Monday, 25 April 2011 14:11

Looking at the Big 12's Revenue Distribution

Written by Jay Beck

This is a topic that has been widely discussed many times before, especially last summer with conference realignment dominating the headlines.  With the Big 12 announcing its new TV contract recently, the question has come up again in regards to the Big 12 not distributing its TV revenue evenly amongst all its members.  Many have called it unfair and it is often given as a reason there has been so much animosity in the conference.

In short, the Big 12 disperses 50% of its revenue equally among the conference members, then the other 50% based upon the number of television appearances.  The teams whose games are selected the most for TV make more money which is a system that has favored teams such as Oklahoma and Texas in the past.

dollar_billThere is absolutely some truth with it not being fair to all the schools, but the when you look at some numbers, you'll see the differences just aren't that great.  These are the last published numbers I could find which are from the 2008-2009 fiscal year which show how the Big 12 distributed it's revenue.  This from the Omaha World Herald.

The Big 12 reported revenue from four primary sources: TV contracts ($69.9 million); bowl games ($31.7 million); NCAA shares ($28.9 million); and ticket sales ($11.7 million).

That is a total of $142.2 million in revenue for the Big 12.  The conference distributed $121.2 million of that amount back to the schools.  The chart below shows what each school received for the 2008-2009 school year.  It also shows the difference had each school received en equal distribution, regardless of the number of television appearances. (There could be other factors that might change that number, but for simplicities sake, the $121.1 was just divided 12 ways).

School Revenue Dist. '08-09 Even Dist. Difference
Oklahoma $12.20 $10.1 ($2.1MM)
Texas $11.80 $10.1 ($1.7MM)
Kansas $11.50 $10.1 ($1.4MM)
Missouri $10.40 $10.1 ($330k)
Texas A&M $10.20 $10.1 ($100k)
Oklahoma State $10.00 $10.1 ($100k)
Colorado $9.77 $10.1 $330K
Nebraska $9.73 $10.1 $370k
Texas Tech $9.20 $10.1 $900k
Baylor $9.10 $10.1 $1MM
Iowa State $8.90 $10.1 $1.2MM
Kansas State $8.40 $10.1 $1.7MM

 

As you can see, OU at the top made $3.8 million more than Kansas State at the bottom. Had the revenue been dispersed evenly, five schools would have made less money while seven schools would have benefited from an equal revenue share.   For seven of those schools, the difference would have been a million dollars or less whether on the plus or minus side.

At least for the '08-09 school year, Oklahoma at the top would have lost $2.1 million while Kansas State would have stood to gain an addition $1.7 million in revenue.  That's a big number, no doubt, and I'm sure any administrator at Kansas State could give you a long list of things they could do with an additional $1.7 million.  But in looking at the total revenue generated by each athletic department in whole, while not insignificant, the differences in revenue distribution don't offer much in the way of tilting the scales back in the favor of the smaller Big 12 schools.

Kristi Dosh in her article on Forbes.com wrote about who's making money in the Big 12 and, as the numbers show, the sheer size of some of the athletic departments make the differences in the TV revenue split seem minute.  Below are the numbers from her article just for the football programs.

Football Revenue and Expenses

School '09-10 revenue '09-10 Expenses '09-10 Profit
Texas $93,942,815.00 $25,112,331 $68,830,484
Oklahoma $58,295,888.00 $20,150,769 $38,145,119
Nebraska $49,928,228.00 $17,843,849 $32,084,379
Texas A&M $41,915,428.00 $16,599,798 $25,315,630
Oklahoma State $32,787,498.00 $15,479,410 $17,308,088
Colorado $26,233,929.00 $12,558,503 $13,675,426
Texas Tech $26,201,009.00 $14,688,382 $11,512,627
Missouri $25,378,066.00 $13,759,649 $11,618,417
Iowa State $19,974,924.00 $13,368,441 $6,606,483
Kansas $17,885,176.00 $16,270,250 $1,614,926
Kansas State $17,570,624.00 $11,157,789 $6,412,835
Baylor $14,355,322.00 $12,462,241 $1,893,081

 

Texas makes a profit of $68 million on its football program at the top, while Kansas nets $1.61 million from its football program on the opposite end.   Would the extra million that certain schools might have received in an equal revenue system have helped?  Sure, any additional money would help any school.  Would it have evened the playing field? Certainly not.

