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May 4, 2012
Florida State's athletic program has experienced unprecedented success lately finishing in the top 10 of the Directors' Cup for the last two years. Even the major revenue generating sports - football, men's basketball and baseball - have done well.
While falling just short of a BCS bowl appearance, the football team has won nine-plus games the last two years, won the state championship and played in two relatively high profile bowl games that both sold out. And within this same two-year span, baseball hosted two NCAA Super Regionals and has been to one College World Series. And Leonard Hamilton's basketball team followed a Sweet 16 appearance in 2011 with an ACC Championship in 2012.
All this success makes the recent news of the projected budget shortfall that much harder to swallow.
The incongruity of FSU's success athletically and the financial bottom line puts Florida State's administration in a very difficult position. Director of Athletics Randy Spetman told Warchant.com last week that the plan is to "to cut our budget back next year pretty drastically." If FSU is able to cut over $2 million in expenses from its budget and is still able operate at a high level that doesn't speak well for how expenses have been handled to date. And that doesn't even take into account that the department has already cut out nearly $500,000 from last year's operating budget.
On the revenue side there is optimism that an aggressive marketing campaign will help boost football ticket sales and booster contributions. While that sounds good on the surface, with five home games against Savannah State, Murray State, Wake Forest, Duke and Boston College it will be a minor miracle if FSU is able to match last year's ticket sales. And it's unlikely that the home schedule will be much better in 2013.
While the current financial situation is a sobering reality for FSU athletics, the prospects for the future are even more daunting.
Despite the recent success on the court, the men's basketball team currently plays in one of the most antiquated arenas in the ACC. The Tallahassee-Leon County Civic Center, which opened in 1981, is a multi-purpose facility that is in desperate need of a facelift. Even FSU president Eric Barron recently told Warchant.com that they must find a way to improve the facility. Without having specific estimates to look at - and I'm not sure they have even been done yet - the cost will be in the millions to upgrade the Civic Center to the level needed to become competitive with the rest of the conference.
"There's going to be a lot of things going in down there like the seats have to be replaced, the place needs to be cleaned up and painted, and the locker rooms need to be redone and we need to do some tradition areas," explained Seminole Boosters CEO Andy Miller. "It's clear to me that we have to dress up the Civic Center."
There are similar demands facing the Doak Campbell Stadium. Miller said that the football stadium is in need of both maintenance and upgrades including at least one major project.
"Somehow we've got to figure out how to put the financing together to repaint the stadium," said Miller. "That's just a big expense and nothing is going to come in (revenue) from that project."
There are some plans in the works like a new athletic dorm that are expected to generate additional income. However, it will take several new successful ventures to put a serious dent on the athletic department's balance sheet.
"I'm confident we've got enough good revenue ideas," said Miller. "There's not one $3 million idea but its 10 or 15 that will make you $200,000 a year (each). That and the investment we are talking about will get us in a lot better shape."
While cutting costs and new revenue generating initiatives is a step in the right direction, it's avoiding the elephant in the room - FSU's share of television revenue within the ACC.
"The other big issue is conference distribution," noted Miller. "The ACC, when I started, they paid more than anybody else. Now, it's significantly different than some of the people we compete against."
Each school in the ACC receives approximately $12.9 million share per year from the league's television contract with ABC/ESPN. The Sports Business Journal recently reported that the addition of Syracuse and Pittsburgh will result in a new television contract that could generate an additional $1 to $2 million annually to each conference member. That will certainly help put a dent in the revenue disparity between the ACC and the other major athletic conferences. Nevertheless, FSU's cut of television revenue will still be far short of what schools in the SEC, Big Ten, Big 12 and Pac-12 receive.
The ACC is locked into its current television until 2023 (probably longer when the new contract with Syracuse and Pittsburgh gets done) and you can bet that expenses aren't going decrease over this time.
According to BusinessofCollegeSports.com, FSU's athletic department has the most expenses of any ACC school by a wide margin. And let's face it, FSU is the most important member when it comes to the ACC's current $1.86 billion television deal. Nevertheless, ACC Commissioner John Swofford calls equal revenue sharing among league members "sacred". That's not a surprising stance from the ACC Commissioner considering that most league members don't have near the expenses that Florida State has nor do they generate the same level of income for the conference. Great deal for most of the ACC but bad for Florida State.
With all these issues hanging over the athletic offices, Florida State's administration will have some difficult issues to grapple with over the next few months. Will certain sports programs have to be dropped in order to get the budget back on track? Where will the financing come from to take care of much needed projects like updating the Civic Center and Doak Campbell Stadium? What moves can be made to create new revenue streams for athletics?
It all comes down to whether FSU wants to continue to play on the big kids playground. Unless FSU can pull a cost-cutting miracle out of its hat, it will become increasingly difficult for football, and all sports programs, to compete at an elite level. The only way to achieve that goal will be to dramatically increase revenue and, absent a football national championship or two, the most obvious way to do that is by getting a larger share of a television contract.
Considering that Swofford is adamantly opposed to anything other than equal distribution within the conference, it may be time for FSU to look elsewhere. While rumors of the Big 12 looking at FSU as part of an expansion plan appear to be bogus, that won't stop FSU from actively seeking out the Big 12 and the SEC to gauge their interest. As evidenced by bowl television ratings, Florida State is still a very hot product and you would expect that a major conference would be interested in adding that product to its inventory. Negotiations with other conferences would also give FSU some leverage for a higher revenue share within the ACC.
If FSU chooses to stand pat and hitch its wagon to the ACC in the long term, it's unlikely that the current budget crisis in the athletic department will improve much. If that holds true, it's just a matter of time before those financial struggles translate into fewer wins for football and FSU's other sports programs.
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