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Thursday, September 11, 2008 11:41am
By: Accsports Staff

By Dave Glenn and staff, ACC Sports Journal
January 6, 2003 GREENSBORO — Every year around bowl time, fans ask hundreds of interesting questions. Many are answered sufficiently in the mainstream media. Many others are not. With that in mind, here's a sampling of questions submitted to the ACC Sports Journal in December and early January, along with some detailed answers that were thoroughly researched as a direct result of fans' inquiries. Most questions are abbreviated from their original form.

What's the big deal with the bowls? Don't most teams actually lose money, after expenses are factored into the equation? And doesn't the ACC make most of its money in basketball anyway?

The “big deal,” of course, is the money. Unfortunately, the ACC and many other conferences don't generally volunteer much financial information, so it's often difficult for media members to report the details. The most readily available info, including minimum bowl payouts, comes from the games themselves. Still, that doesn't paint a complete picture about how the football postseason factors into the conference's overall budget.

Fortunately, the ACC Sports Journal obtained several tax statements that helped illustrate the importance of bowl revenue in the league's financial outlook. All major conferences, as tax-exempt organizations, must file annual summaries with various government agencies, and much of that information is considered a matter of public record.

The most recent documents reviewed by the Sports Journal, which were filed by the ACC in 2000, identified bowl revenue as the No. 1 source of income for the conference. The league, which reported about $82 million in total revenue for the year studied, took in about $19 million from the bowls. Obviously, that was an enormous portion of the annual budget, almost 25 percent. Those wondering about the importance of bowls should wonder no more.

“The bowls are a major factor in our success as a conference,” ACC commissioner John Swofford said. “The national exposure, the success on the field, and of course the financial aspect of it all contribute to making this a winning proposition for us.”

Roughly, the biggest chunks of the ACC's $82 million in revenue broke down this way: $19 million from the bowls, $18 million from football TV contracts, $17 million from basketball TV contracts, $13 million from the NCAA basketball tournament, $7 million from “other football income,” $5 million from the ACC basketball tournament and $3 million from investments and interest. No other single item amounted to more than $1 million.

By the way, the big bowl numbers go a long way toward explaining the difference between the haves and the have-nots of college athletics. In one year, for example, the ACC brought in almost as much money in bowl revenue as the entire annual budget (for the same year) of Conference USA ($21.3 million), and more money than the entire annual budget of the Atlantic-10 ($8.1 million), the Mid-American ($2.9 million), the Mountain West ($2.9 million) and other non-BCS conferences.

So how much money did the ACC bring in this year?

In 2002 the ACC had six pre-arranged bowl tie-ins. Here they are, with their guaranteed minimum payouts per school: BCS ($11-14 million), Gator ($1.6 million), Peach ($1.6 million), Tangerine ($750,000), Continental Tire ($750,000) and Seattle ($750,000). In newspaper reports, the Seattle Bowl repeatedly was listed with a $1 million per team payout, but bowl officials said that was false. The accurate number was $750,000, which is the minimum allowed under NCAA rules.

So, entering each year under the current format, the ACC is guaranteed at least $16.45 million in bowl revenue as long as it qualifies enough teams to fill the six slots. This year, when the conference placed a record seven bowl teams, the actual minimum rose to $17.2 million. The Silicon Valley Football Classic, the San Jose-based bowl that selected Georgia Tech after some financial encouragement from ACC officials and a trade (essentially Oregon for Tech and cash) with the Seattle Bowl, also has a minimum payout of $750,000 per team.

The actual ACC revenue number, which depends on the financial success of the various bowls, always goes higher than the reported minimums. The Peach Bowl, for example, lists a $1.6 million payout per team but consistently has hit $2 million per team in recent years because of excellent ticket sales and attendance numbers. With the tremendous success of the Gator and Continental Tire games this season, they too were expected to rise well above their minimums.

In the end, the ACC expected to bring in more than $20 million in bowl revenue this season. League officials won't know the exact amount until bowl representatives finalize their financial data from the games. Whatever the final number, it again is likely to represent the league's largest single source of revenue in the 2002-03 academic year.

But isn't it true that most teams that go to bowls actually lose money in the end, after deducting expenses for transportation, lodging, entertainment and other things?

Not exactly.

It's true that the big numbers thrown around in December and January every year — including the $20 million of ACC bowl revenue referred to above — can be very misleading. Why? Because they're all gross numbers, not net numbers. However, most of the league's postseason representatives still manage to make money in the end, and all ACC teams ultimately turn a significant profit because of the huge BCS payout and the conference's revenue-sharing policy.

