There’s nothing surprising about the latest financial distribution figures coming from the ACC. Nevertheless, the numbers still have to be disappointing and concerning to member schools.
As Warchant.com first reported on Friday, Florida State received $23.9 million from the ACC for the fiscal year ending June 30, 2016. That’s down from $26 million the prior year because of the huge exit fee Maryland had to pay a result of it leaving the conference prematurely.
The latest distribution figure not only puts the ACC light years behind the SEC and Big Ten, but also in dead last among the Power Five conferences. The fact that ACC schools receive over $11 million less than the Big Ten and are $16.5 million behind the SEC has to set off some alarms. What’s probably even more disconcerting to ACC athletic departments is that this financial canyon is only expected to grow in the future.
Currently, there are no solid projections for what the ACC will be able to distribute to its member schools for the 2016-17 cycle. However, there should be a bump of approximately $3 million per school based on the launch of ESPN’s digital conference network. Best-case scenario, assuming some normal growth from television and postseason revenue, the conference might be able to distribute around $30 million per school. That would still likely put the ACC in last place among the P5.
A $30 million distribution would be a substantial increase from 2015-16 but still well behind the SEC and Big Ten. Based on estimates for the fiscal year ending this summer, both the Big Ten and SEC will distribute well over $40 million to their member schools (see table). In fact, with the Big Ten closing in on a new television agreement, it’s estimated that the conference will distribute somewhere between $50 and $56 million per school starting in 2018. And starting this year, the Big 12 will begin playing a conference championship game, which is expected to generate an additional $27 to $28 million per season ($2.6 to $2.7 million more per school).
Even if the ACC’s new television network enables the conference to catch up with the Big 12’s general distribution numbers, schools will still fall well behind when it comes to total payouts when television rights are accounted for. That’s because Big 12 schools retain their third-tier television rights.
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The value of the third-tier rights varies greatly among the Big 12 schools. On the high end, Texas receives a whopping $15 million per year for its Longhorn Network. However, most major programs in the conference, such as Oklahoma, Kansas and Kansas State, receive between $4 and $6 million annually for their third-tier television rights. When you throw in the extra revenue from the new conference championship game, the major Big 12 programs will be near, or in some cases eclipse, the $40 million mark starting next summer.
On the upside, the ACC is on pace to catch the Pac-12 when it comes to distributions in the near future.
Can the ACC television network save the day?
There is some potential good news for Florida State and the ACC on the horizon. Last summer, ESPN announced that the long-awaited ACC television network will finally launch in August of 2019.
There’s no debate that an actual television network will bring additional revenue to the conference. What is difficult to quantify is exactly how much a conference network is worth. The ACC has the advantage of a huge geographic footprint with several large population centers. On the downside, many of the member schools are better known for basketball, which typically doesn’t bring in as much television revenue as football.
It’s probably speculation, but a report in USA Today last July estimated that the ACC’s new network should bring in an additional $5 to $8 million per school. Florida State athletics director Stan Wilcox was even more optimistic when addressing the school’s Board of Trustees earlier this year. He said the distribution to the member schools will increase between $8 and $15 million during the first few years after the network is launched. If any of these figures are accurate, it would put a pretty good dent in the widening financial advantage enjoyed by schools in the SEC and Big Ten. Those numbers would also put the ACC in the same financial spectrum as most Big 12 schools, and pull the conference well ahead of the Pac-12.
The primary concern at this stage is whether ESPN will be able to follow through on its promise to launch a full-fledged television network. Due in large part to cord-cutting, the cable network has lost 12 million subscribers over the past five years, resulting in an annual loss of approximately $1 billion. Unless ESPN is able to stop the bleeding, or find a new way to monetize its sports monopoly, it’s hard to envision how creating a new network in two years would be financially viable.
Some will argue that ESPN will not go back on its word to launch a conference network in 2019. However, such a move would hardly be unprecedented. The four-letter network was reportedly obligated to launch the ACC Network in 2016 or pay a $45 million penalty to the conference ($3 million per school). The announced “launch” of the online network last fall clearly didn’t fulfill ESPN’s promise of a television network.
It’s not surprising that ACC schools will now reportedly receive an additional $3 million distribution for this new online network (the exact amount of the penalty). Since ESPN and the ACC don’t publicly share their agreements, there’s no way to know exactly what recourse the conference might have should ESPN renege on its promise again.
In the meantime, all Florida State can do is continue to be efficient with the funds it does receive from the ACC and find creative ways to internally raise revenue for athletics if it hopes to keep up with the Joneses.
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