While the annual “will Notre Dame join a conference?” discussion hasn’t been quite as consuming as it was in 2010 and 2011, the debate rages on as the major conference landscape continues to see a multi-year facelift (realistically, it’s more of a Botox injection gone wrong than a facelift). Specifically, there has been a significant amount of buzz surrounding swelling college football TV contracts, particularly with Florida State president Dr. Eric Barron releasing a statement about why the Big 12 may be more attractive than the ACC to FSU, specifically mentioning an extra $3 million per year in TV revenue.
Though we know for certain that the value of college football TV contracts has exploded, it is more difficult to pin down the amount of revenue per school since this information is not typically made public. Instead we are left to rely on “sources” listed in various news publications. And, of course, different sources offer very different numbers. Whether or not these unnamed sources are real or reliable is certainly in question, but for the sake of this post we will assume that the available information is somewhat accurate.
In 2008 Notre Dame signed an extension with NBC, with NBC buying the right to televise Irish home games from 2011 through 2015. Notre Dame never released the value of this contract, but did point out that from 1991 (the start of the NBC contract) through 2008, the TV deal had provided nearly $26 million in aid for about 2,400 Notre Dame students. At the time the extension was signed, ESPN reported that the existing contract was worth $9 million per year. In 2010, Richard Sheehan (ND finance professor who had been involved in earlier negotiations with NBC), told the Associated Press that he believed the NBC contract was worth well over $15 million per season.
Now let’s pause and take a vote: raise your hand if you have heard Irish-haters complain that the NBC deal is “ridiculous” and claim that Notre Dame won’t join a conference because they aren’t willing to give up this “lucrative” deal that other schools don’t have. Huh, every single reader is raising their hand? Not a surprise.
So is it true? Has ND really been raking in an incredible amount of dough that they refuse to share, shunning all conferences thanks to this 21-year-old TV deal? Looking at figures in the table above, it is clear that this is certainly not the case today. Sure, $15 million is nothing to sneeze at…unless you’re Northwestern or Minnesota or Arizona or Washington State cashing checks for $21 million, or Maryland or Wake Forest counting your $17 million.
Notre Dame runs a wildly profitable football program, one of the few football programs that builds cash for its parent institution instead of siphoning it away – but let’s put an end to the argument that the “lucrative NBC deal” is one of the reasons the Irish are not interested in joining a conference.
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NDtex
I still think $15MM might be on the low end for the contract. I would wager we are closer to $20MM, but even so, it is slightly disconcerting that are making comparable TV revenue to the bottom tier of BCS teams.
I would think that would work in ND’s favor though when it’s time to negotiate another extension. The rest of the market has just shot ND’s value up and should allow for us to laugh all the way to the bank.
Considering that we were already the 6th most profitable athletic program last season (Source) without a renegotiation of TV rights, I can only imagine the potential boost in the bottom line that we could see.
Despite that, I don’t think that the NBC deal has anything to do with conference affiliation one way or another. We would actually fit quite nicely in the Big XII model which already bends over backwards for Texas and their unique TV rights. I would wager if other conferences were really serious about courting us, similar exceptions may very well be made.
In the end though, I believe the singular issue that would cause us to flee football independence would only happen if the conferences grab all power in such a way to shut out non-members from national title contention. Based on current postseason negotiations though, it doesn’t seem like they are willing to leave ND out in the cold.
Twibby
Right – while the ND revenue figure is harder to be certain about than the other conference numbers which are more widely reported, it seems that its very unlikely that it is far and away better than what anyone else has.
A lot of the huge deals for the major conferences have come within the past 2-3 years, though, while ND’s was signed in 2008 (meaning it might have been the largest at th time). Like you point out, Tex, I would guess that the next renegotiation will be strongly in ND’s favor.
I’d be interested if any readers out there are familiar with the economics of broadcasting sporting events on major television. How much is it really worth to the station? Let’s say NBC broadcast the English Premier League 7 Saturdays per year and theoretically it pulled the exact same average viewership as ND games – how much money would the EPL be getting?
NostraDomina
Another $$$-driven argument I’m growing tired of is our negotiated deal with the BCS where we get money every year, whether we play in a BCS game or not. Kind of like, you know, Duke and Indiana do.
The haters are fast to point out that we get money from the BCS for not playing…they’re not as quick to listen when one points out that our take for making it to a BCS bowl is considerably less than what it was before the contract. I don’t know what a BCS bowl pays out now, but I know that we’re taking a $10M hit at the very least.
