Growing conference revenue gap adds to financial concerns
On Friday, tax returns for the five major college conferences were made public. The good news for Florida State is the ACC increased its distribution to member schools by nearly 11 percent from the prior year.
The bad news is that the ACC continues to lag well behind the Big Ten and SEC. What is somewhat surprising is how large the revenue gap has grown as of late. For the 2017-18 fiscal cycle, the SEC is outpacing the ACC by $14.2 million per school, and the gap was a whopping $24.5 million compared to the Big Ten.
In just three years, the difference between the ACC and SEC distributions has more than doubled from $6.5 million to $14.5 million per school. Against the Big Ten schools, the gap has increased nearly 400 percent during this time frame – from $6.2 million to $24.5 million.
Also surprising is that the Big 12 went from trailing the ACC’s per-school distribution by nearly $3 million in 2014-15 to ahead by $5.2 million for the latest cycle. And those figures do not include third-tier television rights retained by Big 12 schools. Oklahoma, for instance, earns an additional $7 million annually on top of the monies it receives from the conference.
| Conference | 2014-15 | 2015-16 | 2016-17 | 2017-18 |
|---|---|---|---|---|
|
SEC |
$32.7 mill |
$40.4 mill |
$40.9 mill |
$43.7 mill |
|
Big Ten |
$32.4 mill |
$35 mill |
$37 mill |
$54 mill |
|
Big 12* |
$23.3 mill |
$30.4 mill |
$34.3 mill |
$34.7 mill |
|
Pac-12 |
$25.1 mill |
$27 mill |
$30.9 mill |
$29.5 mill |
|
ACC |
$26.2 mill |
$23.9 mill |
$26.6 mill |
$29.5 mill |
As a result of these disparities, many of the schools that directly recruit against FSU are gaining a significant financial advantage. Nearby University of Florida and University Georgia, for instance, have racked up an extra $52 million each in distributions since the 2014-15 fiscal year. That was the first full year after FSU signed the long-term grant of rights agreement with the ACC.
These chilling numbers only add to mounting financial concerns that have plagued Seminole athletics as of late. For the last reported financial cycle, the athletics department reported a $3.6 million deficit and a similar deficit is expected for 2018-19.
Not helping matters is that season ticket sales for the upcoming football season are reportedly well behind projections. And that’s coming off a significant drop from 2017 to 2018. The sluggish sales recently motivated athletics director David Coburn to write a letter urging 'loyal' fans to renew season tickets and make a donation to the Seminole Boosters.
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Will the ACC Network save the day?
A dedicated linear television network has given the SEC and Big Ten a huge leg up financially the past few years. That will change in August when the ACC finally launches its long-awaited linear network. The question isn't whether the new network will add to FSU's financial coffers, but by how much.
That question is very much up for debate, and nobody seems to have a clear answer. Some have speculated that the new network could generate well over $10 million annually to member schools. That would put a nice dent in the revenue gap, but many insiders caution that it could be a few years before member schools see this kind of revenue.
The first hurdle for the ACC is to get nationwide distribution for its new network. At present, a handful of major carriers have still not agreed to pick it up. Waiting until the last minute to close these deals isn't all that unusual, and ACC leaders and ESPN are in active negotiations to get these deals done in time for the upcoming football season.
Even if all or most major providers agree to carry the ACC Network, it's doubtful it will bring in the same revenue as competing conference networks. The Big Ten and SEC have much larger alumni bases, and those conferences consistently garner higher television ratings for football, the sport that generates the most television revenue. The cable/satellite landscape is also drastically different than it was just a few years ago. Traditional television providers are losing subscribers in record numbers thanks largely to cord-cutting (users canceling in favor of online providers). It's uncertain how this switch could impact the ACC Network's value, but it will probably reduce the fees providers can pass on to its customers.
Until the revenue from the new network starts rolling in, Coburn will have the daunting task of getting FSU's financial shortcomings under control. So far, he's off to a good start. Through some strategic cost-cutting measures, he was able to immediately slice about $600,000 from the budget. He also saved the athletics department another $400,000 by holding out a few extra weeks in hiring new offensive line coach Randy Clements away form Houston.
Ultimately, the easiest way to generate additional revenue in the short term is for the football team to win more games. But like the ACC Network, whether FSU will be able return to its winning ways in football is very much up for debate.
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Talk about this story with other Florida State football fans in the Tribal Council