During a spare hour or so prior to attending a Christmas party last December, I happened to read a newspaper article linked by a TSL poster that was touting some Big East Conference revenue numbers. So, I figured that I would spend a few moments searching the Internet for reliable information concerning athletic conference revenues and expenses. I have always wondered where all of the ACC revenues were coming from and where this kind of information could be found in a reasonably reliable format from which such data could be extracted. As noted in my last review of Virginia Tech athletic department finances, all of the NCAA sanctioned athletic conferences are classified as charitable organizations and thus have to file an information return known as Form 990 with the IRS. My search led me to a site called Foundation Center, where PDF format copies of the IRS Form 990 as filed by charitable organizations are available. You only need to know the name of the organization you are searching for, but you have to get the name exactly correct or the search will not locate the organization. Sometimes you have to spell out numbers that are in the names (Twelve), other times the number itself (12) must be entered. I immediately located the ACC and Big East IRS Forms 990 for the last two years available, which are the fiscal years ending June 30, 2005 and 2006. You would think that filings with the IRS would be fairly consistent among similar organizations as far as the type of information regarding revenues and expenses is concerned. However, there were enough inconsistencies between the ACC and Big East filings to prompt me to find the Form 990's for other athletic conferences to compare them to the ACC and Big East. That was an interesting endeavor also, much like trying to compare the NCAA reports for the various schools, as noted in my reports on Virginia Tech and other schools' athletics operations. However, I was able to extract reasonable comparisons between the ACC and Big East and have detailed the information below for two years. I have also summarized, to the extent possible, similar data for other athletic conferences for the last fiscal year available in order to give you an idea how the ACC and Big East compare to them. Without having audited financial statements and related information to assist in my analysis, my comments will contain certain speculative comments and assertions.   2006 2005 2006 2005 Assets: Cash and investments $24,607,586 $18,959,263 $4,376,887 $4,865,881 Accounts receivable 9,978,469 8,764,717 2,094,549 272,820 Entry fees receivable - - 11,737,060 1,300,000 Land, buildings and equipment - net 2,052,283 1,772,371 12,520 19,218 Other - 26,400 190,437 295,437 Total assets $36,638,338 $29,522,751 $18,411,453 $6,753,356   Liabilities Accounts payable and accrued exp $11,974,109 $9,107,125 $31,970 $44,594 Other - - 11,277,785 1,318,784 Total liabilities $11,974,109 $9,107,125 $11,309,755 $1,363,378   Equity/net worth $24,664,229 $20,415,626 $7,101,698 $5,389,978   Revenues: Contributions/direct public support $726,881 $671,749 $810,584 $657,268 Post-season bowl games, etc. 25,603,150 22,076,870 34,201,473 33,106,385 NCAA basketball tournament 13,118,505 11,892,671 Not identified Other football revenue 7,315,388 7,340,176 Not identified Championship football game 5,749,603 - Not identified Television and radio rights, etc. 70,050,000 64,452,500 19,225,441 15,349,543 Basketball tournaments 7,876,544 6,261,560 5,903,842 3,585,414 Other basketball revenue 2,885,229 2,863,252 Not identified NCAA grants/sponships 11,261,795 10,724,250 8,646,439 8,383,963 Entrance/exit fees 1,656,250 1,718,750 4,100,000 - Investment income 1,580,669 739,811 399,281 179,548 All other 1,044,260 164,024 2,124,451 1,728,426 Total revenue $148,868,274 $128,905,613 $75,411,511 $62,990,547           Expenses: Conference distributions to members $130,330,721 $114,286,614 $62,892,992 $54,437,401 Team reimbursements and bowl expenses 7,414,518 5,335,229 - - Conference championships - - 3,764,700 2,034,804 Other operations 6,831,184 6,824,460 7,042,071 6,169,480 Total expenses $144,576,423 $126,446,303 $73,699,763 $62,641,685           Net income $4,291,851 $2,459,310 $1,711,748 $348,862           Commissioner's compensation, certain benefits and expense account allowances 759,971 747,106 468,446 434,924           Legal expenses 108,612 61,904 66,535 606,763           Football distributions n/a n/a 28,400,000 24,779,344 Basketball distributions n/a n/a 34,492,992 29,658,057           Total distributions     62,892,992 54,437,401           The ACC had 12 members in both years presented         Ave. BE football distribution: 