Chat replay: Henry Cordes and Mike'l Severe will hosted live chat Monday for questions and commentary about Nebraska's contract with the Big Ten and the potential financial windfall coming in 2017. Replay it here.
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When it comes to the athletic department's bottom line, the University of Nebraska-Lincoln's move to the Big Ten Conference hasn't proven a B1G winner so far.
The $15 million partial share of Big Ten revenue Nebraska received last year fell substantially below what former conference brethren such as Oklahoma, Texas and Iowa State received from the Big 12. In fact, the vast majority of big-time football schools were paid more by their leagues.
What's more, the University of Maryland, a relative no-name in football, is expected to be paid more than Nebraska when it joins the Big Ten next year.
So did Nebraska get a raw deal? Only if you look at the short term.
Other numbers uncovered by The World-Herald suggest Nebraska in three years is headed for a big financial score with the Big Ten.
In 2017, when Nebraska will finally be on equal financial footing with the core Big Ten schools, the school's annual revenue from the conference could well swell to between $40 million and $50 million a year.
Such a figure is astounding compared with four years ago, when the Big 12 paid NU $9 million.
The university in 2017 also gains a full ownership share in the Big Ten's TV network, which analysts have valued at more than $1.3 billion.
UNL Chancellor Harvey Perlman says he has no regrets over the deal he negotiated with the Big Ten in 2010.
“This is a long-term agreement and partnership,'' Perlman said. “Even if you are just looking at the finances, you don't look at what you get the first or second year. I think we are financially advantaged by being where we are.''
Since the day in June 2010 that Nebraska joined the Big Ten, the parties have disclosed little of the financial terms of their marriage.
But through open records requests, publicly available tax documents and interviews with Perlman, Big Ten officials and others, The World-Herald assembled the most detailed picture to date of the deal NU struck with the prestigious athletic conference. Among the findings:
» Thanks in large part to the Big Ten Network, the league is the financial powerhouse of conferences. Neighboring Iowa and the other Big Ten members last year received nearly $26 million, believed to be the highest payout of any conference. There's a reason Forbes last year declared the Big Ten the “cash king'' of college sports.
» Nebraska agreed to wait six years to gain a full share of Big Ten revenue. It received $14 million the first year, $15 million last year and will receive no more than $16.9 million this year — each figure roughly $10 million short of a full share.
Membership has its rewards
Athletic dollars aside, UNL Chancellor Harvey Perlman said he sees every day the benefits accruing to the university from its membership in the Big Ten. And some of those benefits also help the university's overall bottom line. The university has seen an increased ability to recruit students from across the Big Ten footprint. Perlman said the school's recruiters are now welcomed into high schools in states such as Illinois, Minnesota and Wisconsin. The school has seen higher-quality applicants for faculty and administrative positions. There have also been increased academic and research collaborations with fellow Big Ten schools. The university is taking the lead on a concussion research collaborative of both Big Ten and Ivy League schools — an opportunity it likely would not have had in the Big 12. Regent Tim Clare of Lincoln agreed, saying he frequently hears campus deans and others speak of the Big Ten's benefits. “We're interested in the stability, the collegial environment and the collaboration that will help advance the university,” he said. “Being part of the Big Ten Conference is a plus.” — Henry J. Cordes * * * On Omaha.com Tune in Monday at 1 p.m. for a live chat about UNL and the Big Ten contract. Send your questions to email@example.com and firstname.lastname@example.org.
» Even though Nebraska is taking in less league revenue than most major schools — and paid a $9 million penalty for leaving the Big 12, to boot — those costs can be viewed as a down payment on its ownership stake in BTN. Based on the television network's estimated value, that stake in 2017 could be easily worth more than $50 million.
» Despite its lagging conference revenue, Nebraska's current $95 million annual athletic budget remains on solid footing. With the expanded Memorial Stadium and new basketball and volleyball arenas, ticket revenue is projected to grow this year by $9 million — nearly 30 percent. The school remains among only roughly a half-dozen colleges nationally that doesn't subsidize athletics with state or student dollars.
» And when Nebraska starts receiving its full share of Big Ten revenue in 2017, its payout could very well be triple current levels, thanks in part to a new network TV contract.
While some might be tempted to Monday morning quarterback the deal, two members of the NU Board of Regents say they're not about to.
“This deal is short on the tooth to start with, but as it builds, it's mighty, mighty positive for the University of Nebraska,'' said NU Regent Hal Daub of Omaha. “We are earning our way into the full financial reward.''
