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PAC expanding revenue deficit vs Big Ten and SEC
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MplsBison Offline
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Post: #1
PAC expanding revenue deficit vs Big Ten and SEC
http://www.mercurynews.com/2017/02/07/co...c-big-ten/

Quote:All in all, we’ll estimate $27 million per school in FY16 net distributions.

It could be a bit lower; it might be a tad higher. As always, I’d rather be high than low with estimates in exercises if this sort.

Which brings us to the comps …

Fiscal year 2015 school distributions (all figures confirmed):

SEC: $32.7 million
Big Ten: $32.4 million
Pac-12: $25.1 million

Fiscal year 2016 school distributions

SEC: $40 million (confirmed)
Big Ten: $35 million (approximate)
Pac-12: $27 million (approximate)

That looks bad … that is bad … but it’s about to get much worse for the Pac-12.

Remember: The Big Ten’s new Tier 1 deal begins in 2017-18, and it’s also a whopper, averaging $440 million per year.

Which brings us to …

Fiscal year 2017-18 school distributions …

Big Ten: $45 million (estimate)
SEC: $43 million (estimate)
Pac-12: $31 million (estimate)

What does it mean?

As a general rule among the Power Five, distributions from the conference office account for varying percentages of the athletic budgets of its memberships — for some, it’s 20-25 percent, for others, 35-40 percent.

That revenue stream helps pay coaches and pay debt service and pay cost of attendance and pay recruiting expenses … and much more.

A single-year deficit of $10M per school for the Pac-12 won’t have a measurable impact on its on-field/on-court performance over the long haul.

But this isn’t a single-year deficit, and the deficit could very well be larger than $10M per school.

The Pac-12’s Tier 1 deal runs through 2023-24. Until then … until it can renegotiate … it’s essentially locked in place. There is no expectation of a major new revenue stream.

In other words, each Pac-12 school could be $12M – $15M behind its SEC/Big Ten peers every year for the next seven years.
02-07-2017 05:40 PM
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MplsBison Offline
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RE: PAC expanding revenue deficit vs Big Ten and SEC
On one hand, the point seems obvious.

But on the other hand, I just don't see how this makes it impossible for a USC or Oregon to win the national championship, simply because the PAC is giving its schools $12-15M less per year than the Big Ten and SEC do.


How much does it actually cost, in an operating budget sense, to run a CFP national champion football program???

Head coach pay is like $7-10M per year?
All other staff (coaches, assistant positions, admin, etc) another $10M per year?
Scholarships (including FOIA) maybe $3-5M?
Recruiting budget?
Travel budget?
Equipment, supplies, etc?


Yeah, USC and Oregon are only getting $30M per year while Ohio St, Michigan, Penn St, Alabama, Auburn, Florida are getting $45M per year. That's not nothing.

But I just can't see how the USC and Oregon boards are going to say "sorry guys, we can't get you that extra $5M you would need to put you over the top to win the national championship". That's peanuts compared to what they already spend on just football, let alone the athletic dept, what football brings in, and especially peanuts compared to the university budget.


Just looking at conference distributions is way too limited of a viewpoint, IMO, if you're going to ignore: a) total revenue streams into an athletic dept (including donations), and b) the fact that the school itself can just i) insert money from the general fund into the athletic dept and/or ii) ask the students to pay more in fees.
(This post was last modified: 02-07-2017 05:49 PM by MplsBison.)
02-07-2017 05:46 PM
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billybobby777 Offline
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Post: #3
RE: PAC expanding revenue deficit vs Big Ten and SEC
(02-07-2017 05:40 PM)MplsBison Wrote:  http://www.mercurynews.com/2017/02/07/co...c-big-ten/

Quote:All in all, we’ll estimate $27 million per school in FY16 net distributions.

It could be a bit lower; it might be a tad higher. As always, I’d rather be high than low with estimates in exercises if this sort.

Which brings us to the comps …

Fiscal year 2015 school distributions (all figures confirmed):

SEC: $32.7 million
Big Ten: $32.4 million
Pac-12: $25.1 million

Fiscal year 2016 school distributions

SEC: $40 million (confirmed)
Big Ten: $35 million (approximate)
Pac-12: $27 million (approximate)

That looks bad … that is bad … but it’s about to get much worse for the Pac-12.

Remember: The Big Ten’s new Tier 1 deal begins in 2017-18, and it’s also a whopper, averaging $440 million per year.

Which brings us to …

Fiscal year 2017-18 school distributions …

Big Ten: $45 million (estimate)
SEC: $43 million (estimate)
Pac-12: $31 million (estimate)

What does it mean?

