Falling behind other leagues in money, ACC considering new revenue distribution system for schools
Posted October 26, 2022 1:51 p.m. EDT
Updated October 26, 2022 4:13 p.m. EDT
The ACC is studying how it distributes revenue to its 15 member schools and considering whether to reward schools that help generate more revenue with a bigger share.
The ACC generated more than $578 million in the 2020-21 academic year, a record amount buoyed in part by Notre Dame's participation as a conference football member in the COVID-impacted 2020 season. The league distributed between $34.9 million (Notre Dame) and $38.1 million (Clemson) to its schools.
But with the league falling far behind the SEC and Big Ten in revenue, the ACC is exploring several ways to increase its distribution -- and, perhaps, placate members eyeing invitations to higher-revenue leagues.
ACC schools are bound by a grant of rights agreement until 2036 when its television deal with ESPN expires. But schools in other leagues have announced their departures several years before the end of their grant of rights agreements while playing out the final seasons in their current leagues.
The ACC is working with ESPN to increase revenue, particularly as the Big Ten's television rights package will grow to more than $1 billion annually in the coming years, and has hired a consulting firm to help generate other revenue streams.
A group of athletic directors, including UNC's Bubba Cunningham, is tasked with studying unequal revenue distribution among the schools. The group, which includes up to seven athletic directors, has been meeting for a couple months, Cunningham told WRAL News on Tuesday.
"I don't think it's as simple as are you in favor (of unequal revenue distribution)," Cunningham said.
The league has 10 or 11 revenue streams and officials could have different ideas about how each of those should be split. TV rights bring in the majority of revenue to the conference with money from postseason football, including the College Football Playoff, and the men's basketball tournament as the other significant portions.
More money is coming, which makes it an opportune time to discuss distribution.
The league's payment from TV rights is expected to jump by several million dollars per team due to the ACC Network's full carriage agreement with Comcast. Phillips called it "a sizable increase" during his address at ACC Tipoff in October.
Expansion of the College Football Playoff from four teams to 12 teams, which will start by 2026 at the latest, is expected to bring a giant increase in rights fees. How that money will be distributed among the conferences is still to be determined. Phillips came out in favor of expanding the men's basketball tournament, another potential money maker.
The ACC received more than $397 million from television rights, more than $104 million from postseason bowls and more than $64 million from the NCAA in 2020-21. The league made about $10.5 million from conference tournaments, according to annual tax documents filed with the IRS.
But even within those categories there are different areas. The group of athletic directors are going through each area, Cunningham said. A recommendation could still be months away.
"Should that be based on athletic success and then that could be defined on CFP or NCAA basketball or national championships?" ACC commissioner Jim Phillips said. "Should it be based on the number of sports and sports sponsorship and programs and scholarships that you are providing? Should it be academic success, graduation rates, GSR scores? We're scrubbing hard on what that may look like."
Cunningham said the group is likely to come up with several options, including keeping distribution as it is. The group may have minimal, moderate and aggressive options as well, Cunningham said.
"We want to stay competitive. We want to be competitive in all we do," Cunningham said. "Not every single dollar equates to winning championships, but we need to be in the ballpark. We've operated very efficiently. When the gap gets so significant, then you have a challenge."
The ACC's membership includes large state universities and small private colleges. Wake Forest, which is ranked No. 10 in this week's football poll, has 5,472 undergraduate enrollees. Florida State, a football power in its first two decades in the league, has more than 33,000 undergraduates.
"We get a lot of different opinions," Cunningham said.
The highest earning football conferences have slightly different payout models.
Between 2015-26 and 2020-21, the last year for which tax documents are public, Clemson has received the largest distribution among ACC members. The Tigers played in the College Football Playoff in each of those seasons.
The Big Ten has distributed nearly identical amounts to all of its members for the past two decades, according to tax forms. In 2020-21, the conference distributed right at $49 million to all of its long-time schools. Newer expansion schools, such as Nebraska, Rutgers and former ACC member Maryland, received smaller amounts.