The ACC actually includes projected bowl expenses in its budget each year, and it does so according to a specific formula agreed upon in advance. Any conference team that goes to the Sugar Bowl, for example, is forwarded $1.6 million from the league office to cover bowl expenses. The numbers for the other affiliated games are as follows: Seattle ($1.1 million), Continental Tire ($1 million), Gator ($1 million), Peach ($1 million) and Tangerine ($1 million). The amounts for non-affiliated games, like the Silicon Valley this season, are determined on a case-by-case basis at regular meetings of conference officials. Georgia Tech representatives said they were told to expect $1.1 million for their trip to San Jose.

All of the schools are permitted to keep the unused portion of their ACC-issued expense checks, so they often face some difficult decisions. How many players will be invited to travel? What about the walk-ons who never play? What about the cheerleaders, and the band? How many administrators will be included in the travel party? How many secretaries, support people and other personnel associated with the program? How many nights will everyone stay in the host city, and at which hotels? How will everyone travel — by plane, by bus or on their own? It's a major logistical challenge, and it often includes some serious financial repercussions, so every school handles these questions differently.

Additionally, ACC schools get help from the conference — and, again, this cuts deeper into the bowl revenue and continues to lower the net proceeds — if they fail to sell their bowl ticket allotments. This, too, is done according to a specific formula. The league shares in the expense of unsold tickets — not to exceed 12,500 and calculated at the lowest ticket price available — to this extent: (1) above 6,000 tickets, 50 percent of the tickets' cost, (2) above 7,000 tickets, 75 percent of the tickets' cost, and (3) above 8,000 tickets, 100 percent of the tickets' cost.

Wake Forest, for example, had no chance of selling its 12,500 ticket allotment to the Seattle Bowl. This is a small, private school that took 4,000-5,000 people to the Independence Bowl in Louisiana in 1992 and about 50 — yes, that's fifty, not a misprint — to the Aloha Bowl in Hawaii in 1999. So when the Deacs brought about 1,000 fans to Seattle and had about 500 others purchase tickets through the school for local charities, that still left almost 11,000 unsold tickets. That dramatically affected the bottom line for Wake, which hoped only to break even in the end.

Side note: When a school requests more than the required ticket allotment from a bowl — this often is done in an attempt to make a team more attractive to a selection committee — and then doesn't sell those tickets, that school must account for the extra cost itself. Maryland did exactly this in December, promising 20,000 fans to the Peach Bowl (the required ticket allotment for that bowl was 17,500) but delivering only 15,000. The Terps were free to apply some of their ACC expense money to cover the cost of the extra 2,500 tickets (at $55 apiece), which is exactly what they did, but they had access to the conference's “unsold tickets” fund only for the original 2,500 (17,500-15,000) shortfall. This, too, affects an individual school's bottom line.

So who made money? Overall, the conference did, thanks to the big BCS check. Individually, Florida State did, thanks to a short trip to New Orleans. So did N.C. State (extended planning time helped with rates), Maryland (although not much), Virginia (short trip to Charlotte) and Clemson (short trip to Orlando). Georgia Tech and Wake Forest barely covered their expenses, if at all, but that was to be expected for a pair of trips to the West Coast.

So what's the bottom line for the conference, financially speaking? Does every ACC school get the same exact amount? Do all conferences divide money the same way?

Nobody knows the final 2002-03 numbers yet, but here's how it works:

Let's say the ACC's total bowl revenue ends up being $22 million (a reasonable but speculative estimate) this year. Immediately subtract the $7.8 million (combined) in expense money handed out to the league's seven bowl participants. Then subtract the conference's “unsold ticket” distributions — estimated at $1 million (combined) — extended to Clemson, FSU, Georgia Tech, Maryland and Wake Forest. (Remember, NCSU and Virginia didn't need help from this fund, and Maryland wasn't eligible for the additional 2,500 unsold tickets it unilaterally requested beyond the required allotment.) Deduct another $250,000 for the ACC's contribution to the Silicon Valley Bowl for making the trade with the Seattle Bowl, which allowed the league to find a postseason spot for Wake Forest.

That scenario would leave the ACC with a net of about $13 million this year. According to conference policy — and, boy, does this policy kill Florida State almost every year — the league divides those net proceeds equally among its nine members, rather than in a fashion that rewards on-field success. Thus, each school — including Duke (2-10) and UNC (3-9), which were home for the holidays — will end up with about a $1.5 million profit from the 2002-03 football postseason. That's a pretty nice number, by the way, but it's not quite up to the standards of other major conferences.

The Big Ten, for example, grossed about $32 million this year after placing Ohio State and Iowa in the BCS and five other teams in bowl games. After expenses, that conference expected to net about $21 million, which it will divide equally among the league's 11 members. At almost $2 million per school — that's net, remember — the Big Ten obviously is doing significantly better than the ACC in this regard. The Big 12, with eight teams in the postseason, also anticipated a 2002-03 bowl profit of about $2 million per school.

