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Continued: Big Ten is bringing in big money as a TV star

  • Article by: MIKE KASZUBA , Star Tribune
  • Last update: January 20, 2013 - 6:53 AM

The goal for the University of Minnesota's athletic teams is to win and draw fans.

But big-time college athletics has complicated even that -- the real money these days for Gophers athletics, regardless of wins and losses, is increasingly coming from the Big Ten's television revenue.

Six years ago, before the Big Ten Network debuted, the university received $10.7 million in annual payments from the Big Ten. Two years later, with the conference's network firmly in place televising football, basketball and other sports, Minnesota's annual share jumped to $18.8 million. It has since spiraled to $22.9 million in 2011 and figures to jump even more -- one unofficial estimate put the figure at $32 million by 2014 -- when Rutgers and Maryland join the Big Ten and push the conference into the lucrative East Coast markets.

Since 2007, the Big Ten Network's first year, the money has continued to grow even though the Gophers have had just one winning football season and never have won more games than they lost against Big Ten opponents. The television money has also dwarfed what Minnesota got from actually winning enough games to go to a football bowl game: The university's appearance last month in the Meineke Car Care Bowl, a loss to Texas Tech, meant a $2.4 million paycheck.

Although U officials downplay its effect, the money has provided a reliable revenue stream even as success on the field and on the court -- and in attracting fans to games -- has been elusive. Athletic Director Norwood Teague said the school may be eyeing the money to help with a facilities update, which a consultant is studying and will issue a report on this year.

"I think there will be increases. It's just a matter of how much," Teague said of the Big Ten money. "That was one of the reasons for expansion."

A top donor to the university's athletics said the school has traditionally said little about the Big Ten revenue -- even as it asks donors for more money. "The university historically has not shared those numbers with the alumni," said Bill Dircks, an alumnus, owner of Berger Transfer and Storage in Roseville, and a donor who said he has given nearly $3 million to the school over time. "You knew they got money." But Dircks said the Big Ten money, even as it grows, has not altered his own giving plans.

Dircks said he is part of a group of two dozen major donors who are being asked to donate $100,000 to the school over five years, and said adding Rutgers and Maryland can only help the Big Ten and the University of Minnesota. "They had to do something to expand, and to get some more revenue," he said.

Too much about money?

But not everyone is happy with the marriage of college athletics and TV. Critics point out that the lure of TV money has made college athletics no different than pro sports, and has led to wholesale conference realignments and put TV networks in the driver's seat in setting game times that are often inconvenient for ticket holders.

Mark Fautsch, a senior investment adviser in Minneapolis who has also contributed to athletic fundraisers for the school, said he did not renew the season tickets for men's basketball that he had for decades, partly because he is bothered by the influence of money on college athletics and specifically that of the BigTen Network.

"I think we have gravitated so far over to the money side, it's tough to watch a game, even on TV," said Fautsch, who said he went "nose to nose" with former Athletic Director Joel Maturi over the effect of the Big Ten Network.

The Big Ten money has of course helped the university's bottom line.

In 2004, the school's annual athletic operating revenues stood at $49.7 million. By 2009, two years after the start of the Big Ten Network, yearly revenues had jumped to $70.3 million and by 2011 had climbed to $78.9 million. While he was athletic director, Maturi said he would have had to cut sports programs without the added money from the Big Ten Network.

The increase of money pouring into the Big Ten has not only been good for the schools. According to tax filings by the conference, Big Ten Commissioner Jim Delany's salary jumped from $383,000 in 2000 to $1.2 million in 2011. The Big Ten's overall revenue increased from $85.2 million in 2000 to $217.7 million by 2008 and to $265 million by 2011.

While the conference's tax filings do not break down how much the Big Ten earned from its television network, which is 51 percent owned by Fox TV, it does provide some clues as to the network's overall value.

In 2010 the value of the Big Ten's 49 percent ownership interest in the network was calculated to be $14.5 million. One year later, the value of the conference's ownership interest jumped to $76 million. "Going in next year, that number is going to increase again," said Brad Traviolia, Big Ten treasurer.

But Traviolia declined to disclose how much revenue the Big Ten specifically earned annually from the Big Ten Network or even how much the conference netted from its inaugural football championship game. "We don't break out, our ESPN agreement is worth this, our Big Ten Network agreement is worth that," he said.

The tax filings do provide some sketchy, though dated, evidence of how even a decade ago television revenue was becoming more important to the Big Ten.

In 2000, television broadcast royalties accounted for $42.3 million of the Big Ten's $78.9 million in distributable revenue. The conference, in contrast, got $14.1 million that same year from taking part in the Rose Bowl, Orange Bowl and Bowl Championship Series.

Two years later, TV royalties accounted for $62.4 million of the Big Ten's $97.8 million in distributable revenue. Bowl game revenues that year totaled $15.9 million.

Incentive to join

Even though the Big Ten does not now release such breakdowns, those are the type of figures that have enticed Rutgers and Maryland to join.

For Maryland, which will start Big Ten play in 2014, the additional money will hopefully help turn around an athletic program with pressing needs.

An internal report by the university in 2011 estimated that -- without the jump to the Big Ten -- the school's 27 intercollegiate sports teams would have a $17.2 million cumulative deficit by 2017. The school recently eliminated seven sports teams.

The study showed that while Maryland was projected to invest $72,997 per student athlete in 2013, it lagged far behind other schools in the Atlantic Coast Conference, which Maryland will be leaving. Florida State invests $128,700 per student athlete, and the University of Miami spends $116,914, the study said.

When the ACC recently renegotiated its own TV contracts, University of Maryland Assistant Vice President Brian Ullmann said the school's annual conference revenue jumped from roughly $12 million to $17 million. But Ullmann said the Big Ten had too many tempting advantages like its own network -- the ACC, he said, has nothing that compares -- and the fact that the Big Ten would soon likely have another windfall when it renegotiated its own major TV contracts.

"Having an equity stake in what we think is an enormously popular and lucrative channel" is a benefit of the Big Ten Network, he said.

In Minnesota, the Big Ten's focus on generating cash, realigning the conference and expanding its TV presence continue to make some uneasy.

Peggy Lucas, another longtime donor who gave $25,000 to help build the school's Ridder Arena, said she is confused by the ever-changing world of big-time college athletics, even though Maturi regularly briefed her and others of how the Big Ten money was being spent.

"I think it's all about money," Lucas said of the Big Ten's expansion. "Where does it stop?"

Mike Kaszuba • 651-222-1673

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