Daub and Regent Tim Clare of Lincoln see many benefits to Big Ten membership beyond athletic dollars. They're certainly not longing to return to the Big 12.
“It's easy to sit back and say, 'Shoot, we got a bad deal' or 'Another school got a better deal,' '' Clare said. “When you're negotiating, you do the best you can at the time. We trust Harvey did the best he could.''
June 11, 2010, will always go down as a historic day in Lincoln. Completing a whirlwind courtship, Perlman, then-Nebraska Athletic Director Tom Osborne and Big Ten Commissioner Jim Delany announced Nebraska as the Big Ten's 12th member.
The move was quickly hailed nationally as a great fit.
The Big Ten gained a recognized football power with five national championship trophies and a strong local and national following. The Cornhuskers figured to bring increased viewership to the BTN, which televises conference athletic contests that aren't picked up by the major networks. Nebraska's entry also allowed for the creation of a conference championship football game, worth millions to the league.
For Nebraska, the move most importantly represented rock-solid stability at a time the Big 12 appeared on the verge of collapse. Rumors circulated that Texas, Oklahoma, Missouri, Colorado and three other schools were in talks to join other conferences — though in the end, to the surprise of many, the league held together.
The move also brought academic benefits. Not only is being “a Big Ten school'' a recognized academic brand, conference schools are known to collaborate as strongly in research as they compete on the field.
The Big Ten also figured to be more financially lucrative for NU athletics. At the time, the Big Ten was paying each school $20 million — more than double the $9 million Nebraska was getting from the Big 12.
Revenue paid out by conferences represents an important funding source for major athletic programs like Nebraska's. It's through the conference that schools receive their share from television contracts, bowl games and conference championship games, as well as their cut from the NCAA's March Madness basketball tournament.
Those dollars help pay for a school's entire athletic program, particularly non-revenue sports. And the more money a school spends on its sports, the more success it often sees on the field.
It was understood from the beginning, however, that Nebraska would have to wait for some of those Big Ten dollars.
Perlman agreed in negotiations with the league that it was only fair to the Big Ten's other schools that Nebraska for a time take a reduced share. The main reason: NU will ultimately gain a full ownership stake in BTN without having shared in its startup costs. The network is owned in nearly equal parts by Big Ten schools and Fox.
For anyone to fail to consider the value of that stake in the deal “is a little short-sighted,'' said Brad Traviolia, the Big Ten's deputy commissioner. “It's significant.''
At the time, the parties wouldn't disclose how long Nebraska would take a reduced share. But Traviolia recently confirmed it lasts until 2017.
The negotiators also decided Nebraska would be “held harmless'' the first year, receiving no less than it would have as a member of the Big 12. From there, a subsequent five-year payment schedule was worked out.
Neither Perlman nor Osborne in recent interviews would disclose the exact financial terms of the deal, saying they are subject to a confidentiality agreement.
However, with Nebraska now in year three in the Big Ten, tax documents and other records obtained by The World-Herald shine a light on how Nebraska's conference revenue stacks up.
Nebraska received $14.3 million in its first year, indeed held harmless to match the Big 12 average, and then $15 million last year. This year, school budget documents indicate Nebraska is receiving no more than $16.9 million total for conference and NCAA revenue. The vast majority of that figure, if not all, would come from the Big Ten.
Not only does each of those annual figures fall far short of a full Big Ten share, Nebraska's conference revenue also ranks below the vast majority of schools in the four other major football conferences: the Big 12, the Southeastern Conference, the Pacific-12 and the Atlantic Coast Conference.
Thanks to a big new TV contract negotiated after Nebraska's departure, the Big 12's core members — Oklahoma, Texas, Iowa State, Kansas, Kansas State, Oklahoma State, Baylor and Texas Tech — last year received $22 million apiece, a league source said, confirming earlier published reports.
Two years ago, tax records show, the SEC and ACC paid their schools an average of $20.3 million and $17.1 million, respectively — figures that are likely $2 million to $3 million higher now based on historic growth.
Under a new TV contract that took effect a year ago, it appears most Pac-12 members also are receiving more. Washington State, a school with little profile in football, is taking in nearly $18 million this year, according to a published report.
The only schools in the power football conferences known to be receiving less than Nebraska are schools that are also transitioning to new leagues. For example, Texas Christian and West Virginia, new to the Big 12, reportedly received half shares — $11 million — last year.
