WRAL Investigates

The ACC is making more money than ever. So why is the league's future so uncertain?

A WRAL News analysis of two decades of tax records from the top five NCAA athletic conferences reveals a revenue gap that is likely to grow significantly and could ultimately threaten the future of the North Carolina-based Atlantic Coast Conference.

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By
Brian Murphy
, WRAL sports investigative reporter
RALEIGH, N.C. — The Atlantic Coast Conference set records in 2020 in revenue generation and distribution to its member institutions, indicators that are nearly as important as wins and losses in college athletics these days.

But it wasn’t enough to keep the Greensboro-based league from falling further behind two other major college athletic conferences in those key financial metrics—a revenue gap that is likely to grow significantly in coming years and threaten the future of the ACC, a conference as much a part of the fabric of North Carolina as Cheerwine and pulled pork.

The athletic conferences are nonprofit entities and file tax forms with the Internal Revenue Service that spell out their revenues and expenses, including distributions to member institutions. WRAL News analyzed two decades of tax records filed by the top five NCAA conferences, a period of enormous financial growth, movement of schools and increasing budgets, financed in large part due to skyrocketing television rights fees.

The financial and power chasm between the top two conferences and everyone else poses big questions and foretells big changes for college athletes, fans and academic institutions.

“If you think about what these distributions were, five or 10 or 20 years ago, the idea that we need more is mind boggling at this point,” Wake Forest athletic director John Currie told WRAL News.

What is the revenue gap?

Over two decades, the ACC has seen its revenues soar as television rights have increased exponentially, not only directly for the conference-held rights to regular-season games but for postseason games in football and men’s basketball.

The ACC brought in about $84 million in the fiscal year ending June 30, 2001, distributing almost $8 million to each of its then-nine league members. Twenty years later, the league reported making $578.3 million in revenue during the 2020-21 fiscal year and distributed an average of $36.1 million to its 15 members, which included Notre Dame as a full member during the pandemic football season of 2020.

Two of its competitors, however, have grown even quicker.

The Southeastern Conference, with football powerhouses such as Alabama, Georgia and Florida, generated $833.3 million and distributed an average of $54.6 million to its 14 members in the 2020-21 fiscal year, the last year for which financial data is available.

The Big Ten, with football stalwarts Ohio State and Michigan and huge numbers of alumni from large Midwestern state schools, generated $679.8 million and distributed an average of $48.7 million to its 14 members in the 2020-21 fiscal year, even as the conference played an abbreviated football schedule.

The differences in those annual payouts, starting small and growing larger each year, is the revenue gap. About 37% of athletic department revenue across the FBS comes from conference distributions. The ACC is at 36%, but the Big Ten is at 50% and the SEC is at 61%, according to 2021 data from the Knight Commission on Intercollegiate Athletics. Donor contributions make up 28% of ACC athletic department revenue.

The money is seen as critical for long-term financial health of the conferences, a key to stabilizing membership and keeping the most successful schools in the league. As the gap widens, at a minimum, it could mean better facilities, more recruiting muscle and more national exposure for the universities across their athletics programs. At a maximum, it could create a class of schools with huge influence over the future of college athletics.

And the chasm is only going to get bigger due to changes in membership: the SEC is adding powers Oklahoma and Texas from the Big 12 by 2025, and the Big Ten is expanding to California with the additions of USC and UCLA by 2024. Each league will have 16 members and, in the Big Ten’s case, television rights deals that could exceed $1 billion annually.

The moves, particularly the Los Angeles schools’ departure for the Big Ten announced this summer, set off a flurry of speculation about further consolidation involving marquee ACC teams and pushed the league’s revenue gap to the forefront.

“It’s economically impossible to address it,” said Karl Benson, who served as commissioner of the Mid-American, Western Athletic and Sun Belt conferences between 1990 and 2019. “When conferences don’t meet membership expectations, you get movement. What causes USC or UCLA or what causes Texas and Oklahoma to leave? When they recognize it ain’t going to get any better.”

The ACC is locked into its current rights agreement with ESPN until 2036 and, barring an unlikely move from Notre Dame to join the league in football, it lacks a clear addition to significantly alter its position.

It’s left the ACC member schools to ponder: Will it get any better?

