SPORTS

New TV deals should result in about $50 million yearly for Iowa

Andrew Logue
alogue@dmreg.com

It’s almost like they’re printing money.

A deal between ESPN and the Big Ten Conference, reported last week by the Sports Business Journal, is expected to give the league a total media rights package worth $2.6 billion over six years.

For the University of Iowa and other member schools, that arrangement could result in an annual distribution share approaching $50 million.

Iowa and other conference members will share a reported $440 million annually when new agreements kick in.

The windfall, however, prompts at least two questions:

First, how much of the wealth should be spread throughout a university?

“That money is going to go to the schools, and how the schools use that really is going to be kind of the issue,” said B. David Ridpath, associate professor of sports management at Ohio University.

“Are they going to use it to help the university as a whole? Probably not, because athletics has gotten much more expensive ... the arms race, coaches’ salaries and all these other things.”

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And second, when will this financial joyride finally take a plunge?

“I can’t think of anything else except the housing bubble,” Ridpath said. “Talking to colleagues of mine, there’s always an end to this.

“There’s always some level it’s going to be maximized.”

But until that point is reached, administrators and fans will continue to benefit from an economic boon — while watching for signs of a potential bust.

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John Ourand of the Sports Business Journal reported on the Big Ten’s deal with Fox Sports in April, and he followed with news of ESPN’s agreement.

The conference has not confirmed any of the details, but it is expected to make an announcement during next month’s Big Ten football meetings in Chicago.

Iowa athletic director Gary Barta responded to an interview request from the Register via email. In regards to the TV agreements, Barta wrote: “There are no changes on the Big Ten media rights front. Negotiations are ongoing (and) any announcements will come from the Big Ten office when there’s something to announce.”

So unless something unexpected pops up, here’s where things stand:

The Big Ten’s current TV deals are set to expire after the coming school year (2016-17).

According to Ourand’s report, the league’s agreement with Fox is worth $240 million annually, beginning in the fall of 2017. ESPN will pay $190 million a year.

Combined, the deals give each network roughly 25 football games and 50 basketball games per season through 2022-23.

Add an additional $10 million from a basketball-only deal with CBS, and the Big Ten is set to receive $440 million a year (not including what it might earn from the Big Ten Network, which is locked in through 2031-32).

Big Ten hints at bigger shifts to future TV broadcasts

For Iowa, which was already set to receive an estimated $35.5 million in media rights in 2016-17, it’s a hefty hike in funds and an added sense of security.

“The Big Ten is one of two, maybe three conferences in the nation where you never have to worry about anybody leaving or any other sort of internal instability,” said Adam Jacobi, a managing editor for SB Nation's Iowa blog, BlackHeartGoldPants.com. “A big part of that is not only that (the conference) generates a lot of money for its members, but it does so on an equal basis.”

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Is there an obligation or responsibility to share profits with non-athletic entities within a university?

“That is a question that we are investigating,” said Katie Mulholland, president pro tem of the Iowa Board of Regents. “I know we are looking into it, and that’s the best information I can give you right now.”

Barta, in his response to the Register, said the Hawkeyes have been planning for an increase in television revenues for some time.

He also listed a series of investments in non-revenue sports, such as a gymnastics training center, an indoor track and softball/baseball stadium upgrades.

There are also plans for the Gerdin Athletic Learning Center, which will benefit all sports.

“There have been discussions in regards to all Big Ten schools using some of their resources to invest back into academic missions,” Barta wrote, “but nothing final.”

Big Ten officials know they're the pace-setters

Administrators could be hamstrung by the rising cost of competition.

According to a USA Today database, Iowa’s total expenses the past fiscal year were $109,214,651, while operating revenue was $105,969,545. Coaching salaries (including bonuses and other benefits) totaled $18,172,755.

By comparison, Iowa State's expenses amounted to $75,209,309, with $75,283,516 operating revenue and $12,053,400 in coaches' salaries and benefits.

Jacobi is among those who would make a case for investing more in the athletes.

Player stipends and additional compensation are becoming accepted parts of doing business in the Power Five conferences: the Big Ten, SEC, ACC, Big 12 and Pac-12.

“As long as athletics is using the facilities on campus, using the name of the university, making use of everything that comes with it, I think they absolutely do have a responsibility to spread the wealth,” Jacobi said. “That being said, I think it’s also pretty obvious that the money should go in large part to pay the players.

“... Getting good players does directly affect the ability of your athletic department to make money.”

If athletes receive more rewards, however, the divide between the haves and have-nots will continue to widen.

“You’re seeing a huge, huge separation,” Ridpath said. “I always ask this question myself: ‘Why is Ohio University trying to compete with Ohio State?’

“It’s more than the U.S. and Argentina (referencing the latter's 4-0 win this week in the Copa America soccer tournament). There’s such a big difference. Why are schools like us trying to maintain (NCAA) Division I status?”

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Ridpath is president of the Drake Group, founded in 1999 by a former Drake University professor and provost, which aims to “defend academic integrity from the corrosive aspects of commercialized college sports.”

He wonders if storm clouds are looming as ESPN tries to overcome the loss of more than 7 million subscribers since 2013.

“I think what you’re seeing now, with the cord-cutting and other things that are going on — the fact we can get our media delivered in so many different ways, through an app, phones, iPads — (other analysts) just really believe the TV bubble will burst.

“Will that be when these contracts start to wind down? I don’t know… But I can’t imagine this is going to go on in perpetuity.”

Concerns about the future may explain why the Big Ten’s agreements with Fox and ESPN are for six years, and not more.

The Pac-12 will be up for a new media rights deal in 2024, with the Big 12 in 2025. The NHL, NFL and MLB will also be seeking new agreements when current deals end after 2021.

In other words, a lot of people will be negotiating during a relatively short time frame.

Might athletic directors might want to keep that timeline in mind when making plans?

“I would say most universities don’t look at it that way,” Ridpath said. “They tend to think that the money is going to be there.

“Schools like Iowa certainly have the alumni base to pick up some slack … But I would look more short term, rather than long term, if I was an athletic director and president.

“But I’m not confident they’re going to be doing that.”

IOWA’S GROWING ATHLETIC BUDGET

The following totals are from the USA Today database of annual athletic department reports submitted to the NCAA. Iowa has seen its expenses nearly double from 2005 to 2015:

Year   Operating revenue   Operating expenses

2005   $61,676,257             $54,982,658

2006   $73,321,227             $59,224,861

2007   $80,832,070             $70,469,589

2008   $81,515,865              $71,602,594

2009   $79,971,143             $71,116,911

2010   $88,735,093             $74,438,196

2011   $93,353,561             $88,057,486

2012   $97,902,974             $104,658,746

2013   $107,153,782           $106,969,227

2014   $105,958,954           $102,278,847

2015   $105,969,545           $109,214,651