Over the past several months, the ACC Sports Journal has taken an in-depth look at some of the means by which the various schools around the league will come up with the money to pay for cost of living stipends. The stipends are going to add financial obligations costing anywhere from $750,000 to $1.6 million or more annually for ACC schools, depending on the size of the individual schools’ athletic departments and the number of sports they host.
In our final feature of the ‘Where Will the Money Come From?’ series, our staff provides our final thoughts and analysis on this important subject.
When it comes to this issue, there’s really no singular, universal solution. We’re entering a new world of college athletics, and there are a lot of things you’re going to see change along the way. Looking down the road for the ACC, I think the most important source of revenue for league schools will be a TV network. It may be years before we see an ACC Network launched, but as the league sits back and watches the SEC and Big Ten capitalize financially on their own networks, you have to wonder how long before the ACC takes the same route. Television money is already a major factor in the equation, and by looking at the success that other conferences have enjoyed, it seems inevitable that the ACC will (at some point) launch a network of its own.
Ticket sales are another key source of revenue. While attendance numbers have been down in college football over the last few years, that doesn’t mean schools can’t make more money on gameday. It’s quite the opposite, actually. Multiple ACC schools have either recently completed renovations on their football stadium or basketball arena, or they’re currently in the process of doing so. While these upgrades often cost tens of millions of dollars, the investments pay off when luxury suites are selling for $50,000 per year. Stadium renovations may not enhance the gameday experience for everyone, as evidenced by the increase in empty nosebleed seats we’re seeing around the country, but schools are more than making up for that by attracting those with deep pockets.
Beyond TV money and ticket sales, we’re going to see different schools approach the matter in different ways. The Florida States of the world will have an easy time reaching out to donors any time they need an extra dollar, while the Boston Colleges will likely be forced to cut multiple non-revenue sports. Again, there’s no simple solution that’s perfect for everyone, but the two main things to keep in mind: The creation of a league network appears to be more a matter of “when” than “if,” and schools aren’t going to stop upgrading their athletic facilities anytime soon.
This isn’t rocket science. The Philadelphia 76ers had the cheapest payroll in the NBA this season, paying their roster about 40% less than the Nets paid theirs. And the Sixers spent $54 million on salaries this year. If the truly dreadful Philadelphia 76ers can make a profit, despite spending $54 million on 15 players, then the ACC can find a way to cover true cost of attendance.
To put that in perspective, if we cut the Sixers’ number in half (because NBA players are better than college players and worth more) that’s $27 million. Louisville plans to spend the most in the ACC on cost of attendance, at more than $5,000 per athlete. $27 million would cover $5,000 in cost of attendance money for 5,400 student athletes, or 360 athletes at each ACC school.
Half of one NBA team’s—the cheapest NBA team’s—payroll would cover every student athlete in every sport in the entire conference.
What does the NBA do that the ACC doesn’t? They have their own network. Even a conservative estimate of how much the ACC Network would earn should cover the costs of attendance. The ACC could also knock down one more barrier between college and the pros. Instead of buying UNC 5 jerseys, go ahead and let the school sell one that has PAIGE on the back. Sure, you might have to give him a cut of the money, or perhaps pay that money into a pool that helps cover cost of attendance.
And for fans who hate the idea of turning college athletes into mini professionals and ruining the integrity of amateur athletics? Take a small portion of that money and set up a JV basketball and football team for every team in the conference. Then hold tryouts among the student body. We’ll see how many of the purists tune in to watch.
Dudes with lots of money love to show other people how much money they have. They also like putting their names on things. This dynamic is the golden ticket for athletic departments as they steer into a more expensive future. Every school has millionaire alumni who need some way to show off to their friends (and get friendly tax breaks). There’s no more certain way to meet your budgetary needs than getting a single donation that covers your expenses.
I expect we’ll see a lot more T. Boone Pickens- and Wendell Murphy-like donors in the near future. These schools will target their influential alumni and pitch them on the concept of carrying the athletic department into a new frontier. Then, they’ll casually drop a reference to an alumnus of a rival school. “Hey, Jason Kilar, did you see that Tim Cook just donated 15 million to Duke?”
The one-percenters will start donating more and more to keep their schools (and their reputation as one-percenters) ahead of the field. In a decade, every program will have a stadium or press box or practice facility named after some guy who helicopters into the parking lot every game and tailgates with mint juleps. These other ideas are all good, sound solutions. A lucrative TV network would provide consistent income, and increased student fees would put more dollars in the bank. But at the end of the day, it will be the millionaires who continue the arms race of college athletics and pick up the tab for full-cost-of-attendance scholarships.
I believe the money for the cost of living stipends is going to come from a variety of different places. Not only will this allow the schools more flexibility in attaining the necessary funds to secure the stipends for their student-athletes, but it will ensure that the schools and their athletic departments do not find themselves in serious trouble if one particular revenue stream dries up.
By being flexible and diversified, the ACC schools can ensure they can provide the benefits necessary to compete in recruiting with other schools around the country, without adversely affecting the athletic department’s ability to function. I think the bottom line is that most of the schools want to move forward with autonomy and provide their student-athletes with legal extra benefits such as the cost of living stipend, while also ensuring that they’re not going broke along the way.
One of the things that’s likely bound to happen in the coming years is a marginal increase in student activities fees around the ACC. A simple 10 dollar per semester raise in the student activity fee on a campus with 10,000 undergraduates is an extra $200,000 per year. That’s an easy way to get some of the necessary money from a source that has already been providing a substantial portion of operational funds for athletic departments around the ACC — the student body. Another potentially effective way to help raise the funds is to provide incremental increases for parking and other stadium amenities such as private boxes.
Something else that I think you’re going to undoubtedly see as time goes on is an increase in dynamic ticket pricing around the ACC. You already see some schools tiering the pricing of their games — providing cheaper opportunities for less popular games, while charging a premium for the more popular games. This is a trend that will almost certainly continue, as schools realize they’re leaving money on the table by allowing the secondary ticket market to profit the difference between face value and street value for the biggest games of the year.
Personally, I think the idea of dropping non-revenue sports is a last resort — something that ACC schools won’t do unless they simply have no other choice. Sadly, it may very well come in the near future where certain schools have no choice but to seriously consider dropping sports. But I believe the majority of the schools will likely exhaust every other potential avenue for generating the necessary revenue before going to that extreme measure.