Even if the University of Tennessee’s football fortunes continue to flounder, its Athletic Department’s financial future appears secure. Its saving grace is UT’s membership in the Southeastern Conference and the bonanza of football TV revenues the conference promises to garner for its members when the new national championship playoff scheme and bowl alignments kick in two years from now.
Under the TV deal that the 10 conferences participating in the Bowl Championship Series (BCS) have negotiated with ESPN, BCS revenues are expected to quadruple to more than $600 million a year from about $150 million presently. And the conferences will get even less equal in their shares of the take. Because of the SEC’s football preeminence in recent years and the astuteness of its commissioner, Mike Slive, the SEC figures to get the single biggest slice. And because the SEC is remarkably egalitarian in its distribution of TV revenues among its 14 members, UT figures to get a near equal share of them regardless of whether the Vols ever play in another bowl, let alone a national championship game, over the 12-year lifespan of the deal with ESPN.
As a result, a Knoxvillian who follows these matters closely—John Pennington, who hosts the blog MrSEC.com and the Sunday TV talk show Enrichment Sports Source—predicts that, “By 2014, you’ll see each SEC school getting between $30 million and $35 million a year.”
That’s up from the $20 million in SEC revenues that the UT Athletics Department has budgeted for the current year. (These revenues also include the take from regular-season football and basketball contracts as well as the SEC and NCAA basketball tournaments.)
A $10 million-plus increase in TV revenues would offset a 30,000-seat decline in football season-ticket sales at the going rate of $360 a seat. While season-ticket sales have already dropped from upwards of 72,000 in 2008 to 60,000 this season, it’s hard to imagine them falling that much more as hope springs eternal and boosters want to preserve their preferred seat locations. (Note: Donations, which cover $25 million of the Athletics Department’s $100 million budget, could also dip, but many of these donations are also for preserving preferred locations and parking spaces for both football and basketball.)
To be sure, the self-supporting Athletics Department isn’t exactly on financial terra firm as matters stand. After sustaining a $4 million deficit in 2011-12, Athletics Director Dave Hart slashed $5 million from the current year’s budget to get it balanced at $99 million. Personnel reductions resulting from consolidation of the previously separate men’s and women’s athletic programs were a major source of the cuts, and there were many others—but they won’t cover the $5 million buyout payments over four years to ousted football coach Derek Dooley.
On the other hand, Chancellor Jimmy Cheek last week announced a three-year waiver of the $6 million a year that the Athletics Department has been contributing to the university proper for everything from academic scholarships to parking garage debt service. That should more than cover the cost of buyouts and the probable higher salary of a new head football coach until the added TV revenues kick in.
Associate Athletics Director for Communications Jimmy Stanton claims that “Any projection of... potential television revenues is pure speculation.” But he appears surprisingly unfamiliar with the terms of the various post-season TV deals that have been widely reported in the sports trade media.
These start with the $470 million a year that ESPN has reportedly agreed to pay for a playoff among the top four college teams as determined by a selection committee. The winners of two semi-final games on New Year’s Day would meet in a national championship game on the first Monday that’s at least six days afterward. The bulk of these revenues would be sliced evenly among the five “major” conferences (SEC, Big Ten, Big 12, Pac-12, and ACC) with a sixth slice going to the five “minor” conferences that also belong to the BCS. (The Big East has been a “major” but its splintering football membership will relegate it to minor status.)
The SEC has also been in the forefront of siphoning off TV from the four major bowl games (Sugar, Rose, Orange, and Fiesta) that presently go into the BCS pot. Under an agreement with the Big 12, the two conferences will split $80 million for sending their top teams that don’t qualify for the national playoff to the Sugar Bowl. The Big 10 and Pac-12 have a similar pact with the Rose Bowl. And the SEC will also share in a $55 million deal under which the Orange Bowl will host a meeting between the ACC champion and the top-ranked remaining team from either the SEC, the Big Ten, or Notre Dame.
The reason the sum of all these deals adds up to more than the $600 million total annual payout is that the Sugar, Rose, and Orange bowls as such will only be played in two years out of three. Once every three years, they will serve instead as hosts for national playoff games that will be rotated among six sites including also the Fiesta Bowl, the Cotton Bowl at Dallas Cowboy Stadium, and the Chick-Fil-A Bowl in the Georgia Dome. The site of the national championship game is yet to be determined.
At the same time, Slive is reportedly nearing completion of a renegotiation of the conference’s regular-season contracts with CBS and ESPN prompted by its addition of Texas A&M and Missouri. While these additions mean the revenue pie will be sliced 14 ways instead of 12, more viewer appeal in the lucrative Texas and Missouri markets is expected to more than make up the difference. As a further feather his cap, Slive is also working on the creation of a proprietary SEC Network that’s expected to launch in 2014 with multi-sport offerings. If it’s as successful as the Big Ten Network, which distributed over $7 million to each of its members last year, then even the upper end of John Pennington’s range of UT distributions from the conference could prove conservative.
Dave Hart has been quoted as saying the Athletics Department needs to develop a “sustainable financial model.” But Mike Slive appears to be going a long way toward providing it.