Do the P5 Conferences Plan to Redistribute College Basketball Revenue?

[Shocker1976]

As I have posted on the Shocker Basketball Forum, I have concerns that the P5 Conferences have strategic plans to change college basketball's revenue stream and competitiveness to replicate what they have accomplished with college football. For the uninitiated, Kristi Dosh reported (Business of College Football) that 2014 football revenue will be split between Ten Conferences as follows:

1. ACC - $83.5 million ($50 mil base plus $6 mil Rose Bowl and $27.5 mil Orange Bowl)
2. Big 12 - $58 million ($50 mil base; plus $4 mil Peach Bowl and $4 mil Cotton)
3. Big 10 - $60 million ($50 mil base; plus $6 mil Sugar Bowl and $4 mil Cotton)
4. Pac12 - $60 million ($50 mil base; plus $6 Orange Bowl and $4 mil Fiesta)
5. SEC - $87.5 million ($50 mil base; plus $6 mil Sugar Bowl, $4 mil Bowl and $27.5 mil Orange Bowl)

Rose and Sugar are Contract Bowls this year; next year when played as a bowl each team invited will receive $40 million

1. American - $12 million base
2. C-USA - $12 million base
3. MAC - $12 million base
4. Mountain West - $16 million (baser plus $4 mil for Boise State playing in Fiesta)
5. Sun - $12 million base

$15 million to be split according to computer rankings (payments of $5 mil, $4 mil, $3 mil, $2 mil and $1 mil)

P5 receives $349 million (81.5%) while Other 5 receives $79 million (18.5%)

Chris Isidore in a March 2013 article offered three points of information, which lead me to believe that the P5 is interested in re-distributing the considerable revenue stream of college basketball -

• $700 million for TV rights paid to the NCAA is the major source of Conference revenue for basketball
• the TV money is split based on the success of all teams in a given conference over a number of years, not individual season performance
• 2012 Kentucky received less than half the revenue of in-state rival Louisville, even though Kentucky was the NCAA men's Champion

Approximately 10% of the schools currently playing D1 basketball report losing money, even though Division 1 schools reported a combined profit margin of 25% on $1.3 billion in men's basketball revenue. For 2013 Forbes produced a listing of the twenty (20) most profitable schools, 19 of the schools were members of the P5. Xavier at number 20 with a profit of $7.3 million was the outlier.

Kenpom's current ranking of the top 100 schools places 51 in the P5 and 49 among other conferences. The top 64 kenpom ranked non-P5 schools fall within 23 different conferences. Note the following for top 64 non-P5 schools:

1. A-10 Conference has 10 teams
2. Big East has 9 teams
3. American has 6 teams
4. Mountain West has 6 teams
5. West Coast has 6 teams
6. MAC has 5 teams
7. C-USA has 4 teams
8. Horizon has 4 teams
9. MVC has 4 teams

Two questions to ask yourself:

1. Could and are the P5, ESPN, CBS and Turner Broadcasting going to realign NCAA College Basketball Conferences?
2. Will the P5 seek to capture 81.5% of the $1.3 billion NCAA basketball yearly revenue?

[Shocker1976]

Yes, IMO the P5 and other interested parties are pursuing a strategy to alter the current distribution of the $700 million paid to the NCAA for media rights. The P5 is pursuing this strategy even though their top basketball programs are profitable and their members comprise only 51 of the Top 100 teams as ranked by Kenpom.com. In 2013 Forbes reported Louisville the most profitable basketball program in the country at $24.6 million while the profitability of the next 18 members of the P5 ranged from $19.9 million to $8.1 million.

The 275 universities not members of the P5 should implement a proactive plan to protect their status and revenue in the world of college basketball. As Kenpom.com currently ranks 49 of these 275 universities in the Top 100 schools playing basketball, I would suggest the Presidents, Athletic Directors and Coaches of these schools meet with appropriate NCAA personnel to discuss and implement the following points of self-interest:

1. Establish the NIT as the National Championship Tournament for these schools.

1. Negotiate a $350 million media rights contract for these schools and tournament

1. Distribute this $350 million to the 275 schools and their conferences as follows –

1. $6 million base payment to each conference totaling $156 million

1. $194 million to the National Championship Tournament, each conference guaranteed one team in the tournament. All payments made to the school and not the conference.

