Albama Arkansas Auburn Florida Georgia Kentucky LSU Mississippi State Missouri Ole-Miss USC Tennessee Texas A&M Vanderbilt
Latest News

Expounding On Expansion: Pay Attention To The Daily Financial News

This morning, the University of Georgia Athletic Association’s board of directors unanimously approved an immediate $2 million gift to be given to the University.

That money is in addition to $6 million over three years that AD Damon Evans pledged to the school in February of 2009.

“I want to thank the association for its support to the university in what I think is the toughest 18 months the university has had financially since World War II,” president Michael Adams said.  “The fact Damon has come forward and volunteered additional help is something I’m grateful for.

“We don’t want a strong university here without a strong athletic association.  Neither do we want a strong athletic association without a strong university.”

Of the $2 million contribution, $500,000 will help with need-based scholarships… $500,000 will help launch a new merit-based scholarship program… and $1 million will go to fund four professorships.

So what does this have to do with conference expansion?  As is the case with just about everything in life, follow the money.

As we recently wrote in Part Two of our “Expounding On Expansion” series, college and university endowments suffered their worst year since the Great Depression between July 2008 to June 2009.

Most colleges are simply desperate for more cash and new revenue streams.

So if a conference can find a way — by adding two, three or four schools — to grow additional revenue, college presidents will pay attention.

That’s why more options are on the table now than ever before.  There will be more bowl games this football season (more bids = more teams = more money).  There will be more NCAA tournament bids next March (more bids = more teams = more money).

Traditions probably mean less now than at any point during the past 50 years.  Example: For all the talk of “student-athletes,” no one should rule out the possibility of a 16-team conference petitioning the NCAA for the right to stage its own four-team in-conference playoff.  Far-fetched?  Probably.  But if presidents were shown research that said such a system could bring in millions more per year, the coaches, student-athletes and all other naysayers would most likely take a back seat to all those dead presidents.

Remember, it was just a few short years ago that the NCAA moved to a 12-game football season.  So much for coaches’ complaints, injury concerns and worries about athletes missing class.  Money was on the table and college presidents took it.

At the same time, the fact that universities are so financially strapped could in reality make conference expansion more difficult.

Let’s assume that the Big Ten will expand to 16 teams.  That’s a big assumption, but for the sake of argument, let’s make it.

From a power standpoint, the SEC would almost have to match the Big Ten in size.  Long-term influence and revenues could be adversely affected if the SEC allowed the Big Ten to create that big of a size advantage.

But despite the need to make a decision based on long-term goals, the league could actually hurt its coffers in the short-term.

If the SEC’s expansion couldn’t bring in enough additional revenue to cover the new 16-way split of the pie, would Georgia’s athletic department have two million bucks lying around to give back to the university?

Would other SEC athletic departments be able to make similar gifts to their universities?

All this should make two things very clear:

1.  The SEC’s presidents should be taking expansion seriously in hopes of finding new cash.  The argument that the league is “already rich” doesn’t mean much in light of the current economy.  Just ask folks at the University of Georgia.  Money is good.  More money is better.

2.  If the SEC is to expand, it absolutely must make its moves based on true financial growth opportunities.  The overall brand must be made stronger.  Texas and Texas A&M would assist in that area.  But it’s debatable if simply adding four more Deep South schools would prove as helpful.

 


0 comments

Trackbacks

  1. [...] should be a reminder about the engine that’s driving all of this expansion [...]

  2. [...] — As expected, the league quickly denied that any conversations had taken place with CBS.5.  Pay Attention To The Daily Financial News — We explain how a $2 million gift from the Georgia Athletic Department to the University of [...]



Follow Us On:
Mobile MrSEC