More money, same problems in conference expansion

There’s a saying in economics that “a rising tide lifts all boats.” In other words, as the overall economy expands, its participants benefit as well. Businesses invest more, hiring increases, wages go up, people buy more stuff, etc.

In the world of college athletics, the tide is starting to rise. More and more money is flowing into conferences’ coffers through new television contracts. In turn, schools such as Missouri and Pittsburgh are jockeying for admittance into more lucrative conference arrangements, offering enticing TV markets in return. As reported by John Ourand and Michael Smith of SportsBusiness Journal, the latest example of the benefits of the boom comes from the Atlantic Coast Conference, which is supposedly on the verge of completing the renegotiation of its media rights deal with ESPN.

As the conference pie expands, so do its members’ slices. Under the reported terms of ACC’s new deal, for instance, each of the member institutions would receive an extra $1 million to $2 million per year. That would boost each school’s payout from roughly $13 million per year to as much as $15 million annually.

The vast majority of D-I athletic departments are feeling the financial pinch, so the new revenue should be a godsend, right? As Chadd Scott of points out, the schools in the ACC could take that money and use it to save non-revenue sports. Or, they could cut their subsidies from the school. In that sense, all this conference shuffling sounds like a win for everyone.

Scott penned his analysis of the new ACC deal in response to a comment from Bryan Fischer of that the additional revenue generated made expansion hardly worth the trouble for the conference. I actually think Fischer has a point, in so far as there were probably expansion candidates – Rutgers comes to mind – that might have juiced the ACC’s new deal even more. But I’m not an expert in TV markets and the sports media industry, and I don’t really care whether or not the league made the right call in expanding.

However, I do think we should disabuse ourselves of the idea that expansion will ultimately lead to athletic departments getting their books in order.

Football and men’s basketball have turned into a permanently escalating arms race. Between coaches’ salaries, facilities upgrades, stadium expansions and the like, schools have shown time and again that they’re willing to spend lavishly on the two major sports, often well beyond their means. If investing in a new weight room is thought to give a program an edge, or if it could simply help it keep up with the competition, so be it.

In that sense, there are numerous ways schools could cut spending on athletics to stay out of the red. They simply choose not to.

Initially, cash-strapped schools like Maryland and Georgia Tech may sink some of that new revenue into cutting their spending deficits. I don’t doubt that school administrators really do look at additional expansion revenue as a path to saving the women’s water polo team. But it comes down to changing their spending habits more so than needing more money.

Soon enough, a coach will demand a contract extension – or boosters will demand he be bought out – and they’ll be back on the road to where they started.