Perlman in a recent interview acknowledged that Nebraska's conference revenue likely lags that of the Big 12 and most big football schools. But he defended the 2010 agreement, noting the circumstances NU faced. With Big 12 instability leaving NU potentially without a spot in a power conference, the school didn't have a strong hand.
“You negotiate from the position you're in,'' he said. “We had a conference that was falling apart.''
In terms of fairness, Perlman said he believes the Big Ten has been responsive to Nebraska in the years since the agreement was inked, twice adjusting the agreed-to payment schedule.
During Nebraska's first year in the league, the school provided the Big Ten more up-to-date projections of what its Big 12 revenue would have been. The Big Ten accepted the figures and adjusted the Nebraska payout by some $2 million.
Nebraska's payments have also been adjusted to reflect the new college football playoff set to start next season. Traviolia said the Big Ten's share of the playoff money could be worth as much as $2 million to each Big Ten school.
In 2017, the future only gets brighter for Nebraska. Not only will NU finally be on equal financial footing with other league schools, that's when the league's 10-year, $1 billion broadcast rights agreement with ESPN and ABC expires.
Given that the new contract the Big 12 signed two years ago came in at double what the current Big Ten deal is worth, it's expected the Big Ten is headed for a big payday.
League projections obtained by The World-Herald suggest a full Big Ten revenue share in 2016 will be worth $35 million. Given that, an industry source said the TV deal will likely boost the annual share in 2017 to $40 million to $50 million.
While not willing to speculate publicly on such figures, Traviolia said the league is optimistic about the new TV pact.
“We're bullish,'' he said. “We think the TV market is robust and our product is getting stronger.”
Perlman also wouldn't speculate on Nebraska seeing such a B1G conference payout. But, he said, “There is light at the end of the tunnel.''
Terrapins' sweet deal evens out over time
Did the University of Maryland get a better deal from the Big Ten than Nebraska?
There seems little doubt Maryland will be receiving more money than NU, from the very start of its league entry this fall. But Big Ten officials maintain that the underlying principles of the two deals are the same.
In December 2012, the Big Ten announced Maryland and Rutgers as the league's 13th and 14th members.
Neither has much football history to speak of, each with a single conference championship over the past 25 years. However, the Big Ten hopes the schools will help the Big Ten Network make inroads into the lucrative New York and Baltimore-Washington TV markets — a significant expansion of the network's reach.
But to get Maryland, the Big Ten had to pay a price — apparently many millions more in league payouts than Nebraska is being paid.
Sports Illustrated and the Washington Post both report Maryland negotiated a front-loaded deal, with league money it would have received far in the future moved into the pact's first six years. The school will reportedly receive $32 million next year and $43 million by 2017.
It appears the school also had considerable leverage — arguably much more than Nebraska had two years earlier.
Maryland already was getting a reported $20 million a year from the Atlantic Coast Conference and had no reason to take less. It also couldn't afford to take less, as its strapped athletic department recently had to cut seven sports.
And Maryland faces a steep $52 million penalty for leaving the ACC, an issue that's currently in court. If the Big Ten really wanted Maryland, it was going to have to overcome that hurdle.
But Brad Traviolia, the Big Ten's deputy commissioner, said the Big Ten essentially followed the same template in its deals with Nebraska, Rutgers and Maryland.
The Big Ten used the same six-year phase-in term. And all the deals attempt to hold schools harmless — that is, ensure that schools do not lose money compared with what they were receiving from their old leagues.
Because the schools were coming from different leagues, with varying levels of conference revenue, that required different hold harmless payments. It took only $14 million two years ago to hold Nebraska harmless when it left the Big 12.
Traviolia would not confirm that Maryland's deal was front-loaded. But he said he believed all three schools are treated equally over the long run.
It appears that even with the big penalty Maryland could face, the Big Ten's higher payouts over time compared with the ACC's turned the move into a financial winner for the school.
Less is known about Rutgers' deal. But its previous conference, the Big East, was self-destructing into a basketball-only league and reportedly paid the school less than $10 million. If the Big Ten indeed followed the same principles, Rutgers' phase-in payments would be smaller than Nebraska's.
In the end, NU Chancellor Harvey Perlman said he voted in favor of both Maryland's and Rutgers' entry into the Big Ten — doing so with full knowledge of the terms.
Said Perlman: “I have no concern that Nebraska was treated unfairly relative to Rutgers, relative to Maryland, or relative to where we would have been had we not gone into the league.''