1. $600,000 to each team of the 64 invited to participate
2. $1 million to each team playing in Round 2
3. $2.5 million to each team playing in the Sweet 16
4. $3.5 million to each team playing in the Elite 8
5. $6 million to each team playing in the Final 4
6. $10 million to each team playing in the National Championship
7. $10 million to the National Champion

Conferences key to making this plan work are –

1. A10
2. American
3. Big East
4. Big South
5. CAA
6. C-USA
7. Horizon
8. MAC
9. MAAC
10. Mountain West
11. Missouri Valley
12. Ohio Valley
13. Patriot
14. Summit
15. West Coast

[RoyalShock]

I don't have the time to delve deeply into this, but if the P5 separates into a different division, the interest in what's left will wane. There's no way to know how much. It could become the equivalent of FCS, making $350 million a pipe dream, IMO.

[Shocker1976]

I don't have the time to delve deeply into this, but if the P5 separates into a different division, the interest in what's left will wane. There's no way to know how much. It could become the equivalent of FCS, making $350 million a pipe dream, IMO.

IMO you are correct, which is why the non-P5 conferences have to be proactive. If they sit on their hands and count on the P5 to act in their best interests; then get ready to watch the equivalent of FCS football.

[Jatrain]

With all due respect, there's a couple of problems with your idea.

1.) You're using the Kenpom data in a way to suggest that the power (on the court) in college basketball is split evenly between the P5 and the others. This isn't the case. If you use the Top 75 instead of the Top 100, more closely matching teams that are actually in contention to make the NCAA tourney, you find the numbers skewed much more in favor of the G5 schools: almost 2/3rds of the Top 75 are P5 schools. 70% of the Top 50 are P5 schools. Only 15 out of your 275 non-P5 school actually have a chance of contention in the tourney (Top 50 Kenpom).

2.) The Big East would never go along with voluntarily separating themselves from the P5 conferences. Beyond how they historically view themselves (as Power basketball schools), their financials are much more in line (as I show below) with P5 conferences (basketball share of revenue) than the rest of the non-P5 (with the AAC occupying a middle ground). And if the P5 decided to put into place a plan as you suggest, I would posit that they would include the Big East in it as well in order to provide, at minimum, some cover.

3.)The fan interest wouldn't be there. The non-P5 schools generate interest during March Madness because of the underdog factor. You remove that and you remove the reason the average fan is going to watch those programs play.

4.) You'll never get that kind of dollar amount for your hypothetical tournament (new NIT). The interest as a whole in non-P5 conferences just isn't there. All one has to do is to look at the current TV contracts that the conferences have negotiated with ESPN, Fox, etc to see the value which is placed on those schools. The Big East is by far the largest at $42 million per year (this is probably somewhat close to the value brought by the basketball portions of the P5 mega-deals). The AAC receives $20 million per year but that includes football and they lost their biggest asset in Louisville since that deal was signed. The A10 receives $5 million per year. The MVC receives $190,000 from ESPN and actually pays Fox to broadcast their games. The CAA has a combination of deals that is a little better than the MVC's but that also includes some football. For comparison's sake we can look at Big 12 schools' individual contracts as they have games (6 basketball, 1 football plus Olympic sports) set aside (Tier 3) for them to negotiate there own TV contracts with. Let's take KU as an example because their contract will based the most on basketball value (as opposed to football for the other schools). They receive almost $8 million per year from Time Warner and ESPN for those 6 basketball games and 1 football game. If $5million of that contract can be attributed to basketball value it is very reasonable to state that 6 games of KU basketball is equivalent in TV dollars to the networks to the entire season of A10 basketball. It has greater monetary worth (to TV) than the all the conference on your list not named A10, American, and Big East combined. The monetary value of the NCAA tournament is tied to 2 things: 1) the P5 schools and 2) the David and Goliath factor attracting viewers. In your proposal the "New NIT" would have neither.

None of this to say that a money grab by P5 would be right. But if the mid-major conferences (that contain non-mid major programs) want to avoid it they need to work with the P5 to jettison the low-major schools who have rushed to join D1 over the last 5-10 years for the sole reason of grabbing NCAA tourney money. It's not fair to those schools and their athletes for the NCAA or their administrators to try to pretend they are in the same division as a P5 school (or a P5 level school such as Wichita).

