Jonathan Taylor #23 of the Wisconsin Badgers runs the ball in the Big Ten Championship game against the Ohio State Buckeyes at Lucas Oil Stadium on December 07, 2019 in Indianapolis, Indiana.
Justin Casterline | Getty Images
The financial consequences of the Big Ten Conference postponing its fall sports season are still being analyzed, but without football, it will undoubtedly impact the conference’s more than $700 million in projected revenue.
The Big Ten postponed its fall athletics on Tuesday, followed by the Pac-12 going a step further and suspending its fall and winter athletics. Big Ten Commissioner Kevin Warren said the decision to postpone games comes at a “very trying time” but added the conference wanted to be “exceptional with how we treat our student-athletes.”
With so many unknowns about Covid-19, including the new concerns that athletes can develop inflammation in their heart muscle, health, safety and liability were the determining factors in postponing play this fall.
“We have to deal with what’s being presented in front of us,” Warren said in an interview with the Big Ten Network (BTN) on Tuesday.
But showing leadership and being responsible during a pandemic does comes at a cost. The BTN, which signed a media rights deal with Fox Sports for more than $1 billion and promises to pay the network an estimated $250 million per season, is a considerable portion of the Big Ten’s annual revenue. USA Today reported the conference made “nearly $759 million” in 2018.
Last season, 12 of the 14 universities that make up the Big Ten, including original members Michigan and Wisconsin – which said it could lose $100 million with football postponed – were paid at least $55 million each (estimated $660 million) for its memberships with the conference.
According to data provided by research firm Kantar, football is the money machine for most college athletic programs, as the sport’s revenue racked in roughly $3 billion combined over the last two years. And most of that was due to Power 5 conference competitions, including the Big Ten.
“When we talk about the economic impact, you take it all the way down to – pick the college town, understand the impact of sales tax revenue and then just take it straight up from there,” said Mike Arthur, senior vice president of Veritone, which advises the Big Ten on its advertising and content licensing.
“It impacts networks, regional sports; it impacts individual stations,” Arthur said. “It’s going to be significant.”
Arthur factored in national and local ads, the Big Ten’s “shoulder programming,” which attracts advertisement revenue, and coach’s shows in regional markets.
As part of their joint venture agreement, Fox Sports has the right to telecast more than 20 Big Ten football games per year. The deal also includes Big Ten schools receiving 33% of ad revenue from BTN, which started in 2007.
But not all Power 5 schools have fully committed to postponements as they attempt to save profits. The Southeastern Conference (SEC), which produced $721 million in 2019, the Atlantic Coast Conference (ACC), which generates more than $400 million, and Big 12 (roughly $400 million) still plan to hold fall sports.
With other schools still planning to compete, fellow Big Ten member Nebraska continues to explore its options to save some of its revenue, though Arthur said it’s unlikely the school can do so due to media rights. Warren also shot down any notion of schools competing outside of the conference.
“To contemplate Big Ten and Pac-12 going in one direction and perhaps the others trying to scramble into some sort of deal that they can craft for a one-year television contract and combine conferences, it’s too complex to contemplate,” Arthur said.
And with Saturday TV slots free, the National Football League is reportedly looking to fill the void created by the Big Ten and Pac-12 and other conferences who have decided to play it safe.
Arthur said if the NFL isn’t already discussing the options, “the networks will come calling sooner than later once they fully know what’s going on with college football.”
The Big Ten did respond to a CNBC request seeking comment.