As a general rule among the Power Five, distributions from the conference office account for varying percentages of the athletic budgets of its memberships — for some, it’s 20-25 percent, for others, 35-40 percent.

That revenue stream helps pay coaches and pay debt service and pay cost of attendance and pay recruiting expenses … and much more.

A single-year deficit of $10M per school for the Pac-12 won’t have a measurable impact on its on-field/on-court performance over the long haul.

But this isn’t a single-year deficit, and the deficit could very well be larger than $10M per school.

The Pac-12’s Tier 1 deal runs through 2023-24. Until then … until it can renegotiate … it’s essentially locked in place. There is no expectation of a major new revenue stream.

In other words, each Pac-12 school could be $12M – $15M behind its SEC/Big Ten peers every year for the next seven years.

It's only going to get tougher for the PAC, when the Cali schools have to pay to cancel games in states where they aren't allowed to play anymore because of their new bathroom laws. Cali public schools can't play games in 4 states this year, and fine, maybe only Cal at North Carolina gets canceled. But in future years more and more will get cancelled...including conference games in conservative states like Utah and Arizona, who are potentially states who won't agree with California politically.
Cheers!
02-07-2017 05:54 PM
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MplsBison Offline
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Post: #4
RE: PAC expanding revenue deficit vs Big Ten and SEC
Can we please avoid turning this into a political thread? Thanks
02-07-2017 05:59 PM
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bluesox Offline
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Post: #5
RE: PAC expanding revenue deficit vs Big Ten and SEC
How much would the big 10 make if it jumped to 24 with 10 pac 12 school's, everybody but Wash st and oreg state?

Big 10

East: UM, MSU, IU, Pur, OSU, PSU, Rut, Mar
Central: NW, ILL, WIs, MIN, IO, Neb, Col, Utah
West: USC, UCLA, CAL, Stan, Oreg, Wash, Ariz, ASU
(This post was last modified: 02-07-2017 06:16 PM by bluesox.)
02-07-2017 06:15 PM
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UTEPDallas Offline
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Post: #6
RE: PAC expanding revenue deficit vs Big Ten and SEC
How will the Pac-12 compare to the Big XII and ACC revenue wise?
02-07-2017 07:30 PM
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Stugray2 Offline
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Post: #7
RE: PAC expanding revenue deficit vs Big Ten and SEC
The thing to remember is the P12 owns the equity on the P12N. It should be worth at least $1B in a 50% equity sale. That would be like a $40-50m shot in the arm to P12 programs -- it could sell for a multiple of that.

But the current setup wont improve much. Demographics and interests in the West mean it will never match the SEC and B1G in monetizing.
02-07-2017 08:14 PM
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billybobby777 Offline
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Post: #8
RE: PAC expanding revenue deficit vs Big Ten and SEC
(02-07-2017 05:59 PM)MplsBison Wrote:  Can we please avoid turning this into a political thread? Thanks

No problem. My question to you is:
When did the PAC ever make as much revenue as the Big 10 and SEC? I say never. They still get to play at the same level, just like the ACC. The only football conferences that went under were the Big East-Internal problems. WAC-internal problems. SWC maybe broke up due to tv revenues, but there were major sanctions (internal issues) with most of the conference at the time of its breakup. ...if the Big 12 breaks up--probably due to internal problems.

Cheers!
02-07-2017 09:00 PM
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orangefan Online
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Post: #9
RE: PAC expanding revenue deficit vs Big Ten and SEC
(02-07-2017 08:14 PM)Stugray2 Wrote:  The thing to remember is the P12 owns the equity on the P12N. It should be worth at least $1B in a 50% equity sale. That would be like a $40-50m shot in the arm to P12 programs -- it could sell for a multiple of that.

But the current setup wont improve much. Demographics and interests in the West mean it will never match the SEC and B1G in monetizing.

The P12 Network has been a significant disappointment. You are correct, selling all or a portion of the network would be a great opportunity to raise cash and to partner with someone able to bring more leverage to distribution negotiations.
(This post was last modified: 02-07-2017 09:22 PM by orangefan.)
02-07-2017 09:22 PM
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MplsBison Offline
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Post: #10
RE: PAC expanding revenue deficit vs Big Ten and SEC
(02-07-2017 09:00 PM)billybobby777 Wrote:  When did the PAC ever make as much revenue as the Big 10 and SEC? I say never. They still get to play at the same level, just like the ACC.

I think that's a great point, and was trying to argue something similar in post #2.

I just don't see how schools like Oregon or USC are going to allow even a $15M gap in conference distribution to make it impossible for them to compete with programs like Alabama, Michigan, Ohio St, etc. on the field.

