ACC experiences record revenue growth but gap remains wide as rich grow richer

The ACC is generating more revenue than it ever has, but the gap between it and the richest of the rich college sports conferences remains tens of millions of dollars wide, according to an analysis of federal tax returns.

During the ACC’s 2014-2015 fiscal year, the conference reported a record $403.1 million in revenue, which allowed it to disperse approximately $373 million to its member schools. In the same year, the SEC generated $527.4 million of revenue and the Big Ten $448.8 million.

The SEC dispersed $457.8 million to its member schools, an average of $32.7 million per school. The Big Ten dispersed $411.3 million and an average full share of $32.4 million, although its newest members – Maryland, Rutgers and Nebraska – did not receive a full share. The Big Ten and SEC were the only conferences to disperse at least $400 million to its schools.

In the ACC, each of the 14 schools that received a full share of conference revenue – every one except Notre Dame, which is a part-time member that remains independent in football – received an average of $26.2 million in conference revenue, according to a tax filing the ACC recently released. Notre Dame received $6.2 million.

The ACC’s $403.1 million of revenue in 2015 represented a 33.3 percent increase from $302.3 million the previous year. Before 2015, no conference had ever generated that much revenue, but revenues for the Power 5 conferences – the ACC, Big 12, Big Ten, Pac-12 and SEC – increased dramatically last year.

Each of those five conferences increased their revenue during the 2014-15 fiscal year by at least 17 percent from the previous year, according to their tax filings. The SEC, in the first year of the SEC Network and the College Football Playoff, increased its revenue by 61.8 percent, from $325.9 million to more than $527 million.

The ACC’s $403.1 million of revenue ranked fourth among the Power 5 conferences, ahead of the Big 12 ($267.8 million) but behind the SEC, Big Ten and Pac-12 ($439 million). The ACC ranked third, ahead of the Pac-12 and Big 12, in the amount of money it gave back to its members.

The Pac-12 distributed $301.4 million to its 12 members, which received an average of $25.1 million in league revenue. The Big 12 distributed $227.2 million to its 10 members, which received an average of $22.7 million in league revenue.

Revenue streams

College sports conferences operate on the same fiscal year calendar, which begins annually on July 1 and ends June 30. The 2015-16 numbers won’t be available for several months. The 2014-15 figures, which are included on the tax forms that conferences submit to the IRS because of their non-profit, tax-exempt status, reflect the extraordinary financial growth of major college sports.

Conferences generate revenue from a variety of sources, but they make most of their money from television rights deals and postseason events, like the College Football Playoff, football bowl games, conference basketball tournaments and the NCAA basketball tournament.

The ACC during the 2014-15 fiscal year also received $31.3 million in an exit fee when Maryland left to join the Big Ten. That counted toward the revenue the ACC distributed to its members.

The College Football Playoff, meanwhile, helped conferences generate tens of millions of dollars more than they had been making from the football postseason. The ACC, Big 12 and Pac-12 all detail the amount of revenue they receive from the football postseason.

In each of those three conferences, football postseason revenue increased by at least 75 percent. In the ACC, which sent Florida State to the first College Football Playoff in January 2015, football postseason revenue jumped from $48.8 million in 2014 to $94.2 million in 2015, an increase of 93.1 percent.

In the Pac-12, which sent Oregon to the same College Football Playoff, postseason football revenue grew from less than $40 million to more than $80 million – an increase of about 100 percent.

The Big 12’s postseason football revenue went from $42.5 million to $74.4 million, an increase of 75 percent despite the conference’s absence from the first College Football Playoff. The Big Ten, whose member Ohio State won the college football national championship in January 2015, doesn’t itemize its postseason football revenue.

Neither does the SEC, which sent Alabama to the first College Football Playoff, although the conference reported $162.8 million in revenue from “postseason events.” That represented an increase of 65.2 percent from the previous year, when it made $98.6 million from postseason events.

Revenue from TV

The college sports revenue boom is also attributable in large part to the ever-rising price that television networks, like ESPN and Fox, have been willing to pay conferences to broadcast football and men’s basketball games.

During the 2012-13 fiscal year, the ACC received $146.6 million for its broadcast rights. Two years later, after Notre Dame joined the conference as a partial member that plays five football games per season against ACC teams, that figure increased to $217.9 million.