8 teams in 2006, 10 in 2005     3,550,000 2,477,934 Ave. BE basketball distribution: 16 teams in 2006, 14 teams in 2005     2,155,812 2,118,433 The Big East football distributions in 2005 included Miami., BC & Temple The Big East basketball distributions in 2005 included Va. Tech, BC & Miami, but did not include the 5 new members At June 30, 2006 the ACC had assets of $36.6 million and the Big East has $18.4 million. Included in the ACC assets is the league headquarters building in Greensboro, NC, which is located adjacent to the Grandover Resort and is free of debt. It appears that the Big East does not own its headquarters facilities since neither land nor buildings are reported in its filings. The ACC has cash and investments of $24.6 million compared to $4.4 million for the Big East. That in itself is a significant difference in available operating funds, and also provides significantly more investment income to supplement league operating activities. Both leagues report accounts receivable -- the ACC $10 million and the Big East $2.1 million. I believe this represents primarily the amount of NCAA basketball tournament revenues receivable (both current (due within one year) and long-term portions). The Big East reports league entry fees receivable of $11.7 million. It appears that this amount is owed by the five new members -- Louisville, Cincinnati, South Florida, DePaul and Marquette, since I believe Boston College paid their exit fee prior to fiscal year 2006. Just guessing, but it appears that the entrance fees for each school was probably $3 million each, since $4.1 million of entrance/exit fees income was reported by the Big East in fiscal year 2005. I believe Boston College only had to pay $1 million to get out of (escape from) the Big East. I guess the incoming five schools thought the $3 million (extortion?) was worth it. The Big East also reports a liability of $11.3 million, of which most of this is what is known as "deferred revenue". It appears for accounting purposes the league will recognize the deferred portion of the entry fees as they are received. Getting to the revenues, the ACC breaks out its revenues in more detail than the Big East. NCAA basketball tournament revenue is included in the Big East postseason bowl games revenue category for this presentation because it is not segregated on the Form 990. If you combine the revenue categories of postseason bowl game revenues, NCAA basketball tournament revenue, other football and basketball revenues you would have the total of $48.9 million for the ACC and $34.2 for the Big East, a difference of $14.7 million in favor of the ACC. Also, the ACC Championship football game generated $5.7 million, and the ACC television/radio revenues of $70.1 million exceeded the Big East amount of $19.2 million by almost $51 million. That is a huge difference! Also, the ACC receives $1 million a year from satellite radio rights. The Big East is not on satellite radio. The Big East only has eight football schools, but has 16 basketball schools compared to the ACC twelve member schools. When you consider the total distributions to the member schools, that can make a significant difference in the amount of overall revenue that is available to be distributed. Plus, the ACC reimbursed its members $7.4 million (2006) and $5.3 million (2005) for playing in football bowl games and other events, where the Big East appears to have reimbursed its members nothing. In the Big East each school pays its own expenses related to bowl game participation. The Big East reports expenses for league championship events, but the ACC does not specifically report this on the Form 990. Perhaps the ACC expenses for league championships are covered by the sponsors directly and the ACC receives the residual amounts after expenses. Or, these expenses could be included in the team reimbursements and bowl expenses category. Both leagues report contributions and grants from the NCAA. Generally, the NCAA disburses three significant grants to leagues for various charitable activities for student athletes and other related activities. Two of the grants received by each league are based on the number of student athletes in each league that receive Pell grants. The third grant is to be used for compliance, education, officiating men's and women's basketball, and other purposes. Other observations in comparing the ACC and Big East are the legal expenses. The Big East reported paying just over $600,000 in legal fees in fiscal year 2005. I suspect most of this is related to the defection of VT, BC and Miami to the ACC. The ACC only reported expending around $62,000 in 2005. The next item of interest is that the other operating costs for both leagues are in the same neighborhood. The Big East costs increased approximately $900,000 in 2006, probably due to increased costs in dealing with 16 basketball schools and related logistics. The amount of compensation paid to the commissioner of each league is also provided in the filing. The total compensation reported here includes base pay, retirement and similar benefits, and expense accounts. John Swofford is paid almost $300,000 more than his Big East counterpart. Now, let's get to the other BCS conferences.   