Of course, there's more to running than athletic department than just the football program (just ask Kansas) so below are the net profits for each athletic department in total.  Equal revenue distribution or not, the Texas athletic department would still be netting over $15 million more than any other school in the league.  Tack on an additional $1MM to Iowa State's bottom line and they are still light years between them and the schools at the top of the conference.

School Athletic Dept. Profit '09-10
Texas $29,603,034.00
Kansas $11,687,378.00
Kansas State $11,099,094.00
Oklahoma $10,121,904.00
Oklahoma State $5,402,887.00
Nebraska $5,029,604.00
texas Tech $4,898,394.00
Texas A&m $2,675,650.00
Missouri $2,505,575.00
Colorado $930,604.00
Iowa State $215,540.00
Baylor $0.00

 

If you still aren't convinced, check out the numbers from the Big Ten, which is widely known to distribute its TV revenue equally.  As you'll see, there are still a huge disparities between the schools at the top, and those that aren't.

Athletic Dept Profit
Penn State Univ. $26,354,087.00
Univ. of Michigan $24,549,181.00
Michigan State Univ. $18,477,200.00
Ohio State Univ. $18,239,971.00
Univ. of Iowa $14,299,406.00
Indiana Univ. $7,022,613.00
Univ. of Wisconsin $3,779,582.00
Purdue Univ. $3,288,418.00
Univ. of Illinois $1,739,610.00
Northwestern Univ. $0.00
Univ. of Minnesota $0.00

 

Whether everyone is in agreement on the unequal revenue distribution or not, the numbers show it doesn't create that big of a disparity.  At least not a disparity that creates a distinct advantage for one team or another. And within the Big 12, if any school has a huge problem with it, simply win more and you'll likely get a bigger piece of the pie.  The reason those schools can't win more goes far beyond receiving a little extra (or less) cash from the TV revenue.

Now, would sharing the TV revenue evenly create a better feeling of all teams being equal within the league?  It's possible, if certain schools truly felt slighted to begin with.  The fact of the matter is, however, no matter how the TV revenue is distributed, everyone will still be looking up at the same teams on top of the mountain.

Another thing to remember is that the smaller schools in the conference are going to benefit greatly with the new TV deal, even if they get slightly less than the big dogs. Is that fair?  Maybe not, but everyone is going to be better off because the conference stayed together.  Kansas State athletic director, John Currrie, has already stated the new contract will create a "7-figure impact" for Kansas State.

So, while certain schools are mildly affected by the Big 12's distribution model, its not near the negative argument against the Big 12 that some make it out to be.  Even the schools that lose a little money in the arrangement would most likely agree that the benefits of being in the Big 12 far outweigh some of the negatives that come with being part of the conference.

And finally, all this talk about TV revenue distribution leads to another important point within the Big 12 TV contract talks.  That is, how should the third tier rights be distributed?  That topic deserves its own post which will be coming shortly.  In my view, it's a discussion that is far more important to the overall health of the conference than that of the Big 12's revenue split..

Last modified on Sunday, 14 August 2011 22:15
Jay Beck

Jay Beck

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4 comments

  • Comment Link Jay Beck Monday, 26 September 2011 08:32 posted by Jay Beck

    Very valid point, Harry. And the Pac-12 not wanting to inherit some of the Big 12's issues may be the exact reason the Big 12 looks like its sticking together for the immediate future.

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  • Comment Link Harry P Tuesday, 20 September 2011 10:46 posted by Harry P

    The takers say "it's not that big a deal" but these figures show that the egos in Texas can rationalize anything into being "not that big a deal." I am a fan of the SEC and have no love lost for the PAC but I would hate to see the PAC get involved in the dysfunction that Texas will bring to the table.

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  • Comment Link Jay Beck Wednesday, 27 April 2011 10:25 posted by Jay Beck

    Flint, there's something to be said for that. With the dollar amounts not being that much different, the bigger schools wouldn't be giving up all that much if they agreed to even it out.
    On the other hand, everyone is obviously happy with the new deal and another one will be on the way in a few years. With only ten teams, the smaller schools are likely to be on ABC/ESPN more which will help increase their take, as well.

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  • Comment Link Flint Harris Tuesday, 26 April 2011 10:55 posted by Flint Harris

    The Big 12 has to realize that equal revenue sharing is important...not just for the money, but for the state of mind of everyone in the conference. The lack of depth in the Big 12 continues to kill it with regard to national perception.

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