There are 32 NCAA Division I conferences. Ten of them compete in the Football Bowl Subdivision, the top football level. Five of the conferences have the autonomy to set some of their own rules. The ACC is No. 3 in terms of revenue. That could be a badge of honor. But as the Power 5 becomes a Super 2, is No. 3 good enough?

“When you think about where we're at right now, we're probably in the gated community as one of five,” ACC commissioner Jim Phillips said during his address at the league’s annual football kickoff event in Charlotte last month. The league’s current position in the changing landscape of college football was the dominant theme of the event. “Maybe people have a different line of demarcation about who is in there. It really doesn't take away from: We're going to continue to try to find new ways to generate revenue for our conference.”

How did we get here?

In the fiscal year ending in 2002, the first year for which tax documents are easily accessible for all five power leagues, the conferences were living in the same neighborhood. At the high end, the ACC distributed an average of $9.7 million to its nine members. At the low end, the Big 12’s 12 member schools received an average of $5.7 million from the conference. The SEC paid out $8.4 million to its members; the Big Ten $8.8 million.

The ACC led the way in average payouts, in part because it was the smallest league, for the first half of the 2000s. The league distributed slightly more revenue to its member schools than the SEC throughout the 2000s. In 2005-06, the ACC, SEC and Big Ten were relatively equal in terms of revenue and distribution.

Then television turned on the spigots.

In a time of hundreds of channels, cord-cutting and, now, streaming services, live sporting events—football especially—still draw American eyeballs. Of the top 40 most-watched primetime shows in 2021, 37 were sporting events and one was a show that aired after the Super Bowl.

The Big Ten increased its total revenue from $126 million in 2005-06 to $217 million two years later in 2007-08. That was the first year of the Big Ten Network, which the league created with Fox. The Big Ten does not include a breakdown of its revenue sources, including television, on its 990 form.

The SEC would make a big jump in 2009-10, moving from $148 million to $244 million, largely on the strength of its television contract which jumped from $60 million to $153 million. In 2008, the SEC—in the midst of seven consecutive national titles in football—signed a 15-year, $2.25 billion deal with ESPN to begin in 2009. In 2014, they expanded it 20 more years and created the SEC Network, which led to another dramatic jump in revenue. In 2020, the entities agreed to a 10-year, $3 billion deal for additional content beginning in 2024.

“At the end of the day, it comes down to ratings and viewership,” said Tag Garson, senior vice president of properties at Wasserman and former programming director at ABC Sports and ESPN.

The ACC, even with its large East Coast markets, has been playing catch up with the Super 2 ever since.

Benson credited former SEC commissioners Roy Kramer and Mike Slive and former Big Ten commissioner Jim Delany with being “on the cutting edge of turning their conference into revenue producers.”

Said Garson: “You also have to win. They have programs that have been very successful and raised the awareness of college football beyond where it was. The interest level and the consistency they’ve had and the big games that take place between the schools in the conference are ones people are waiting for every year. Success has also helped. But I think they were also thinking ahead as to what could make a difference for their conferences.”

Under Kramer, the SEC expanded to 12 teams in the early 1990s to take advantage of an NCAA rule allowing leagues of 12 or more to hold conference championship games in football. That game alone was worth nearly $15 million in revenue in 2007 up from less than $7 million in 2000, according to tax documents. The league stopped reporting “football championship game” revenue separately in subsequent years.

The Big Ten generated $4.7 million in operating revenue in 2001. That number steadily grew to a high of $37.4 million in 2019-20, according to the tax documents.

“Conference offices went from being service organizations to being business enterprises,” Benson said. “It didn’t just happen with the big boys. Every membership was expecting them to generate new money, and every conference office, down to the [Ivy League schools], had marketing departments and sponsorship attempts and development people. It changed the entire face of what the role of conferences and, thus, the role of the commissioner was.”

The ACC hasn’t stood still. It grabbed Florida State 30 years ago and, for a time, the Seminoles carried the league’s banner in football. It acquired the football side of the Big East in stages, swiping Miami, Virginia Tech and Boston College in the early 2000s. A decade later, Syracuse and Pittsburgh joined the ACC to secure the conference’s position as the lone power conference on the East Coast.
In 2004, the ACC announced a seven-year, $258-million deal with ABC and ESPN. In 2010, the conference signed a 12-year, $1.86-billion agreement. In 2016, the deal was extended for 20 years to launch the ACC Network, a key to keeping up with the SEC and Big Ten, which also had networks.