Among the six BCS conferences, four divide their net bowl proceeds equally: the ACC, the Big 12, the Big Ten and the Pac-10. Technically, not every school in those conferences gets exactly the same amount of money from the postseason, because those bowl teams that save part of their expense checks (as NCSU and others this year) add to their individual bottom lines. In the end, though, the various schools' numbers in those four leagues never vary by more than $500,000.

In contrast, the Big East and SEC have more merit-based policies, which reward schools that earn bids in the bowls with the highest dollar values. In the SEC, for example, the BCS team gets an initial $1.7 million, plus travel expenses, plus its 8.33 percent share (as one of 12 teams) of the league's net bowl proceeds. There are similar (but lesser) financial benefits for any teams that play in bowls with minimum payouts of $1.5 million or more. In the Big East, the BCS representative takes home about $4 million of the $11-14 million payout, plus its share of other net bowl proceeds. This was considered a major selling point for perennial power Miami, which did not get the same offer in preliminary expansion discussions with the ACC years ago.

“Any time Florida State is unhappy about something going on in this conference,” one ACC official said, “you can be sure we're all going to hear about the way some other leagues handle the distribution of bowl money.”

Is it true that ACC schools should root for one another in bowl games because you get more money if you win, and everyone in the conference splits the money anyway?

No. Under NCAA rules, bowls must split their payouts evenly between the two participating schools. Financially speaking, at least in the immediate sense, the key is to get to the bowls — and, more importantly, the right (higher-paying) bowls — rather than actually winning the games. That's nice, of course, but it doesn't affect the bottom line.

The “root for the ACC” attitude does make sense in basketball at NCAA Tournament time, however, because the amount of the NCAA's checks to various conferences each year directly depends on league members' success over an extended period. It's a complicated formula, but suffice it to say that the size of a conference's check directly reflects the success of that league's member schools in the tournament over the previous several years. There's no such formula in football.

Which schools' fans improved their reputation for traveling well, and which did not?

That one's easy, although it still requires a brief explanation. In these discussions, fans often end up comparing apples to oranges. Some count only tickets sold through the school's ticket office, which is the most easily verifiable number. Others also include those purchased through Ticketmaster, travel agencies and/or directly from the bowl, and that number is much more speculative and difficult to prove. For the sake of discussion, we'll use the first number — sales through the schools' ticket offices — as the important one, with some speculation on the size of the overall fan contingent as well.

The short answer: NCSU and Virginia thrilled bowl officials with their turnouts. FSU, Maryland and especially Clemson disappointed them. Georgia Tech and Wake Forest delivered very small numbers for West Coast trips, but that development was viewed as inevitable.

N.C. State — Wolfpack fans helped their already strong reputation by buying a whopping 26,500 Gator Bowl tickets through the school, and unbiased estimates from Jacksonville pegged the NCSU contingent at more than 35,000 in sold-out, 73,491-seat Alltel Stadium. The Jan. 1 Gator, which sold out for the second year in a row, exhausted its ticket supply by Dec. 13. It was a wonderful success story on and off the field for the Pack, which was the subject of controversy when it was selected for the game over Maryland and Virginia teams that had won head-to-head matchups and finished one game higher in the ACC standings.

Virginia — Talk about top-to-bottom success stories. The Cavaliers' fan base, probably energized by being snubbed by the Gator, Peach and Tangerine bowls despite a second-place ACC finish, turned out in force for the Continental Tire Bowl. Facing the shortest bowl trip in school history — most of the school's supporters can drive to Charlotte in six hours or less — UVa fans purchased 18,500 tickets through the school's ticket office and brought an estimated 21,000 to the Dec. 28 game. Opponent West Virginia brought more than 30,000 fans to the event.

The first-year bowl, which is contracted to get the fifth choice from the ACC and the fourth choice from the Big East, couldn't have been happier when it ended up with a matchup of the second-place team from each league. Bowl officials, who originally hoped for a crowd of 30,000, ended up selling out 73,367-seat Ericsson Stadium in less than six days. Hotels were booked throughout the Charlotte area on a weekend when they're usually about three-quarters empty.

“I don't know how we can top this,” Continental Tire Bowl executive director Ken Haines said, “but it's a great place to start.”

Maryland — The Terps sold a disappointing 15,000 tickets to the Dec. 31 Peach Bowl and, according to first-hand accounts, actually sent a smaller number of folks to the game. There were extenuating circumstances, for sure, but the excuses offered by Maryland officials and fans exhibited one of the lingering differences between ACC football and, say, SEC football. In a great year for the Terps on the gridiron, they sent far fewer people to the Atlanta game than perennial power Tennessee sent (20,000-plus tickets purchased through UT, perhaps 40,000 total) after an extremely disappointing season. Overall, Peach attendance was 68,330 this season, the bowl's lowest number in six years.