[Shocker1976]

With all due respect, there's a couple of problems with your idea.

1.) You're using the Kenpom data in a way to suggest that the power (on the court) in college basketball is split evenly between the P5 and the others. This isn't the case. If you use the Top 75 instead of the Top 100, more closely matching teams that are actually in contention to make the NCAA tourney, you find the numbers skewed much more in favor of the G5 schools: almost 2/3rds of the Top 75 are P5 schools. 70% of the Top 50 are P5 schools. Only 15 out of your 275 non-P5 school actually have a chance of contention in the tourney (Top 50 Kenpom).

2.) The Big East would never go along with voluntarily separating themselves from the P5 conferences. Beyond how they historically view themselves (as Power basketball schools), their financials are much more in line (as I show below) with P5 conferences (basketball share of revenue) than the rest of the non-P5 (with the AAC occupying a middle ground). And if the P5 decided to put into place a plan as you suggest, I would posit that they would include the Big East in it as well in order to provide, at minimum, some cover.

3.)The fan interest wouldn't be there. The non-P5 schools generate interest during March Madness because of the underdog factor. You remove that and you remove the reason the average fan is going to watch those programs play.

4.) You'll never get that kind of dollar amount for your hypothetical tournament (new NIT). The interest as a whole in non-P5 conferences just isn't there. All one has to do is to look at the current TV contracts that the conferences have negotiated with ESPN, Fox, etc to see the value which is placed on those schools. The Big East is by far the largest at $42 million per year (this is probably somewhat close to the value brought by the basketball portions of the P5 mega-deals). The AAC receives $20 million per year but that includes football and they lost their biggest asset in Louisville since that deal was signed. The A10 receives $5 million per year. The MVC receives $190,000 from ESPN and actually pays Fox to broadcast their games. The CAA has a combination of deals that is a little better than the MVC's but that also includes some football. For comparison's sake we can look at Big 12 schools' individual contracts as they have games (6 basketball, 1 football plus Olympic sports) set aside (Tier 3) for them to negotiate there own TV contracts with. Let's take KU as an example because their contract will based the most on basketball value (as opposed to football for the other schools). They receive almost $8 million per year from Time Warner and ESPN for those 6 basketball games and 1 football game. If $5million of that contract can be attributed to basketball value it is very reasonable to state that 6 games of KU basketball is equivalent in TV dollars to the networks to the entire season of A10 basketball. It has greater monetary worth (to TV) than the all the conference on your list not named A10, American, and Big East combined. The monetary value of the NCAA tournament is tied to 2 things: 1) the P5 schools and 2) the David and Goliath factor attracting viewers. In your proposal the "New NIT" would have neither.

None of this to say that a money grab by P5 would be right. But if the mid-major conferences (that contain non-mid major programs) want to avoid it they need to work with the P5 to jettison the low-major schools who have rushed to join D1 over the last 5-10 years for the sole reason of grabbing NCAA tourney money. It's not fair to those schools and their athletes for the NCAA or their administrators to try to pretend they are in the same division as a P5 school (or a P5 level school such as Wichita).

You may be correct that "the ship has already sailed" and the non-P5 schools are too late to take action to protect the integrity of their basketball programs. And I agree with your comment that the non-P5 schools need to focus their efforts on legitimate D1 programs relegating those schools that are unwilling or unable to support their basketball programs to another division (five or six such schools currently reside in the MVC).

You are also correct that today the "power" of the P5 schools is "greater" than the non-P5 schools both on and off the court and IMO this separation will continue to expand if the non-P5 schools remain complacent. This imbalance is due to greater financial resources expended by the P5 schools coupled with the far greater marketing of P5 schools by themselves and various media outlets. Non-P5 schools have little exposure via the media even though their basketball product is often superior to P5 schools. The Big East is the only non-P5 conference that has made any progress in this area.

Today non-P5 schools have leverage, as their status in the Top 25/Top 75/Top 100 schools ranges from 30% to 49% of these divisions, and they should use it. If they do not then they will lose it in the future.