I saw a post the other day complaining about revenue sharing of gate receipts in the Big Ten. It was honestly something I never thought about much in the past. Before I read this article I didn't even know how the Big Ten split gates receipts. I did know that for non-conference games it is a bidding war of sorts ranging from $500-$800k per game for the top schools. That's why schools love to play the Buckeyes and why the Ohio Legislature has "encouraged" the Buckeyes to play Ohio universities.
As has been commented on in the past, the Big Ten is extremely equitible when it comes to their member institutions. At some point they had to figure out how to split gate receipts. This is a hard thing to do as some schools are more popular than others. How much should a school get for simply showing up if 90% of the fans in the stadium are rooting for the home team? In many ways it's a great deal if your school doesn't have a great fan base. Your home games net you about $300k but you play Ohio State, Michigan, and Penn State at their stadiums and are rolling in the money. It would be great that season but imagine the drop in revenue the next season when you have them at home.
More after the break....
At some point the league decided the fair thing to do was that every school would give to give 35% of the gate receipts to a league with a minimum of $300,000 per game and a maximum of $1,000,000. At the end of the year this league pool would be split equally among all members. Since all schools have 4 games this means at the end of the year each school pay somewhere between $1.2MM and $4.0MM. Here are the numbers for last season:
4.0 - Ohio State
4.0 - Michigan
4.0 - Penn State
3.7 - Iowa
3.6 - Wisconsin
3.6 - Michigan State
2.4 - Illinois
2.2 - Purdue
2.1 - Minnesota
1.6 - Indiana
1.2 - Northwestern
This averages out to about $2.95mm per team which was split between all teams. You can take two things from these numbers. First, that there is a definite dividing line between the givers and the takers (though I'm sure the product on the field played a part). Second, the average payout per game to the visiting school was about $740,000 (2.95 / 4 games) which is at the top end of what schools pay for non-conference games. Another interesting thing is excluding the Big Three we can also calculate the average gate receipts in the Big Ten to be about $1.8mm per game ((Sum of these team's revenue shared/8) / .35) -- we will come back to that later.
At this point you might be asking yourself - why does this matter? There are two things on the horizon that will be affected by this - 1) Expansion and 2) the move to 9 game Big Ten schedule.
Expansion
Expansion is done for the moment and the good news is that the team they are bringing in will help these numbers. Nebraska has the nation's longest home sellout streak and with an 81,000 seat stadium they are likely to join Ohio State, Michigan, and Penn State in the $4 million dollar club. This is good news to everyone as this will add approximately $88k to be shared with the other league members (and be offset by Big Ten Network revenue for Nebraska to keep them whole). Adding Nebraska was certainly positive from a gate receipt standpoint. Now think about the future if the Big Ten decides to goto 14 or 16 teams. The average gate receipt for mid-tier teams in the Big Ten is about $30 per ticket sold so using that information and the 2009 attendence figures we can estimate the impact for each of the possible additions.
Est. Revenue Shared - Team - (2009 Attendance)
1.5 - Boston College (35.7)
1.6 - Connecticutt (38.2)
2.1 - Kansas (50.6)
1.9 - Maryland (44.5)
2.7 - Missouri (64.1)
4.0 - Notre Dame (80.8)
2.2 - Pittsburgh (53.4)
2.1 - Rutgers (49.1)
1.6 - Syracuse (39.0)
2.0 - Virginia (48.0)
2.8 - Virginia Tech (66.2)
From these numbers the only Nebraska/Penn State homerun is Notre Dame while no other teams are the league average. I'm sure these number fluctate a bit from season to seaon but the Syracuse numbers were especially disappointing. These numbers make me more and more a fan of Missouri, Notre Dame, Pitt, and Rutgers combo if the league decides it has to expand. If Notre Dame insists on staying out of the league then Kansas would be a decent substitute. None of the options are especially exciting from a gate receipt standpoint as the non-Notre Dame option would mean that every team in the would eventually lose $189k in terms of revenue sharing. Even if Notre Dame joined the league average would decrease by $72k. I realize the television numbers dwarf these figures but unless a team can bring a significant television market I can't imagine the Big Ten expanding as low gate receipts will definitely take money out of the hands of league members. If that's the case then no one will vote for it.
9 Game Schedule
A few weeks ago I raised the question of the cost of going to a 9 game conference schedule. Finding the gate receipt numbers helps me expand this thought a bit more as it helps me calculate the actual cost to the league. Currently the league has 12 total games with 8 conference games and 4 out of conference. Most schools schedule it so they have 3 MAC type games and 1 tougher game that will be a "home and home". Going to a 9 game schedule will eliminate one of the "MAC" games. That means that we will take 11 home dates and turn them into 5.5 home dates. An average Big Ten home game for the bottom tier (not UNL, OSU, PSU, UM) has a gate of $1.8mm per game. I imagine these schools pay around $0.5mm per game giving them a gate profit of $1.3mm or $7.1 for the 5.5 games. If you consider that the top 3 easily make $4 million per game that would up this number to at least $10 million. These numbers are actually a bit low as they don't include concessions, parking, and other revenue associated with a home game so the real number is even more. The incremental television money for these 5-6 games has to be greater than the 12 games the netsworks already televise or the league will lose money. Considering that each team currently gets about $22mm for 12 games today I find it hard to believe that the incremental income is going to be higher than the cost.
The other factor is that schools will have alternating years with a 4 game and 5 game conference schedule. While this is certain to have an effect on league results, it will also potentially have an affect on overall gate receipts if not considered when creating the schedule. Imagine a season that had Ohio State Nebraska, Michigan, Penn State, and Iowa, and Wisconsin with 5 games. Then imagine the next year when they all had 4. Using the numbers from before, the league would have a difference in total income between the two years of over $2.5mm for revenue sharing or about $212k per team. Another way to think about it is this would create an 8% variation in revenue. That's a huge difference and one that the league will need to schedule around. Expect the league to have 2 teams from the top four (Ohio State, Nebraska, Michigan, and Penn State) alternate the 4 game - 5 game schedule to alleviate this. I can already hear the cries of "The schedule was unfair!!!" when a school loses the conference title in a year they only had 4 home games.
No comments:
Post a Comment