The network has been a success, but the long-term contract has come to be an anchor for the ACC, as the other leagues get multiple opportunities to renegotiate television deals in an escalating market. The ACC can’t.

“When the deal was done most recently to extend as far out as was done, it allowed for a network to be created,” Garson said. “It allowed for stability to be maintained. At the time, those were two important goals for the conference. Those that want to look back are forgetting how important those two factors were at the time. I can defend that deal eight days out of seven for when it was done. If the extension wasn’t done for the length of time, the network doesn’t exist.”

It has worked. The ACC has seen a jump in revenue, and it has provided membership stability—for now.

Like the ACC, the Big 12 and the Pac-12 conferences have fallen behind their Power 5 peers in revenue, leading to member movement. Eight schools from the ACC, Big 12 and Pac-12 have left for or announced their departure for the SEC and Big Ten in the past decade. During the same time, the three other conferences have taken a single school—Colorado from the Big 12 to the Pac-12—from another Power 5 member.

After losing founding member Maryland to the Big Ten, the ACC had its schools sign a grant of rights agreement that now runs through 2036, perhaps the only thing keeping its league together at the moment. The grant of rights says schools’ media rights remain with the ACC even if the school changes conferences.

Each time the ACC narrows the television revenue gap, the other leagues cash in with another huge television rights increase. The percentage of total revenue that comes from television rights is growing in the SEC, too, now edging toward 70% up from about 60% at the time of its first big deal with ESPN.

In 2013-14, the ACC trailed the SEC by $23 million and the Big Ten by $36 million in total revenue. The next year, the ACC made $45 million less than the Big Ten and $124 million less than the SEC. The ACC has trailed the SEC in total revenue by more than $200 million each year since. The ACC has trailed the Big Ten in total revenue by at least $90 million and by as much as $326 million each year since.

“The ACC is a terrific conference led by a really good commissioner with so many strong athletic directors,” Garson said. “I think people need to focus on that and how good they are and what they have and try to make that better.”

With the huge brands coming to the Super 2, those leagues could create an annual revenue gap for ACC schools larger than the payout they receive from the league. The Big Ten, whose primary rightsholder is Fox, will receive $350 million from CBS for a package of 13 football games, according to multiple reports. The ACC received less than that for its entire television rights package in 2019-20. The Big Ten may eclipse $1 billion in annual television rights fees.

Since 2014, the SEC has made $3.1 billion in television rights fees. The ACC has made $1.7 billion. That difference accounts for the bulk of the $1.57 billion gap in the conferences’ earnings over that time period.

“Nobody ever used to report their end-of-year distribution,” Benson said. “You didn’t issue a press release on June 30 to report it. Now those are bragging rights.”

Closing the gap

The leagues break down their revenue differently on their tax forms, but much of every leagues’ revenue comes from television through league rights, postseason football bowl games and the NCAA Tournament. A new College Football Playoff format and contract, expected to be in place in the later half of the decade, should bring a windfall. But that will help each conference, and likely give the SEC and Big Ten even more of an edge.

Any hope to close the revenue gap starts—and likely ends—with television, which in the ACC’s case means ESPN. The SEC earned $588 million from television rights, more than the ACC’s entire revenue, in 2020-21, according to tax documents. The ACC earned $397 million from television, in a year where it got to fold Notre Dame's NBC contract into its conference pool.

Given the power of television rights holders, ESPN, which is a partner in the ACC Network and owns all the league’s rights, is the one entity that could help the league cut into that deficit.

“We have an eager partner, ESPN,” Phillips said. “They also understand they want a healthy ACC. They need a healthy ACC. We’re all in with them, and they’re all in with us so those continue to be some conversations.”

In the weeks since the Big Ten announced its expansion, there have been reports of a possible ACC partnership with the remnants of the Pac-12 to generate additional revenue. ESPN will not have any part of the Big Ten’s soon-to-be-announced next agreement, the Associated Press reported. That could free up better game times for the ACC and, for the dreamers, more money. It would behoove ESPN, the thinking goes, to keep the ACC together and successful.

