Pages

Saturday, August 26, 2023

Things Change - Part 10 (more details on dollars)

Jon Wilner at the Mercury News has more detailed information than in our prior post on UC-Berkeley and Stanford joining the Atlantic Coast Conference. but with reduced revenue:

The ACC’s proposed payments for Cal and Stanford don’t seem that much higher than what they’d earn in the Mountain West or American. And travel would be worse. So why are Cal and Stanford pushing for the ACC? — @ebrohinho

Because they are desperate to remain in a power conference — so desperate that they have offered major concessions to appease the four ACC schools in opposition to expansion. Essentially, the Cardinal and Bears are on hands and knees, shamelessly begging for an escape hatch from an awful situation that they themselves created.

The subpar states of their football and men’s basketball teams in recent years left the Bay Area schools without offers from the Big Ten during either of its western raids (the L.A. schools in 2022 and the Northwest schools in 2023). Now here they are, with the ACC as the lone lifeline to power conference status, the only option for linking arms with the major college elite.

So deep is the desperation that Cal and Stanford are willing to join a conference based in Charlotte and schlep their Olympic sports back and forth across the country, 

That they are willing to accept reduced revenue shares from the ACC …

And willing to lock in their media rights with the ACC until 2036, an eternity in college athletics.

The financial piece must be hammered out in negotiations, but we have a working framework to assess.

The Cardinal and Bears would receive reduced revenue shares (compared to the existing ACC members) on a laddered basis. In the early years of their membership, the Bay Area schools would receive quarter-shares (approximately), with the amount increasing until 2036. According to a source, the average over time would be roughly 50 percent.

That would place each school about $15 million behind, with the gap steadily disappearing. Yes, the annual media revenue in the initial ACC years would be comparable to what the two schools would receive if they rebuilt the Pac-12.

Stanford, which has more money than it could possibly spend, will offset the lower revenue internally.

Cal doesn’t have the institutional wherewithal to cover the revenue disparity, but it does have UCLA. Last year, the University of California Regents attached a condition to UCLA’s move to the Big Ten: The so-called Berkeley tax would force the Bruins to subsidize Cal between $2 million and $10 million annually for the drop in Pac-12 revenue caused by UCLA’s departure.

We suspect the subsequent collapse of the Pac-12, combined with Cal’s plight, will move the regents to impose a subsidy on the high side of that range. So the Bears could offset reduced revenue in the ACC through the fee imposed on UCLA. (The Bruins are expected to receive an average of approximately $65 million per year from the Big Ten’s media rights deal. Remove $10 million for the Berkeley tax and another $8 million to $10 million from increased travel costs, and UCLA’s net annual revenue, excluding postseason events, from the Big Ten could fall into the mid-$40 million range.)

Put another way: The Bay Area schools have financial mechanisms in place to remain competitive despite the reduced shares required for membership in the ACC. The more consequential issues are locking in their media rights until 2036 and sending their Olympic sports back and forth across the country. For years, the schools refused to fully engage in the necessary evils of college sports that would have helped their football and basketball programs compete.

Why? Because those evils ran counter to the academic missions and institutional cultures on each side of San Francisco Bay. Yet here they are, desperate for membership in a conference on the Atlantic Seaboard, prepared to send their athletes back and forth across the country and prime examples of the very evils they purportedly stood against.

Years of poor decisions have left them with no choice.

Source: https://www.mercurynews.com/2023/08/25/mailbag-desperation-thy-names-are-stanford-and-cal-an-acc-power-play-pac-12-had-no-luck-and-more/.

No comments:

Post a Comment