Tuesday, June 8, 1999

Crunching the Numbers on Big East Membership

Jack Bogaczyk wrote a column last week called Tech will pay anything for full inclusion that touched upon a subject that I thought needed further exploration:  namely, if Tech gets into the Big East for all sports, will we make more money, and if so, how much more?  We all know that the Big East has a better TV deal than the A-10, and we assume that Big East teams would bring more fans into Cassell Coliseum for men's basketball, but with the exit fee we would have to pay the A-10, and the entry fee we would have to pay the Big East, how would the dollars shake out, in the final analysis?

First, before I embark on this, a couple of comments:  (1) this discussion of money will center solely around men's basketball revenue.  It is assumed that women's basketball and football revenue will not be significantly affected by all-sports Big East inclusion; and (2) as I start this analysis, it's 11:35 p.m., so if it's not bulletproof, please forgive me.

From Jack's article and other sources, here's what we know:

  • If Tech announces it is leaving the A-10 before June 30th, our exit fee is $200,000; after June 30th, $500,000.
  • The A-10 TV contract pays about $100,000 a year (whoopee!), and the Big East pays about $500,000 a year if you don't appear on TV a single time.   For this analysis, I won't factor in Tech TV games, which would bring extra revenue.
  • Tech will have to pay an entry fee into the Big East (more on that later).
  • Tech will not begin Big East play until the 2000-2001 season, which means one more year in the A-10.

Now, here's what I'm going to assume:

  • Tech will get into the Big East before the end of June, so the A-10 exit fee will be $200k, not $500k.
  • Tech will average 4000 paying fans a game for A-10 hoops next year, and the Big East numbers will start out at 5000 and rise in later years (due to more interest, better visiting teams, and better Tech teams).
  • The Hokies will pay a $1 million entry fee into the Big East, spread out over five years, beginning the first year Tech is actually in the Big East, 2000-2001.

If all this comes to pass and my assumptions are valid, then here's the money breakdown for the next few years (please excuse the small print, but I wanted to make sure that it would fit in a 640x480 space without creating scroll bars on the browser):

TV Revenue $100k $500k $500k $500k $500k $500k $500k
Ave. Paid Attendance* 4000 5000 6000 7000 7000 7000 7000
Ticket Revenue* $480k $600k $720k $840k $840k $840k $840k
A-10 Exit Fee -$200k -- -- -- -- -- --
BE Entry Fee -- -$200k -$200k -$200k -$200k -$200k --
Total Revenue $380k $900k $1020k $1140k $1140k $1140k $1340k

* For the A-10, assume 4000 paying fans per game at $10 a head and about 1000 students; for the Big East, assume the paid numbers shown, and that by the year 2004-2005, students would average 3000 per game to fill the Cassell.  I have no idea whether or not these numbers are bogus.  I completely made them up.  Assume 12 home games a year, and assume that ticket prices stay constant at $10 (a hedgy assumption).

It's interesting to note that if Tech does not get into the Big East and attendance stays around 4000 paid for A-10 games, Tech's income from men's basketball will be $580,000 per year (the same as what I show in the table for 99-00, but without the A-10 exit fee).  If attendance rose to 5000 paid per game, Tech would make $700,000 per year from men's hoops in the A-10.

This simply does not compare with the $1.34 million Tech could make annually from Big East basketball membership (once the BE entry fee is paid off).  Granted, my forecast does include a rosy paid attendance average of 7000 per game if we're in the Big East, which may or may not happen.

But even if Big East membership meant no rise in attendance at all (yeah, right!), Tech would still stand to make another $400k per year in the Big East, just because of the TV deal.  Even with the Hokies taking a $200k per year hit their first five years in the league, Tech still makes $200k more per year than they would in the A-10, and that's if attendance doesn't rise.

Sure, this analysis probably leaves a lot of things out, like concession revenue, but it's a good look at the big picture.  No matter how you slice it, Big East membership would be a financial windfall for Tech men's basketball, even with the steep Big East entry fee.


Money Survey Going Well

So far, I have received nearly 500 replies to my money survey.   Keep filling them out, folks - I appreciate the input.

I have received a number of emails from people who say, "Will, I think HC is great, but it doesn't look like it, because I entered nothing but a bunch of zeros on the survey."  Don't worry about it, because the survey is measuring what it's supposed to measure.

I have also received a couple of emails telling me how I could have made the survey more accurate or more scientific, and I freely admit that whatever the numbers add up to, it's not going to be very accurate.  This is more of a fun exercise than anything else.

When I write my article summarizing the survey results, I will also include some of the comments that many of you have been emailing to me.  I didn't include a comments section on the survey itself, because variable-length comments would make it hard to process the results by computer program, so I left that out.   Plus, I wanted this to be a numbers exercise, not a HokieCentral testimonial.

Thanks to everyone who has taken the time to fill one out!


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