“If I’m sitting in that chair today and I know I have an agreement that allows for stability and also a revenue stream that is consistent, I don’t know that I’m thinking, ‘Oh, I now need to change this.’ Because a contract is a contract,” Garson said. “I would certainly be willing to work with the conference on how to better monetize rights if there are certain areas that aren’t making as much money as they could on behalf of both the conference and the network.”

The ACC announced Wednesday it is working with FishBait Solutions as its chief revenue and business innovation consultant “to assist the conference in the areas of revenue generation.” FishBait, whose top executives have deep ties to ESPN and ACC schools, will meet with individual schools and work to “drive value.” An agreement with cable company Comcast to carry the ACC Network in November 2021, perhaps the biggest accomplishment of Phillips’ short tenure as commissioner, will increase revenue distribution to the schools, he said. The league is also considering moving its headquarters from Greensboro, where the ACC was founded in 1953.

The ACC is working to raise money “not only with sponsorship and championships and how do you generate the most revenue you can through ticketing, etc., but television. Television, first and foremost,” Phillips said.

The additional money around the edges won’t fully close the gap, not with the Big Ten and SEC deals getting larger.

“We can develop, with FishBait’s help, a really comprehensive strategy about how we continue to maximize and articulate the advantages we have in our league,” said Currie, a Chapel Hill native who graduated from Wake Forest.

Phillips and the ACC may have some time. No one has yet challenged a grant of rights agreement, including Oklahoma, Texas, USC or UCLA, which, as of now, have chosen to wait until the agreements with their current leagues end.

“I don't have any concern that we're not going to continue to grow and prosper,” Currie said. “In a lot of ways, it can be a bit of a crisis of confidence when you start just comparing newspaper headlines versus the actual content, so to speak. And so I think we have a tremendous opportunity.”

But each year moves the ACC closer to the end of its grant of rights agreement and each year may bring a larger revenue gap, changing the calculus for schools.

Several ACC schools could be coveted by the SEC or Big Ten, including Notre Dame, North Carolina, Florida State and Clemson. Other schools may be of interest to one or the other for different reasons. Some schools, perhaps more than half of the league, could end up remaining in a diminished ACC. The schools that help drive the revenue could push for unequal revenue distribution within the league.

“All options are on the table,” said Phillips, who was considered the favorite to replace Delany as Big Ten commissioner in 2019 before Kevin Warren got the job. “When you look at revenue, you look at closing the gap, you look at generating more, you look at distribution, it all is part of a similar conversation.”

Why does it matter?

Fans still primarily cheer for schools and teams, not conference offices. They celebrate victories, conference titles and national titles, not balance sheets.

On that front, the ACC is holding its own.

“Having the most money doesn't always mean you win the most,” said Currie, who previously served as athletic director at Kansas State in the Big 12 and Tennessee in the SEC. “And we got to continue to figure out ways to generate more revenue for our schools in our conference. But that's not going to be the differentiator whether we're successful or not.”

The ACC has the second-most appearances in the College Football Playoff with eight. Two teams reached the men’s basketball Final Four in 2021. The league won seven team national titles in the 2021-22 academic year: men’s soccer (Clemson) and tennis (Virginia), women’s cross country (N.C. State), lacrosse (North Carolina), soccer (Florida State), swimming and diving (Virginia) and the co-ed sport of fencing (Notre Dame). Three ACC schools finished second in the nation.

The SEC, Pac-12 and Big 12 also won seven team titles, though six of the Big 12’s seven were won by soon-to-be SEC members Texas and Oklahoma. The Big Ten won five.

Still, it is football that drives the fortunes of so many athletic departments and the fates of most conferences. And there one league stands head and shoulders above the rest.

The SEC has won 12 of the past 16 national titles in football. The league has had two of its teams play for the championship three times in that span, nearly as many times as another league has captured the crown. Five different SEC schools—Georgia, Alabama, LSU, Auburn and Florida—have won the title in that span. The ACC has won three titles—Clemson twice, Florida State—in that time, and the Big Ten one: Ohio State.

