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January 2012, Leadership
The Great Divide and How It Affects College Sports Reform
Over the last twenty years there has been a concerted effort by the haves in college sports to redirect as much revenue as possible to themselves. This effort was best characterized by Big Ten Commissioner Jim Delany in his use of the word “equity” to rationalize why he believed that the schools and conferences that had invested the most in college sports should reap a greater share of the revenue that flowed from that investment. With the massive growth in media rights fees over the years, this philosophical approach has produced significant disparity between the resources available to the equity conferences and all other conferences.
In my opinion, there is nothing wrong with this approach. It makes sense on many levels and is consistent with the American way. The reality is that the most commercially valuable college sports properties are from the equity or BCS conferences. Those are the teams and games that the fans want to watch; as a result, the media deals reflect the preferences of the fans.
There are three main areas of college sports revenue: 1) the television contract for March Madness, which produces almost $900 million annually; 2) BCS bowl/television contracts, which are valued at approximately $200 million and have the potential to exceed the March Madness payment if some form of a playoff develops; and, 3) conference television deals that amount to $1 billion annually for the BCS conferences alone. The lion’s share of these revenue categories go to the BCS conferences/schools, which is simply another way of saying equity conferences/schools. Comparatively, only crumbs are shared with non-BCS/non-equity conferences/schools.
The BCS/equity conferences/schools completely control the revenue from football and conference television deals; and, while they get most of the revenue from the March Madness television deal, they do have to share some of it with other participating schools. The sharing of this revenue produces complications for both the haves and the have-nots. The BCS/equity conferences/schools would prefer not to share any of this revenue since they believe the value of the deal is being driven by them. At the same time, the have-nots are addicted to both the visibility provided by March Madness and the money that flows from it, even if it is heavily weighted toward the teams that go deep into the tournament. In addition, both sides are attracted to the Cinderella drama that occasionally unfolds, although it is important to remember that the last such team to actually win the national championship was in 1985 with Villanova. The likelihood of a Cinderella team actually winning in the future is probably less than in the past because of the growing disparity in the level of resources available.
The reality is that the growing resource gap between the haves and have-nots is making it virtually impossible for the have-nots to effectively compete in sports across the board. At the same time, the growing resource disparity makes it difficult for all Division I schools to agree on a set of rules. This is at the heart of the dispute about allowing schools to pay for the full-cost of attendance. The BCS/equity conferences/schools have the resources to fund this new expense, while the have-nots do not. It is not a philosophical dispute; rather it is simply an economic issue. Simply put, it is impossible to agree on a set of rules that govern a school with a $125 million athletic budget and a school with a $5 million athletic budget.
Change has to occur, but the economic realities have to be faced to effectively do so. History and common sense tells us that the BCS/equity conferences are going to continue to maximize these revenue streams, and well they should. Non-BCS/non-equity conferences/schools need to recognize this reality and refrain from making costly investments in athletic facilities, coaching salaries or operating budgets in the false hope of securing access to these media driven resources. What these schools have to do is create a competitive, economic and regulatory structure that makes sense for them. The addiction to a small revenue stream that flows from the March Madness contract and the impractical dream of a Cinderella victory needs to be placed in context.
It is time to call the question and to recognize that there is as much of a divide (if not more) within Division I as exists between Division I, II, and III. The discussion should not simply be whether the BCS/equity conferences/schools should unilaterally decide that it is in their interest to form Division IV within the NCAA structure or break away from the NCAA altogether, but whether they should be encouraged to leave by the non-BCS/non-equity conferences/schools because it is their interest to separate.
Dave O'Brien J.D. has been a college sports executive and educator for over 25 years. He served as a Division I athletic director at Long Beach State University, Temple University and Northeastern University for 16 years (1991-2007).
O'Brien is currently the Director of the Sports Management Program at Drexel University where he also teaches at the undergraduate, graduate and law school levels. In addition to his academic position, O'Brien is the managing partner of the O'Brien Sports Group which provides a wide range of consulting services to the college sports industry, including NCAA rules compliance, risk management audits, business support services, executive recruitment, training workshops and more. He is also an editor of College Sports Business News.
O'Brien is active nationally in sports law matters as co-author of a monthly column on college sports law issues published in College Athletics and the Law and as a consultant on sports topics including pay equity, retaliation, harassment, Title IX, and coaching contracts.
Prior to becoming an athletic administrator, O'Brien served in a variety of roles in higher education, which included assistant to the president for legal and legislative affairs at Montclair State University and the assistant vice president for administration and finance at Long Beach State. He also served on the legislative staff of the New Jersey Senate and practiced law in New Jersey.
O'Brien is a graduate of Moravian College and Seton Hall Law School, and has also attained certification from the Sports Management Institute as part of its inaugural class. He can be reached at dobrien@collegesportsbusinessnews.com