More than half of the ACC’s $403.1 million of revenue – 54 percent – came from its broadcast rights.

The ACC’s contract with ESPN runs through the 2026-27 college sports calendar. The league and ESPN renegotiated the contract after Notre Dame became a part-time ACC member, and so it’s unlikely that the league would receive another significant jump in base TV revenue before the deal expires.

Separate from its standard broadcast rights contract, though, the ACC has for years been considering the possibility of an ACC channel in partnership with ESPN. Such a channel could provide additional opportunities for revenue growth, although the cable TV industry has entered a time of uncertainty.

ESPN has reportedly lost millions of subscribers in recent years as a growing number of people have cut their cable packages in favor of streaming services, like Netflix. The upheaval of the traditional cable broadcast model has led to questions about the viability of an ACC channel.

ACC Commissioner John Swofford, though, said at the end of his league’s annual spring meetings that ESPN remains “bullish” about the live broadcasting of college sports. Swofford has provided few hints about a potential ACC channel, but he intimated that the ACC is considering a non-traditional model.

“With technology and so forth, you want to be with people that are progressive and that have flexibility, that are willing to adapt,” Swofford said. “And I think that’s who our partner is (with ESPN).”

The ACC has another partner, at least behind the scenes, in its television talks. For years the conference has worked with the Wasserman Media Group, a multi-service agency that, among other things, helps its clients through media rights negotiations.

Dean Jordan, a Wasserman executive – who, according to his company biography, “leads all client media rights strategy and negotiation strategy” – has been instrumental in previous ACC negotiations with ESPN, and Jordan also played an important role in 2013 in helping convince member schools to agree to a grant of media rights, which secured the ACC’s future.

According to its tax filing, the ACC paid Wasserman $604,704 during the 2014-15 fiscal year. Conferences are required to list their highest-paid contractors, and Wasserman isn’t listed on previous tax forms. That the ACC paid Wasserman more than $600,000 is another strong indicator that the ACC could be close to finalizing a dedicated ACC channel – or a next-generation equivalent of one.

Making more money

Swofford at the end of the league’s spring meetings said a prospective ACC channel “might not look exactly the same” as a cable channel might have looked years ago. In recent years the SEC, Big Ten and Pac-12 have launched channels that have helped their revenue growth.

The SEC launched its network in 2014 in partnership with ESPN. The Big Ten Network debuted in 2007 in partnership with Fox Sports. The Pac-12 is the only conference that owns and operates its own network, which launched in 2012.

In the first year of the SEC Network, the revenue the conference generated from its TV broadcast rights increased nearly 50 percent, from $210.4 million to $311.8 million.

Some athletic directors at ACC schools have expressed concern about the ACC’s ability to keep up, financially, with leagues that have a television network. Swofford downplayed those concerns at the spring meetings. His confidence, he said, “comes with the development of what we anticipate doing.”

“That’s why ESPN is in the discussions with us,” he said. “They like to make money, too. And we like to make money, as well.”

The ACC is making more than it ever has. Between July 2013 and June 2015, its revenue rose by 73.4 percent – the largest percentage increase of any Power 5 conference. Between July 2012 and June 2015, the ACC’s revenue increased 80.3 percent, from $232.4 million to $403.1 million.

During the same time, though, other conferences experienced even more increases in revenue. During those three years the Pac-12’s revenue increased 150 percent, from $175.9 million to $439 million. The SEC’s revenue increased 93.1 percent, from $273.1 million to $527.4 million.

Among the Power 5 conferences, the Big Ten benefited from the most modest revenue increase between the fiscal years ending in 2012 and 2015. Its revenue increased only by 47.4 percent – from $304.3 million to $448.8 million.

Combined, the Power 5 conferences nearly doubled their total revenue in three years. In the fiscal year 2012, the ACC, Big 12, Big Ten, Pac-12 and SEC combined to generate $1.14 billion of revenue. Three years later, those five conferences combined to generate $2.1 billion of revenue.

This story was originally published June 11, 2016 at 6:31 PM with the headline "ACC experiences record revenue growth but gap remains wide as rich grow richer."