2006 Assets: Cash and investments 56,914,536 18,664,534 6,634,818 1,095,252 Accounts receivable - 1,258,067 523,739 303,685 Land, buildings and equipment - 2,535,405 3,124,926 114,974 Other - 207,660 86,863 27,464           Total assets 56,914,536 22,665,666 10,370,346 1,541,375           Liabilities: Accounts payable, accrued exp - 12,350,128 633,595 150,000 Other - 4,796,421 3,000,000 186,865           Total liabilities - 17,146,549 3,633,595 336,865           Equity/net worth 56,914,536 5,519,117 6,736,751 1,204,510           Revenues: Contributions/direct public support - 1,262,642 203,935 203,935 Post-season bowl games 22,955,410 - 25,190,136 - NCAA basketball tournament 26,952,015 - 24,548,308 - Membership dues - 935,000 - - Championship football game 15,884,145 - 11,400,142 - Television and radio rights, etc. 64,250,000 - 50,000,000 - NCAA grants/sponships 2,062,200 - - - Investment income 2,982,962 257,002 579,810 511,654 Sports revenues, etc. - 117,819,900 - 75,847,662 All other 3,624,517 6,615,535 1,510,569 955           Total revenue 138,711,249 126,890,079 113,432,900 76,564,206           Expenses: Conference distributions to members 122,027,959 117,819,900 90,123,348 71,198,130 Team reimbursements and bowl expenses - - 13,046,252 - Conference championships 3,872,584 845,162 - - Other operations 12,050,906 9,097,094 9,158,763 5,389,590           Total expenses 137,951,449 127,762,156 112,328,363 76,587,720           Net income (loss) 759,800 (872,077) 1,104,537 (23,514)           Commissioner's compensation, certain benefits and expense account allowances 545,129 959,236 699,700 513,891           Conference headquarters: SEC: Birmingham, AL Big Ten: Park Ridge, IL Big 12: Irving, TX PAC 10: Walnut Creek, CA The financial reporting disparities increase substantially when comparing the remaining four BCS conferences. The Southeastern Conference reports on an August 31 fiscal year and also reports on the cash, as opposed to accrual, basis of accounting. This is allowed by the feds, but it does create some havoc when trying to match up revenues and expenses when analyzing the data. And, the Big Ten and Pac-10 do not even segregate their major revenues by source ... they just lump the major revenues in to broad categories. So, I have reported them in the "sports revenues" category for this report. Interesting facts on these conferences are: The Big Ten charges annual conference membership fees to its members The Southeastern Conference has a huge amount of cash and investments (almost $57 million) The Big Ten and Big 12 both own their office buildings and have debt on those facilities (the Big Ten reports $200 thousand in debt and Big 12 reports $3 million). The SEC and Big 12 make a lot of money on their football championship games, but do not have as much television/radio contract income as the ACC. However, the NCAA basketball tournament revenue reported by both of these leagues is substantially more than the ACC. There may be other items included here. However, if you look at the pure bottom line revenues, the ACC takes in more revenue than any of its peers! Another item to note is that the Big Ten commissioner makes almost $960,000 in compensation and benefits... more than any other league commissioner. How about the Non-BCS leagues?   2005 2006 2004 2006 Assets: Cash and investments 9,929,811 2,091,917 163,199 4,738,603 Accounts receivable 7,503,751 239,761 172,735 61,781 Land, buildings and equipment - net 104,530 - 55,519 94,490 Other 16,824 - 526 567,948           Total assets 17,554,916 2,331,678 391,979 5,462,822           Liabilities Accounts payable and accrued expenses 555,412 126,280 632,409 73,330 Other 13,391,912 96,816 298,411 3,050,172           Total liabilities 13,947,324 223,096 930,820 3,123,502           Equity/net worth 3,607,592 2,108,582 (538,841) 2,339,320           Revenues: Contributions/direct public support 415,992 1,475,725 - 1,857,659 NCAA basketball tournament revenue 6,081,497 3,279,626 2,466,280 - Post-season bowl games 4,026,462 566,047 2,707,497 - BCS revenue 1,050,000 1,050,000 1,000,000 - Basketball tournament 1,322,626 309,607 - 972,094 Membership dues 3,588,200 3,885,000 850,000 2,700,000 Championship football game - - 98,182 - Television and radio rights, etc. 7,800,000 900,000 668,680 532,175 NCAA grants/sponships 2,298,558 - - - Entrance/exit fees 500,000 - - - Investment income 352,665 198,248 2,490 375,912 All other 7,907,244 - 868,048 325,190           Total revenue 35,343,244 11,664,253 8,661,177 6,763,030           Expenses: Conference distributions to members 25,773,401 7,616,177 2,818,477 1,350,645 Team reimbursements and bowl expenses 4,260,084 - 2,491,700 - Conference championships - 559,246 233,011 1,263,023 Realignment issues 1,283,867 - - - Television - - 769,690 321,653 Other operations 4,688,913 3,665,461 1,994,424 2,890,337           Total expenses 36,006,265 11,840,884 8,307,302 5,825,658           Net income (loss) (663,021) (176,631) 353,875 937,372           Commissioner's compensation, certain benefits and expense account allowances 381,120 341,368 210,000 377,740           Conference headquarters: CUSA: Irving, TX WAC: Englewood, CO MAC: Cleveland, OH Mt. West: Colorado Springs, CO The 2006 data was not available for all of the four Non-BCS leagues presented here. So, I took the most recent year available with the reporting fiscal year noted above each league summary. Conference USA appears to be the most fiscally sound of these four conferences. The MAC appears to be almost bankrupt (in 2004), and the Western Athletic Conference and Mountain West appear to be on reasonably sound footing. An interesting item for all of these leagues is that each charges annual membership fees in order to subsidize the respective league operations. Conference USA underwent substantial realignment issues in 2005 and 2006 when the Big East raided them for replacements for VT, BC and Miami. Not only did the Big East take three football schools, they took two basketball schools. Another item of interest is the $1 million plus the BCS pays these leagues each year. The Mountain West does not report this subsidy, but I believe it is probably in the contributions line item. Also, the Mountain West does not report any NCAA basketball tournament revenue. However, I am sure this is buried somewhere in the other numbers. The bottom line revenues for these leagues are substantially less than any of the BCS leagues. If the Big East ever lost its BCS standing, it could look like Conference USA or worse. Now for a look at two 1-AA football/mid major basketball conferences. Just for curiosity, I summarized information for the Colonial Athletic and the Atlantic Ten Conferences to provide a picture of what these leagues financial activities look like.   2006 Assets: Cash and investments 876,465 5,785,368 Accounts receivable 302,000 17,836,632 Land, buildings and equipment - net 215,712 51,144 Other 1,183 31,226       Total assets 1,395,360 23,704,370       Liabilities Accounts payable and accrued exp 25,586 2,028,072 Other 181,350 -       Total liabilities 206,936 2,028,072       Equity/net worth 1,188,424 21,676,298       Revenues: Contributions/direct public support - - NCAA basketball tournament revenue - 3,892,482 Basketball tournaments 811,386 1,520,422 Membership dues 623,250 - Television and radio rights, etc. 20,000 963,600 NCAA grants/sponships 1,245,380 1,264,700 Entrance/exit fees - - Investment income 31,064 328,756 All other 68,044 571,186       Total revenue 2,799,124 8,541,146       Expenses: Conference distributions to members - 1,969,900 Conference distributions to members - entrance fees - 1,500,000 Conference championships 398,153 1,647,900 Television 411,400 987,226 Other operations 1,920,799 3,771,842       Total expenses 2,730,352 9,876,868       Net income (loss) 68,772 (1,335,722)       Commissioner's compensation, certain benefits and expense account allowances 203,600 329,971       Conference headquarters: CAA: Richmond, VA A-10: Philadelphia, PA The Atlantic 10 has a much larger operation than the CAA, at least for 2006. It is interesting to note that both of these leagues pay Comcast and other networks to televise their games rather than the networks paying the league to televise the games. I understand now some of the reasons why the University of Richmond jumped to the Atlantic Ten from the CAA a few years ago. In summary, Virginia Tech is in one of the most financially sound and stable college athletic conferences in the country. I think we all knew this, but now we have an idea where the money is coming from. Randy Jones is a 1969 graduate of Virginia Tech and currently lives and works in Charlottesville. TSL Home

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