Of the 10 public schools that spend the most on football, five are SEC schools, two are Big Ten schools and two are Texas and Oklahoma, according to a Sportico database. Clemson is the only ACC school in the top 10. Expand it to the top 20 highest-spenders and the SEC has nine, the Big Ten has seven, the ACC two plus Texas and Oklahoma.

“It's really easy to get swept away into a comparative thing,” Currie said. “It really comes down to what do you do with the resources you're allocated? And how do you maximize? How do you maximize your advantages and capitalize on the advantages? You have to build a great program that serves student athletes and serves your community.”

Take Clemson, which has built a powerhouse right next to an SEC at its height.

Clemson, the ACC’s best football program over the last decade, had $129.9 million in athletic department revenue in 2020, according to data compiled by the Knight Commission on Intercollegiate Athletics. The Tigers spent $55.9 million on football. Alabama, the SEC’s football titan, had $189.2 million in athletic department revenue in 2020. The Crimson Tide spent $58.5 million on football.

“Nobody’s asked me a question about our league,” said Clemson football coach Dabo Swinney, who has led the Tigers to six appearances in the College Football Playoff. “We’ve always talked about our program. … That really should be what it’s about.”

More widespread football success, specifically from its name-brand programs and particularly against other Power 5 conference schools, might be the most impactful thing the league can do to improve its position. The ACC placed five teams in the preseason Top 25 coaches’ football poll, including Wake Forest and Pittsburgh, the two teams that played for the ACC championship a year ago. Clemson, Miami and N.C. State are also ranked.

If the ACC schools had another $20 million or, gasp, $40 million annually in their conference distribution, where would it go? Would it impact wins and losses, the things fans actually care about? Would it improve the student-athlete experience?

Coaching and administrative salaries are on the rise with the highest-paid coaches now over $10 million. Loosened NCAA rules have increased what schools can provide in academic grants, school-related expenses and food. The schools have made commitments around mental health and diversity, equity and inclusion in recent years.

Currie said that at resource-rich Tennessee, some of the athletic department revenue went to paying for two university-run parking garages. Facility improvement projects are often funded by donors, as was $100 million in football projects over the last seven years at Wake Forest.

No matter how much you spend, someone has to finish last in the SEC and the Big Ten, too. What the money does, however, is allow schools to have more priorities. One example is women's basketball.

Among public schools, the SEC has four of the top 10 spenders in women’s basketball, plus Texas and Oklahoma, according to a Sportico database. The Big Ten has two. The ACC one. And then there’s powerhouse Connecticut at No. 1, an illustration of Currie’s point that schools do have a choice in what sports they want to excel in. SEC member South Carolina has won two national titles and Mississippi State has finished second twice in the past five tournaments.

“Money matters and the ability to attract great talent and have great sports medicine, support and athletic trainers for all your teams and all that kind of stuff that does matter,” Currie said. “I think the question is more when you talk about an overall conference distribution revenue number, how does that actually translate to the field, right?”

The difference for individual schools in the ACC versus individual members of the SEC and Big Ten is about $100 million over the last seven years. Since 2014, North Carolina has received $204 million from the ACC. SEC member Kentucky, like the Tar Heels a basketball powerhouse with intermittent football success, has made $301 million in conference distribution.

Since 2014, North Carolina State has received $202.8 million from the ACC. Big Ten member Minnesota, which has gone 58-39 in football compared to the Wolfpack’s 61-40, has gotten $317 million in distribution from its league.

“It’s a concern,” N.C. State football coach Dave Doeren said. “Obviously, if one school is getting $30 million more than another school, they can do more things with that money. So it’s been that way for a while though and if you look at what’s happened, we’ve still had a team in the playoffs eight out of the last nine years. So we’ve overcome it. But you wouldn’t like to overcome it, if you didn’t have to.”

The ramifications are not just financial. The ACC’s power could be diminished. The concentration of football powers in two leagues will allow the SEC and Big Ten to set the agenda at the highest level of college athletics at a time of massive disruptions. Everything from the structure of the college football playoff to the number of scholarships, from the shape of the NCAA Tournament to revenue sharing with athletes is on the table, and the Super 2 will be able to shape those discussions.

“We understand where those two leagues are,” Phillips said. “No one is ignoring that. We're all trying to find ways to close that gap.”

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