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Basketball, the ACC's hidden potential revenue generator

   Posted by All Sports Discussion at  12/20/2012 9:28:32 PM  |  Follow us on Twitter: @scacchoops
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Before we begin, let me say I’m not going to try and convince anyone that the money produced from basketball will approach what football can do. That’s simply not going to happen anymore. Football is the top revenue generator in college athletics, and that’s not going to change anytime soon if ever.

That said there is still a significant amount of money involved when it comes to the NCAA basketball tournament. In April 2010 the NCAA signed a 14 year $10.8 Billion deal with CBS Sports and Turner Broadcasting for the rights to the Division 1 Mens’s basketball tournament.

From the Business of College Sports in 2011 the ACC earned roughly $18.2 Million. If you divide by that by 12, each ACC school earned $1.51 Million Dollars. Not bad, but for comparison the Big East regarded as the country’s best basketball conference in 2011 eached nearly $25 Million.  How is this calculated? It’s a credit based system, where each NCAA game a team participates in earns on 1 credit per game. Being in the Final 4 and advancing to the championship game still count as 1 credit, so a maximum of 5 credits can be earned by a team.

In 2011 each unit was worth $239,664. The ACC earned 76 units the previous 6 years. 76 * $239,664 and you get your $18.2 Million. In 2010 a unit was worth $222, 206. These numbers come from the NCAA revenue distribution plan, that you can view. From that same document the NCAA distributed $122 Million in 2006. It rose to $180.5 Million by 2011, with an average increase of $11 Million each year.

So I take it you are probably wondering how much will future credits be worth? Let’s take an educated guess. For the credits to go from $222,206 to $239,664 required a 7.8% increase. For an average of the distribution to go from $122 Million in 2006 to $180.5 Million in 2011 is roughly an 8% increase per year. Let’s be very conservative and say each year the units will increase by 7%. Therefore in 2012 a unit grows from $239,664 to $256,440 and so on. Here are the estimates for future game unit values.

2013 = $274,390

2014 = $293,597

2015 = $314,148

2016 = $336,138

2017 = $359,667

2018= $384,843

What does this have to with the ACC? Well the ACC is about to get really good and really deep at basketball. With the additions of perennial basketball powers Louisville, Syracuse, Notre Dame, and Pittsburgh the conference is going to get credit bump if you know what I mean. The last few years the ACC has been putting in on average 4 or 5 teams into the big dance. I would say in a given year with the new additions the ACC will average somewhere from 7-9 teams a year in the NCAA’s.

The ACC had 76 units in the previous years from 2006-2011 for an average of 12.67 credits per year. We know Pitt and Syracuse arrive next year, but with the current turmoil in the Big East, we don’t know exactly when Notre Dame and Louisville will join, but let’s say by 2018 the ACC can average 17 credits a year. The Big East had 22 credits in 2011, so I think 17 is reasonable. Let’s go to 2018 with our 17 credit average. That’s a 102 credits by 2018 multiplied by $384,843  for a total of $39.3 Million. You equally divide by the 15 schools, and each ACC school receives $2.61 Million. Older members of the ACC may get a little bit more, but we made it equal for the sake of this article.

Take another conference than averages 12 credits per year during the same period which is also reasonable. The ACC earned 11 in 2011 for comparison… That’s 72 credits multiplied by $384,843 for a total of $27.7 Million. In other words the ACC can simply through better basketball earn nearly $12 Million more in 2018 than a weaker basketball conference in this very conservative estimate.

My only point here is to show while basketball is clearly trailing football in any revenue comparison, and by quite a large margin I might add, there is still significant money to made through quality basketball play.

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