For the ACC, it seems more is not enough
Revenues grow, but not at levels of SEC, Big Ten
FERNADINA BEACH, Fla.— Throughout the late 2000s and early 2010s, officials within the ACC constantly fought rumors and speculation about the conference’s demise. Every few months, it seemed, brought another account of Florida State and Clemson’s impending defectionfor the Big 12 and then, in late 2012, Maryland announced that it was leaving theACC for the Big Ten.
The departure of one of the ACC’s founding members stunned the conference. It solidified the perception, which had existed for years, that the ACC was vulnerable for poaching; that its relative lack of revenue, compared to the SEC and Big Ten, was too large of a problem to ignore orperhaps even solve.
A decade later the ACC still faces a revenue problem, relative to its two main conference rivals, only the financial pressure has become much more dire. Ten years ago, the ACC generated $50 million less than the SEC, and $93 million less than the BigTen. The margin between the wealthiest two leagues and the ACC seemed large then, but has since become hundreds of millions of dollars wide.
Addressing that revenue gap, to the extent that it can be addressed, has been a focal point for the ACC here this week during its annual spring meetings. Jim
Phillips, now in his second year as the conference’s commissioner, said last week that generating more revenue is “top of mind” for the league, which stands to be dwarfed in revenue by the SEC and Big Ten in the coming years.
Both of those leagues will enter into new TV rights contracts in 2024. The ACC’s deal with ESPN, meanwhile, stretches into 2036 and, barring the unlikely addition of Notre Dame as a full-time, football-playing member of the ACC, there’s little indication that anything can be done to renegotiate it in a way that’s more favorable for the conference.
It makes for a somewhat grim financial picture for the ACC, and one that speaks to a defining reality of major college athletics: more is never enough. The ACC generated nearly $500 million in revenue during the 2019-20 fiscal year, a record for the conference. In the same year, though, the Big Ten generated $769 million. The SEC last year surpassed the $800 million mark.
Conference revenue is derived from several sources, including bowl games and the NCAA tournament. Nothing, though, is more important to any conference’s bottom line than its TV broadcast rights. The value of those contracts has skyrocketed in recent years, and the success of the Big Ten Network and the SEC Network has pushed those leagues into a different financial stratosphere.
They are not so much members of the Power Five these days as they are their own entity; a Power Two that has pulled away from the field, at least financially.
When their new rights deals go into effect in two years, the distance between the SEC and Big Ten and the other three Power Five leagues will only increase. That is the tide the ACC is fighting.
When he met with reporters last week, Phillips tried to spin the positive. The ACC Network’s recent distribution deal with Comcast was “a big moment,” he said, “and we’ll see a nice bump, I think, coming up.”
“We haven’t had a full year of the distribution” with the ACC Network, Phillips said. “So that will close the gap for us, for this iteration, this particular year.”
In two years, though, that gap is likely to become wider than ever — and will likely continue to grow unless the ACC finds a way to alter its deal with ESPN. The league entered into its contract with the network during a time in which the ACC needed stability. Maryland had left the conference. Speculation persisted that other schools might follow.
John Swofford, former ACC commissioner, orchestrated a Grant of Rights agreement in 2013, which effectively has tethered every school to the conference, lest
it leave and surrender its cut of the ACC’s TV revenue. Originally, the conference’s deal with ESPN was to expire in 2027, but the ACC agreed to a nine-year extension with the launch of the ACC Network.
The conference’s decisions throughout the mid-to-late 2010s brought a desired level of stability. But those decisions also locked the ACC into a TV rights deal that hasn’t aged well, one that’s made it far more difficult for the ACC to address its widening revenue disparity with theSEC and Big Ten.
Phillips conceded an obvious point:
“We have to do a better job with revenue within the conference office,” he said. “And I think you’ll see a Chief Revenue Officer at some point be part of our new structure, after we find our new location — whether we stay in Greensboro ... or we go to two of the other finalists. So the overall organization needs to have somebody each and every day thinking about revenue.”
In the short term, at least, the ACC faces a significant challenge to make more money. Though its TV contract is set, Phillips said conference officials “talked with ESPN at length” on Wednesday “about some really, I think, high-level opportunities from a sponsorship standpoint to help generate” more revenue.
“And they’re as motivated aswe are,” he said.
The revenue disparity with the Big Ten and SEC has notyet proven to be much of a competitive disadvantage between the lines of competition. The ACC outperformed every conference in the NCAA tournament, when Duke and North Carolina met each other in a memorable national semifinal in New Orleans. In football, Clemson has become a national power over the past decade, with coaching salaries and a football-only facility that remains the envy of most schools in the sport.
The question, though, is what happens as the financial gap grows even wider. The so-called arms race, both in salaries and facilities and everything else, has long defined major college athletics, and schools from the SEC and Big Ten already find it easier than most to outbid their rivals from other conferences. They’re not likely to find spending money any more difficult in the years to come.
Phillips, meanwhile, emphasized the number of sports the ACC sponsors — 28, as of next year. That’s more than any other conference with the exception of the Ivy League and “that’s been in the bloodlines and DNA of the ACC for as long as the ACC has been around,” he said.
“We want to address that and close that as often and as quickly as we can,” Phillips said of the revenue gap. “But I’d also say at the same time (that) just because you have the most money doesn’t mean you win all the time, either. Depending on whatever sport you look at. And so that’s not an excuse not to try to close the revenue gap, but I also know that we’ve done a really good job in our schools of taking the resources that they’ve had and using them tohave success.”
Indeed, the ACC has remained competitive. The league can produce metrics, whether related to men’sbaseball or NFL draft picks, and make the argument that it’s as strong as any conference in the country. The financial numbers, though, tell a more concerning story.