They'll hire big name head coaches for the same salaries, they'll spend the same, and they'll give their teams every bit of same footing as those major programs east of the Mississippi, to win the national title.


(02-07-2017 09:22 PM)orangefan Wrote:  partner with someone able to bring more leverage to distribution negotiations.

It seems Scott's long play is to hope that it only takes 10-15 years for the "distribution" portion of the system to be completely turned on its head.
(This post was last modified: 02-07-2017 10:23 PM by MplsBison.)
02-07-2017 10:22 PM
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p23570
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Post: #11
RE: PAC expanding revenue deficit vs Big Ten and SEC
Lets be real. The PAC has been down for a while. So bad that Stanford has turned into the dominant program in many ways. Washington and Colorado were both blown off the field in bowl games and were completely outmatched from a talent standpoint. Stanford was able to play at an elite level with a once in a lifetime QB a few years back, and still lost to OkSU. Oregon has never really lived up to expectations even with elite talent which is not there anymore. USC is the conference's only shot at an elite team right now. Maybe Washington can get there but they have a long way to go if they plan to knock off Bama/Clemson. PAC FB attendance is only better than the ACC and that is only by a couple thousand fans per game.

Basketball is abysmal not close to p-5 levels.

Schools like CAL are struggling financially to keep up with facilities and coaches salaries, as is most of the PAC who require larger subsidies than the rest of the p-5 which is due to lacking fan support in donations and ticket sales as well as the PACN being a complete flop not even being carried by the major carriers. Schools like WSU, OSU, Utah, and Colorado are among the poorest AD's in the p-5.

You can be guaranteed that losing 10+M in TV $ along with lost income from donations, ticket sales, and the conference network will result in a competitive disadvantage. Most people don't realize that KU is richer than most of the PAC. All they want to talk about is population. Yea population who doesn't' care. That's worth what Direc TV is paying the PAC for PACN. That's right, nothing.
02-07-2017 11:48 PM
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goofus Offline
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Post: #12
RE: PAC expanding revenue deficit vs Big Ten and SEC
Don't worry the tv rights race is a bubble that can not be sustained. The main thing that jumped out to me in all your numbers is that rights fees are out of control. PAC revenue is growing, a lot, it just can't seem to catch up.

Remember back in 2009 when everybody was shocked to learn that the BigTen schools were making $17M a year. That seemed outrageous at the time. Now in less than 10 years its balooned to a more outrageous $43M? The bubble is going to pop.
02-08-2017 04:10 AM
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Dr. Isaly von Yinzer Offline
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Post: #13
RE: PAC expanding revenue deficit vs Big Ten and SEC
I'm not trying to debate political point, I am trying to make a point about the subject at hand. I don't think the bathroom bill stuff will be much of an issue because I expect those laws to be overturned, severely modified or struck down altogether as unconstitutional long before that becomes an issue.
02-08-2017 08:34 AM
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CougarRed Offline
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Post: #14
RE: PAC expanding revenue deficit vs Big Ten and SEC
In 2014-15 (at that level of athletic giving, ticket buying, TV disparity, etc), here's what the average public school spent on athletics per conference, from:

http://sports.usatoday.com/ncaa/finances/

Big 10 = $107M
SEC = $106M
Big 12 = $98M
ACC = $88M
Pac 12 = $83M
American = $51M
Mountain West = $39M
CUSA = $30M
MAC = $29M
Sun Belt = $23M

As the TV disparity grows, the Big 10 and SEC will pull further ahead from the rest. The Pac 12's only chance to stay in the game is to raid the Big 12 for Texas and Oklahoma. Just switching those two schools, and it's

Pac 12 = $94M
Big 12 = $82M
02-08-2017 08:51 AM
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FrancisDrake Offline
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Post: #15
RE: PAC expanding revenue deficit vs Big Ten and SEC
(02-07-2017 09:00 PM)billybobby777 Wrote:  
(02-07-2017 05:59 PM)MplsBison Wrote:  Can we please avoid turning this into a political thread? Thanks

No problem. My question to you is:
When did the PAC ever make as much revenue as the Big 10 and SEC? I say never. They still get to play at the same level, just like the ACC. The only football conferences that went under were the Big East-Internal problems. WAC-internal problems. SWC maybe broke up due to tv revenues, but there were major sanctions (internal issues) with most of the conference at the time of its breakup. ...if the Big 12 breaks up--probably due to internal problems.

Cheers!