Maryland's logic, which certainly had some merit, was that its fans basically were financially and/or emotionally exhausted by their athletic program's recent success. Last year, the Terps sold 22,000 tickets through their ticket office and brought about 24,000 fans to the Orange Bowl. Boosters also put out significant money recently for the basketball team's run to the NCAA title, the football team's preseason appearance in the Kickoff Classic and the building of the striking new basketball arena. Still, the fan bases of some successful programs shell out the big bucks year after year, sometimes for decades. If Maryland fans truly are worn out after just two seasons of success, perhaps they're not quite ready for the big-time after all.

Florida State — Now here's a fan base that can legitimately complain about being worn out. It was a minor disappointment to the Sugar Bowl when only 10,000-plus FSU fans purchased tickets through the school, and again when only an estimated 12,000 showed up for the Jan. 1 game against Georgia, coached by former FSU offensive coordinator Mark Richt. But nobody in the ACC was complaining about the Seminoles, whose BCS appearance as the conference champion accounted for about half of the league's 2002-03 bowl revenue — and whose presence as a member, realistically, led to the ACC's inclusion in the BCS and its forerunners many years ago.

Clemson — The spin doctors did everything they could to paint a pretty picture here, but this one was a major disappointment for everyone involved. The Tangerine Bowl, in its second year in Orlando, took a beating for the second year in a row. (Last year, 28,562 watched Pittsburgh beat NCSU, which sold 9,500 tickets but sent only 5,000 fans.) Yes, the awkward timing (Dec. 23) was bad for many people. True, the shorter turnaround between the announcement of the matchup and the game itself didn't help, either. But the Tigers sold only 6,700 of their required 12,500 tickets (at $45 apiece) through the school's ticket office, with an estimated 2,000 more sales through other outlets. The game drew only 21,689 (34,987 tickets sold) to Florida Citrus Bowl Stadium, which seats almost 70,000. A year ago, Clemson purchased 8,000 tickets to the Humanitarian Bowl in Idaho but brought only 2,000 fans to the game.

Clemson apologists correctly pointed out that many fans found better bargains by buying tickets from other outlets, but that's the case to some extent with most bowls. By any definition, the Tigers' turnout was a major disappointment for the second season in a row, with perhaps 7,500 orange-clad supporters on hand. Both Clemson and Tangerine officials expressed their disappointment in surprisingly public ways, although the game actually made a small profit this year.

“Other than the game in Boise, I've never known Clemson to sell less than 15,000 tickets,” said Tom Mickle, the executive director of Florida Citrus Sports, which runs the Tangerine and Capital One bowls. “This is a total surprise and certainly a disappointment. Last year Clemson was trying to get the game and said they could sell 20,000. Ö Still, given the distance other schools would have had to travel, I think we made the best possible choice.”

Wake Forest — The Deacons were just happy to be invited anywhere after a 6-6 regular season. They sold about 1,500 tickets (of their 12,500 allotment) for the Seattle Bowl against Oregon, which was just the sixth postseason game in school history, and nobody was surprised or disappointed. Wake has never had a reputation for traveling well, it still doesn't and it probably never will.

The long-term viability of the Seattle event — 38,241 bought tickets and about 25,000 showed up at 67,000-seat Seahawks Stadium this year — remains in jeopardy, but that's another story. Interestingly, although bowl organizers made a trade with the Silicon Valley event to get Oregon as a host team of sorts, big chunks of the resulting crowd appeared to be Washington fans who adopted the Deacs against the hated Pac-10 rival Ducks.

Georgia Tech — Tech, playing in a school-record-tying sixth consecutive bowl and its second straight postseason trip to the West Coast, took fewer than 1,000 fans to the Dec. 31 Silicon Valley game in San Jose. The Yellow Jackets were required to sell about 5,000 tickets to the event, held at 30,578-seat Spartan Stadium, but nobody expected that to happen. It helped that opponent Fresno State, which is located less than three hours from San Jose and was playing in the event for the third time in the game's three-year history, brought a significant contingent of supporters (6,000-plus) in what amounted to a home game.

After losing $108,000 in last year's trip to the Seattle Bowl, Tech expected to break even this time. The school wasn't required to sell as many tickets, wasn't required to stay as many nights and found less expensive flights this time. The Silicon event, which has no affiliation with the ACC, wasn't as lucky. With an actual attendance of 10,132 for this year's game, its long-term future is murky at best.