Posted by John Vrooman on Friday, September 7, 2018 in NCAA Football.

Interview with Pittsburgh Post-Gazette 9/6/2018. (pdf) (xls)

• Pitt made $26.3 million from the ACC in the 2016-17 fiscal year while Connecticut — a former conference mate in the Big East that is now in the American Athletic Conference, a league Pitt may well have ended up in had it not landed in the ACC — made about $8 million that same year from the AAC. The raw numbers are obviously notable, but from an economic standpoint, just how big of a gulf is that between schools in one of college athletics’ five major conferences and schools outside of them?

The noticeable economic fissure between Power 5 and Group of 5 NCAA FBS Conferences is rapidly becoming a grand canyon that polarizes D1 college football into economic and athletic haves and have-nots. The driving force is clearly an inequality in media revenue (new and old) that currently divides FBS football budgets along a not so subtle $20 million red line. (See attached list of D1 football budgets and coach salaries).

The inequality in long-term media rights deals for D1-A conferences since 2012 is further aggravated by a more recent infusion of ESPN’s FBS College Football Playoff (CFP) largesse since 2015.

• How much of a role did that pursuit of conference payouts, a good deal of which I’m guessing come from TV contracts, play in the widespread conference realignment of the past 10-15 years?

Recent realignment in college football is an unstable equilibrium punctuated by the chaotic infidelity of the mating game that surrounds TV rights negotiation. Under the polarizing economic pressure of unequal TV rights fees the 129 team FBS will be split right down the middle, and the current P5 conferences will break away to form a separate super-league. These musical chairs games will probably occur during the coincidental expiration of the current long-term TV rights deals (including Notre Dame-NBC and ESPN’s CFP deal) leading up to 2025.

On paper, the most economically and logistically efficient configuration would be four new power conferences comprised of 16 teams each. This would imply that one of the P5 conference would be absorbed by the other 4. After the ACC Network deal in 2016, the merger candidates would now be the Big 12 because the league doesn’t have a dedicated network or the Pac-12 where the P12N is fully owned and inefficiently operated by the member schools.

• For a school like Pitt that goes from making about $10 million in its final year in the Big East in 2012-13 to the $26 million it made last year, where do those extra tens of millions of dollars typically go? Where do schools most often allocate those additional resources? Is it facilities, coaching salaries?

Most schools spend the money on facilities and exploding salaries for college coaches, while some schools like Notre Dame reallocate the TV revenue toward the needs general student body.

• Building off that last question, should it stand as a concern that Pitt hasn’t made any visible or notable changes to its facilities after five years of being in the ACC and receiving those kind of payments? Is there often a lag for schools when they join these new leagues, that they don’t spend this newfound money right away in big ways?

In addition to facility upgrades, the major concern in Pitt athletics should be the athletic department instability and revolving door for quality coaching in the two revenue sports.

For example, the football budget at Wisconsin of $70 million is still about twice the budget at Pitt after the shared revenue from their respective leagues.

Even after joining the ACC, Pitt had no shot at keeping Paul Chryst, who’s current salary at Wisconsin is 50 percent higher than Pat Narduzzi’s current paycheck at Pitt. (See attached FBS budgets and salaries).

• How much of an economic impact could an enterprise like the ACC Network, launching officially in 2019, be for the league and its schools? Do you question whether a TV network, especially a niche one like that, can be profitable in 2018?

Recent optimistic forecasts of $10 million – $15 million per school for the new network are over-exaggerated but after an initial shakedown, ESPN’s fully owned ACC Network should surpass the P12’s fully owned P12N with about $5 million to $8 million bump in revenues per school after 2019.

The ACC Network is unique in two important respects. First, the ACC deal with ESPN is set to expire in 2036—a full decade after the projected realignment derby surrounding the expiration of major media rights deals in 2023-25.

The benefit of the long-term deal is the relative certainty and stability of ACC cash flow from media. The risky aspect of the long-term deal with ESPN is of course its economic viability as it simultaneously fights for and against the rapidly changing digital media revolution by systematically overbidding for increasingly scarce live sports programming across the board.

Second, the ACC has the inside track through 2036 on Notre Dame football when the Irish finally decide to join a conference. Notre Dame currently receives about $15 million annually for 2016-25 NBC deal and a $5.8 million share of the ACC media pie. ESPN’s current CFP deal also ends in 2025. By the coincidental expiration of the current ND-NBC and ESPN-CFP deals in 2025, Irish football will begin to fully merge home and away games into the relatively stable ACC Network revenue stream.