Good article, as always.
Zibby
One thing that’s not factored into your argument is the time value of money and the fact that we made our deal (for whatever it’s worth) many years ago. Before recent deals, what were the power conferences making, per year, in TV rights fees? 10M? Less? Factor in that there are likely some escelation clauses (start at 9M and ramp to 18M or 20M?), we’ve been making more money than everyone else for 18 of the last 21 years. But in the last 2-3 years, all the conferences have signed 8-year, 10-year or 12-year deals at the current numbers (remember it’s listed as average over the 10 years, including all escalation, so they may be making 15M now, 17M in 5 years and 19M in years 8-10 or something). Meanwhile we get to renegotiate our deal starting 2-3 years, and take advantage of the fact that everyone else is getting more and so should we. I’d be shocked if we got less than 25M a year over the average life of the deal, even in our “can’t win more than 8 games” state. If we put together a few decent years between now and then, I wouldn’t be shocked if the number climbed into the 30s.
Twibby
Agreed – I tried finding some historical data for what conferences were making 5-10-15 years ago but was unable to find anything concrete. It would be great if anyone has insight into that.
It will definitely be interesting to see how much ND can leverage these huge new deals for the conferences when renegotiating with NBC.
HerringBoneSports
I’ve never researched this so maybe it’s a dumb question – does ND also receive chunks of revenue for their ESPN/ABC broadcast road games? I’d assume yes because it’s part of the game contract but I don’t really know. If they do, then their yearly regular season income would still surpass other teams with conference deals, right?
Twibby, feel free to drop some knowledge on me if I’m wrong.
Vairish84
The NBC contract does not include revenue from away games, not sure what that is, and it does not include basketball broadcast revenue. For most of the conferences, their away conference games are included in that number as are all their home and away conference games in basketball.
I am not sure how to tease all those numbers out, but my guess is that all in for football only, we probably make roughly the same as any team, with the possible exception of an SEC team. For that conference, I am guessing we are very close.
Twibby
Good point about the away games. On the other hand, the NBC number also doesn’t take into account how much of the money we share with the teams we play at home, either. Under the original deal in 1991 the visiting team got 50%, but I highly doubt that is the case today.
It all adds into the mystery of how much TV money ND is getting – the point I was hoping to make, though, is that it is not presently a number astronomically higher than what anyone else is getting (which you point out in your comment – thanks).
Lenny
I think you need to restate that revenue chart a bit.
Some conferences, unlike the big10(12) but such as the big12 and pac 12, do not distribute their revenues equally; .
For instance Texas is the big dog in the big12 and I belive will not distribute much or any of the TV revenue it takes in for the longhorn network.
Here in the pac-12, local papers have often pointed out the revenue is not shared equally between the have of the conference (USC) and the have not of the conference (WSU). Without doing the research, I seem to recall that USC’s take is over $25M and that WSU’s is less than $15. It’s still a good deal for teh cougs, but not as cushy as you describe
Under prior leadership, USC’s sports dept publically declared that they’d leave the pac-12 before they’d share revenue equally.
It’s this reason that I suspect that all things being equal, if we HAD to join a conference we’ll join one that does not enfore strict revenue sharing.
Lenny
Twibby
Lenny – doing my research for the article I saw that numerous news outlets reported that under the Pac-12’s new deal last year revenue would be split equally (though that wasn’t the case before last year’s deal). I just did some quick searching to see if that wasn’t the case anymore but couldn’t find anything to the contrary, but I’d be curious to see it if you remember where you saw that recently.
But yes, Texas gets a disproportionate share which is one of the reasons they didn’t take up the Pac-12(10)’s offer to move. Thanks for pointing that out.
Trey
That was at the core of why Texas A&M left the XII too. I have a feeling Neb did for similar reasons as well. Colorado was just high and wanted more west-coast games. But yeah, all the non-UT Texas schools are pretty pissed about the Longhorn Net
Cruising Route 66
The writer of the article has no clue to what the B1G’s rights deals currently generate.
The ESPN rights feel is currently worth $10M/yr/school. The BTN rights fee is currently 6.5M/yr/school. And the CBS deal produces $200K/yr/school That’s after the B1G takes a 3.75% cut for operating expenses.
Source: BigTen Conference Audited Fnancial Statements.
The Biscuit
New deal with NBC rumored to be worth $24 mil/year. Money money money MONEY.