5 years ago, SEC schools divvied up $244.0 million; last week, they divvied up $584.2 million
by Tony Barnhart
February 11, 2017
In 1990, I attended my first SEC Spring Meetings in Destin, Fla. The meetings mark the official end to the academic year for the conference, and when the meetings concluded there was a celebration as each of the 10 schools received a share of revenue generated from TV, bowl games, the NCAA basketball tournament and the like.
That June, the SEC schools shared $16.3 million – about $1.5 million per school.
“And our schools were thrilled to have it,” said Roy Kramer, who had taken over as commissioner the previous January. “Some of our schools were on very tight budgets.”
My, how things have changed.
Fast forward to last Friday. Just one week ago, SEC commissioner Greg Sankey announced that the league’s 14 member schools would share $584.2 million – which comes out to $40.4 million per school.
Thus, in that time frame, the revenue that the SEC schools have shared, mostly thanks to football, has increased 40-fold.
Here is a quick look at how the shared revenue has grown over the decades:
1980: $4.1 million
1990: $16.3 million
2000: $73.2 million
2010: $209.0 million
2016: $584.2 million
How did this happen? Here are five major events that led to the financial explosion the SEC has enjoyed over the past quarter-century.
1. Expansion, divisional play and the creation of the SEC championship game in 1992
Kramer had been on the job for less than a year when he found a little-known codicil in the NCAA by-laws that allowed conferences that were split into divisions to host a conference championship game.
The rule was created for the lower classifications, but Kramer saw divisional play doing two things: 1. Creating division championships, which means more games in November would be relevant; 2. The ability to create a winner-take-all championship game, which would have some value.
“We were pretty sure the championship game would work, but the ability to win a divisional championship caught people’s attention more than we thought,” Kramer said.
The first SEC championship game in Birmingham generated about $6 million in revenue, which was shared by the schools. That money has only grown.
2. The Bowl Coalition, the Bowl Alliance and the BCS
Before 1992, the bowls operated independently to put together the best matchup for each. As a result, several bowl games could impact who would win the national championship in the polls. In fact, No. 1 had met No. 2 in a bowl game only a handful of times before 1992.
In that year, five of the then-seven major conferences (the ACC, Big East, Big Eight, SEC and Southwest) banded together to form the Bowl Coalition. The agreement guaranteed that No. 1 and No. 2 would meet in a bowl game if those two teams were from the five conferences (and Notre Dame) that were part of the deal. The Big Ten and the Pac-10 did not participate, choosing to continue to send their champions to the Rose Bowl.
It worked in ’92 (No. 1 Miami vs. No. 2 Alabama, Sugar) and ’93 (No. 1 Florida State and No. 2 Nebraska, Orange). It didn’t work in ’94, when No. 2 Penn State of the Big Ten played in the Rose Bowl. No. 1 Nebraska beat No. 3 Miami in the Orange Bowl and was declared national champions.
So, the Coalition evolved into the Alliance in 1995 and finally the BCS in 1998 to guarantee a No. 1 vs. No. 2 matchup. And with that matchup guaranteed, the value of the major bowl games increased.
In 1992, the highest bowl payouts were about $6 million per team. By the end of the BCS in 2013, the biggest bowl payouts were $18 million.
3. The 15-year football contracts with CBS and ESPN
In 2008, the SEC agreed to an unprecedented 15-year contract with CBS that paid the conference an average of $55 million per year. That deal was adjusted when Texas A&M and Missouri joined the conference in 2012, but it did not include more money.
That same year, the SEC signed another 15-year deal, this with ESPN, to televise football and men’s and women’s basketball. That deal was scheduled to pay the conference $2.25 billion over the life of the contract.
4. The SEC Network
When the SEC signed the 15-year deals with CBS and ESPN in 2008, there was discussion about the possibility of an SEC Network. But then-commissioner Mike Slive decided to wait. He wanted to watch the Big Ten Network, launched in 2007, to see what kind of problems it had and what kind of mistakes it would make. He wanted the SEC to have all of its ducks in a row, particularly on the distribution side, before starting a network.
That time came May 2, 2013, when the SEC announced a 20-year deal with ESPN to launch the SEC Network. The launch came on August 14, 2014. It has been a financial success. The SEC does not release financial figures, but our Chadd Scott projected that the revenue from the SEC Network could exceed $100 million per year.
5. The College Football Playoff
After 16 years of the BCS, the college football powers-that-be announced the formation of the College Football Playoff for the 2014 regular season. The CFP signed a 12-year deal with ESPN that will pay the five major conferences an average of $470 million per year. By contrast, post-season football generated about $185 million in 2013, the final year of the BCS.
Also note that in that same year, the SEC and Big 12 began a 12-year agreement to send their champion or another conference team to the Sugar Bowl. That deal represented another $40 million a year for the SEC.
So what kind of impact has the creation SEC Network, the Sugar Bowl deal, and the College Football Playoff had on the SEC’s bottom line? Here are shared revenue numbers for the past five years. Notice the increase in years four and five, when all three of those contracts kicked in.
2011-12: $244.0 million
2012-13: $289.4 million
2013-14: $292.8 million
2014-15: $475.8 million
2015-16: $584.2 million
Financially, things are only going to get better for the SEC as the contracts have increased payments each year. The question is what the TV and college football landscapes will look like when the contracts end after the 2025 season. But that is another story for another day.