That same argument can be made about the P5 and G5 currently but it hasn't stopped the perception of division has it? Many BCS and now P5 schools always had more resources than other schools prior to the BCS era. If ESPN starts espousing the differences between the Power 2 and use-to-be-3 that will be the reality.
02-08-2017 09:08 AM
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nzmorange Offline
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Post: #16
RE: PAC expanding revenue deficit vs Big Ten and SEC
(02-08-2017 08:51 AM)CougarRed Wrote:  In 2014-15 (at that level of athletic giving, ticket buying, TV disparity, etc), here's what the average public school spent on athletics per conference, from:

http://sports.usatoday.com/ncaa/finances/

Big 10 = $107M
SEC = $106M
Big 12 = $98M
ACC = $88M
Pac 12 = $83M
American = $51M
Mountain West = $39M
CUSA = $30M
MAC = $29M
Sun Belt = $23M

As the TV disparity grows, the Big 10 and SEC will pull further ahead from the rest. The Pac 12's only chance to stay in the game is to raid the Big 12 for Texas and Oklahoma. Just switching those two schools, and it's

Pac 12 = $94M
Big 12 = $82M

IMHO, I think that the ACC would be crazy to not offer Texas a ND-type deal. I also think that offer would top anything that the PAC can offer.

I also think that OU would fit in better in the SEC, and I think that KU would prefer the B1G.

I don't think that the PAC has a play for a while. SDSU might eventually grow too big to ignore now that the chargers are gone. But the Cali schools will push against adding them until they are already a very established product, and that won't happen for another ~20 years (at the earliest). BYU would probably be the next best financial move, but they'd very much be a cultural outlier. But who knows? BYU might be fantastic for rivalries. Mormons invading Berkeley might be what the PAC needs to get left coasters to care about watching football.
02-08-2017 09:15 AM
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jrj84105 Offline
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Post: #17
RE: PAC expanding revenue deficit vs Big Ten and SEC
The revenue gap basically means the smaller PAC schools won't offer as many Olympic sports as the smaller B1G/SEC schools, and the bigger PAC schools won't be having spring camp in Italy.
02-08-2017 09:24 AM
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RE: PAC expanding revenue deficit vs Big Ten and SEC
Boo who. So some schools do not have the money to spend to make up grades at the same rate as schools in other conferences.
Now I am just going to take one SEC school Auburn and mention what they are spending the extra money on. A new video scoreboard that is so dam big that it could been seen clearly from 20 miles away. It would not surprise me if they added another one in the other endzone just so that the fans with seats with there back to the one they just build did not have to turn around to see it. Just this month Auburn announced that they were going to start a $28 million facility, locker room renovation at Jordan-Hare Stadium.
http://www.al.com/auburnfootball/index.s...r_roo.html

Now I toured the locker rooms just last spring at Jordan-Hare an there is nothing the least bit wrong with them. But that extra money has to be spent somewhere. Lets remodel the baseball locker rooms since they were only upgraded a few years ago.

New track & field facility, 2006.
New basketball arena & practice facility, 2010.
(This post was last modified: 02-08-2017 10:33 AM by ValleyBoy.)
02-08-2017 10:32 AM
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Post: #19
RE: PAC expanding revenue deficit vs Big Ten and SEC
http://awfulannouncing.com/league-networ...-nets.html

PAC Networks are only in 15 million homes, millions fewer than B1G and SEC networks (and likely new ACC Network). The result is only $1.5M per school payout, despite full ownership of the network.

A big part of this is the lack of distribution by DirecTV. Lack of inventory outside of the Pacific and Mountain time zones also contributes.

In addition to low payouts, some AD's are upset with the frequent 10 or 10:30pm ET kickoff times with 1-2 weeks advance notice. Hurts ticket sales and lousy ratings in the East.

How soon do we reach the tipping point? Is there any hope for the PAC network without PAC expansion?

I honestly don't think the PAC is strong enough to attract Texas or Oklahoma in comparison to what the SEC, B1G, and even ACC might offer.

What other expansion options would the PAC seriously consider? TCU and Houston? If academics are a crucial factor - Kansas? Iowa St.? Rice? Tulane?

Could the PAC get Oklahoma, without Texas, if there are sufficient other Central time zone schools?

Oklahoma-TCU-Houston-Kansas?
02-08-2017 12:01 PM
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p23570
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RE: PAC expanding revenue deficit vs Big Ten and SEC
The only thing that will fix the PAC network is adding rabid fan bases to the PACN. In the MTN and PAC time zones that meas BYU content. Outside of those time zones they need central time zone content.

I personally think the PAC and Big 12 are working together to solve the network issue as they both need each other at this point to survive. Big 12 adds BYU and 1 more (likely UConn) and partners with the PACN. At which point the carriage issue is solved instantly and the network can more forward. Boren gets his network, a CCG, and a conference with 12 members.
02-08-2017 12:44 PM
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