Money Ball: Triangle schools rule ACC in hoops profits
Posted February 8, 2012
Updated February 9, 2012
Raleigh, N.C. — The University of North Carolina, Duke University and North Carolina State University are constantly battling for athletic bragging rights.
When it comes to basketball, the Tar Heels and Blue Devils have silenced the Wolfpack in recent years – at least on the scoreboard. Despite some disappointing seasons, however, State is still one of the big three at the bank.
Four national championships, 18 ACC tournament trophies and 18 ACC regular-season titles give Duke plenty to brag about.
UNC's winning ways go much further into the history books. Since 1922, the Heels have 35 regular-season titles, 25 conference tournament titles and five national championships.
Of the three, NC State is at the back of the performance pack with two national titles and 17 conference tournament championships.
But what about financial wins and losses?
The books submitted to the NCAA by the schools reveal some insight into which program delivered the most bang for the buck.
During the last fiscal year, UNC spent $6.51 million on basketball and had almost $20 million in revenue. That's more than a 3-to-1 rate of return – tops in the ACC. The numbers reveal that win or lose, UNC is a cash cow.
“I think UNC is a buy,” said David Glenn, radio host and editor of ACC Sports Journal. “Carolina basketball is as strong as any other brand name in all of college athletics and that makes it a big money maker for UNC.”
While UNC and Duke are the top performers on the court, the Wolfpack is a howling success when it comes to money.
With a little under $4 million in spending and more than $10 million in revenue during the 2010 fiscal year, State makes $2.65 for every dollar it spends on men's basketball.
“I think NC State fans deserve a lot of credit for being incredibly passionate in both football and basketball,” Glenn said. “One of the true tests of passion is, ‘Are you still there, are you still supporting the program when things are not going as well?’”
Glenn said that if NC State was a stock, he would be buying.
“If you want a longer-term investment, Mark Gottfried is a great place to put your money,” Glenn said.
Among the three schools, Duke made by far the most money from its men's basketball team - almost $29 million in 2010. But the school also spent the most at just under $14 million, making about $2.09 for each dollar spent.
The man behind the success on the court is a part of the reason why Duke's bottom line isn't bigger.
“Duke spends a lot of money in part because they have one of the most famous coaches in the country and he needs to be compensated fairly, so you're talking about many millions of dollars for Mike Krzyzewski,” Glenn said.
Throw in a small venue like Cameron Indoor Stadium, and Duke can't match the ticket sales of UNC or NC State.
“In one way, that might lower their revenues versus what it could be if they had a bigger arena, but obviously they believe the pluses far outweigh the minuses,” Glenn said. “And they also believe that Mike Krzyzewski more than delivers the bang for the buck.”
The rest of the ACC
Whether you bleed Duke or Carolina blue, or Wolfpack red, the bottom lines of the area's basketball programs are well ahead of the rest of the teams in the Atlantic Coast Conference.
In revenue-to-expense ratio, Georgia Tech sits fourth in the ACC with a $1.85-to-1 earning. Maryland is fifth in the conference in rate of return in large part because the Terrapins' expenses are similar to that of UNC at over $6 million.
Virginia spent the second most on their basketball program in 2010, but was just middle-of-the-pack in revenue, placing them 10th in profit from the sport at just $1.31 to the dollar.
Two schools, Florida State and Boston College, use a break-even model that is not uncommon across the landscape of college athletics. Their basketball expenses match – to the dollar – the revenue gained.
Clemson, Wake Forest, Virginia Tech and Miami all made profits in the range of $1.49-1.74 per dollar spent in 2010, putting them in the middle of the pack in conference earnings.
Wake Forest and Florida State’s basketball programs are the only two in the ACC that earned more in revenue in 2003 than in 2010.
With the addition of Syracuse and Pittsburgh, Street & Smith's Sports Business Journal predicts that every team in the ACC will gain $1-2 million in annual revenue. The additional revenue will be available due to reopened television rights discussions with ESPN.
The ACC is currently in a 12-year, $1.86 billion deal with the cable network, but the expansion allows the conference to reevaluate the deal. Currently, the TV deal generates on average $13 million per school annually. The new terms that are being negotiated are believed to pave the way for each school to make $14-15 million annually.