22-2016 12:35 PM)nzmorange Wrote:  We shouldn't be chasing conference revenue. They dumped a lot of money into their conference and we didn't. If the payouts are the same, then we are killing them in economic profitability.

***Before a ton of people misquote that, I want to explicitly say that we are behind the SEC/B1G and that we should do everything in our power to improve our financial situation on both an individual level and on a conference level.***

So they bought the stock before it skyrocketed but we didn't... and that's supposed to make us feel better than we still have that seed money in our pockets?

No. The conference bought a perpetuity, and we individually bought perpetuities. You're ignoring one investment (school-bought ones with money that would otherwise be invested in the conference) and counting the other (conference-bought ones).

Of course the one with the investment being counted is going to look good. What do you expect?

So what did the schools buy, and what return are they getting? I'm not following you at all...

It is different for every school and generally not traceable because money is fungible.

But I'll give you an example that might make it easier to understand. Rutgers and Louisville each joined conferences at the same time. Rutgers is investing in the B1G by taking a partial payout and giving the conference the rest. UL is investing in itself by taking a full payout and using that money to improve its stadium. All things being equal, RU would have a higher payout from the B1G, but UL would have more internal-generated revenue. It could very well be the case that UL's return on its investment exceeds RU's. Under your analysis, it would look like RU made a better decision, even when UL's investment has a bigger payoff.

The University of Louisville men's basketball team was in an unique situation before the season started and was able to play 6 games in Puerto Rico. CardsTV offered a one month subscription for $10 for all six games. Feed was crap and a game got cancelled but 6 games for $10 was too enticing for me to pass up.

Why I mention this is because the ACC Olympic sports are phenomenal! Not one reason to not capitalize on this. Each school could do a special feature on each of their future Olympians or future professionals.

We need to buy back as much Olympic sports content as we can and monetize it ourselves,

Just win baby and the rest will take care of itself.

(02-22-2016 04:46 PM)Dasville Wrote:  The University of Louisville men's basketball team was in an unique situation before the season started and was able to play 6 games in Puerto Rico. CardsTV offered a one month subscription for $10 for all six games. Feed was crap and a game got cancelled but 6 games for $10 was too enticing for me to pass up.

Why I mention this is because the ACC Olympic sports are phenomenal! Not one reason to not capitalize on this. Each school could do a special feature on each of their future Olympians or future professionals.

We need to buy back as much Olympic sports content as we can and monetize it ourselves,

It might be valuable. However, if it is valuable, it won't be cheap to buy back. Unfortunately, that concept zaps the profitability.

(02-22-2016 04:50 PM)Wilkie01 Wrote:  Just win baby and the rest will take care of itself.

FSU won a national title 2 years ago and won 29 straight games.


So I guess we are all set and everything will take care of itself now?

(02-22-2016 11:32 AM)Hokie Mark Wrote:  YOU GOT ANY BETTER IDEAS? Let's hear them!

Yes, reward schools who produce in areas that bring in money.

You have to incentivize the ACC

Dude, it means some schools like Wake Forest and Boston College have to up their game.

(02-22-2016 04:58 PM)Wilkie01 Wrote:  Dude, it means some schools like Wake Forest and Boston College have to up their game.

The ACC isn't going to close the revenue gap with wake and BC.

Fine schools.....but lets be realistic.

BC: 0-8 in ACC football, and so far 0-14 in ACC men's basketball... could become the first team to ever go 0-fer in both money sports. Historically bad.

(02-22-2016 04:51 PM)nzmorange Wrote:  

(02-22-2016 04:46 PM)Dasville Wrote:  The University of Louisville men's basketball team was in an unique situation before the season started and was able to play 6 games in Puerto Rico. CardsTV offered a one month subscription for $10 for all six games. Feed was crap and a game got cancelled but 6 games for $10 was too enticing for me to pass up.

Why I mention this is because the ACC Olympic sports are phenomenal! Not one reason to not capitalize on this. Each school could do a special feature on each of their future Olympians or future professionals.

We need to buy back as much Olympic sports content as we can and monetize it ourselves,

It might be valuable. However, if it is valuable, it won't be cheap to buy back. Unfortunately, that concept zaps the profitability.

Very true! I think it is telling that Oklahoma gets like $5-6 million for their tier III stuff. That is 1 football game, some men's basketball games and their Olympic sports.
I think the ACC could monetize their Olympics sports better than ESPN and more profitably.

(02-22-2016 05:10 PM)Dasville Wrote:  

(02-22-2016 04:51 PM)nzmorange Wrote:  

(02-22-2016 04:46 PM)Dasville Wrote:  The University of Louisville men's basketball team was in an unique situation before the season started and was able to play 6 games in Puerto Rico. CardsTV offered a one month subscription for $10 for all six games. Feed was crap and a game got cancelled but 6 games for $10 was too enticing for me to pass up.

Why I mention this is because the ACC Olympic sports are phenomenal! Not one reason to not capitalize on this. Each school could do a special feature on each of their future Olympians or future professionals.

We need to buy back as much Olympic sports content as we can and monetize it ourselves,

It might be valuable. However, if it is valuable, it won't be cheap to buy back. Unfortunately, that concept zaps the profitability.

Very true! I think it is telling that Oklahoma gets like $5-6 million for their tier III stuff. That is 1 football game, some men's basketball games and their Olympic sports.
I think the ACC could monetize their Olympics sports better than ESPN and more profitably.

No...despite all that "third tier" crowing out of the Big 12...those schools aren't really making anything out of that. While Oklahoma is getting that money, after expenses, they actually net less than $2M. I mean, every million counts, but that's not a game changer.

And that's Oklahoma, a premier brand. The rest of the schools aren't making anything meaningful on those rights (besides Texas obviously).

It's all going to come down to extending the contract, whether as part of a network or not, and what the ACC is willing to take or give up. Such as:

a) Willing to let the Raycom requirement go, now or at the end of current contractual obligations

b) Offer to play football every Friday night.

c) Offer to play football at 10 or 11 a.m.

d) Give ESPN more 6 day options in football

e) Play more basketball on what would be non-traditional or inconvenient times, such as 10pm est starts.

f) Willingness to put really attractive games on a potential network where they will be seen by hundreds

Those are the kind of things that will be in play in a new deal, and the ACC is going to have to think long and hard about if they can't or won't wait for the contract to run out in 2026.

And keep in mind, if the Big 12 expands, they will do a new contract, quietly extend their deals by years, and see a nice bump as well, just like the ACC did for Pitt and SU. So that will make the ACC look even worse.

Lou,
Great points...and maybe I am missing this....but with that extension, it has to be determined if the small bone that ESPN throws to the ACC for an extension is worth it?

I am sure a good portion of the ACC will be happy with anything, but others might have to seriously consider if that just locks them into a severe revenue gap for an even longer period of time.

The ACC can't afford to lock themselves into a contract that keeps them at the bottom financially and aggressively gets attacked by that network while promoting their competition.


Seems issue #1 is the ACC has a vast divide on what is acceptable in these areas....think most schools don't care about the coverage issues (SEC issues) and are good with any revenue, just as long as they seem themselves on the 'inside'. That simply won't be good enough for higher value brands who will be asked to lock in for another 10-20 years.