Even with big increases in TV rights fees, most NCAA Power Five conference members are spending more than they have, including UW and WSU. Will the bubble burst?
Despite the heralded revenues anticipated from the Pac-12 Networks, athletics departments of four of the 10 public schools in the conference operated at a deficit in 2015, including the University of Washington. UW had revenues of $103.6 million and expenses of $104.4 million. But the deficit was small compared to the $13.3 million reported recently by Washington State athletics director Bill Moos.
WSU’s deficit led the conference, followed by Cal (minus $8.4 million, Oregon State (minus $7.7 million) and UW (minus $800,000). UCLA broke even. Arizona had the biggest surplus at $6.1 million, followed by Utah ($3.7 million), Colorado ($2.7 million) and Oregon ($1.8 million).
USA Today Sports reported Monday its analysis of financial information that 281 public schools annually provide the NCAA. The Pac-12’s two private schools, Stanford and USC, did not offer data.
For the 50 public schools in the Power Five conferences (Pac-12, Big Ten, ACC, Big 12 and SEC), revenues rose by $304 million in 2015. But spending rose by $332 million from the year before. At the 178 public schools in Division I conferences outside the Power Five conferences, revenue increased by $199 million, but spending rose by $218 million.
The entire list is here. Also included is the amount of subsidy the athletics departments get from the schools’ general funds. WSU’s $6.1 million subsidy is 11.3 percent of the athletics budget; UW’s subsidy of $3.9 million is 3.8 percent.
USA Today’s story posited that spending more than athletics make creates a dangerous “bubble,” particularly since the building boom prompted by large increases in TV rights fees over the last five years saddled departments with long-term debt. The data showed that less two dozen schools can cover all their athletics expenses without asking for help from each school’s general fund.
“There are big-time things leading it to pop,” said Andrew Zimbalist, a professor of economics at Smith College and author of Unpaid Professionals: Commercialization and Conflict in Big-Time College Sports. “It’s an unstable situation.”
NCAA president Mark Emmert, the former UW president, unsurprisingly managed to put a positive spin on the issue of subsidy.
“A very small number of the 1,100 (NCAA members) have a positive cash flow on college sports, so those schools are making a decision that having a successful athletic program is valuable to them, despite the fact they have to subsidize it with institutional money,” Emmert says. “The same thing is true for a lot of academic programs. So every school has to sit down and say, ‘What is this worth to us?’ ”
The Pac-12 is in a different TV situation than the other conferences. Even though it’s estimated that about 12 million subscribe to P12Nets, it doesn’t have the biggest distributor in the West — DirecTV. The nation’s No.1 satellite carrier has consistently refused to carry P12Nets, saying it’s overpriced for the quality provided.
Perhaps up to 90 percent of the televised events are non-revenue sports that have small audiences, according to DirecTV. The college football and men’s basketball schedules are what ESPN and Fox pay rights fees for. The networks are not interested in the rest of the content, which it believes amounts to infomercials for the conference and its schools.
The conference is unwilling to lower its price, because all the cable carriers that have P12Nets would demand similar concessions on their deals.
So, according to reporting from the Mercury News’s Jon Wilner, each school in the Pac-12 receives a smaller annual share, about $25 million per, than the schools in the other Power Five conferences from the TV deals, led by the $31.2 million for each school in the SEC.
The P12Nets deal, put together by Commissioner Larry Scott and hailed as a panacea for the conference that was usually last in TV revenues compared to the other big conferences, remains last.
The annual shortfalls often must be made up by campus administrators being stretched to fund basics like faculty salaries.
So if it’s true nationally that athletics departments’ financial picture is a bubble, a bursting is going to have long-term impacts beyond merely the citadels of jockdom.
By the way, the school with the biggest budget ($192 million revs, $108 million in expenses) in the NCAA? Texas A&M, where former UW athletics director Scott Woodward now works. Now you know why he moved.