Legends and Leaders, Chapter 8: Dollars and Sense

Published: July 26 2011 | 12:01 am - Updated: 3 April 2014 | 3:39 pm in
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(NOTE: This is the eighth chapter in a multi-part series on how the Big Ten Conference divided into two football divisions)

IOWA CITY — The Big Ten boasts three of the nation’s four largest football stadiums, lucrative television contracts and the most generous revenue-sharing package among NCAA conferences.

Following the 2010 fiscal year, Iowa reported nearly $21.9 million in revenue from the Big Ten, a number almost evenly distributed throughout the league and a 40 percent increase since 2006. That includes shared television rights fees and distributions by the NCAA and college football bowls.

The conference generates and distributes more revenue than any other league, partly because of its own Big Ten Network. But the secret to the league’s financial success is based on how it shares the wealth.

“One of the reasons the Big Ten is as strong as it is no question is the fact everything is kind of put into a pot and divided equally,” Michigan Athletic Director David Brandon said. “Everybody is looking at the greater good and understands we all share in the success of the whole. That model to me has been incredibly effective and important.”

During the Big Ten football realignment meetings last summer, financials were void of discussion. Both Northwestern Athletic Director Jim Phillips and Big Ten Commissioner Jim Delany said everyone was aware the financial base lies in the league’s eastern half. Delany said the league looked “at competitive factors only” in realignment. Michigan, Ohio State and Penn State — along with Nebraska — all ranked among the league’s elite on the field as well.

“In looking at the data, those four schools developed records in the conference, outside the conference, and in BCS games and national championship games,” Delany said. “The size of their stadium, the ratings that they draw, probably contribute and reflect the strength that they have, but the notion of how successful they are financially were not considerations.”

“We were conscious of (tilting eastward) and we were aware of that and maybe that ended up being the determining factor, but I don’t think it was the single factor,” Phillips said. “Only that we tried to split up our teams are best as we could with different institutions.”

Financial equality off the field allowed competitive balance to take center stage in the realignment discussion. The Big Ten’s revenue-sharing model allowed that to happen, Brandon said.

2010 BIG TEN FOOTBALL GATE RECEIPT REVENUE SHARING REPORT

  • SCHOOL               PAID IN (in millions)
  • Illinois                 $2.196
  • Indiana                $1.996
  • Iowa                    $3.962
  • Michigan             $4.000
  • Mich. State          $3.344
  • Minnesota           $2.122
  • Northwestern       $1.879
  • Ohio State           $4.000
  • Penn State          $4.000
  • Purdue                 $2.061
  • Wisconsin            $3.892
  • TOTAL               $33.454

Every school received $3.041 million in gate revenue sharing. Each school gives 35 percent of its gate revenue from league games to the Big Ten office, where it is evenly distributed among the members. There is a $1 million cap and a $300,000 floor per game.

SOURCE: University of Iowa/Big Ten Conference

There is financial disparity among the league’s football programs, however. In 2009, Penn State submitted football earnings exceeding $70 million to the U.S. Department of Education. Michigan and Ohio State football each earned more than $63 million that year. Big Ten newcomer Nebraska, Iowa, Michigan State and Wisconsin also reported more than $38 million in football revenue.

Four schools — Illinois, Indiana, Northwestern and Purdue — failed to crack $26 million in football revenue in 2009. But it could have been much worse without the league’s football gate sharing model.

The schools send the Big Ten 35 percent of its football gate receipts — with a $1 million ceiling and a $300,000 floor — from each home league football game, which then are evenly distributed among the membership. Each year schools like Penn State, Michigan and Ohio State automatically send in $4 million from their four home Big Ten games. In 2010, Iowa forked over $3.962 million, Wisconsin chipped in $3.862 million and Michigan State sent $3.344 million to the league. Every school, including Northwestern which sent just under $1.88 million, received $3.041 million back.

It’s a system that hits the pockets of the big and aids the small. Yet it fails to cause a rift among the schools.

“Over time Michigan has been one of those schools that could have said we deserve more, we’re bigger,” Brandon said. “Thank God Michigan or Ohio State or Penn State or any of the programs that may have been inclined to seek a greater share of income, it’s never happened. Because I really believe when you get into situations like the one we were in last year, it’s so much easier to get to the right answer when everybody’s pulling in the same direction for the same purpose. To me that model is very important, and it works very well.

“It’s the same thing with the way the revenues are shared at the Big Ten Network. We’re all in it together, and we’re all working for the betterment of the conference. I think it’s a really good model. It saves a lot of the drama that would come if everybody came to the table trying to negotiate their piece of the pie.”

The schools with heavy football tradition — like Michigan, Penn State and Ohio State — have more inventory to provide networks and more viewers to excite advertisers. That’s why Iowa Athletic Director Gary Barta doesn’t flinch when explaining the positives of a gate revenue-sharing model that negatively impacts his school.

“I think we all take great pride in the fact that the goal is the keep the conference competitive top to bottom, year in, year out,” Barta said. “We also realize Iowa, for example, is a smaller state. We don’t have as many television sets because of the population base in our state as (compared to) some of the bigger states. The fact that our football stadium — because we have great fans — fills up, so there’s give and take. Indiana might not fare as well in a revenue share in terms of contributing in football, but probably contributes more in the average, more in their share in basketball.”

“The reality is that if with all the issues that needed to be sorted out a year ago when we went through this, if all of that would have been colored by money — depending on whether it goes this way or that way — is going to have multi-million-dollar implications going back and forth from one school to another school, my experience has been if you introduce the financial pressures to any of those kinds of discussions, it changes the dynamic considerably,” Brandon said.

“So the fact we can have those discussions and it wasn’t about a money grab, it wasn’t about who was going to get a better financial outcome, it really was about what brings the best experience for our fans and what keeps the conference healthy, and it helps to have all the schools participate equally. To me that just made the process a lot easier lot with a less drama and a lot less hard-edge negotiating.”

COMING WEDNESDAY: Scheduling Map Quest. The league put together its first 12-team schedule with an emphasis on power matchups on each weekend, culminating with the six powers competing against one another in the final weekend.
 

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